Sitting of 10 March 1975

Preamble
The House met at half-past
Two o'clock

PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  INDUSTRY

    West Midlands
    Mr. Ashleyasked the Secretary of State for Industry what steps he is taking to reduce unemployment in the West Midlands and to increase investment in the region ; and if he will make a statement.
    The Minister of State, Department of Industry (Mr. Eric S. Heffer):I am aware of the concern expressed recently about the economic situation in the West Midlands. When the National Enterprise Board and the planning agreements system come into operation, we shall be in a position to do more to encourage industry to raise the level of investment.
    Mr. Ashley:I appreciate that reply, but cannot my hon. Friend take emergency action now to increase investment and reduce unemployment until the board
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    becomes fully operative? Is he aware that the North Staffordshire area, which is within the West Midlands region, has special problems? Will he undertake to consider those problems and take them into account in any moves he makes to attract new, modern industry into the region?
    Mr. Heffer:With regard to my hon. Friend's first point, it would be wrong for me to anticipate the Budget of my right hon. Friend the Chancellor of the Exchequer. My Department is aware of the problems in the West Midlands and of the similar problems in other parts of the country. We are examining them, but it would be wrong for me to suggest that we could take emergency action.
    Mrs. Renée Shortasked the Secretary of State for Industry what proposals he has to revitalise industry in the West Midlands in order to end short-time working in subsidiaries to the motor industry.
    The Secretary of State for Industry (Mr. Anthony Wedgwood Benn):The West Midlands and the motor industry are going through a very difficult period and we shall continue to keep a close watch on the situation.
    Mrs. Short:Is my right hon. Friend aware that the Goodyear tyre plant, which is the largest employer in my constituency, has been on short time for several weeks and that several hundred redundancies have now been declared? Does he appreciate that that is a very serious

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    situation? Further, is he aware that the industrial building industry is in difficulty and that the future completion of a Government skillcentre is in jeopardy? Does he not think it necessary to take urgent steps to see that that matter is remedied?
    Mr. Benn: I suggest to my hon. Friend that when individual firms run into difficulties there should be talks between the unions and the management concerned, and that an approach should be made to my Department. Something can be done in some of these cases. Beyond that, as my hon. Friend will realise, the world situation is a difficult one against which to resolve these problems rapidly.
    Mr. Cormack:Is the right hon. Gentleman aware that many people in the West Midlands work in small businesses and that the very existence of those businesses is being put in jeopardy by the Chancellor's capital transfer tax proposals? Will he have discussions with his right hon. Friend to ensure that his good endeavours on one front are not sabotaged by his right hon. Friend on another?
    Mr. Benn:I take the point that the hon. Gentleman is making, but it would be wrong to suppose that the current difficulties facing small firms in the Midlands, which may be making components or supplying to the large motor firms, are currently affected by the Budget proposals to which he refers. That is a separate point, which I have no doubt the hon. Gentleman is taking up with my right hon. Friend.

    Companies (Disclosure of Information)
    Mr. Hall-Davisasked the Secretary of State for Industry why, if the disclosure of information might be held to be prejudicial to the interests of an undertaking, he is requiring in the Industry Bill an undertaking to disclose that it is appealing against a direction to furnish such information.
    Mr. Benn:When a company makes an application that may restrict the information available to its workers their representatives should know of this, and be able to argue their case.
    Mr. Hall-Davis:Is it not more in line with the Maoist derivations of the right hon. Gentleman's philosophy on industrial affairs that a company should be
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    given the right to appeal for the protection of non-disclosure, but to be obliged to disclose, before its case is heard, that it is seeeking such protection? Is not that a negation of British natural justice?
    Mr. Benn:The last great incursion of Mao Tse-tung into British politics was the warm welcome he gave the former Leader of the Opposition when he visited China last May. The Maoist contribution to current debate is to give warm support to British membership of the Common Market.
    In our view, people who invest their lives in British industry are entitled to know more than they are now allowed by the shareholders to know about the future of the companies in which they work. It is no good Conservative Members constantly saying that we should tell the truth to the British people if, when we ask industrialists to do the same about the firms in which those people work, they always line up with those in favour of secrecy.
    Mr. McNamara:Is my right hon. Friend aware that from the interventions from the Opposition on this sort of topic we take it that they approve of such closures as that of the Imperial Typewriter Company, in Hull, where the workers, having been told that there was nothing to concern them about their future, received one month's notice a fortnight later? A total of 1,400 jobs have been lost. The company is up and off with the British taxpayers' money, and there is a great deal of unemployment in my constitutency.
    Mr. Benn: I agree with my hon. Friend that it is a public scandal that men who have worked for many years in industry should be laid off by managers who have told their workers nothing about the problems which lead to the closure.
    Mr. Heseltine: Will the Secretary of State tell us which paragraph of the White Paper states that companies will be compelled to disclose information where they have no intention of entering into planning agreements?
    Mr. Benn: The hon. Gentleman must not seek to reproduce at Question Time the debate in the Committee which is

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    going through the Industry Bill line by line. We have made it absolutely clear.—[Interruption.] Does the hon. Gentleman wish to intervene?
    Mr. HeseltinŉeWhich paragraph?
    Mr. Benn: Perhaps the hon. Gentleman will allow me to answer the question. It was made absolutely clear in the White Paper that the disclosure of information by management to workers and Government was a central part of our proposals.

    Private Investment
    Mr. Ridleyasked the Secretary of State for Industry if he will give the figure for private industrial investment in 1974 ; and how this compares with 1973.
    Mr. Benn: Capital expenditure by manufacturing industry in 1974 is provisionally estimated at about £3,260 million, at current prices. This represents £2,115 million at 1970 prices—10 per cent. greater than in 1973. This figure relates mainly to private industry, but includes publicly-owned manufacturing concerns.
    Mr. Ridley: Is it not clear from those figures that industry was investing more in 1974 than in 1973, contrary to what the right hon. Gentleman has alleged? Will he now publicly admit that the policies of the previous Conservative Government were producing an increase in investment and that it would be wise for him not to interfere with that improvement?
    Mr. Bean: I am afraid that I do not accept that argument, in that the so-called "Barber boom" had come to a halt by the summer of 1973, before the oil crisis. The previous Conservative Government left office following the disaster of the three-day working week and the investment in the pipeline at that time may have continued until the end of the year —but the forecasts for future investment were low when the hon. Gentleman's Government left office.
    Mr. Ronald Atkins: Does my right hon. Friend agree that the figures are an argument for the increased investment in the public sector which he proposes to carry out?
    Mr. Benn: My hon. Friend is quite right. The one sustained area of continued high investment and high investment intention is the public sector. That has come out clearly from the recent NEDC reports. It is our intention to introduce the National Enterprise Board and to make good use of the Conservative Government's Industry Act of 1972. That indicates our view that public sector investment must play a leading part in re-equipping British industry.
    Mr. Heseltine: Does the right hon. Gentleman not agree that if investment stood high in 1974 as a result of commitments in the pipeline in 1973, it makes nonsense of his attempts to try to blame the Conservatives in 1970 for falling investment which was already planned in 1969?
    Mr. Benn: No.

    British Steel Corporation
    Mr. Peter Morrisonasked the Secretary of State for Industry what is the total number of BSC employees working on less than a five-day week.
    The Under-Secretary of State for Industry (Mr. Michael Meacher): The corporation informs us that some 4,500 employees are at present working less than five days a week on their normal duties, but the corporation has so far found alternative work for nearly all of these, so as to provide full five-day working.
    Mr. Morrison: Is the Minister aware that there is grave concern amongst the employees of the British Steel Corporation about their future? Does he agree that nationalisation is not necessarily an answer to full employment, and that it can lead to redundancies just as much as private industry?
    Mr. Meacher: In fact, the record of the British Steel Corporation on redundancies is a great deal better than it would have been if the corporation had been a number of private concerns. That is shown by the fact that only half of the job losses resulting after 1967, after nationalisation, led to redundancies. In 50 per cent. of all cases there was redeployment. I can give the hon. Gentleman an assurance that the BSC is taking all steps to try to overcome the

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    present situation. It is making up 80 per cent. of average earnings under the terms of the guaranteed working week agreement made between the corporation and the unions. That is a great deal better than arrangements made with private concerns in similar circumstances.

    Concorde
    Mr. Terry Walkerasked the Secretary of State for Industry when he now expects the Concorde aircraft to go into operational service.
    Mr. Meacher: As my hon. Friend the Under-Secretary of State for Trade said in reply to the hon. Member for New. bury (Mr. McNair-Wilson) on 26th February, the question of the date on which British Airways and Air France should begin commercial services with Concorde will be a matter for discussion at the Secretary of State's forthcoming meeting with the French Minister for Transport which is to take place in London on 25th March 1975.
    Mr. Walker: Does my hon. Friend agree that it is vital that Concorde goes into service at the earliest possible moment? Does he further agree that not until Concorde is in service shall we get foreign orders for the aircraft? I impress upon the Ministry that it is vital for jobs in my area—I am sure that my right hon. Friend the Secretary of State for Industry will agree with this—that the aircraft gets into operational service at the earliest possible moment.
    Mr. Meacher: I entirely agree that it is of the greatest importance to ensure that Concorde is brought into operation at the earliest possible moment. That is why we are taking every step to ensure that that happens. Provided that the certification programme can be completed later this year we hope that it will be possible to start limited service before the end of this year.
    Mr. Cope: Is the Minister aware that among the steps that we hope the Government will take is that of ensuring that both the British Embassy in Washington and British Airways do everything possible to help those in America arguing against Senator Proxmire's Bill, so that the aircraft can enter service in the United States at the same time as it enters service elsewhere?
    Mr. Meacher: We are doing all that we can to assist in the discussions to which the hon. Gentleman refers. I think he will be pleased to know that the recent publication by the US Federal Aviation Administration of an environmental impact statement on Concorde is an important step forward. Of course, there are other steps to be taken. There has to be a period of public hearings and representations before the FAA decision is finally made. We shall seek to assist in those disussions in the way that the hon. Gentleman has described.

    Johnson Firth Brown
    Mr. Hooleyasked the Secretary of State for Industry what further discussions he has held with the trade unions and/or management concerning the future of Johnson Firth Brown consequent on the collapse of Jessel Securities.
    Mr. Meacher: Since my reply to my hon. Friend on 9th December, my right hon. and noble Friend the Minister of State has had discussions with both these parties about the acquisition by Government of Jessel Securities' shareholding in Johnson Firth Brown Ltd. However, hon. Members will know that the shares have now been otherwise disposed of.
    Mr. Hooley: Is my hon. Friend aware that there is strong resentment amongst the workers in Johnson Firth Brown about the interference of the European Coal and Steel Community in this matter, and its interference with the proposals of the British Steel Corporation for taking a share in this important company? Does he agree that the special steel industry in Sheffield is far too important to become the catspaw of city financiers in London? Further, will my hon. Friend give an assurance that the NEB, when set up, will study that industry with a view to a sensible reorganisation?
    Mr. Meacher: On my hon. Friend's first point, I certainly agree that it is a matter of deep public concern that the European Commission imposed conditions which were as unacceptable as they were in this case—namely, the divesting of William Beardmore's and the JFB Foundry, in Glasgow, employing 1,000 men. That is a condition which even before it was carried out caused

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    acute job anxiety in that firm, and which would certainly have undermined its viability if it were outside a larger group. I agree, too, that a decision on the reorganisation of the special steel sector should not be left to a board which allowed itself to be argued into a self-damaging situation as a result of political suspicions which were entirely unjustified. I give my hon. Friend the assurance that we shall retain an NEB option to reorganise the industry in the proper interests of wider industrial benefits to this country. That is what we now propose to do.
    Mr. Michael Marshall: Is the Minister aware that what the ECSC is doing in this area is reflecting the view that a monopoly raises grave problems? Does he agree that if the logic of his argument is carried forward, we shall have a continuing series of monopolies right across our industries, irrespective of the interests of both consumers and the work forces employed in those industries? That is what the argument is about.
    Mr. Meacher: I do not accept that the ECSC is entitled to take power from this House in the way that it proposes. Though there may be competition considerations, it is utterly unacceptable to the Government—and, I hope, to all Members of this House—that a condition should be imposed which puts at risk the jobs of 1,000 men.

    South Yorkshire
    Mr. Edwin Wainwrightasked the Secretary of State for Industry, if he will take action to reduce the high unemployment in certain areas of South Yorkshire, by reclassifying the South Yorkshire intermediate area as a development district.
    Mr. Heffer: While unemployment in South Yorkshire is certainly too high, particularly in certain areas, the general level is about the national average and, therefore, reclassification cannot be justified at the moment.
    Mr. Edwin Wainwright: Does my hon. Friend realise that we are not standing for that? Is he aware that unemployment in the Mexborough district has been running at between 6·5 per cent. and 6·7 per cent. in recent years and that young people in the area have to go outside
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    it to find suitable jobs? When will the Government do something to ensure that South Yorkshire has more viable industries and more diversification to provide some alternative to the pits for our young people?
    Mr. Heffer: The Government's policy in relation to the classification of areas·and it has been the policy of all Governments—is to do it on a broad-band basis. We understand that within the broad bands some parts have a very high level of unemployment. We are looking at the whole matter, but at this stage I am afraid that I cannot give my hon. Friend the answer that he wants, which is to upgrade certain areas within the broad band.
    Mr. Richard Wainwright: Is the Minister aware that the newly-constituted area of South Yorkshire was created for local government purposes and that for any treatment of the kind proposed in the Question the whole industrial area of the former West Riding should be considered as one unit?
    Mr. Heffer: Local government boundaries and areas for intermediate, development and special development areas do not necessarily follow the same lines. I reiterate that this area is an intermediate area. It gets certain assistance from the Government. Nevertheless, there are problems within the area. We understand this. The position at the moment is that there is a general recession throughout industry, which not only applies to the Yorkshire area concerned but extends into development and special development areas with even higher levels of
    unemployment.

    Workers' Co-operatives
    Mr. Stanleyasked the Secretary of State for Industry whether he will publish the guidelines currently being used by his Department to determine the terms under which financial assistance is offered to workers' co-operatives.
    Mr. Benn: Guidelines for assistance under Section 7 of the Industry Act 1972 were announced on 2nd October 1972, and notified to the House on 1st November 1972. The considerations governing Section 8 cases are wider, and both are covered by the Act itself. These apply to all applications for assistance under

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    these sections of the Industry Act 1972, irrespective of the type of company involved. The final responsibility lies with Ministers.
    Mr. Stanley: Will the Secretary of State say when, on any previous occasion to that concerning the Kirkby co-operative, the taxpayer has provided 100 per cent. of the capital of a company on the basis that it is non-returnable to the Exchequer whether the co-operative succeeds or fails?
    Mr. Benn: I cannot answer that specific question without notice. However, I can say that this was the first co-operative supported under the Industry Act 1972. I have noticed the bitter hatred expressed by the Opposition to all workers' co-operatives.
    Mr. Tom King: Does the Secretary of State realise the importance of having guidelines? Will he explain why two separate cases—Aston Martin and Meriden—were considered not viable, though both had export potential, both were rejected by the IDAB, but the Secretary of State opted for one and not for the other?
    Mr. Benn: No guidelines were written into the Bill passed by the previous Government. The matter was left to Ministers, subject to the advice of the IDAIR, with no obligation to accept that advice. In the case of Meriden, a marketing arrangement had been reached with NVT, whereas in the case of Aston Martin the absence of adequate marketing arrangements played some part in reaching our decision. The latest proposals for support from Aston Martin would principally have benefited the creditors and not the future of the business. It was on those grounds that I felt unable to accept them.
    Mr. Michael McNair-Wilsonasked the Secretary of State for Industry if he will make a further statement about Government financial assistance to the Meriden Workers' Co-operative.
    Mr. Benn: With the completion of the necessary agreements, assistance has been provided to enable the co-operative to begin production.
    Mr. McNair-Wilson: Is the right hon. Gentleman still satisfied that the amount of assistance being given will enable the co-operative to reach viability? Is it his intention that it should continue to remain
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    a subcontractor to Norton Villiers Triumph, or does he want it to be something more?
    Mr. Benn: I certainly adhere to the decision that I took and recommended to the House. This co-operative is an important example of what may be achieved by these means.
    As the hon. Gentleman knows, the arrangement with NVT is time dated for two years for marketing purposes. I hope that with the launching of the cooperative, which I understand began production today, we may open a slightly happier chapter for the British motor cycle industry.
    Mr. Benyon: Does the right hon. Gentleman accept that the Aston Martin workers in my constituency think that they behaved far more responsibly than the workers at the Meriden co-operative? Even at this late hour, will the right hon. Gentleman agree to meet those concerned to see whether the proposals put forward, which involve a degree of worker participation, can be reconsidered to save this famous company?
    Mr. Benn: I have never refused to meet people who have asked, through their Member of Parliament, to see me. That is the practice that I aim to follow. However, the parallel that the hon. Gentleman sought to draw between Aston Martin and Meriden is not a close one. I pointed out in answer to an earlier supplementary question that the marketing arrangements at Meriden are established through NVT. The marketing arrangements for Aston Martin are not so established. All the support in the latest proposal would have gone to the creditors, not to establish the business on a viable basis.
    Mr. Heseltine: The right hon. Gentleman has already given the House an assurance that the maximum aid to the co-operative is £4·95 million. Will he now answer the question put to him by my hon. Friend the Member of Newbury (Mr. McNair-Wilson), namely whether that is sufficient to make the co-operative viable? If not, what will happen when the money runs out?
    Mr. Benn: It is an old principle as the hon Gentleman knows, that Ministers cannot answer hypothetical questions. I

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    answered the question by adhering to the statement that I made to the House in recommending support of the Meriden co-operative on the basis I proposed. I stick to that view.

    Scotland (Minister's Functions)
    Mr. Dalyellasked the Secretary of State for Industry what functions he has in Scotland, and what functions he will retain after the proposed transfer of certain powers to the Secretry of State for Scotland.
    Mr. Canavanasked the Secretary of State for Industry what role he envisages for his Department in Scotland after the setting up of the Scottish Development Agency.
    The Under-Secretary of State for Industry (Mr. Gregor Mackenzie): At present my right hon. Friend's functions in Scotland are the same as in the rest of Great Britain. Following transfer of responsibility for regional selective assistance in Scotland to my right hon. Friend the Secretary of State for Scotland and the setting up of the Scottish Development Agency which will be answerable to him, my right hon. Friend will retain throughout Great Britain his existing responsibilities for general and sectoral industrial policy, statutory responsibility for the British Steel Corporation and the Post Office, and responsibility for industrial research and development, together with certain aspects of regional industrial policy. In all these matters in so far as they affect Scotland, we shall, as always, consult my right hon. Friend the Secretary of State for Scotland.
    Mr. Dalyell: Is it possible to avoid duplication between the Scottish Development Agency and the National Enterprise Board?
    Mr. Mackenzie: As my hon. Friend knows, the Secretary of State for Scotland has published a consultative document on which he will be seeking advice from interested parties on the general question of the Scottish Development Agency. But we have always consulted very closely on this matter and there is no difficulty in making this distinction. These matters are being worked on at present.
    Mr. Canavan: Will the National Enterprise Board be regarded as a complement
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    to, rather than a competitor of, the Scottish Development Agency? Is my hon. Friend aware that what Scottish industry requires is meaningful decentralisation within the context of a comprehensive United Kingdom plan for industrial development'? Does he agree that, just as political devolution is preferable to complete political separatism, industrial devolution is to be preferred to complete industrial separatism, in order to serve the best interests of the Scottish people and people elsewhere in the United Kingdom?
    Mr. Mackenzie: I agree with my hon. Friend. The whole purpose is to allow this degree of decentralisation, in that certain decisions will be taken in Scotland about Scottish affairs. However, the broad overall aim is to preserve the industrial integrity of the United Kingdom.
    Mr. Crawford: Is the hon. Gentleman aware that great concern has been expressed by industrialists in Scotland about a remark by the Minister of State for Industry during the Second Reading of the Industry Bill in which he said that the writ of the NEB would run in Scotland, that the Scottish Development Agency would be subservient to the NEB, and that this would lead to even greater centralisation of decision-making in Scottish affairs?
    Mr. Mackenzie: I do not recall any-think of the kind.
    Mr. Dempsey: Which Minister will be responsible for ending the shameful practice whereby industrialists such as the Tinsley Wire Company, Coatbridge, settle in Scotland with Government financial aid and then, after capturing the Scottish market, move to England, throwing 120 men out of work and without regard to the social and economic consequences to the work force?
    Mr. Mackenzie: I am very conscious of problem. My hon. Friend and I know this one very well. That is why we are introducing the practice of planning agreements. We believe that these will be valuable and useful in this regard.

    Industry Bill
    Mrs. Millie Millerasked the Secretary of State for Industry which provisions of the Industry Bill are affected by EEC regulations.
    Mr. Benn: I explained in my reply to the hon. Member for Tynemouth (Mr. Trotter) on 25th February how the exercise of the powers proposed in the Bill might be affected by membership of the EEC. All State aids that might be offered under the Industry Bill would be subject to the control of the European Commission under Articles 92–94 of the Treaty of Rome.
    Mrs. Miller: Is my right hon. Friend aware that the Italian tobacco industry, which is at present under State control, will, under the regulations of the EEC, end its control within one year? On 31st January the Italian Journal Stampa Sera reported that one year's notice has been given for State control to end and that private tobacco companies are already moving in to provide their own monopoly in the private sphere. This will not be to the advantage of Italy and it is unlikely to be to the advantage—
    Mr. Speaker: Order. The hon. Lady must put a question.
    Mrs. Miller: Is my right hon. Friend aware of the circumstances that I have outlined?
    Mr. Benn: I thought that my hon. Friend was asking whether I was aware of something. I was not aware of the details of that case. However, my hon. Friend should be in no doubt that the powers exercised by the Commission under the Treaty of Rome are powers that the previous Government entrenched in our domestic legislation in Section 2 of the European Communities Act 1972.
    Mr. Heseltine: Does the right hon. Gentleman agree that on 3rd March his right hon. Friend the Foreign Secretary told the other EEC countries that the Government could now accept the terms that had been negotiated? Does he agree with this set of negotiations?
    Mr. Benn: The hon. Gentleman knows that the Cabinet has not yet determined its view on the renegotiation package. I am surprised that the hon. Gentleman, who is always shouting his head off about the powers of the National Enterprise Board, should not be concerned about the powers of the European Commission over the House of Commons.
    Mr. Trotterasked the Secretary of State for Industry how many representations he has received from both sides of industry since the publication of the Industry Bill.
    Mr. Moonmanasked the Secretary of State for Industry how many representations he has received from both sides of industry since the publication of the Industry Bill.
    Mr. Heffer: My right hon. Friend has received a number of representations from both sides of industry and from the City, which he is considering.
    Mr. Trotter: Have not the heads of industry expressed their deep alarm at the unprecedented powers being taken by the Secretary of State and the spirit in which those powers are apt to be applied? Does the right hon. Gentleman deny that his intention in seeking further State control, intervention and ownership is to try to achieve a Socialist Britain after his own pattern, rather than an efficient free enterprise industry?
    Mr. Heffer: The hon. Gentleman should be aware that we have received approximately 30 letters from various bodies. They have not been quite so critical as the hon. Gentleman suggests, although some obviously have been critical and negative in their approach. The Government intend to carry out the manifesto upon which they were elected in both February and October last year.
    Mr. Moonman: In order to give the Bill an even chance of success, will my hon. Friend consider making a statement at the earliest possible opportunity to avoid further confusion about the whole process of the sharing of information and the Planning Agreements?
    Mr. Heffer: The Bill is now in Committee. Naturally, there will be the closest parliamentary scrutiny by both sides of the Committee and statements will be made and explanations given relating to the points to which my hon. Friend has referred. If my hon. Friend has a specific point in mind, I suggest that he gets in touch with me or my right hon. Friend and we shall answer that point.
    Mr. Tom King: In addition to the representations received from both sides

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    of industry, may I ask what representations the Minister has had from the Home Policy Committee of the Labour Party—in which I believe his right hon. Friend has some distant interest—and what attitude he is taking towards those representations?
    Mr. Heffer: Surely a number of standing committees continually discuss the programme and policy of the Conservative Party. The Labour Party has a Home Policy Committee, which is a standing body, which I believe is entitled to express its opinion on present and future Government policies.
    Mr. Blenkinsop: Is my hon. Friend aware of strong representations from workers on Tyneside, for example, for the rapid passage of the Industry Bill and, indeed, the introduction of Bills for the nationalisation of the shipbuilding industry in order that worker participation may become a reality?
    Mr. Heffer: My hon. Friend is absolutely right. One of the most interesting features of life as a Minister in the Department of Industry is the number of deputations that one receives from trade unions and workers on the shop floor who insist that we get this Bill through at the earliest possible moment.

    British Leyland Motor Corporation
    Mr. Biffen: asked the Secretary of State for Industry if he will make a statement on his future plans for British Leyland Motor Corporation Ltd.
    Mr. Benn: The team led by Sir Don Ryder is at present conducting, in consultation with the British Leyland management and trades unions, an overall assessment of British Leyland's present situation and future prospects. I have undertaken to report to the House as soon as possible on the team's recommendations and their financial implications.
    Mr. Biffen: As there are disturbing rumours that Sir Don Ryder is thinking in terms of 30,000 redundancies, does the right hon. Gentleman foresee a situation in which he can guarantee that there is no likelihood of plant closures as a result of Government assistance?
    Mr. Benn: I invited Sir Don Ryder to undertake these discussions with the
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    management and unions. I have had no report, or forecast of a report. When the Government receive the report they will discuss the matter internally and with the unions and management. However, I have had no indication of the kind that the hon. Gentleman conveyed in his supplementary question.
    Mr. Mike Thomas: Is my right hon. Friend aware that industrialists not unconnected with this company consistently argue that politicians who fail should be removed? Does he feel that industrialists who fail should also be removed?
    Mr. Benn: I understand my hon. Friend's general point. The House would be better advised to wait until we have the report from Sir Don Ryder and his team before we jump to conclusions about any solutions which may emerge from it.

    Tracked Hovercraft Vehicle
    Sir David Rentonasked the Secretary of State for Industry, in view of the fact that the tracked hovercraft vehicle, in its original building at Earith, is the only vehicle of its kind in the world and is of historic interest and potentially of scientific value, if he will take steps to ensure the suitable preservation and public display of this vehicle.
    Mr. Meacher: The vehicle, RTV31, is the property of Tracked Hovercraft Ltd., which developed it with funds provided by the National Research Development Corporation. The project was terminated two years ago and the disposal or preservation of any residual equipment is the responsibility of NRDC and THL.
    Sir D. Renton: Will the Minister bear in mind that it was Government money which was used to develop this most promising invention, in which we have a world-wide lead and which has now become a museum piece? Does his answer mean that the Government are taking no responsibility whatever for its preservation for the future in case it should have further scientific value?
    Mr. Meacher: The right hon. and learned Gentleman is quite right to refer to the fact that when the previous Conservative Government cancelled this project £5million of public money was lost without any benefit in sight. As for his

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    question about preservation of the project, this is not a unique vehicle. Other air cushion vehicles are being developed elsewhere, notably in France. As I sought to make clear, the question of the vehicle's display and preservation is a matter primarily for NRDC. but if it makes such a specific request to us we shall certainly consider it.
    Mr. Lane: As much of the expertise for the project came from my constituency, and as there is great disappointment that it is not possible to proceed with it, will the Government keep an open mind on the suggestion that my right hon. and learned Friend has made and positively respond if an appeal for help on a modest scale reaches them in the near future?
    Mr. Meacher: Yes, Sir.

    National Enterprise Board
    Mr. Gryllsasked the Secretary of State for Industry whether he intends to give the National Enterprise Board specific directions to acquire shares in profitable manufacturing industry.
    Mr. Heffer: This is unlikely, because the Industry Bill already provides the necessary powers.
    Mr. Grylls: Whose agreement will be necessary before shares are acquired in profitable manufacturing industries?
    Mr. Heffer: As the hon. Gentleman knows full well, the position is that there are no compulsory powers in the Industry Bill or in the White Paper.
    Mr. Flannery: Does my hon. Friend agree that a large section of people were disturbed by Sir Don Ryder's view, expressed on television to Mr. Christopher Chataway, that nationalisation is a method of regenerating collapsing British industry in order to hand it back, ultimately, to private enterprise? Will my hon. Friend take note of that and make it clear that large numbers of working people hope that profitable industry will be nationalised on behalf of working people and not taken over only when it is in a process of collapse, as it inevitably is under capitalism?
    Mr. Heffer: I personally am not aware of Sir Don Ryder making such a statement, although I understand that something similar was supposedly said—
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    although it was denied afterwards—by the chairman of a nationalised industry. It is clearly laid down in the White Paper and in the statement of the National Enterprise Board that one of the functions of the board is that it should enter into profit-making industry.
    Mr. Edelmanasked the Secretary of State for Industry whether he will make it a condition of appointment to the National Enterprise Board that no persons appointed shall take up further appointments at the termination of their contracts with any firm with whom they have had financial dealings in the course of their work at the NEB.
    Mr. Heffer: This is a very complicated problem, but one which is important, and we are looking into the issues involved. At this stage, it is not possible to give a definite answer one way or the other.
    Mr. Edelman: I thank my hon. Friend for that neutral answer. In view of the special and privileged relationship between members of the NEB and industrial firms, is it not desirable that there should be an interval before such members take up appointments with private industry with which they may have had financial or advisory dealings? In those circumstances, will the Minister ensure that the rules governing such continuing appointments are assimilated to those governing the appointment of senior ex-civil servants when they leave the public service to take up appointments with private enterprise?
    Mr. Heffer: My hon. Friend is right. There are well-established rules for the Civil Service and the Armed Forces. There is no general code for public corporations. However, I have taken on board the point that my hon. Friend has made. I cannot go further than saying that we are looking into the issues involved.

    South-West Region
    Mr. Hicksasked the Secretary of State for Industry whether he is satisfied that the present extent and character of regional policies take sufficient account of the specific needs of the South-West assisted areas, particularly in respect of the promotion of primary and local craft

    21
    industries and the problems facing small firms.
    Mr. Gregor Mackenzie: Yes, Sir. Substantial assistance is available under the Industry Act 1972 by way of regional development grants and selective financial assistance, and also regional employment premium for manufacturing firms. The Development Commission, through the Council for Small Industries in Rural Areas, provides financial assistance by way of loans and technical and advisory services in rural areas. In addition, my own Department's Small Firms Information Centre in Bristol is available to help small businesses find solutions to their problems.
    Mr. Hicks: Does not the Minister agree that the economic structure of the South-West differs in character from that of the other assisted areas and, therefore, that greater flexibility in applying existing regional policies is essential if our specific problems are to be solved? In particular, does he not agree that the Small Firms Assistance Centre should be transferred from Bristol to a site within the assisted area itself, because Bristol is nearer to London than it is to Bodmin?
    Mr. Mackenzie: We have 10 such centres throughout the country, and they are very helpful. We have considered this matter and I am satisfied that this can be done from Bristol at present. In any event, may I say, wearing my hat as someone having responsibility for the Post Office, that a Freephone service is available for any small industrialist who wants to contact the Bristol office? We have not found any difficulties about that so far.
    Mr. Emery: Does the Minister realise that in the South-West the small firms are subcontractors or smaller parts of major industry, and that these are usually the plants that close down first? Will he consider giving more money and greater assistance to COSIRA, to ensure that there is greater investment in the rural areas?
    Secondly, I support my hon. Friend for Bodmin (Mr. Hicks), in that the West Country does not consider that the unit in Bristol understands much about the problems of Devon and Cornwall. The Minister would be well advised to have the Small Firms Assistance Centre moved
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    out of Bristol to some area in Somerset, Devon or Cornwall.
    Mr. Mackenzie: We have devoted much thought to the question which would be the best place for the centre. I have been given to understand by those in the area that so far the needs of smaller companies are being met. As regards the hon. Gentleman's question about investment in rural areas, the whole question of COSIRA falls within the purview of my right hon. Friend the Secretary of State for the Environment. We can put this point to him.

    Co-operative Development Agency
    Mr. Newensasked the Secretary of State for Industry if he will be introducing legislation to establish a co-operative development agency during the course of this session of Parliament.
    Mr. Meacher: The proposal to establish a co-operative development agency is under consideration, but it is unlikely that decisions will be taken in time to introduce any legislation that might be considered appropriate this Session.
    Mr. Newens: Does my hon. Friend agree, however, that the co-operative development agency, as envisaged in the Labour Party manifesto, could play a very important part in extending co-operation in our economy and that co-operation is a very desirable form of social ownership, which has proved its worth over many years, in distribution and elsewhere?
    Mr. Meacher: I entirely support the sentiments my hon. Friend has expressed. That is why the concept was originally put into the manifesto. We have great hopes that it will be able to achieve the extension of social ownership and all that goes with it in a society that is still basically capitalist.
    Mr. Baker: As, in the first co-operative that has got off the ground, the cost of saving each job is modestly estimated at £30,000, is this the new standard that the Government intend to apply to saving jobs? If so, and if 30,000 jobs are at risk in British Leyland, has the Minister calculated the cost? It is about £900 million.
    Mr. Meacher: The hon. Gentleman should take into account the fact that we

    23
    shall not be confined to firms in which private enterprise has already totally failed.
    Mr. Baker: Then it will be worse.
    Mr. Mike Thomas: Will my hon. Friend quell the animal noises emanating from hon. Members opposite by telling the House that the first co-operative got off the ground about 135 years ago, and that it has proved a great success? There are those of us in the co-operative movement who are very anxious to see this item in the manifesto proceeded with speedily.
    Mr. Meacher: My hon. Friend is right. There are many existing co-operatives in France, Italy, Spain and Sweden which are very successful forms of social enterprise.

    Regional Policy
    Mr. Martenasked the Secretary of State for Industry, if he will make a statement on the EEC plans for exercising measures of control on the United Kingdom's industrial and regional policies.
    Mr. Benn: All the industrial and regional policies of all member States involving State aids are subject to the provisions of the Treaties of Rome and Paris, which conferred power of decision upon the Commission. It is one of the Government's renegotiation objectives to ensure the retention by Parliament of the powers which we need to pursue effective regional, industrial and fiscal policies.
    Mr. Marten: As there has been no apparent progress, so far, on the latter point which the Minister mentioned, does he not agree that there is still some way to go before the pledge on which the party opposite was elected can be honoured? Will the right hon. Gentleman make this point to his cabinet colleagues in the near future?
    Mr. Benn: I do not think I can anticipate the discussions which are currently taking place, but I sought to answer the hon. Gentleman's question.

    PERSONAL INJURY (LIABILITY AND COMPENSATION)
    Mr. Hannamasked the Attorney-General if he can yet say when the Royal
    24
    Commission on civil liability and compensation for personal injury will report.
    The Solicitor-General (Mr. Peter Archer): No, Sir.
    Mr. Hannam: Is the hon. and learned Gentleman aware that there are 250 cases of severe vaccine brain-damaged children who have been waiting since May 1973 for the Royal Commission to report? Is he also aware that the Secretary of State for Social Services declined to award compensation to them until the report is made? Will he press his right hon. Friend the Secretary of State for Social Services to award the compensation now rather than wait for the report? In any case, will he confirm that the Royal Commission will not be able to recommend retrospective awards?
    The Solicitor-General: The hon. Gentleman will be aware that my noble Friend and I are no less anxious than he is that the report should be available as soon as possible. This is a very wide-ranging inquiry. The second part of the hon. Gentleman's question is a matter for my right hon. Friend the Secretary of State for Social Services. Whether retrospective legislation will be appropriate will depend to some extent upon what is recommended, but I shall see that what the hon. Gentleman has said is passed to my right hon. Friend.
    Mr. Lawrence: Is the Solicitor-General aware that the findings of the report are likely to involve matters of far-reaching importance to individual freedoms? Will he use his good offices with the right hon. Gentleman the Leader of the House to ensure that when the findings are made public there will be debate about them on the Floor of the House?
    The Solicitor-General: Perhaps we should wait until the report is available. I shall certainly see that what the hon. Gentleman has said is brought to the attention of my right hon. and learned Friend.

    MAGISTRATES (TRAINING)
    Mr. Simsasked the Attorney-General what is his policy towards adding to the membership of the Lord Chancellor's Advisory Committee on the Training

    25
    of Magistrates so as to include representatives of those persons involved in the work of magistrates' courts.
    The Attorney-General (Mr. S. C. Silkin): My noble Friend's policy is to ensure that the committee is well qualified to give him the advice which he requires on the training of magistrates. He is satisfied that it is so. It does include several members who are directly involved in the work of magistrates' courts. It has also called for the views of those, including the relevant representative bodies, who may be able to assist it in its task. With permission, I shall circulate in the Official Report the membership and qualifications of the committee, which have already been published in the Press.
    Mr. Sims: I am grateful to the right hon. and learned Gentleman for that reply. Does he agree that most members of the advisory committee are magistrates or magistrates' clerks? Does he accept that there are other court officers, such as probation officers and possibly even police, whose advice and experience would be of some value to the advisory committee? Will he consider drawing upon such sources of experience?
    The Attorney-General: Of course the experience of people such as the hon. Gentleman has suggested is extremely valuable. The committee has invited memoranda from a substantial number of organisations, including some to which the hon. Gentleman has referred. The work of the committee is sufficiently advanced to make reconstitution inappropriate, and we hope that work will not be slowed down in that way.
    Mr. Watkinson: Does my right hon. and learned Friend not consider it timely to consider the training of the judiciary generally? Does he not think it right to impose mandatory training on all judges, particularly High Court judges in matters of sentencing?
    The Attorney-General: Mandatory training is not a matter for me. My hon. Friend will be aware that judges do have sentencing conferences from time to time, and in the course of those conferences they meet people of all kinds of different disciplines. That is of great assistance from the point of view of the question which my hon. Friend asked.
    Following is the information:
    LORD CHANCELLOR'S ADVISORY COMMITTEE ON THE TRAINING OF MAGISTRATES
    Members
    The Honourable Sir Leslie Boreham (Chairman). Judge of the High Court, Queen's Bench Division.
    Sir Thomas Skyrme, KCVO, CB, CBE, TD (Vice-Chairman). Secretary of Commissions to the Lord Chancellor and a Justice of the Peace for the City of London.
    Mr. E. R. Horsman, OBE (Secretary). Training Officer in the Lord Chancellor's Office. Formerly Clerk to the Justices of Eastleigh, Romsey and Totton. One-time President of the Justices' Clerks' Society.
    Sir William Addison, DL. Chairman of the Council of the Magistrates' Association. A Justice of the Peace for the County of Essex and Chairman of the Epping and Ongar Division.
    Mr. W. H. Clarke. Justice of the Peace for the County of Hereford and Worcester. Member of the Executive and Treatment of Offenders Committees of the Magistrates' Association and of the Central Council of Magistrates' Courts Committees.
    Mr. D. A. Crockatt, MBE, DL. Justice of the Peace for West Yorkshire. Member of the Council of the Magistrates' Association and Chairman of the Training Committee of the Council.
    Mr. C. J. S. French, QC. Barrister at Law Recorder.
    Dr. D. E. Gray, MBE, PhD. Senior Lecturer, Department of Extramural Studies, University of Birmingham. Justice of the Peace for the West Midlands and Chairman of the Solihull Division. Member of the Central Council of Magistrates' Courts Committees.
    Mr. F. H. Hatchard. Clerk to the Justices for Walsall.
    Mr. J. B. Horsman, OBE. Clerk to the Justices for Wigan. President of the Justices' Clerks' Society.
    Mr. R. L. Jones. Assistant Secretary, Home Office.
    Mr. D. W. Jones-Williams, OBE, MC, TD, DL. Commissioner for local administration for Wales. Formerly Circuit Administrator for Wales and Clerk of the Peace and Magistrates' Training Officer for the County of Merioneth.
    Mrs. N. M. Lowry. Metropolitan Stipendiary Magistrate.
    Mrs. N. M. McGregor. Justice of the Peace for Inner London. Member of the Central Council of Magistrates' Courts Committees.
    His Honour Judge Mynett, QC. Circuit fudge. Mr. Eric Taylor. Solicitor.

    INSURANCE COMPANIES (WINDING-UP)
    Mr. Trotterasked the Attorney-General whether, following the enactment of the Insurance Companies Amendment Act 1973, rules have been made under

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    Section 365 of the Companies Act 1948 with respect to the winding-up of insurance companies.
    The Attorney-General: No, Sir.
    Mr. Trotter: Does the right hon. and learned Gentleman not agree that it would have been of great assistance to the liquidator of Nation Life if such rules had been made? Will he now give urgent attention to this problem?
    The Attorney-General: In the particular circumstances of that case it is highly unlikely that rules made in advance would have been of great assistance, but the position, now that we have had this case—it is the first one in a generation in which a company dealing with life business has had to be wound up—is that the lessons which are to be drawn from that liquidation will certainly be very much borne in mind, not merely in connection with any rules and regulations which may be brought forward but from the point of view of the Bill which my right hon. Friend the Secretary of State for Trade will be introducing this Session.

    MAINTENANCE ORDERS (COMMITTAL WARRANTS)
    Mr. Jesselasked the Attorney-General if he will advise magistrates' courts to make it their practice that when persons in respect of whom committal warrants have been issued for nonpayment of maintenance apply under Section 18(4) of the Maintenance Order Act for a hearing to ask for the committal to be quashed on grounds of inability to pay maintenance due to unemployment, such persons should be granted a hearing.
    The Solicitor-General: No, Sir. The question whether an application under Section 18(4) of the Maintenance Orders Act 1958 should be referred to the court is a matter within the judicial discretion of the magistrate hearing the application, whose duty it is to consider all the relevant circumstances.
    Mr. Jessel: Although the court has the power to decide whether to allow a hearing in such cases, as prison is regarded as the last resort in maintenance cases, is it not an abuse of the court's undoubted
    28
    power to refuse to allow a hearing in such cases? Will the Solicitor-General comment on the refusal of Winchester Court to give a hearing to my constituent, Paul Watts, in such a case?
    The Solicitor-General: This is a statutory discretion vested in magistrates, and how it is exercised in certain cases must depend upon the facts and the occasion I am aware of the case to which the hon. Gentleman has referred. I understand that he has had a personal interview with my noble Friend the Lord Chancellor and my hon. Friend the Minister of State, but they have no authority to give directives to magistrates on how they shall exercise a statutory discretion.

    NORTHERN IRELAND JUDICIARY
    Mr. Biggs-Davisonasked the Attorney-General whether he will make a statement on the strengthening of the Northern Ireland judiciaries.
    The Attorney-General: My noble Friend is satisfied that there is at present no need to strengthen the judiciary in Northern Ireland, but the position will he kept under review and further appointments will be made should they prove to be necessary. The hon. Member may like to know that very considerable progress has been made in reducing delays before the trial of defendants in the Courts.
    Mr. Biggs-Davison: Is the right hon. and learned Gentleman not aware that there is concern at some very serious cases of delay between arrest and trial? Will he and his noble Friend keep this matter constantly under review? That said, may I ask him whether he thinks it appropriate that we should pay tribute to the courage and devotion to duty of the judiciary despite threats and actual assassination?
    The Attorney-General: In reply to the last part of the hon. Gentleman's question, of course I entirely agree, and I am sure the whole House will agree, with what he said, particularly in the light of some of the tragic incidents which have taken place.
    In reply to the first part of the question, we have kept this matter very much under review. We have been very concerned and, of course, we shall continue

    29
    to keep the matter under review. As a result of doing so, in co-operation with the judiciary in Northern Ireland and the Lord Chief Justice in particular, and others, special measures were introduced. I can give the House some figures. In September 1974 the average length of time, in weeks, between committal and trial was 22 for scheduled offences and 10·7 for non-scheduled offences. By February, those figures had fallen to 7·5 and 9·8 respectively—a remarkable reduction.
    Mr. Powell: Is the right hon. and learned Gentleman aware that despite the heavy arrears, there is considerable satisfaction at the rate of progress in reducing them and that, more than is generally recognised by the public, a high proportion of the serious offences of terrorism and violence are now resulting in sentences in the courts?
    The Attorney-General: Yes, Sir, that is also true. I can give a further figure. At the beginning of September last year, 633 persons had been committed and were awaiting trial. At the beginning of this month, which is the last counting day, that figure had been reduced to 203.

NATIONAL HEALTH SERVICE (CONSULTANTS' CONTRACT)
Dr. Vaughan Dr. Vaughan (by Private Notice) asked the Secretary of State for Social Services whether she will make a further statement on the hospital consultants' dispute.
The Secretary of State for Social Services (Mrs. Barbara Castle): At the time of my last statement to the House, on 17th February, I was awaiting the profession's reaction to my letter of 11th February. Its response was to ask the Prime Minister to intervene. Copies of the correspondence between the Prime Minister and Dr. Stevenson have been placed in the Library of the House.
In his replies my right hon. Friend the Prime Minister explained that he did not intervene in pay matters because these were for the independent Review Body on Doctors' and Dentists' Remuneration, that when I put to the consultants proposals for a new contract I was doing so with the full authority of the Cabinet, and that he was willing to see the consultants' representatives on any wider
30
National Health Service issues as soon as sanctions had been removed. He pointed out also that by limiting their hours of work unilaterally consultants were not honouring the accepted obligations and that in consequence the interests of patients were being damaged. I regret to say that this situation is arising in many parts of the country.
As my right hon. Friend the Prime Minister has told the consultants, the Government are satisfied that sufficient common ground exists for a settlement to be reached when negotiations with the Health Departments are resumed. I hope that, having studied the Prime Minister's replies and the assurances they contain, the consultants will decide to drop sanctions and get round the negotiating table.
Dr. Vaughan: I thank the right hon. Lady for her statement, but many of us will be extremely disappointed at how little she has had to say today and at the unsatisfactory nature of the Prime Minister's replies to the consultants. The right hon. Lady will know that I am a consultant. Will she agree that nothing in her statement and her recent actions will have helped to resolve the present dispute? Does she recognise also that waiting lists are now lengthening to a most dangerous extent, and there is now the likelihood of serious damage to the care of patients in the National Health Service?
Will the right hon. Lady agree that a major difficulty is that many leading hospital consultants have no confidence in her whatever? Will she, please, not play party politics over this matter, and may I suggest to her—I say this knowing that it will not be easy for the right hon. Lady —that the most useful thing she could do now would be to put her personal feelings to one side and to reopen negotiations at once, or, failing that, will she hand over the discussions to an independent arbitrator?
Mrs. Castle: I suppose that it would be asking too much to expect a consultant to be objective about a consultants' dispute. The hon. Gentleman will, therefore, not be surprised that I reject all his propositions except the one to the effect that this dispute is damaging the interests of patients. May I ask him, in reply, to discharge his duty and call on consultants

31
to withdraw sanctions first, in the certain knowledge that, as the Prime Minister has stated, I have in this matter been acting not personally but with the full authority and knowledge of the Cabinet, and second, recognising that there are no grounds left that would prevent a settlement if the consultants were at least willing to show the shadows of a compromise?
Dr. M. S. Miller: Will my right hon. Friend acknowledge that, in addition to the opinion of a large number of people in the country, there is a growing body of opinion among consultants who are irritated, annoyed and impatient with the small group of consultants who put monetary advantage above the necessity to do the best for their patients?
Mrs. Castle: I think that my hon. Friend is right. We had an example of that on the television only yesterday when Professor McColl, professor of Surgery at Guy's, appeared on the programme "Weekend World" and was asked by the interviewer whether the whole profession was behind its negotiators in demanding that we drop the current differential in favour of the whole-time consultant. He was asked what he thought the reaction would be if I were to accede to that pressure, which is now almost exclusively the issue before us, and he replied:
"… there would be a riot if you take away the extra payment …".
It is clear, therefore, that the profession is divided on this issue, and that in standing by the principle of maintaining the present differential I am acting in the interests of the National Health Service as a whole.
Mr. Paul Dean: Will the right hon. Lady recognise the unhappy fact that the consultants have lost confidence because of her dictatorial and unfeeling attitude? Does she realise that this dispute is not fundamentally about pay but about the freedom of the consultant—[An Hon. Member : "To make more money."] —to do his duty and fulfil his responsibility to his patients without political interference?
Mr. Harper: Anyone who believes that will believe anything.
Mr. Dean: In view of that unhappy fact, will the right hon. Lady consider the
32
plea which has already been put, and will she ask the Prime Minister—as often happens in similar circumstances—to set up an independent arbitrator acceptable to the consultants so that their grievances and views may be properly aired?
Mrs. Castle: I certainly realise that by the time I took office the profession had totally lost confidence in my predecessors —the hon. Gentleman and his right hon.Friend who refused even to set up a working party to examine the consultants' demand for a closed contract. The first thing I did was to set up such a working party, in response to what I felt was the legitimate grievance of consultants that hours had lengthened to a degree which could not be remunerated within the context of the present open-ended commitment. There is no dispute between the consultants and me about that.
As to the request for an independent arbitrator, I must ask, first and foremost, what such a person would be asked to arbitrate about. It could not be about pay, because that is a matter for the independent review body and is currently before it. It would, therefore, be necessary to define exactly what the arbitrator would have to arbitrate about, and that the consultants have never made clear because in their own minds they are divided and confused.
Mr. R. C. Mitchell: Is my right hon. Friend aware that in the Southampton area a small minority of consultants are acting in a thoroughly despicable and disgraceful manner? Does she know, for example, that one of my constituents who had an appointment with a consultant on 28th February had it cancelled at the last minute and an alternative date given in January 1976? Is that not a thoroughly disgraceful state of affairs?
Mrs. Castle: Such action is totally tragic from the point of view of our National Health Service, the interests of which the consultants say they have at heart. I believe that action of that kind is deplored by a large number of members of the profession itself. There is an increasing consciousness that the breach of their accepted obligations is doing violence to the medical ethic by which the profession claims to stand.
Mr. Norman Fowler: Surely the Secretary of State is not claiming that Professor McColl speaks for all the consultants.

33
Is her understanding of this dispute so small that she does not understand the real feelings which exists among consultants throughout the country on this issue? At this stage will she reconsider her view and either set up an independent inquiry or take some new initiative?
Mrs. Castle: Of course, no individual spokesman speaks for all the consultants. I believe this to be one of the real difficulties. There is a conflict of interest here between the whole-timer and the maximum part-timer, between the man who can and does earn large sums from private practice and those other consultants in the Cinderella areas, the neglected specialities, who depend totally upon the whole-time emolument. What I am doing now is—[HON. MEMBERS : "Nothing."] I am defending the whole time emolument. I am defending, and will defend a proper reward to those who are devoting themselves full-time to the health service in areas where there are not fat private practice pickings to be made.
The best way the Conservatives can bring this dispute to a conclusion is to condemn the intolerable behaviour being indulged in by so many consultants.
Mr. Molloy: Is my right hon. Friend aware that the banality of the current situation is reminiscent of some of those troglodyte attitudes adopted by ignorant and greedy people when the National Health Service was first established? Will she give the House an assurance—not that my right hon. and hon. Friends and I require it—that she will stick to her guns in defending this great service because other members of the health service, like the members of the COHSE, are looking to her to do so? She will have their support for her campaign, and that support will be given not merely in the health service but by all the sick and ailing.
Mrs. Castle: The answer to my hon. Friend's question is "Yes ", and in defending the health service I shall be standing by a compromise which has obtained for many years, a compromise which the consultants are now trying to breach unilaterally. On the one hand the consultants want to retain the option agreement which permits them to choose,
34
after having accepted an appointment, whether they will serve whole-time or only maximum part-time, and on the other hand they are trying to drop the other part of the compromise which has also given a differential in favour of the man who opted to go whole-time.
The only way out of this trouble is by a compromise. I have compromised. I suggest that before the Conservatives ask me any further questions they should read all the correspondence that both I and my right hon. Friend the Prime Minister have had with the consultants. In it they will see that I recognise the importance to the consultants of the option agreement. I am therefore not proposing to interfere with it. In return I ask them not to interfere with the present agreement on the differential. That is reasonable.
Mr. Maxwell-Hyslop: Is the right hon. and noble Lady aware that more than 10 per cent. of consultant posts are vacant, and is she aware that the trend in filling registrar appointments is becoming very dangerous? While she plays politics and refuses to do her job as Secretary of State, the National Health Service will bleed to death in both the consultant and the registrar grades.
Mrs. Castle: I am very grateful that the hon. Member for Tiverton (Mr. Maxwell-Hyslop) recognises my nobility of spirit. Of course I am aware of the recruitment problems. That is a matter currently being looked at by the review body, the independent body on pay. That is a matter for it, not for me. As I have told the House on previous occasions, my Department has given evidence to the review body supporting the increase in pay and pointing out the latest recruitment and manpower figures and the implications these have for the coming award.
I have always made clear that consultants have the right to be adequately remunerated. I am willing to negotiate with them a limited contract which would give them extra pay for the long hours many of them do. There is no difference between us on that score. I therefore see absolutely no reason why the dispute should continue a moment longer or why sanctions should be retained.

INDUSTRIAL CIVIL SERVANTS (DISPUTE)
The Secretary of State for Employment (Mr. Michael Foot): With permission, Mr. Speaker, I will make a statement on the unofficial action being taken by industrial civil servants.
As from this morning the industrial civil servants employed by the Property Services Agency on providing maintenance and services to Government buildings in the Whitehall area and to the Houses of Parliament have begun unofficial action for an undefined period. I understand that about 420 people may be involved.
This unofficial action is being taken in support of a claim by the trade unions concerned on behalf of all industrial civil servants for an interim increase pending their next annual settlement in July. The Lord Privy Seal has recently met trade union representatives to discuss the unions' claim and pointed out the difficulties involved in reconciling an interim increase with the TUC guidelines. A response to the claim can be expected soon.
My right hon. Friend the Lord President will be dealing with the possible effects of this unofficial action on the business of the House. Services to Government Departments could also be affected.
In the light of the position as I have described it I very much hope that those concerned will lift the unofficial action and return to normal working.
Mr. Prior: The right hon. Gentleman's alacrity in making a statement about a dispute which concerns the House of Commons will compare very unfavourably with his reluctance to make statements concerning disputes which affect millions of people in other parts of the country. I hope that Labour Members will appreciate the feelings of commuters coming in to London about that. Does any interim increase fall within the terms of the social contract?
Mr. Foot: Dealing with the first matter that the right hon. Gentleman raised, on the last occasion, which concerned the signalmen, I volunteered a statement to the House and Conservative Members complained when I did so. Moreover,
36
those who criticise me on this matter will realise why I took the attitude I took on the signalmen and will realise that it was a sensible course. On the right hon. Gentleman's second point, the difficulty about a proposal for an interim payment is that it would have breached the guidelines on the 12-month rule, and we were and still are concerned about that.
Mr. Thorpe: Will the right hon. Gentleman accept that there will be genuine sympathy for him over the regularity with which he has to come to this House and deplore unofficial strikes in support of claims in breach of the social contract to which we know he is wedded? When will the Lord Privy Seal be making a response to the claim which has been made?
Mr. Foot: The negotiations have not broken down. Discussions are continuing over the claim through the normal negotiating machinery, and that is where we say the discussions should take place. We hope that they will proceed speedily there.
As for the first part of the right hon. Gentleman's question, I am not quite sure where he stands on the social contract, and he had therefore better think up his own view before he makes comments about other people's views.
Mr. Bidwell: Does my right hon. Friend appreciate that the workers concerned feel very deeply about this issue, as is evidenced by the stoppage? My right hon. Friend gave figures of the numbers involved, but I understand that this is a solid stoppage of work throughout Whitehall. Does he accept that these workers are generally very low paid and that the position has been exacerbated by increases given to non-industrial staff? These people certainly seem to have a grievance. They were caught by the pay freeze and by phase 3, I understand from fellow members of the Transport and General Workers' Union, to whom I have been speaking. Is it not obvious that Whitehall and the Houses of Parliament can no longer rely on low-paid workers and grace-and-favour circumstances?
Mr. Foot: I certainly apppreciate what my hon. Friend says. I am sure that those who are taking this action feel

37
their grievance strongly. But it is also the case that they have had considerable increases since the settlement of last July. It is true that they were caught under the end of phase 3, but since then they have had threshold increases and some and possibly all of those taking action today have also had considerable increases in London weighting. [HON. MEMBERS: "That is the same "]. It is not the same. It is not the case that they have not had any increase since the July settlement.
When the July settlement was reached —and this touches on the feeling of grievance—it was agreed that there should be a joint study of the way in which the rates of pay in the industrial civil service were compared with those in comparable work in outside industry. I cannot anticipate the outcome of that study, but of course that outcome will play its part in the discussions now taking place.
Mr. Brittan: If the action today is unofficial, what steps is the union taking to persuade its members who are participating to go back to work?
Mr. Foot: The union representatives of these workers, as of other industrial civil servants, have shown a most proper respect for the procedures throughout the whole of these discussions, They have sought to secure a settlement of this matter through the normal negotiating machinery, and I think that it would be wise for those taking this action today to do the same.
Mr. Moonman: Is not the situation likely to become more acute as the custody guards on Government buildings escalate the dispute by Thursday? Would my right hon. Friend agree that to meet that claim would not be in breach of the social contract?
Mr. Foot: I should have to look at that, but I think that that would be in breach in the respect that I have mentioned. Certainly it would be most unfortunate if there were any escalation of the dispute. The discussions now taking place through the normal machinery may help to end the dispute. That is what I wish, and I am sure that that is what the whole House wishes.

HOUSES OF PARLIAMENT (FACILITIES)
The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): As my right hon. Friend the Secretary of State for Employment has just said, the present situation is that industrial civil servants manning the PSA works depôts which look after the Houses of Parliament and buildings in Whitehall have gone on strike today. The strike is unofficial and the total number of staff involved is about 420.
Strikers are picketing the Houses of Parliament and other Government buildings in Whitehall. Certain other categories of staff, in particular those responsible for lift maintenance and the inter-departmental dispatch services, are not willing to cross the picket lines.
No major breakdowns in services have been reported and it is hoped to continue to run all essential services so that the work of both Houses will be able to continue.
Steps are being taken to provide whatever papers are essential to enable the House to function, though, as in the past, there may be some inconvenience to hon. Members.
House of Commons catering staff are working but are unwilling to light gas appliances which are normally lit by the unofficial strikers. I regret that this means that only a cold meal service is available. Coffee is available in the Members' Guest Room and will be available after lunch and dinner in the Harcourt Grill Room. Tea and coffee are available in the Members' Smoke Room.
Sir G. Howe: Is it not a fact that this is the first time that workers employed in the Houses of Parliament have themselves been the subject of pickets of this kind? Does not the progressive influx of industrial action of this kind into the Palace of Westminster itself betoken evil times for the future? If, as the Secretary of State for Employment has made clear, the claims now being discussed are themselves in breach of the social contract, will the Lord President of the Council encourage his colleagues to do something to secure a settlement of this dispute that actually upholds the social contract? Will he not also himself be prepared to strike a blow

39
by going to strike a light in the Tea Room to set these fires going?
Mr. Short: The reply to the right hon. and learned Gentleman's first question is that I understand, although I am not sure, that there was a previous occasion when the House was picketed.
Mr. Skinner: Is my right hon. Friend aware that some of us have attended the House of Commons today only at the insistence of those on the picket line in order to put their case in the House and that we shall continue to do so for as long as this unofficial strike lasts? The strike may become official when the union executive has considered the matter.
My right hon. Friend the Secretary of State for Employment mentioned other increases. Is my right hon. Friend aware that London weighting and threshold agreements are not part of any wage increases as such? Is he aware that this situation is a relic of the statutory incomes policy of the last Tory Government and something that we should clean up as soon as possible?
Is he also aware that although it might have been wrong for his right hon. Friend to interfere in the railways dispute, for that interference would have been Government interference in industrial free collective bargaining, as the custodian of this place my right hon. Friend should have some part not as a mediator, but in a capacity in which he can solve the problem?
Mr. Short: I am sure that, as my right hon. Friend has said, it will be the wish of hon. Members in all parts of the House that the dispute should be settled as quickly as possible. We hope that the strikers will go back to work so that the normal process of negotiation, which has not broken down, may continue.
Mr. Thorpe: Is the right hon. Gentleman aware that some of us have come to the House to represent the voters who return us from our constituencies? Would he give an undertaking that if action is taken that would impede the discharge of parliamentary functions by an hon. Member, he will immediately make a statement to that effect, because although, if we are denied hot food and lifts, we shall still be able to discharge those func-
40
tions, and probably be rather healthier in the process, there is a sessional order and we are getting near to seeing a breach of it?
Mr. Short: Any question of privilege would be a matter for you to decide in the first place, Mr. Speaker. You would have to say whether there was a prima facie breach of privilege and it would then be for the Committee of of Privileges, and I should not venture to comment on that. However, I understand that for there to be contempt of Parliament and therefore a breach of privilege two elements would have to be satisfied. One is that there would have to be physical obstruction real physical obstruction—and the other is that the dispute would have to be angled solely and exclusively towards impeding the work of Parliament and not just be part of a general and broader dispute. Those are the two conditions. However, it is of course initially a matter for you, Mr. Speaker, and ultimately for the Committee of Privileges.
Mr. Arthur Lewis: Is my right hon. Friend aware that this dispute could be settled within five minutes? All it needs is for him to say that the Government will treat these people as generously and as quickly as they treated the top paid civil servants and that they will give these people an increase of as many thousands of pounds as they give each year to the judges and the top paid civil servants. If he says that, they will be back within five minutes.
Mr. Short: There is machinery for dealing with the salaries of top civil servants and judges and there is machinery for dealing with the salaries of the civil servants who are now on unofficial strike. The negotiations are going on. They have not broken down. I hope that my hon. Friend will add his voice to ours in urging these people to go back to work.
Mr. Ronald Bell: If they do not go back to work, what does the Lord President propose to do about it? When are the Government going to stand up to these juvenile cowboy and Indian games of crossing picket lines and all the other nonsense? Why not face up to it and give some kind of reward and recognition to those who stand up to group action and break strikes.
Mr. Short: My job is to try to ensure that the House is able to carry out its functions and to carry on normally, and this I shall do to the best of my ability.
Mr. Frank Allaun: Is my right hon. Friend aware that these men have very good reasons for striking? They were promised an interim increase by January but they have not received it, although non-industrial civil servants have received an increase of £3 a week, plus three extra days' holiday a year, plus extra shift allowances. If non-industrial workers have received the award, why is it that industrial workers have not been given it?
Is my right hon. Friend aware that, because their wages are so low, these men are having to work on Saturdays to support their families? Is my right hon. Friend further aware that there are 6,000 men involved in London who will be called out shortly if this promise is not kept, and it has not been? It is all very well for Conservative Members to talk about inconvenience, but they have no idea of the inconvenience suffered by these men every day of their lives.
Mr. Short: My hon. Friend is wrong. No promise was made of an interim settlement. I repeat that the negotiations have not broken down. They are going on, and I hope that all hon. Members will wish the dispute to be brought to an end as quickly as possible.
Sir G. Howe :Is it not clear that if, as the Lord President says, the Houses of Parliament are being picketed for only the second time in their history, the negotiations have in any practical meaningful sense broken down and the members concerned are demonstrating their disquiet at the failure of the negotiations to produce results?
Can the right hon. Gentleman say clearly, first, whether the claim being made is in breach of the social contract? Secondly, is the Government's position in breach of the social contract? Will the right hon. Gentleman accept his responsibility to clarify this rather cloudy document at least in this respect which affects us so directly? He must see that one side or the other is not welshing on this important document.
Mr. Short :My right hon. Friend said clearly that an interim payment would be in breach of the 12-month rule, and that is the difficulty.

HOUSES OF PARLIAMENT (FACILITIES)

  LOTTERIES BILL (STANDING COMMITTEE)
  Mr. Farr: May I, Mr. Speaker, ask for your guidance on the way in which the Lotteries Bill is being put through the House? First, only 1 hour and 45 minutes was allowed for the Second Reading debate, as a result of which a number of hon. Members on both sides of the House did not have an opportunity to enter into the discussion.
  Secondly, Standing Committee B, which is due to meet tomorrow to consider the Bill, is composed of 17 Members, only one of whom was against the Bill. It occurs to me that —
  Mr. Speaker: Order. The hon. Member began by asking for guidance, but he is putting forward what is clearly not a matter for the Chair. We have had this out before. I must ask for the support of the House in preventing matters being put to me which are not matters of order.
  It is not for me to comment on the actions of the Committee of Selection. The hon. Member has put down a motion on this. He must seek in other ways to have that matter debated. He must bring pressure to bear on his Front Bench or ask the Leader of the House about it, but the matter cannot be raised with me as a point of order because I have no power to do anything about it.
  Mr. Farr:I appreciate that, Mr. Speaker, and I am most grateful to you for your guidance. The reason why it would be inappropriate to raise the matter on Thursday is that the Committee is due to meet tomorrow. By Thursday the Bill may be well advanced in Committee and it will be difficult to get its progress reversed.
  Mr. Speaker: I see the hon. Member's point, but I think he must seek some other way of raising it. I heard the Patronage Secretary saying something under his breath. Perhaps the hon. Member will follow the matter up in that way.

  ORDERS OF THE DAY

    FINANCE BILL
    [4TH ALLOTTED DAY]
    Order read for resuming adjourned debate on Amendment (No. 92) proposed [6th March] on consideration of the Bill, not amended in the Committee and as amended in the Standing Committee.

    FINANCE BILL
      Clause 39

        FREE LOANS, ETC.
        Which amendment was : In page 30, line 35, at the end, to insert the words :
        but no period beginning before 6th April 1976 shall be a chargeable period.'—[Dr. Gilbert.]
        Question again proposed That the Amendent be made.
        4.4 p.m.
        Mr. David Howell: The House, or at least some Members, may recall that when we were rather abruptly interrupted at midnight on Thursday we were dealing with Clause 39, the free loans clause. It is a curious piece of drafting, and it has come to be known by hon. Members who have been following these things through as the lost clause in the Bill because, first, the Chief Secretary and the Financial Secretary had some difficulty in interpreting it when it came forward for discussion, and then the Opposition amended it in Committee to the point where in effect it was completely sterilised and removed from effective existence. The Chancellor of the Exchequer then postponed its operation until April of next year and when last seen was forlornly looking for a juridical formula to make the underlying aim of the clause effective again.
        Our interest, besides our general interest of wishing never to see such an absurd provision in any Act on the statute book, is to deal with the undertakings given in Standing Committee by the Financial Secretary that if ever such a provision appeared on the statute book certain aspects would be protected from its more lethal effects.
        There was the undertaking given in response to an amendment that gross in
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        terest indicated in the clause—that is, the notional interest flowing supposedly and deemed to flow from loans given at no interest or low interest—would be added to the net income of the donor, from which certain consequences follow—for example, whether that income could possibly be liable in any form to capital transfer tax, but that is for the Government to sort out.
        Secondly, there was the undertaking that any loans given as part of a partnership, partnership operations or in the financing of close companies where this is customary, as I think Treasury Ministers have learned—although the drafters of the clause did not know beforehand—as part of the whole financing operation of close companies, would be protected, and will be so when a clause comes forward in April 1976 presumably in the Finance Bill of that month and when the Chancellor produces this juridical formula for which he is so desperately searching.
        Those are the two undertakings and we should like them on the record so that we may be satisfied that there is no suggestion that this postponement will be long enough for people to forget about these little local difficulties and for the Government to bring back this nonsensical clause unamended, which would be very damaging.
        The Financial Secretary to the Treasury (Dr. John Gilbert): The hon. Member for Guildford (Mr. Howell) has put his finger on a couple of points about which he wants reassurance, and the hon. Member for Blaby (Mr. Lawson) raised many more on Thursday evening, largely in repetition of our Standing Committee proceedings. I shall, of course, during the coming year examine all the points that I undertook in Committee to examine and I am sure that both hon. Gentlemen will accept that the Government have no intention of using the period of recollection in tranquility for resiling from any of the commitments given earlier in our proceedings on the Bill.
        Mr. Nigel Lawson: I am sure the hon. Gentleman does not want to make it appear to the House that the commitment was merely to examine. In a number of cases the commitment was to table amendments on Report to meet the points that had been made.
        Dr. Gilbert: The hon. Gentleman is right. The commitment varied according to the context of what we were debating, and I take the hon. Gentleman's point completely. We have met the whole range of difficulties by this Government amendment which ensures that the clause shall not come into effect until April of next year, and I am sure the hon. Gentleman will welcome that.
        I could go further now if the hon. Gentleman would like me to do so. On the particular question of loans to close companies and partnerships, I am happy to repeat the categorical undertaking that I gave in Committee that the revised legislation will incorporate an exemption in accordance with the principle of Amendment No. 917 tabled in Committee. It will cover loans to close companies and partnerships where the transferor is a participator in the company or a member of the partnership, and loans to companies will not be confined to the close company situation.
        The Opposition were seeking reassurance on one other point, namely, that the gross consideration for the use of a loaned asset should be treated as part of the transferor's net income or, if less than full consideration is charged for the use of the asset, the gross difference between the normal consideration and the consideration actually charged. So that we have the record straight, I will repeat what I said in Committee :
        " It is considered that subsection (1)(c) must mean without further words that the amount deemed to be transferred is capable of being treated as both normal expenditure end as income of the transferor ".—[Official Report, Standing Committee A, 12th February 1975 c. 1570.]
        None the less, I will again consider whether there is any need for revision of the clause to make this intended result doubly sure. It was one of the many cases in which the Opposition insisted that it all meant something different from what we insisted it meant. On many occasions my right hon. Friend the Chief Secretary and I have been at pains to lean over backwards to try to meet Opposition objections, although we did not think that the passages were ambiguous.
        Mr. Lawson: Will the hon. Gentleman deal with the point made on Thursday by my hon. Friend the Member for Hove (Mr. Sainsbury) concerning dividend
        46
        waivers, which is covered by Amendment No. 438?
        Dr. Gilbert: The hon. Gentleman is being uncharacteristically impatient. I intend to refer to all the items raised in our debate on Thursday.
        Amendment No. 91 would deny the application of Clause 39 to the provision of dwelling houses. It goes further than Committee Amendment No. 451 in the name of the hon. Member for Blaby (Mr. Lawson). That amendment excluded only houses for dependent relatives. Government New Clause 7 exempts transfers of value for the maintenance of dependent relatives, and that exemption is available in respect of any charges under Clause 39. Therefore, there is no need for any special provisions on the lines of this amendment to benefit dependent relatives.
        I referred last week to the problem of houses for employees and former employees. I intend to revert to that matter, and I shall be looking at it again during consideration of possible amendments to Clause 39.
        Amendment No. 92(a) would defer the operation of Clause 39 until after 6th April 1980. It will come as no surprise to Opposition Members to learn that we regard deferment until April 1976 as going as far as we can justify. I could not recommend my hon. Friends to accept Amendment No. 92(a).
        Amendments Nos. 415 and 419, broadly speaking, deny the application of Clause 39 to loans to businesses, whether or not incorporated, by persons who carry on the business or are shareholders, to business partners and to non-profit-making bodies, members of clubs and churches. I have already given an undertaking to revert to the substance of those amendments at a later stage.
        Amendments Nos. 416, 418, 445 and 499—of which the only one you called, Mr. Speaker, was Amendment No. 416—all bear on the same point and provide alternative wordings. Clause 39(1)(c) provides that :
        " the transfer shall be treated as made out of the transferor's income."
        The amendments would embellish those words, which we consider to be sufficient in themselves. We undertook, in column 1571, to consider the point again in Committee. I remain of the view that the

        47
        words in subsection (1)(c) mean without further addition that the amount deemed to be transferred is capable of being treated as both capital expenditure and as income of the transferor. For that reason, Amendment No. 416 is not necessary.
        The hon. Member for Blaby asked about Amendment No. 438, to which the hon. Member for Hove (Mr. Sainsbury) spoke on Thursday. The amendment is self-explanatory, but it is not in place attached to Clause 39. If he will look at the earlier clauses, particularly Clause 20, he will see that that is the appropriate clause to which to attach the amendment. A dividend waiver cannot be concerned with the use of money or other property without consideration. As we have gone past Clause 20, it might be convenient for me to say to the hon. Gentleman that at first sight a waiver would be caught by Clause 20(7), but there is a let-out in certain circumstances under Clause 20(4), and the chargeability or otherwise of a dividend waiver would depend on the facts of the case as covered by those two subsections.
        4.15 p.m.
        Mr. Peter Rees: I should like to get absolutely clear this matter of great practical significance. Suppose a person who feels that he does not need a dividend from a company in which he has a substantial interest decides to execute a waiver under paragraph (c) and no consideration moves the company. He would be conferring a gratuitous benefit on the company because its funds would not be depleted by the amount of the dividend which would be payable to him. Would that person be treated as having made a transfer to the company?
        Dr. Gilbert: The answer depends upon the facts of the case. In general the intention would be that the transfer should not be chargeable, but there could be circumstances in which the waiver of a substantial dividend accrued to an individual member of the family in a close company situation. The circumstances would determine whether the waiver were chargeable.
        Mr. Rees: I appreciate how difficult it is to probe these delicate matters across the Floor of the House, but I am a little disturbed about the Financial Secretary's
        48
        answer. He referred to a substantial shareholder—I cannot see why it should matter whether a shareholder is substantial—and seemed to suggest that there might be a transfer not to the company but to the other shareholders who took their dividends. That alarms me a little. Would the Financial Secretary be kind enough to elaborate on that?
        Dr. Gilbert: This is very much a Committee point, but I will do my best to assist the hon. and learned Gentleman. The essence of the matter is that if the effect of the waiver were to create a considerable benefit for another shareholder, which could happen in a close company situation where there are few shareholders, a chargeable transfer could be deemed to have taken place. I cannot go into the matter in greater detail because it depends on the facts of the case, as I am sure the hon. and learned Gentleman appreciates.
        Mr. Rees: Is the hon. Gentleman referring to a benefit to the shareholder or to the company?
        Dr. Gilbert: I was referring to a benefit to a shareholder. Where a close company is virtually owned by three or four people, if one shareholder waived a dividend the major part of the benefit would fall to another shareholder, as distinct from the situation which obtains in a public company with many shareholders. This would depend on the circumstances on each case.
        Mr. Nicholas Ridley: Surely that would not be a transfer of capital but a transfer of income. The shareholders who benefited would have a larger income and would therefore be liable to larger income tax. How can the Government claim that the transaction which my hon. and learned Friend has described is a transfer of capital? It is surely a transfer of income. That is why I maintain that this clause should not be in the Bill. It is a clause which taxes income.
        Dr. Gilbert: The hon. Gentleman is flogging a horse that has been flogged quite a bit. He has already raised this point about whether the clause should be in the Bill and whether it is in order. He has done so many times and it has been found to be in order many times. I do not think it is profitable for me to

        49
        follow that point yet again. The question is whether there is an intention to convey a gratuitous benefit. If there were such an intention by the exercise of a waiver, there would be a liability to capital transfer tax. It all depends on the facts of any individual case and whether the intention to create a gratuitous transfer was paramount.
        Mr. Tim Sainsbury: In view of the difficulty we are having on this point
        I wonder whether the Financial Secretary would agree to look at it again and see whether he can find some form of words which would make the situation clearer to shareholders, companies and their financial advisers.
        Dr. Gilbert: Whenever I say that I will look at something again I am castigated by the Opposition for not understanding the Bill. I understand the Bill very well. I am prepared to look again at the matter. The relevant part of the Bill to which this amendment should attach is Clause 20. I do not think we can advance consideration of the point later. If the hon. Gentleman would like to write to me about any set of circumstances he has in mind I would be happy to look at it.
        Mr. David Howell: I promise not to castigate the hon. Gentleman again but may I ask him whether, in the examination which will take place before this is brought forward in April 1976—with the juridical formula—there could be new definitions or explanations underpinning the clause, explaining to the lay and expert public how it is that if Clause 1(c) says that the transfer should be treated as made out of income from the transferor and Schedule 6 says that if it is made out of income it is exempt, chargeable transfers can arise under the clause? This is bound to puzzle anyone who tries to following our proceedings outside.
        Dr. Gilbert: As I have said in Committee, the Inland Revenue produces a massive and comprehensive set of explanatory notes to the Bill. It intends to produce a revised set of notes to take account of the amendments made in Committee. I am sure that it would be possible to cover the point made by the hon. Gentleman. I think that is all I
        50
        need to say at this stage except to commend Amendment No. 92.
        Amendment agreed to.

      Clause 40

        ANNUITY PURCHASED IN CONJUNCTION WITH LIFE POLICY
        Amendments made: No. 93, in page 30, line 38, leave out ' 26th' and insert 27th '.
        No. 95, in page 31, line 25, leave out ' 26th ' and inset 27th '.— [Dr. Gilbert.]

      Clause 42

        ASSOCIATED OPERATIONS
        Amendment made : No. 97, in page 32. line 21, leave out 26th' and insert 27 '.— [Dr. Gilbert.]
        Mr. John Nott: I beg to move Amendment No. 539, in page 32, line 32 at end add—
        ' (4) Where a transfer is made between spouses, then any two or more operations including that operation shall not be associated operations if they would not have been associated operations but for the transfer between spouses '.
        Mr. Speaker: With this it will be convenient to discuss the following amendments :
        No. 706, in page 32, line 32, at end insert—
        ' (4) The foregoing provisions shall not apply so as to make any transfer of value a chargeable transfer where that transfer is by one party to a marriage to the other and that other party subsequently or previously has made a transfer of value of an amount equal in value to the first mentioned transfer '.
        No. 234, in Schedule 6, page 94, line 43, at end insert—
        ' (5) An arrangement between two spouses to enable each to contribute £5,000 as a gift within sub-paragraph (2) shall not be treated as an associated operation for the purposes of this Part of this Act '.
        Mr. Nott: I thought that some of the confusion surrounding Clause 42 had arisen as a result of the original Press notice issued by the Inland Revenue, to which the Chief Secretary referred in Committee. The right hon. Gentleman admitted then that it had been a little misleading. Although I did not serve on the Committee I have read the passage in question. The Chief Secretary assured the Committee that transfers involving

        51
        husband and wife would not be associated operations for the purpose of the Bill.
        Until a few moments ago, when I saw a letter written by the Chief Secretary, dated 7th March, to my hon. Friend the Member for Gloucestershire, South (Mr. Cope) we had hoped that this would be a short debate. That letter has raised the whole question yet again and we shall have to start where we began the debate in Committee. During the course of the Bill the Chancellor has constantly made it clear that he has no wish to inhibit transfers between husband and wife. On many occasions he has emphasised the great benefit the Government are giving to the community generally by allowing these transfers in a more generous way than was the case hitherto.
        Many delegations have been to see Treasury Ministers. I take one example, the delegation from the CBI which was concerned about small businesses. I can speak only on the basis of hearsay since I was not present. This delegation, like others, has been told by the Chief Secretary or other Ministers that if only the business man arranges his affairs in a sensible way and takes full advantage of the avoidance devices, which Treasury Ministers are prepared to explain to the business man, the full rigours of this tax will be much mitigated.
        When Ministers speak from the Treasury Bench they constantly sound off about the evils of avoidance and how they are doing their best, as public-spirited citizens, to stop these loopholes. On the other hand, when delegates see Ministers they are told of the ways in which liability for capital transfer tax can be mitigated. The transfer between husband and wife has been demonstrated on several occasions as being one of those means. I shall not be breaching any confidences if I say that in private meetings my hon. Friends have an expression known as the "Gilbert and Sullivan Shop." I understand this to be a shorthand expression for explaining the kind of transactions which the Government understand might go on to minimise capital transfer tax liability. In spite of what was said in Committee a nagging doubt remains about Clause 42 which is much aggravated by this letter, to which I shall refer.
        52
        Treasury Ministers come and go, some rather faster than others, but the Inland Revenue's obsession about tax avoidance goes on for ever. Frequently its obsession about stopping up the tax avoidance loopholes leads to considerable fall out that is contrary to the interests of the ordinary taxpayer. The right hon. Gentleman may be certain of the Government's intentions on Clause 42 but in some mysterious way, as has often happened in the past, we may find the Revenue, in subsequent years when new Treasury Ministers have taken office contesting some transactions between husband and wife. In that situation the Inland Revenue may convince those new Ministers that what they are doing is fully within the terms of the clause.
        I turn to the Chief Secretary's letter received today. It is confusing. It says:
        " In a blatant case where a transfer by husband to wife was made on condition that the wife should at once use the money in making gifts to others, a charge on a gift by the husband might arise under the clause."
        If there is a condition in the transfer, the situation could arise where Clause 42 might override paragraph 1 of Schedule 6. Where there is a condition, we are perhaps moving nearer to the "associated operations" type of case. The letter continues :
        "It might even arise apart from the clause because in that case the wife would be a mere conduit pipe for passing the husband's gifts to their intended recipients."
        That was obviously drafted by the Inland Revenue. The Chief Secretary has been extremely busy and may not have had as much time to devote to the study of this letter as he would have liked.
        4.30 p.m.
        There is a definite distinction between what is contained in Clause 42 and what we are being assured by Treasury Ministers. We must sort out that difference in this short debate. The letter continues:
        " There would, however, be no question of invoking the concept of the 'associated operation' so as to treat a gift made by a wife as one made by her husband merely because the wife's assets had come from her husband."
        That is all right, but a general paragraph is included to ensure that the Revenue can always go for a situation it does not like. The letter continues:
        "You will, I am sure, accept that there will, however, be other and more complex situations involving transactions between husbands,

        53
        wives and others where the Revenue would wish to invoke Clause 42.
        I am sure they would, but it is vital to have two assurances from the Chief Secretary. The first is that in no circumstances wil transfers between husband and wife be caught under Clause 42 unless the right hon. Gentleman can give us very specific examples where that general undertaking might have to be broken. Furthermore, I hope that he will be able to show the exact connection between Schedule 6, paragraph 1(1) and Clause 42.
        In the Bill this matter is mentioned in the final three lines of Schedule 6, paragraph 1(3). I have read those three lines over and again and find them obscure. We seek an undertaking from the Chief Secretary so that we shall know whether in future years the Inland Revenue could come down on such a transfer.
        Mr. Peter Rees: Despite the limpid, not to say deathless, prose of the Chief Secretary's letter to my hon. Friend the Member for Gloucestershire, South (Mr. Cope), I must admit that I am confused and not a little alarmed. I understand from the letter that if a wife is acting as no more than a conduit pipe—a well-worn phrase but a somewhat unattractive one as applied to the relationship between husband and wife—in other words, when the wife is acting as no more than an agent of her husband, naturally the gift must be a gift by the husband. However, I am a little confused, and I hope that the right hon. Gentleman will be able to assist the House on how far motive creeps into the test.
        I have done the best I can in construing Clause 42, and by a sudden flash of recognition I recognised that it derived from Section 478 of the Income and Corporation Taxes Act 1970 and that it had an even longer and more dishonourable history than that. In that section there is an overriding protective subsection letting out such transactions if it can be demonstrated that the person involved had no fiscal motive. I cannot detect that overriding protection in Clause 42. We are told that "associated operations" means
        "… operations which affect the same property, or one of which affects some property and the other or others of which affect property which represents, whether directly or indirectly, that property…".
        54
        I should like to ask how motive comes into that provision if there is a mere physical connection between properties involved in a series of transactions. It seems to me that if there is an associated operation the consequences to the unwitting taxpayer could be incalculable.
        I should like to put two examples to the Chief Secretary. Suppose the right hon. Gentleman were to approach me for a loan and were to say "I wish to set up a settlement in favour of my family. I wish to put funds into it, but it will involve my realising some securities. which, in the depressed state of the present market, I do not wish to do. Will you cover me for three months?" Knowing the good will that exists between the Chief Secretary and myself, after our long exchanges upstairs, I might say "Yes, I shall make a loan to you interest-free" in the knowledge that he would use that as the nucleus of a trust fund for his children. I hope that I would be innocent of any tax avoidance motive in involving myself in that transaction, but in that situation would I be regarded as having made a transfer to the Chief Secretary's children? If so, will he tell me by how much?
        It might well be that the Chief Secretary would endorse my cheque to the trustees and say "Here is your trust fund ". It seems to me that one would have two operations affecting the same property On a strict reading of Clause 42, that would seem to involve a transfer between me and the beneficiaries of the Chief Secretary's settlement. Is that what he intends?
        Let me put to the right hon. Gentleman an even simpler transaction. Suppose he approaches me and says "I wish to buy a Rolls-Royce Corniche. My official salary will not, however, cover it in the immediate future. Will you make me a loan of £10,000?" I reply "Certainly", and make him out a cheque for that sum, which he endorses over to the motor car dealer. Admittedly, the Chief Secretary does not intend to confer any gratuitous benefit on the motor car dealer, but I wish to confer a gratuitous benefit on the Chief Secretary because I am making him an interest-free loan. Again those two operations affect the same piece of property. Between myself and the Chief Secretary there is a gratuitous transfer, whereas there is no such transfer between

        55
        the Chief Secretary and the dealer. How-over, as I understand Clause 42, they must be linked together. Because I am not entirely innocent of tax avoidance, and because I wish to benefit the Chief Secretary, does that operation corrupt and taint the second limb of the transaction? Do I find myself in the absurd situation that I have made a capital transfer to the motor car dealer? That is perhaps an extreme case, but we are entitled to have a clearer demonstration of the limits of the clause than we have had so far.
        The Chief Secretary to the Treasury (Mr. Joel Barnett): In reply to the remarks of the hon. Member for St. Ives (Mr. Nott), I should like to point out that the only funny thing about the Gilbert and Sullivan shop is that the Opposition have made it fundamentally clear to us that they have no real understanding or conception of small shops and their problems over capital transfer tax. I am sorry the hon. Gentleman is confused because he knows how I hate to see him confused. I certainly hate to see the hon. and learned Member for Dover and Deal (Mr. Rees) confused because it makes his skin pucker and go red. That hurts me terribly.
        In Standing Committee we were given a vast array of examples by the hon. and learned Gentleman. It is possible to give innumerable examples relating to CTT or to any other tax to make it sound confusing. I am sorry if in presenting examples the Opposition have so confused themselves that they have made it difficult for themselves to understand the tax.
        I shall give only one example to show the purposes of the clause. I come immediately to the serious point that has worried a number of people about associated operations in relation to husband and wife situations. There were some misunderstandings because of what happened over the Inland Revenue Press notice. Therefore, I want to give the necessary assurance.
        I assure the hon. Member for St. Ives that I read the letter to his hon. Friend the Member for Gloucestershire, South (Mr. Cope) before signing it—indeed, before it went for typing a second time —so I am well aware of its contents.
        56
        I want to explain the reason for the clause. As I said in Committee, it is reasonable for a husband to share capital with his wife when she has no means of her own. If she chooses to make gifts out of the money she has received from her husband, there will be no question of using the associated operation provisions to treat them as gifts made by the husband and taxable as such.
        In a blatant case, where a transfer by a husband to a wife was made on condition that the wife should at once use the money to make gifts to others. a charge on a gift by the husband might arise under the clause. The hon. Gentleman fairly recognised that.
        I want to give an example of certain circumstances that could mean the clause having to be invoked. There are complex situations involving transactions between husband and wife and others where, for example, a controlling shareholder with a 60 per cent. holding in a company wished to transfer his holding to his son. If he gave half to his son, having first transferred half to his wife, and later his wife transferred her half share to the son, the effect would be to pass a controlling shareholding from father to son. The Revenue would then use the associated operations provisions to ensure that the value of a controlling holding was taxed.
        I hope that that is clear to the hon. Gentleman, and that he will recognise that that kind of situation could arise if the clause could not deal with it. That is basically the reason for the clause. The amendent would prevent a tax charge on the value of the controlling holding.
        This is the main reason why I cannot recommend my hon. Friends to accept the amendment. I hope that the hon. Gentleman will not press it, because if it were put on the statute book the result would be that a controlling shareholder would not be taxed as such. I do not believe that that is the hon. Gentleman's intention, whatever he thinks about the tax.
        Transfers between husband and wife will not be liable to the tax except in certain circumstances of the kind that I have outlined.
        Mr. Peter Rees: The right hon. Gentleman has not done me the courtesy of

        57
        dealing with the rather simpler examples which I gave, and which I hope exemplify some of the difficulties of the clause. I hope that he will address his mind to them. I am still not entirely clear how far motive comes into the matter in the example the right hon. Gentleman gave in answer to my hon. Friend the Member for St. Ives (Mr. Nott).
        If a father gives 50 per cent. of his shareholding to his son and 50 per cent. to his wife, and later the same 50 per cent. is passed on by the wife without intent to avoid tax, is that regarded as blatant because the property can be identified, or is motive the paramount test? The right hon. Gentleman should be a little more helpful than he has been so far.
        4.45 p.m.
        Mr. Barnett: I do not expect the hon. and learned Gentleman to be fair and reasonable, or to make me any interest-free loans, nor do I expect to make such loans to him. I thought that I had been fair, and that I had clearly explained where a situation could arise in which a transfer of a controlling shareholding would not be taxed as such if the amendment were carried. At present we are not considering motive and whether it is done perfectly innocently. The motive comes up quite separately on the donative intent. That is a separate issue, which does not come under the clause. We are talking about associated operations. If the clause were not there, certain transfers of controlling interests in companies could be made without being taxed as such. I have given an example which clearly shows how that can happen.
        Unless hon. Members can explain to me a situation in which that transfer of the controlling shareholding would not be taxed otherwise than as a controlling shareholding under the amendment, I shall not he inclined to accept it. The onus must be on them to prove to my satisfaction and that of the House that the amendment would do other than I have suggested.
        Mr. David Howell: This is an important matter. We have no interest in prolonging the proceedings, but what the right hon. Gentleman has just said will be read carefully outside the House, and it is vital that we have it clear.
        The right hon. Gentleman spoke about a gift from a mother to her son which
        58
        gives the son a controlling interest in a firm in which his father had previously had the controlling interest, the father having given him half. The Chief Secretary said that as the mother's gift meant that the controlling interest passed into the son's hands, a chargeable event would have taken place when, some years before, the husband gave half the controlling interest to his wife, having previously given half the control to the son, or even if he gave it afterwards. I ask this not to make debating points, but in order to have the matter clear for the outside world. Are we to deduce that it is by the transfer from mother to son in later years, which is a chargeable event in its own right, that the chargeability of the transfer by husband to wife in previous years will be judged, and that the question whether liability to tax will arise will he determined by that?
        Is that exactly what the Chief Secretary is saying?
        Mr. Barnett: There will be circumstances in which a husband and wife each transfer a half where there would be no liability under the clause. I can recall companies that started from scratch under the joint ownership of husband and wife, each perfectly legitimately holding 50 per cent. of the shares. In those circumstances, there would be no problem.
        But we are talking about an associated operation of the kind of which I gave an example, where the father had a clear intention to avoid paying tax on the transfer of a controlling shareholding.
        I hope that that is clear, or that it will be clear to hon. Members when they have an opportunity to read the example I have given of the kind of situation that would be caught by the clause.
        There are ordinary, perfectly innocent transfers between husband and wife. For example, where a husband has the money and the wife has no money—or the other way round, which happens from time to time—and the one with the money gives something to the other to enable the spouse to make a gift to a son or a daughter on marriage, that transaction would not be caught by the clause. It would be a reasonable thing to do. I have made that clear in Committee upstairs, and I make it clear again now.
        We are talking only of the sort of operation of which I give an example.

        59
        In general, my assurance stands. I do not go back on the assurance which I gave in Committee and which I have repeated today.
        Mr. Graham Page: If I may say so, the Chief Secretary has put a very reasonable case. I say that in no patronising manner. I understand exactly what he intends to happen, but the fact is that his intention does not appear in the clause. As Clause 42 stands, a transaction between husband and wife and the wife making gifts to a third party would be, to use the clause literally, an "associated operation ". Therefore, something more than an assurance from the Chief Secretary is required.
        I cannot see how the courts could operate this clause in the reasonable manner adopted by the Chief Secretary in explaining its intention. There are occasions when the wife is being used merely as a pipe when there is a transfer from husband to wife and then wife to third party so that some transaction goes on which would otherwise be chargeable. I know that it is difficult to define such an operation. I know that it is difficult to draw the line between the associated operation, which is not to be taxable, and the operation which is to be taxable.
        I ask the Chief Secretary if in some way he can put what he has told the House into reasonable language as an extra-statutory concession. There must be something for those who are concerned in these transactions to turn to so that they may know where the line is drawn. If I may say so, the right hon. Gentleman has drawn the line very reasonably today, but that is not in the clause. If a case comes before the courts the literal interpretation of the clause will be that transactions from husband to wife, or wife to husband, and then to a third party will be chargeable. I ask the right hon. Gentleman to consider putting his intention into words. Even if they did not appear on the statute book there would at least be available an extra-statutory concession so that people could understand the position.
        Mr. Ridley: Supposing a husband has an 80 per cent, holding in a business and he gives 40 per cent. to his son and 40 per cent. to his wife, and the Revenue
        60
        classes that as a collective operation and charges him the full rate of tax under the clause. Supposing at a later stage the wife does not give her share to the son but gives it instead to her boy friend. Obviously the first transfer to the wife in those circumstances should not have been charged. Is there provision for repayment of the tax in those circumstances?
        There will be occasions in many other aspects of the tax when repayment will be due. Nowhere do I see in the Bill an opportunity for the Revenue to make repayment where tax has been overcharged. I know that this is not an appropriate moment to raise such a matter, but there are few perfect moments when considering a guillotined Bill as badly put together as this one. Would it be right in such circumstances—and there are similar circumstances which I could describe, but I would be out of order in doing so—for repayment to be made where tax had been overcharged on certain assumptions which were not later fulfilled?
        Mr. John Cope: I am grateful to the Chief Secretary for writing to me on this subject in answer to my letter to him. I am grateful to him for setting out his views. They have been helpful to me in trying to understand what is in the Government's mind.
        I find the Chief Secretary's assurance to be reasonable and satisfactory, but, like other of my hon. Friends, I do not think that the right hon. Gentleman's assurances can be found in the Bill. The right hon. Gentleman said, if I noted his words correctly, that where there is a gift to the wife and on the marriage of the son or daughter the wife passes it on to the son or daughter, the wife is then being used as a pipe. Certainly there would be an intention—that is the word that he used in another connection —that the gift should be handed on. Therefore, it would be caught by the clause. The right hon. Gentleman is relying on intention. He is also relying on motive. That is the same thing in another context. He assured by hon. and learned Friend the Member for Dover and Deal (Mr. Rees) that he does not wish to rely strictly upon the clause.
        It seems that the clause leaves a lot of discretion with the Revenue. I

        61
        appreciate that it is difficult, as my right hon. Friend the Member for Crosby (Mr. Page) said, to frame in legislation what the House or the Government desire, but I dislike the more discretionary arrangements that crop up in our tax law. I do not pretend that it is a unique feature ; none the less, I dislike the more discretionary arrangements which occur. I would much prefer the Chief Secretary to say that he will consider making an amendment to the tax in a future Finance Bill, preferably the one that we are to have, unfortunately, in a few weeks' time.
        Mr. Joel Barnett: Perhaps I may speak again with the leave of the House, Mr. Deputy Speaker. First, I say to the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) that I always enjoy his examples. He always gives us some interesting ones. His example of a husband with an 80 per cent. holding is similar to the one that I put forward. In the hon. Gentleman's example, 40 per cent. is given to the wife and 40 per cent. is given to the son. The wife, instead of giving her 40 per cent., as was presumably intended, to the son, leaves her husband and gives it to her boy friend. That is an interesting situation that might or might not arise.
        As I understand it, Treasury Ministers generally never like to give an answer to the kind of example that the hon. Gentleman always seeks to bring before us. On the first transfer there would be no problem. The husband transfers 40 per cent. to his son. No problem would arise on that. At a later stage much would depend on the nature of and the intention behind the transfer. I cannot go beyond that. We could go on for ever with extreme examples of all kinds. The hon. Gentleman's example could, I suppose, be described as reasonably extreme. I am not sure whether the wife's boy friend would wish to have a minority interest in the family business. However, that is another matter. On the other hand, I suppose that he might wish to have such an interest. Very interesting thoughts are brought to mind as to what could happen in those circumstances.
        Next, I turn to the point made by the hon. Member for Gloucestershire, South (Mr. Cope) and the right hon. Member for Crosby (Mr. Page). It is true that the interpretation of clauses is always a difficult matter. Clauses in a Bill never include
        62
        examples or the Chief Secretary's speeches. They would be rather long if they did. I know that all too often what we do in the House gives the lawyers a marvellous time in interpreting clauses and sections when relevant cases eventually appear before the courts.
        Of course, it is not possible to imagine the enormous range of possibilities that lie behind these matters. Not every one has the imagination of the hon. and learned Member for Dover and Deal (Mr. Rees) or the hon. Member for Cirencester and Tewkesbury. I am obliged to hon. Members for saying that they felt that I had given an appropriate assurance and that I had been reasonable. Like many hon. Members, I am not happy about extra-statutory concessions. However, between now and next year we shall consider the matter and determine whether the interpretation could be other than that which I have given to the House. As I understand it, the interpretation which I have placed before the House is a rational understanding of the clause. If that is not the position, I give an understanding that I shall see whether it is possible to make the position even clearer.
        5.0 p.m.
        Mr. Nott: Our problem is that the courts do not have the Chief Secretary's speeches or undertakings before them when they decide upon clauses of this nature. That is why we are so concerned that Clause 42 should not slip through without examination. It is a very good example of a case where the vigilance of this House is crucial in Finance Bill debates.
        When I was in a comparatively menial position in the Treasury, I had endless problems with interpretations of what was Section 28 and is now Section 460. I remember what happened when it was the other way round. Undertakings were given by a Minister from the Dispatch Box. The problem was to try to decide what the law was and not what undertakings Treasury Ministers had given.
        I listened to my right hon. Friend the Member for Crosby (Mr. Page) with great interest. Rather than suggesting any extra-statutory concessions, would it be possible for the Revenue to issue another notice attempting to clarify this whole matter for the business community and

        63
        for professional advisers? It seemed as if there would be some distinction made between innocent motive and culpable motive. Apparently it will be innocent motive where a husband transfers property to his wife in order to reduce the capital transfer tax on a subsequent disposition to the children, but it will be culpable motive falling under Section 42 if an attempt is made by a similar transaction to avoid tax on a controlling shareholding.
        This places professional advisers and others in an extremely difficult position. I should be grateful if the Chief Secretary could arrange for that.
        Mr. Joel Barnett: As we have indicated already, the Revenue will be issuing a statement on all the clauses after we have Third Reading. It will include in that some clarification of this point.
        Mr. Nott: Then, in the circumstances, I beg to ask leave to withdraw the amendment.
        Amendment, by leave, withdrawn.

      Clause 43

        PERSONS TREATED AS DOMICILED IN THE UNITED KINGDOM
        Mr. Joel Barnett: I beg to move Amendment 100, in page 32, line 41, leave out from Kingdom ' to on ' in line 42.
        Mr. Deputy Speaker: With this we are to consider Government Amendment No. 104.
        Mr. Graham Page: I think that this amendment needs a little explanation. It proposes to leave out some clauses which define "United Kingdom ".
        Does the omission of these words mean that "United Kingdom" includes or does not include the Channel Islands and the Isle of Man?
        Mr. Joel Barnett: These amendments ensure that the availability of a dwelling house for a person's use shall be disregarded for the purposes of deciding

      New Schedule

        RELIEF FOR WOODLANDS
        ' Nature of relief

        5

        1.—(1) Subject to the following provisions of this Schedule, where any part of the value of a person's estate immediately before his death is attributable to the value of land in the United Kingdom on which trees or underwood are growing but which is not agricultural property within the meaning of Schedule 8 to this Act, and the conditions

        whether a person was resident in the United Kingdom under the 17 years out of 20 test in Clause 43(1)(b. The first amendment is merely a drafting amendment which paves the way for the main amendment. Amendment No. 104 introduces a new subsection identical in its effect and almost identical in terms to Amendment No. 929 moved in Committee by the right hon. Member for Crosby (Mr. Page), which I said that I accepted in principle. These amendments meet that commitment.
        Mr. Peter Rees: Does this mean that the Revenue will apply purely the 90 day per year test—in other words, if over a period of years a person is in this country for 90 days each year he will be regarded as resident even though he does not have a house available for his occupation?
        Mr. Joel Barnett: The answer is "No."
        Amendment agreed to.
        Further amendment made : No. 104, in page 33, line 4, at end insert :
        '(1A) For the purposes of subsection (1)(b) above the question whether a person was resident in the United Kingdom in any year of assessment shall be determined as for the purposes of income tax, but without regard to any dwelling-house available in the United Kingdom for his use.'—[Mr. Joel Bartlett.]

      Clause 44

        DEEDS OF FAMILY ARRANGEMENT, ETC.
        Amendment made: No. 832, in page 33, line 30, at end insert—
        ` (5) In relation to a death occurring before the passing of this Act but not before 10th December 1972 subsection (1) above shall have effect as if the reference to a deed of family arrangement or similar instrument made not more than two years after the death were a reference to such a deed or instrument made not more than two years after the passing of this Act '.—[Dr. Gilbert.]

      Clause 46

        ABOLITION OF ESTATE DUTY AND TRANSITIONAL PROVISIONS
        Amendment made : No. 110, in page 35, line 6, leave out 25th ' and insert 26th '.—[Dr. Gilbert.]

        stated in paragraph 5 below are satisfied, then, if the person liable for the whole or part of the tax so elects—

        (a) the value of the trees or underwood shall be left out of account in determining the value transferred on the death; but

        10

        (b) tax shall be charged in the circumstances mentioned in paragraph 2 below in accordance with paragraph 3 below.

        (2) An election under this paragraph must be made by notice in writing to the Board within two years of the death or such longer time as the Board may allow.

        Tax chargeable on disposal of trees or underwood

        15

        2.—(1) Subject to the following provisions of this paragraph, where, under paragraph 1 above, the value of any trees or underwood has been left out of account in determining the value transferred on the death of any person, and the whole or any part of the trees or underwood is disposed of, whether together with or apart from the land on which they were growing, then, if the disposal occurs before any part of the value transferred on the death of any other person is attributable to the value of that land, tax shall be charged in accordance with paragraph 3 below.

        20

        (2) The person liable for the tax chargeable under this paragraph shall be the person who is entitled to the proceeds of the sale or would be so entitled if the disposal were a sale.

        25

        (3) Sub-paragraph (1) above does not apply to a disposal made by any person to his spouse.

        (4) Where tax has been charged under this paragraph on the disposal of any trees or underwood tax shall not again be charged in relation to the same death on a further disposal of the same trees or underwood.

        Basis and rate of tax chargeable under paragraph 2

        30

        3. Where the value of any trees or underwood has been left out of account in determining the value transferred on the death of any person and tax is chargeable under paragraph 2 above on a disposal of the trees or underwood, it shall be charged on the following amount, namely,—

        35

        (a) if the disposal is a sale for full consideration in money or money's worth, on the net proceeds of the sale; and

        (b) in any other case, on the net value, at the time of the disposal, of the trees or underwood;

        40

        and at the rate or rates at which it would have been chargeable on that death if that amount, and any amount on which tax was previously chargeable under that paragraph in relation to the death, had been included in the value transferred on death and the amount on which the tax is chargeable had formed the highest part of that value

        Credit for tax charged under paragraph 2

        45

        4. Where a disposal on which tax is chargeable under paragraph 2 above is a chargeable transfer, the value transferred by it shall be calculated as if the value of the trees or underwood had been reduced by the tax chargeable under that paragraph.

        Conditions of relief

        50

        5.—(1) The conditions referred to in paragraph 1 above are that the deceased either was beneficially entitled to the land throughout the five years immediately preceding his death or became beneficially entitled to it otherwise than for a consideration in money or money's worth and, subject to sub-paragraph (2) below, that—

        (a) if the land is situated in Great Britain, the land is managed in accordance with a plan approved by the Forestry Commissioners under a forestry dedication covenant or forestry dedication agreement within the meaning of the Forestry Act 1967; and

        55

        (b) if the land is situated in Northern Ireland, either a grant with respect to the land has been made under section 2 of the Forestry Act (Northern Ireland) 1953 or the land is managed in accordance with a plan approved under section 3(l)(c) of that Act in connection with the Planting and Maintenance of Woodlands Scheme administered by the Department of Agriculture for Northern Ireland for the purposes of those sections.

        60

        (2) In the case of a person dying before 1st January 1976 paragraphs (a) and (b) of sub-paragraph (1) above do not apply and, in the case of a person dying before 1st January 1981—

        65(a) the condition in sub-paragraph (l)(a) shall be deemed to be satisfied if a forestry

        dedication covenant or a forestry dedication agreement in respect of the land has been offered to the Forestry Commissioners and the offer has not been refused; and

        70

        (b) the condition in sub-paragraph (l)(b) above shall be taken to be satisfied if a grant has been applied for or a plan for the management of the land has been submitted to the Department of Agriculture for Northern Ireland for approval and the application or approval has not been refused.

        Brought up, and read the First time.
        Mr. Joel Barnett: I beg to move, That the schedule be read a Second time.
        I referred to this schedule one night last week and told the House broadly what it was intended to do. Since what I said on that occasion is available to hon. Members in the Official Report, it may be as well for me to leave it at that, to allow hon. Members to move the amendments which they have tabled to the schedule, and to reply to those.
        Mr. Ridley: The House will welcome the fact that some relief has been made for forestry, and, although I shall be critical of the exact nature of the relief included in the schedule, any crumb of bread is better than no loaf at all. This is a small step in the right direction.
        It is appalling that a totally new tax regime for an important industry like forestry should have been decided as a result of two short debates in the small hours with no consultation with the industry concerned. Instead, we have a schedule slapped down on Report which, under the timetable, it is impossible to probe in depth or to seek to amend in such a way that amendments could be made, because there is no further parliamentary consideration of this schedule after today. I am certain that the Government will have to come back to this House with a new proposal for forestry. I do not know whether the Ministry of Agriculture has been consulted. I am sure that the tree-growing interests have not been. If we are to decide our tax affairs in this way, we court disaster by getting them wrong.
        68
        Even at this late stage, I urge upon the Chief Secretary some amendments which he would do well to accept so that some confidence may return to this industry which was hit by a sort of taxation tornado when this wretched Bill was first published.
        Let me make it clear first that the Opposition have never sought to find loopholes through forestry. I made that clear on several occasions in Committee, as did others of my hon. Friends. We are seeking a régime in which forestry can operate profitably and successfully and can expand. We do not seek to open up ways of avoiding the tax for those who are not foresters. I wish that the Chief Secretary had not made the accusation which I heard last week in one of the interminable debates which we had. I know of no occasion when anything said from the Opposition benches can be open to that charge, and nothing which I say now is intended to open a loophole for anyone other than genuine foresters.
        It was unfortunate that the Government should send a copy of this charming letter from the Minister of State, Department of the Environment to all hon. Members. It reads :
        " National Tree Week has the full support of the Government and the Department of the Environment … but depends upon the goodwill of tree-lovers everywhere for its success. The Council has asked Sydney Chapman to act as Director … You may remember that he, when an MP, campaigned successfully for the ' Plant-a-Tree in '73 ' year."
        I can continue the ditty : "Plant a tree in '73, plant no more in '74, cut em' alive in '75." That will be the result of this piece of legislation.

        69
        I turn now to the amendments which I think should be the substance of this short debate. First, the amendments are not entirely as they were put down. Many of my right hon. and hon. Friends' names have been removed leaving my name against practically all, some of which 1 did not put down. However, I am happy to shoulder the burden for all the amendments which carry my name, although I had asked that some be taken off the paper. I hope that the Chief Secretary will not make any points about the curious collection of amendments under my name. I believe that there has been a printing mistake of some magnitude. I make no complaint. I am merely explaining what I think has happened.
        The first group of amendments is perhaps best represented by Amendment (a), which deals with whether the value of the land upon which the forest grows should be exempt. We discussed this point in Committee. The Chief Secretary rather brushed it aside by saying that he did not believe that forestry land was worth anything, so it was not any great hardship to pay capital transfer tax on the value of forestry land. I said at the time, and I repeat, that forestry land can be worth a great deal. I think that in the West of England there are values of between £50 and £200 per acre for forestry land. I have been making some inquiries. In some areas with forests the land could be worth £300, £400 or £500 an acre.
        The major problem is what valuation will be put upon forestry land in the case of a death or transfer. A valuer might say that land with a forest upon it is not worth very much, that it is the trees which carry the bulk of the value. Alternatively. if the trees were cut down or the land had never been planted and the land were returned to agriculture, he might say that it would be worth £400, £500 or £600 an acre. We need a definition of the basis upon which forestry land is to be valued. Otherwise it will be left to the capriciousness of the Revenue whether it is inclined to say that the land is worth very little or what would be bid for it. Forestry land which attracted planning permission could have a great value. What happens in a situation like that?
        If the land is to be charged to tax, the concession for the trees could often be of little value. In the first 20 years of a wood's life the land is almost bound
        70
        to be worth more than the trees. If the owner who inherits a forest through transfer has to pay tax on the value of the land, he will probably have to cut down the trees to pay that tax and will no doubt attract capital transfer tax on the felling of the trees. This awful cat's cradle of tax will be enveloping. I strongly urge that the land should be exempt with the trees. If, as the Chief Secretary believes, the land is valueless, his concession is worth very little to the Treasury and virtually costs him nothing. But the concession could be worth a great deal more than nothing in other directions because damage to the industry would be avoided.
        The next group of amendments is best represented by Amendments (bb) and (cc), which seek to charge to tax the value of the trees not at the time that tax becomes chargeable but at the time that the transfer was made. I may not have explained that very well. If on transfer through death the trees are worth £20,000 and 10 years later the new owner sells or cuts down the trees, I suggest that he should be charged on the value of the trees at the time of coming into possession of them, which would be £20,000, not on their value when he cuts them down, which might be very much more.
        Mr. A. J. Beith: I find it difficult to distinguish between any inflationary factor in the value of an estate and the separate point of the increased value of the trees through growth between death and the subsequent payment of tax. Does the hon. Gentleman agree that it is desirable to distinguish between those two matters in the drafting of the Bill?
        5.15 p.m.
        Mr. Ridley: The amendments to which I am referring simply relate to the tax being charged on the value at the time of the original transfer. It is possible that 20 or 30 years later both the growth of the timber and of inflation will have contributed to changing that value. The hon. Gentleman underlines my point that is a wild guess what the value would be and what the tax chargeable at that later stage would be. We are dealing with somebody who not only cashes in his forest and goes away to spend his money but cuts it down because it is mature and

        71
        the time has come to replant. It is material to know how much value should be put upon it because that will determine how much tax is charged at that stage. That matter is strongly urged by the Forestry Committee of Great Britain. Indeed, that point is reinforced by what the Chief Secretary said on 5th March when new Clause 8 was being discussed:
        " A third point is that the rate of tax in relation to woodlands will be the rate or rates which would have applied on death."—[Official Report, 5th March 1975 ; Vol. 887, c. 1605–6.]
        That seems to give substance to what I am saying. In the new schedule we have a rate of tax which applies upon the sale or the felling of trees, not on death. Perhaps the right hon. Gentleman was not referring to the same point. Those words indicate to me that the right hon. Gentleman thought that the new schedule applied to value on death, not on sale.
        The next point that I want to urge on the Chief Secretary relates to the rate of tax. Here we have three amendments which I should mention briefly in passing. Amendment (ii) allows the forestry estate to be separately aggregated from any other property of the donor or transferor. Therefore, when it comes to paying the tax at some later stage, that tax is lessened by virtue of the fact that only the forestry property is included in the estate.
        Amendment (jj), which the right hon. Member for Down, South (Mr. Powell) will doubtless develop, proposes the mean or average, not the highest, rate of tax on the person who owns the woodland. That again would ameliorate the level of tax to be paid.
        Amendment (kk) is perhaps best mentioned with this group because it explores what other taxes would be payable on the felling of mature timber. It is complicated, but at present Schedule D can be payable, and for companies corporation tax can be payable on the profits made. Presumably, capital gains tax also comes in somewhere here. The Chief Secretary would do the House a favour if he were to give a careful description of what other taxes will apply. If capital transfer tax at its penal rates is to be levied on the profits from growing trees, there is little need to levy other taxes as well. However, it is not clear to me what other
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        taxes will be leviable, and I hope that the right hon. Gentleman will help us by giving an exact account of them.
        On the question of the taxation of whatever profit arises, I had hoped to see in the schedule the acceptance by the Government of the flat-rate tax which we come fairly near to agreeing about in Committee. I am not suggesting that the Chief Secretary has gone back on an undertaking. He never gave one. However, he seemed attracted by the idea of a flat-rate tax.
        The defects of the present suggestion in the schedule are numerous. It means that the bigger the forest the higher will be the level of tax, thereby causing all forests to become very small after a certain number of generations, because every time they are cut down half of the land and of the timber will go in tax, and, therefore, not so much can be replanted. It is a measure designed to reduce the size of forests, nor for ecological reasons but for taxation reasons. That is anomalous.
        As I told the Chief Secretary in Committee, the truth is that foresters do not cut down a whole forest every 100 years and then replant it. Every few years they cut down a bit of a forest and then they replant it. There are thinnings coming down every 20 or 30 years which have value and which can be sold. Every year a balance must be drawn as to the profit made. The profit can be made only from the felling of trees, and from nothing else. Every year capital transfer tax will have to be paid on the year's trading profit on the forest. This is a very odd concept because it is supposed to be a tax on capital to start with. It is standing logic on its head to have to bring in all the reliefs and all the complications of the rest of the Bill which we have discussed over the last few weeks in order to assess the size of the chargeable transfer which was represented by cutting down an acre of woodland.
        The Chief Secretary knows very well that this calculation will, in fact, be done every year by every substantial forest owner if he declares a profit at all, because he will have felled trees and cashed in on their value. If the Government really mean this, it would have been better had they applied some form of income tax or corporation tax to the profit rather than capital transfer tax,

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        which is intended not for such circumstances but for gratuitous transfers of wealth from one party to another.
        I am sorry to have detained the House for so long on these points, but they are important.
        Finally, 100 years of an oak forest or 80 years of a mature softwood forest have represented capital tied up both in the land and in the trees. The interest which should have been payable on those capital investments is automatically, so to speak, ploughed back in, because very often little or nothing comes out of the investment until maturity and felling. So included in the expenses which can set against the profit which is defined in the schedule should be the interest which has been forgone on the capital which has been invested. If we are to deny that, we are to deny the servicing of the capital in forestry as well as to tax that capital to capital transfer tax on maturity. In that context certainly I mention Amendment (eee), which is an attempt to assess the interest forgone, which should not then be treated as capital and taxed under this schedule when the trees reach maturity.
        Mr. Jerry Wiggin: Whilst my hon. Friend is dealing with this important question of an owner's continuing investment in a forest—that is, with his never cashing in the whole value of it—will he also comment on the fact that dedicated woodlands, which are a requirement under the schedule, require that immediately felling takes place replanting should take place? Therefore, the cash is never drawn out of forestry when it is dedicated.
        Mr. Ridley: My hon. Friend is quite right. The Government have wisely allowed the cost of replanting to be deducted from the profits. What I am worried about is that the sum will have to be done each year. Each year the cost of any replanting, thinning, maintenance, fencing, and so on, will have to be set against any profit. The calculation will be extremely complicated before it will be possible to arrive at the taxable profit under this schedule.
        If on top of that it is necessary to work out what capital transfers have been made by the owner, what his rate of tax is, whether he can pass something on to his wife or to his child on her marriage, the
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        matter will be of endless complication. Incidentally, it will be of great help for one's daughter to get married if one is a forester, because one will be able to make use of the £5,000 allowance to plant a few more trees. These calculations are nothing to do with forestry and they should not be treated in this way.
        I urge all these amendments on the Chief Secretary and conclude by saying only this. Welcome though the Government's recantation is—that they do not want to expose forestry to the full rigours of the tax—the schedule is thoroughly ill-thought-out and thoroughly inappropriate to the job it was designed to do. I ask the Chief Secretary to organise discussions with the private forestry industry and with his colleagues in the Ministry of Agriculture, Fisheries and Food and with others who have a part to play in such discussions and to hammer out a new sort of relief for forestry which will meet the bill and do the trick properly.
        I ask the Chief Secretary to listen to the Forestry Committee of Great Britain and the Forestry Commission together rather than to his hon. Friend the Member for Luton, West (Mr. Sedgemore) and to others of his hon. Friends who have been urging him not to go even this far.
        Mr. Patrick Cormack: Invisible friends.
        Mr. Ridley: Great though my respect for those hon. Gentlemen is, the broad woodlands of Luton, West and Bebington do not seem to me to have left on their minds that deep and intimate knowledge of this important industry which it is necessary to have before considering this taxation régime.
        Sir John Gilmour: Much has been made during these debates on forestry about the big part that timber can play on saving imports. The Chief Secretary will agree that the decisions that we take now will not influence the size of our timber imports and our balance of payments this year or next year, because these are influenced by the number of trees which are growing now. However, those matters will be influenced by the number of trees which are planted over the next 10 or 15 years. Getting the schedule right will ensure that the right amount of trees is planted for the future. The Chief Secretary will

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        agree also that if the home-grown timber industry is to flourish it must have an orderly system of marketing.
        One of the real troubles I see arising from the schedule is that if someone inherits an acreage of trees which are 30 or 40 years old, it might well pay him better to cut down those trees and sell them—to the pulp mill at Fort William, if he is in Scotland—rather than to allow them to go on and become of greater value, because it appears that under the schedule growers of timber will be required to pay capital transfer tax on the maximum value if they allow trees to go on to complete maturity.
        5.30 p.m.
        I should like to take up the question mentioned by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) who referred to a statement by the Chief Secretary, as reported in Hansard at c. 1605–6, that the rate of
        tax chargeable is the rate which would have applied on death. It would be helpful to the House if, before any more hon. Members speak in this debate, the Chief Secretary would make clear exactly how he interprets this schedule which we are discussing. The Forestry Committee of Great Britain and many other forestry interests to which I have spoken during the weekend are under the impression that the rate of duty will be charged on the value of the timber at the time that it is cut down. This is not what the Chief Secretary said.
        Mr. Joel Barnett: I was referring—and I thought this was clear on rereading it to the rate applicable to the estate of the man who died.
        Sir J. Gilmour: I still do not think the right hon. Gentleman has helped us very much. He said that the rate of tax would be that which applied at death. All the forestry interests which have written to me say that they believe that the rate of duty will be the rate on the value of the trees as and when they are cut down.
        Mr. Joel Barnett: The hon. Gentleman is dealing with two points. One is the rate applicable to the estate of the man who died and the other is the question of the value. The value is at the date of sale. There are two separate matters.
        Sir J. Gilmour: The Chief Secretary says that if somebody dies and the trees are cut down the next day, the duty is assessed on their value. But if the trees are transferred to the man's successor and are cut down in 25 years' time, the capital transfer tax is assessed on the value of the trees at the time that they are cut down. The House should recognise that if we do not get over the inflation which we are suffering at the moment, irrespective of the value of the timber, and if the value of money continues to fall, not only is capital transfer tax charged on their increased value at the date of death, but tax is also charged when the trees are cut down in 20 or 25 years' time since the original owner died.
        I thought the Chief Secretary said during our debates that capital gains tax did not apply to forestry. But on the basis of the value of timber 20 or 25 years after the death of the owner, I am certain that, unless we completely cure inflation, a measure of capital gains tax is being introduced as a result of the change in the approach to the taxation of forestry compared with our approach in the past.
        We are not talking about trees which are growing now. We are concerned with trees which are to be planted in the future. I believe that forestry should play a very big part in the country's economy in the future. We may be fortunate enough to solve our balance of payments problem in the next 15, 20 or 25 years, in that we may not have to import the same amount of oil as we have imported in the past, and, therefore, we shall get a relief in the matter of oil imports. However, unless we adopt the right approach to tree planting now, the balance of payments situation in 20 or 30 years' time will be very much out of balance and will cause us distress and trouble.
        Treasury Ministers have got out of balance in their belief that people have planted trees in order to avoid tax. When we debated the original clause on this subject in Committee of the whole House, the Chancellor of the Exchequer said that four-fifths of all private planting was carried out by forestry interests and others who were trying to avoid income tax. I wrote to the Chancellor of the Exchequer on 4th February asking whether he could tell me where this information came from. Today I received a letter from his private secretary, dated 6th March—over a month

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        since he made that statement in the House—saying that he was still unable to answer my question. I am sure that the Chancellor of the Exchequer got this idea because somebody said to him "There is a lot of tax fiddling in forestry and you ought to clobber it ". That is basically untrue. Having written to him in February, I cannot understand how his secretary should have delayed for over a month before saying that he did not know the answer. Did he merely pull this idea out of the air—that it was a good thing to plant trees in order to avoid tax?
        I read a very good article in the Scotsman which referred to the late Professor Anderson, professor of forestry at Edinburgh University just after the war. when a good deal of work required to be done in replanting woods which had been devastated during the war. The article says:
        "He was among the first to point out that forestry brought capital into the rural economy and an investment once made, could not be returned. Had he been with us today he might have added that if things go wrong with, say, North Sea oil, the entrepreneurs can pull up their rigs and go or if Chrysler see too much red in a factory's balance sheet they can close it. Once the trees are in they are there and Professor Anderson emphasised how essential it was to have grants and fiscal incentives to establish woodlands."
        This is a point which the Treasury Bench apparently has not appreciated. According to this article in the Scotsman, 70 per cent. of the Economic Forestry Group Owners in Scotland own 350 acres or less, so the average investment in Scotland yields a comparatively small amount of money. There are from 38,000 to 40,000 acres of forests in Scotland and the average planting held in any one person's hands is not more than 250 to 300 acres. If this is so, the contention put forward by the Treasury Bench that people plant trees in order to avoid tax cannot he true.
        The forestry interests have approached the Treasury and said that they agree that it is not right that people should have the facility suddenly to make death bed purchases. The forestry interests themselves put forward the suggested periods of seven or 10 years, and now the Treasury favour a five-year period. All the reasons which the Treasury put forward for discouraging private planting have been entirely discounted. In an age of inflation, to gross up tree values
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        and charge at the top value will bring ruination to forestry, and the Treasury Bench should accept these amendments.
        Mr. J. Enoch Powell: I shall refer to Amendments (t), (ee) and (jj) to the Government's new schedule.
        Northern Ireland is a part of the Kingdom very poor in woodland, but the fate of forestry and the maintenance of woodlands there is not for that reason unimportant. On the contrary, it is vital not only that the woodland which exists should be maintained and replaced but that its area should be extended. It is to the far-sightedness of the great developers and landlords of the eighteenth century that a great part of Northern Ireland today owes what might be called its English aspect. But for them, it would be a country entirely without trees, as it was at the beginning of the eighteenth century, and we are now in a period when replanting and renewal and a deliberate forestry and woodland policy are particularly important.
        There is, therefore, no less interest in this schedule and the impact of the tax upon forestry in Northern Ireland than there is in other parts of the Kingdom.
        The first of our amendments, Amendment (t), is put down to secure an explanation from the Chief Secretary of the words in lines 19 and 20 of paragraph 2 of the new schedule—
        "…if the disposal occurs before any part of the value transferred on the death of any other person is attributable to the value of that land …".
        It may well be that those words owe their presence there to a beneficent purpose, and sometimes, in endeavouring to understand them, I have fancied that I caught a glimmer of the meaning—that it might be intended somehow to avoid a double impact of the eventual taxation. But I think that the words and their effect are sufficiently obscure to justify an explanation from the Chief Secretary, and I hope that he will give it.
        I come now to the point made by both hon. Members who preceded me in the debate, the hon. Members for Cirencester and Tewkesbury (Mr. Ridley) and for Fife, East (Sir J. Gilmour). The principle of the new schedule is the deferment of capital transfer tax upon the value of trees or underwood until

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        the time when disposal occurs. That being so, the double problem arises in handling that deferment : at what time shall the value be struck, and at what point of time shall the rate be struck?
        The Government have so far given a different answer to those two questions. They propose that the value should be struck now, as it were, at the time of the disposal, but that the rates shall be as at the time of death. It is to be noted that that means not only rates in the sense in which the Chief Secretary used the term in an intervention just now—namely, the rate resulting from the composition of the value transferred at the disposal—but the rates ruling under the tax law at the time.
        We are not looking forward here for a year or two, as I fear we are in much tax legislation, but we are looking forward in this legislation, if it is to make any sense, in terms of decades, and there will be big changes, or one presumes that there may well be big changes, in the rates of capital transfer tax if the tax should survive at all.
        The Government have therefore been inconsistent. They have come down on opposite sides of the same fence. I think that they took the right decision when they selected the date of death for the purposes of the rate, and that should also have been the point selected for the purposes of valuation.
        It has been said—for example. by the hon. Member for Berwick-upon-Tweed (Mr. Beith)—that inflation enters into this question and that a future Chancellor of the Exchequer might be loth to see tax levied in a future year upon the value at the date of a past death. To that my reply is that, since the prime responsibility for inflation rests upon the Government, or series of Governments, they cannot come back and claim against the citizen that they are entitled to mulct him for the progress of inflation since the relevant date ; namely, the death which resulted in the deferment of the charge which would otherwise have fallen due.
        5.45 p.m.
        We shall be wiser on this question also when we have heard the Chief Secretary's response to Amendment No. (kk) to the Government's new schedule put down by the hon. Member for Cirencester and Tewkesbury, that is, when we know how
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        far, if at all, capital gains tax may intervene in the ultimate sum due by way of tax upon disposal.
        I propose that the relevant dates both for the purposes of valuation and for the purposes of fixing the rate should be the date at which capital transfer tax would but for this schedule have been paid namely, the death in question.
        I turn now to the question of the rates. It has been said already that in working out the rate one must assume that the value of the trees or underwood when disposed of will form the top slice ; that is to say, that they will attract the highest part of the rate leviable on the estate. In this matter, I believe, there is no absolute logic to which one may appeal, as one could in my previous proposition. It is possible for the Chief Secretary to say : Here is a piece of the value transferred upon a death the capital transfer tax on which is being deferred, but when it comes eventually to be levied the Revenue will have its pound of flesh and it will put that value back where it would have been, on the top of the total pile of the value transferred at the relevant death.
        That is one approach, but, of course, it is the least favourable to the interests of forestry, and it is the approach which exerts to the maximum the claims of the Treasury. Moreover, as the hon. Member for Cirencester and Tewkesbury argued, it is by no means the only reasonable approach.
        The alternative is to say that a whole period of time—whatever it may be, perhaps many years—has followed since the relevant death, and now we shall levy the capital transfer tax upon the value realised at the disposal. At least, that is how the schedule stands. We would rather say that it should be levied upon the value which the trees or underwood disposed of had at the time of the death. So let us look at the tax which the value transferred, other than that of the trees and underwood, bore at the time of the death and impose that rate of tax now on this deferred portion. My hon. Friends and I have sought to achieve that result by substituting the word "mean" for "highest ". Others have sought to do it by a more complicated method ; for example, that in Amendment (ii).
        We must not simply treat this provision as a means of going back to the

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        circumstances of the death and, as it were, reconstructing them and in so doing make the assumption that the trees or underwood would, in fact, have constituted the top slice.
        My plea to the Government, therefore, is that they should not charge upon the trees and Underwood the maximum which any conceivable line of argument would produce but that, in a spirit of reasonableness and, I would even say, deliberate encouragement to forestry and the maintenance of woodlands, they should charge a mean rate upon the value of the transfer when the deferred tax is eventually imposed.
        If these two amendments are made, and I think that they will be urged, in different forms, by most of those who contribute to the debate, they will represent a considerable improvement and will remove some of the remaining sense of injustice which is felt by those who have no interest in the matter but the maintenance of forests and woodlands as part of the economy and ecology of the Kingdom.
        Mr. David Steel: I acknowledge immediately the debt which we all feel to the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) for the work that he has clearly done on the subject and for the way that he moved the amendment.
        It is extraordinary that even at this late stage someone of such an astute mind as the right hon. Member for Down, South (Mr. Powell), and a former Treasury Minister to boot, should find it necessary still to be asking the Chief Secretary questions about what parts of the schedule mean. I cannot remember an occasion when such a major new tax provision was put before the House at such a late stage in our consideration and under the guillotine. When last did we have at such a late stage such a major proposal which by its very nature attracted so many amendments that they were labelled with up to three letters of the alphabet?
        The Government deserve the severest censure for the way they have handled the whole question of the taxation of forestry. There was considerable alarm among those concerned with forestry when the Bill was first published. I
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        expect that there are few forests in Leeds, Heywood and Royton and the other places represented by Treasury Ministers. I expect that those Ministers were under the impression that the proposals affected only a relatively small number of wealthy landowners, but that is far from the truth. In the last few months they have affected the interests of many who work in forestry, including many of my constituents, and a lot of them are not highly paid. I believe that the Government have totally misunderstood the nature of private forestry in Britain. Their activities in the last few weeks have certainly been most detrimental to a large number of people.
        The only thing to be said in the Government's favour is that they have at least introduced the five-year rule for deathbed purchases. That is something which the genuine foresters have been urging on the Government for some time. The idea that the country in general, or even my constituency, is filled with plantations owned by octogenarian gentlement from the Home Counties is a long way from the truth. The loophole is being closed, and its closure we surely welcome. That does not justify the remainder of the Government's proposals, however.
        The hon. Member for Fife, East (Sir J. Gilmour) was seeking to make the point that the whole of this proposed tax on forestry is, by definition, retrospective. Unlike any other form of activity I can recall, someone who is already engaged in planting trees is therefore committed, regardless of what changes the Government may make or may wish to make. He cannot unplant his trees, or the next year, as with agriculture, decide to do something else to take advantage of changed economic circumstances. He is stuck with a decision taken in good faith, and in a very real sense the Government are breaking faith with those who have for various reasons undertaken planting.
        The right course for the Government, therefore, would have been to withdraw the imposition of the CTT on forestry at least until they had consulted the forestry interests. After that they could bring forward sensible and comprehensive proposals. I remind the Government that they have another Finance Bill, God help us, only a few weeks away. It is

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        not as though they were going to have to wait for another full year before tackling this subject.
        I believe there is a need to encourage still further the home production of timber. The Government's activity has resulted in a down-turn of planting of 51 per cent. in the private sector in Scotland in the last season. Over the United Kingdom as a whole the effect of the uncertainty in this last winter has been to negative in planting terms everything that was achieved in Plant a Tree Year. It was laughable that we should have been treated over the weekend to pictures of the Prime Minister planting one tree in the grounds of Chequers, bearing in mind the wreckage which has been caused to forestry by the Government's activtities over the last few weeks.
        I hope at this late stage that the Government will repent and accept some of the amendments. We shall support those amendments.
        Mr. Iain MacCormick: The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) rather flattered the Members on the Government Front Bench by referring to their actions as being a small step in the right direction. Perhaps what they have done does not go as far in the wrong direction as their previous ideas, but it still leaves a tremendous amount to be desired.
        As for the comments by the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel), I must emphasise that much of my party's opposition to the Government's stance on this matter stems from the fact that in a constituency like Argyll, and in many other rural areas like Scotland, forestry is the small man's business. As the hon. Member for Fife, East (Sir J. Gilmour) said, many of the holdings are very small and are not the province of the wealthy landowners. Many of the people who work on these holdings are either workers themselves or what one might consider to be small business men—timber contractors of one kind or another who have been penalised twice. They have been penalised by the blow struck at the forestry industry, and they have been penalised by the other parts of the Bill which strike a blow at small businesses.
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        The question of the valuation of these afforested areas is vital. It is not only illogical but perhaps wicked to say that when someone dies consideration of the trees on his estate will be held over and that the value will be set at its level 20 or 30 years later and charged to the dead man's estate. We have heard the hon. Member for Roxburgh, Selkirk and Peebles refer to retrospective taxation, but this surely brings in an entirely new principle—the taxation of someone who is dead.
        Only a few weeks ago my party spoke of bringing about a "green revolution" which would be of immense value to Scotland and would enable it and other parts of the United Kingdom to enjoy the benefit of being once more a large-scale primary producer in an industry which is clearly coming into its own again. Gone are the days when one could read of learned City-based economists describing the Forestry Commission as a daft idea. Now we are appreciating the foresightedness not only of the Ulster landowners of the eighteenth century who planted trees but of the people in Britain in the twenetieth century who planted forests which in areas like mine are only now reaching maturity. What folly to wait until these trees mature and then to create the situation in which they will be felled, in which the estates on which they grow will be mismanaged, and in which the whole industry will be brought to its knees.
        My party calls its forestry policy its "green revolution ". I am sorry to say that my party sees the Government's measures on forestry as the "red revolution ".
        6.0 p.m.
        Mr. Cormack: I hope that the Chief Secretary will realise that four parties have been taking part in this debate but that they have spoken with but a single voice, and all have urged on the Government a last-minute repentance. Because or their obsession with this deathbed nonsense, the Government have set a mantrap to catch a mouse, and it is quite ridiculous that they should have persisted with their insane endeavours. I hope that they will listen to what has been said and will realise that their schedule does not go anywhere near meeting the valid arguments advanced this afternoon.

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        We have here probably the best illustration to date of the extreme stupidity of rushing a major tax revolution through Parliament. That is what it is all about. We should like the Chief Secretary to explain exactly how his new schedule meets the new points that have been made and that he says the Government have accepted. I would say to the Chief Secretary in this context that it is no crime not to understand, but it is a crime to pretend to understand. That is what the Government are doing.
        I hope that the Chief Secretary has had his attention drawn to the telegram sent to the Chancellor of the Exchequer on Thursday by the Scottish Landowners' Federation saying that it was
        " greatly concerned at decision to assess capital transfer tax on sale value of timber instead of on value at date of death. The Government's amendment will have disastrous effects on private forestry and employment in Scotland ".
        This was the point made by the hon. Member for Argyll (Mr. MacCormick), and the telegram called on the Government to recognise it.
        However, lest it be thought that this is a particular group of landowners in Scotland, let me draw the attention of the Chief Secretary to the representations last week of the Forestry Committee of Great Britain referring to his statement of 5th March that the rate of tax in relation to woodlands would be at the rate or rates that would have applied on death. The committee said:
        "This is not so. The effect of the Government's decision to assess the tax on the sale proceeds, not as previously on the value at death, means that the tax will be paid on a value which will frequently be several times higher than at the time of the previous death …".
        That, too, was a point graphically made by the hon. Member for Argyll.
        This is not just a matter of the interests of the Timber Growers' Association and the Scottish Landowners' Federation. If the Government see those organisations as being beyond the pale because they represent landowners, I draw the attention of the Chief Secretary to the Association of Professional Foresters. Here are many ordinary workers who have certainly made a proper social contract with the community in the dedication with which they have pursued their extremely important industry but who have not been properly recognised.
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        There is the point made by Mr. Phillips, their secretary, who wrote to Members last week saying:
        " Owing to the shortness of time which has been allowed between the publication of the amendments and the Debate of the Report Stage this week, we have been unable to consult Members fully ; neither have the Government made any approaches to organisations such as our own representing those employed in the private sector, who jointly with the British Foresters' Action Group represent some 10,000 people employed in the industry."
        It is monstrous—and I use that word determinedly—that the Government should not have had any consultations with these organisations representing ordinary workers. The Government claim time and again that they have the interests of the workers at heart, that they wish them to have a fair deal, but the jobs of these workers are being jeopardised. As another of their leaders, Mr. Yull, reminded us, these workers have been forced by the present Government into having to contemplate emigration because they cannot see a properly secure future for themselves and their industry.
        This is a silly situation because, as the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) rightly said, all the Government need to do is to take away this proposal. We are to have another Finance Bill—Heaven preserve us—in eight or 10 weeks' time. It is a fearful thought, but it nevetheless gives the Government a breathing space. There are those of us on this side of the House who are totally opposed to this tax, but all we are saying this afternoon is that at least the Government should operate it properly. If they have accepted the case for forestry being accorded special treatment, as they say they have, they should bear in mind the force of our arguments, think about it again and come back with a new clause and schedule that will meet the case so admirably made this afternoon by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), the right hon. Member for Down, South (Mr. Powell) and others.
        However, if that sort of argument carries no weight with them and cannot dissuade the Government, let them be reminded in purely materialistic terms of the enormous importance of timber to our balance of payments. After oil and food, it is this country's largest import. We import more timber than does any other

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        country apart from Japan. In 1974, timber imports, cost £1,878 million.
        If the pleas of ordinary workers and the legitimate and proper requests of the timber growers and the urgings and entreaties of hon. Members of all parties have no effect, let the Government at least think of the financial considerations and of the importance to the environment. My hon. Friend the Member for Cirencester and Tewkesbury quoted the letter of the Minister of Sport urging us all to support Tree Planting Week. I shall support it in my constituency by planting a tree on Friday [HoN. MEMBERS: "Why bother?"] My hon. Friends ask why I should bother. [HoN. MEMBERS: "He's cutting it down."] The Chief Secretary may well be performing that task if we are not careful. All that can be done by Tree Planting Year and Tree Planting Week and by encouraging the appreciation of trees is certainly being undermined by the Government's clumsy handling of this situation. It has already been said that some 30 million trees that would have been planted this winter have not been planted mainly because of the uncertainty created by the Government's tax arrangements.
        I do not want to detain the House any longer because there is much more of importance to discuss this afternoon. However, without making invidious distinctions, I suggest that there is no more important debate than this, no more important topic for the country's future. Considered from the standpoint of scenic beauty, the environment, the economy, or the interests of workers, this is a subject of major importance.
        Having accepted that forestry deserves special treatment, the Government should at least accept the proposal so powerfully supported by the right hon. Member for Down, South. At best they should accept the suggestion of the hon. Member for Roxburgh, Selkirk and Peebles and defer the implementation of their scheme by another eight or 10 weeks, when they will have had the chance to talk to the workers and to consider the case that we have made and then to do something constructive and sensible.
        Mr. W. Benyon: I must declare an interest as a woodland owner.
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        I am therefore one of the toads under the harrow.
        What depressed me about the Chief Secretary's speech was not what he said about the tax but rather that he seemed to think that he had secured the future of forestry in this country. That is not the case. Many effects of the tax have been mentioned—the effect on employment, environment and so on—but I wish to concentrate on the fact that replanting will be largely reduced, if not eliminated, by the tax.
        Essentially, forestry is a long-term business. I have been given some interesting studies of two identical businesses, one a forestry business and the other an industrial or commercial business. Each was given the figure of £150,000 on the date of transfer, not an excessive sum in either case. When one comes to work out the tax—that is the tax on the small business on the one hand, and the tax on the forestry business on the other—one finds that the tax payable on the latter is more than double that payable on the former. This seems to me to be quite mad, because it is a tax on growth, pure and simple—growth of the trees—and those figures were worked out on a very modest rate of increase.
        Some hon. Members said last week that we should not worry so much about the private sector but should let the public sector take over. I urge the Treasury Bench to have discussions with the Forestry Commission, because it obviously has no desire to take on small forestry enterprises all over the country. It is not geared to do that.
        What happens under these arrangements in the case of windblow or fire? What happens to the payment of tax in those two instances? That is not clear.
        What about selective forestry? Paragraph 2 of the new schedule contains the words :
        "and the whole or any part of the trees or underwood is disposed of ".
        Am I right in thinking that if someone practises selective forestry—which is a fairly normal form of forestry in the South of England—it means that after the transfer has taken place he is taxed on a single oak tree which he fells?
        What about the question of thinnings, which was mentioned by my hon. Friend

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        the Member for Cirencester and Tewkesbury (Mr. Ridley)? If what my hon. Friend said is right, it means that a business which is geared to a set rate of felling will find that if it has to pay tax at a rate of 50 per cent. it will have to fell double the number of trees which it had originally planned to fell, and the whole business will start to run down progressively. There is no getting away from that.
        It is not clear what happens on a subsequent death before tax has been paid on the previous transfer. If the figure is completely reassessed, there could be a 100 per cent. tax on certain plantations. What should happen in these cases is that only the incremental value should be charged on the second transfer or death as the case may be.
        It is essential that the land in a dedication agreement should not have to pay capital transfer tax, because to charge the tax is a breach of faith. Softwoods mature in 80 years, while hardwoods take 100 years-plus. A dedication agreement is entered into between the owner and the Government over that period, and, therefore, to change the tax base during that period is, in a sense, a breach of faith, and, therefore, the amendment dealing with this is essential.
        The point has been made by nearly everyone who has taken part in the debate that the value should be the value at the date of transfer and not at the date of disposal. This is essential, because this is the real killer for a business such as forestry which has a very low rate of return.
        I do not wish to detain the House for very much longer. I urge the Chief Secretary to think again, even at this late hour. It is right that he should take action on the five-year rule. This is what so many people have been urging was wrong, and action should have been taken before now to deal with it, but, as a result of these changes, the Chief Secretary is dealing essentially with genuine foresters who are trying to make a successful enterprise of forestry. If no action is taken, replanting in the private sector will disappear, and I cannot believe that that is the result desired by the Government.
        6.15 p.m.
        Mr. Wiggin: I shall not detain the House for more than a few moments.
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        I am sorry to note that again the Minister of Agriculture, Fisheries and Food is not with us. During the progress of the Bill, both in Committee and on Report, it has become abundantly clear that the interests of agriculture and forestry, which should be looked after by the right hon. Gentleman, have not been put internally as they should have been. It is becoming increasingly clear that the Ministry of Agriculture is unable or unwilling to comment on the effects of the tax on either agriculture or forestry.
        There seem to be three specific points which are lacking in the new schedule, most of which has been mentioned. First, there is the failure to include woodlands if occupied with other agricultural land. The point about this was made by my hon. Friend the Member for Buckingham (Mr. Benyon) and particularly concerns some of our best hardwood trees. The isolated oak tree is a particular example. The new schedule will give a considerable incentive to farmers to fell these trees, which not only contribute a considerable amount of timber but add beauty to the countryside.
        The omission of gifts inter vivos seems to be explained. I have no idea why forestry should not be alleviated on this basis. Perhaps the Chief Secretary will comment on the matter.
        My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) made the point about the land on which trees grow. The argument for this is obvious, and it seems illogical not to include it.
        Despite repeated requests to him to deal with it, the Chief Secretary has said nothing in answer to the point about tax evasion in forestry. By its special nature, this industry requires special tax treatment. It is a unique industry, and it is understood only by a number of people involved in it. It is clearly not understood by the Treasury.
        The Scottish Landowners' Federation and other interests have put it to the Treasury that it should close the tax loophole and leave the genuine foresters alone, but their pleas have been rejected. It is estimated that about 30 million trees have not been planted because of the threat of CTT. I can only say what has been said so many times already. When a major tax of this sort is introduced without proper preparation its effects turn out in

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        the oddest places and can do immense damage if it is not properly considered either by a Select Committee or by some other procedure.
        My hon. Friend the Member for Buckingham referred to the low rate of return in the forestry industry, and in an intervention I commented that no sooner has a tree been felled, particularly on dedicated woodland, than replanting has to take place as a requirement of the felling permit. Therefore, if one assesses the actual rate of return for a given period one finds that because of this permanent investment the figure is very low and compares most unfavourably with agriculture.
        Sir John Gilmour: Was not that borne out by the Treasury memorandum which was produced two or three years ago, which said that trees were hardly worth planting?
        Mr. Wiggin: We must not get diverted into an argument about the Forestry Commission, but that organisation, which is so deeply involved in tree planting, does not show a very good return on the national investment.
        I admit that we are not dealing with totally altruistic people who invest in forestry, because there is a profit, but the return is very low indeed. It seems to me that both agriculture and forestry have been the victims of this tax because of the actions of unknowing and, regrettably, uncaring Ministers. The Chancellor of the Exchequer should look very closely at the points that have been made in this debate and others on these two subjects and try in his forthcoming Budget to put things at least partly right.
        Sir Anthony Meyer: The Government's original forestry proposals produced something akin to panic among timber growers, with the result that there has been an estimated loss of close on 30 million trees which would otherwise have been growing for the benefit of future generations. The new schedule does something to put matters right, but, by reason of the dismay which was sown by the Government, it is grossly inadequate. The Government should have taken much more time and, above all, should have consulted many more people before proposing something which will
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        result in the loss of jobs and the loss of valuable raw material, and cause great damage to the environment.
        I wish to speak simply as a Welsh Member whose countryside is distinguished largely by the wealth of beautiful trees, often uneconomic to their owners, many of which will be cut down unless the Government can put some heart back into timber growers.
        The Emperor Vespasian assured himself of a place in the history of France because he put a tax on public lavatories. Every public lavatory in France is now familiarly referred to as a vespasienne. I should hate to think that the Chief Secretary, a most civilised and urbane man, would earn his memorial because every clump of cut down, black and rotting tree stumps became known henceforth as a Barnett.
        Mr. Russell Fairgrieve: I support the amendment. It is getting near the eleventh hour, but I hope that the Chief Secretary will take notice of what has been said about it. Forestry is important for the United Kingdom, but it is even more important for Scotland, particularly in West Aberdeenshire, where it gives a lot of employment.
        We are now running an import bill of some £2,500 million for forestry, which is approaching the size of our oil deficit and the cost of our food imports. Yet the Government here are taking action which mitigates against the production of more trees in this country. Although in Britain, and especially in Scotland, there is so much room available for forestry, Britain has a smaller forestry percentage per acre than nearly every other country in Europe. That is a ridiculous state of affairs. We should be giving encouragement to forestry, not discouragement.
        Reference has been made to the telegram which has been received from the Scottish Landowners' Federation. The federation has also brought to our notice a list of curtailed or abandoned investment projects brought about by the threat of the tax. I cannot understand why the Government do not realise the difference between forestry and other forms of business, including agriculture. A softwood forest takes up to 75 years to mature and a hardwood forest up to 150 years. Even the people who have been accused of tax evasion do not themselves benefit,

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        neither do the next generation. The beneficiaries are two or three generations ahead—and at least the country got trees.
        As we come to the end of our long debates on this Finance Bill and all the nights and early mornings in Committee, as a new Member of the House there is one memory I shall take away. That is the sheer, utter stubbornness of the Labour Government, their unwillingness to listen to reason and their refusal to consider in one package this tax, the wealth tax and capital gains tax. For doctrinal reasons the Government have pushed the tax through, unamended, without thought. At the beginning of the debate, long before we went Upstairs, I said that this hastily-drawn-up Bill was drafted either by fools or knaves, by morons or Marxists. I have come to the conclusion it is the latter. We are dealing with knaves and Marxists, and that is why the Government have pushed the Bill through against all reason. Once again, I ask the Chief Secretary to take back the Bill and reconsider the capital transfer tax proposals.
        Mr. Peter Rees: In rising to intervene briefly in this debate I declare a small personal interest.
        The general considerations have been so eloquently deployed by my hon. and right hon. Friends that I shall limit my intervention to a few specific questions with which I hope the Chief Secretary will deal explicitly.
        The first is a question which I ventured to address to the Chancellor of the Exchequer in an earlier debate. What consultations, if any, have been held with the Forestry Commission about the basis of capital transfer tax on forestry? If there have been none, why not? If there have been any, what conclusions were reached? What was the advice tendered to the Chancellor of the Exchequer by the Forestry Commissioners?
        My other question is of a more technical kind, and it is deployed by Amendment (bbb). It relates to the interaction of income tax and capital transfer tax when the woodlands are cut and sold. Supposing the transferee is to be assessed under Schedule D on the proceeds of cutting, and supposing there is a charge to capital transfer tax carried forward from a past death. A taxpayer might pay more than 100 per cent. when he came to cut. There
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        may be a simple answer, but 1 cannot find it within the recesses of the schedule. If there is a simple answer I hope that the right hon. Gentleman will give it. If not, I hope that he will treat this as another and cogent reason why this ill-thought-out measure should be withdrawn and reintroduced on another occasion.
        Mr. Beith: I hope to draw the attention of the Chief Secretary to a specific question, as other hon. Members have covered the ground so well. I endorse what my hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel) said and pay tribute to the amendments in the name of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley).
        I remind the Chief Secretary that the Chancellor received from my constituents, who are forestry workers—not the landowners—three petitions reiterating how deep is their concern. I hope that he will bear this in mind when he blames the disagreement on the views of the landowners alone.
        I want particularly to ask the Chief Secretary about the limitation of the schedule to dedicated woodlands. Dedicated woodlands provide only about 37 per cent. of the hardwoods. A large amount of hardwood plantation of considerable environmental importance is outside the area of dedicated woodlands. The reference to dedicated woodlands is probably included because the Opposition stressed strongly that it would be absurd for one Government body to enter into dedication agreements and another Government body to undermine them by taxing dedicated woodlands at a critical rate. Naturally, we welcome the inclusion, but the limitation means that an enormous amount of planting will be seriously threatened. I am thinking especially of small copses of parkland timber and timber planting which would not naturally be the subject of dedication agreements.
        A question was asked whether consultations have taken place with the Forestry Commission. Does the commission see the necessity of redefining dedication agreements? If tax concessions are to be based on dedication agreements, the agreements must be extended to cover a far wider range of timber planting, including smaller plantations and scattered planting of environmental value,

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        trees in parkland, small copses, small shelter belts, and so on. Is the Forestry Commission willing to accept this new approach to dedication schemes? If it is not, such planting will be threatened. Experience to date is that the Forestry Commission, perhaps for good reason, has wanted to confine and limit the operation of dedication agreements to certain kinds of planting. The whole approach to dedication must be revised if it is to be made the sole basis of tax concessions. I shall be grateful for the Chief Secretary's comments on that point, although I hope he will look favourably on a considerable number of amendments.
        6.30 p.m.
        Mr. Joel Barnett: There are 30 amendments, and I shall do my best to reply to them all in detail. The assumption behind many of the arguments—it is certainly the assumption of the hon. Member for Argyll (Mr. MacCormick), although I do not know whether this is the view held by the Scottish National Party—is that forestry should not be taxed at all. The assumption is that the major reason for planting was that it presented an opportunity for less estate duty to be paid, and without that relief there would be very little new planting.
        Sir John Gilmour: I have written to the Chancellor asking for the source of his information that four-fifths of planting was carried out for reasons of tax evasion. He has not yet replied. Everything that the right hon. Gentleman says has been proved false.
        Mr. Barnett: I have not yet dealt with that point. I shall be happy to deal with it later. So far, I have made a perfectly innocent remark, and I do not know what the hon. Gentleman is getting excited about. I have said that the assumption behind most of the speeches is that without the old estate duty relief, or something like it, we shall not get the number of trees planted that hon. Members wish.
        I turn to the details. First, there is the argument of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) about Amendment (a). This adds to the relief for woodlands relief on the value of the land. Hon. Members have failed to understand the purpose of the schedule,
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        which is to help growing crops. We recognise this. In certain cases of hardwood there will be four or five generations-130 or, perhaps, 150 years—before the crops mature. We recognise that it would be unfair to tax them at each successive death.
        The question of land is entirely different. We have gone a long way in giving the relief we have given, a relief for one special type of asset. To extend that relief much further would be to go too far. I cannot accept the amendment relating to land. The hon. Member for Cirencester and Tewkesbury is obviously getting a little tired as we come to the end of our proceedings, because his example was not as good as the many he gave us in Committee. He cited the case of a man possibly having to chop down his woodland because planning permission had been granted. If that was so the land was worth a substantial sum, and I can see no reason why it should be exempt from capital transfer tax.
        Mr. Ridley: The right hon. Gentleman is obviously getting a little tired, because he has just told us that it could take four or five generations to grow mature oaks. He is right, for once. How are the four or five generations to pay four or five swathes of capital transfer tax on the land under which the trees grow? Trees cannot be grown without land.
        Mr. Barnett: I am obliged to the hon. Gentleman. I am always glad to learn. It is useful to know how trees grow. I regret to tell him that I can see no reason why capital transfer tax should not be paid on the land, given that the trees have been cut down and the land used for building. If it is agricultural land, forming part of an estate, it gets the relief applicable to agricultural land. I cannot go along with the hon. Gentleman's suggestions.
        A major amendment was moved by the hon. Member for Cirencester and Tewkesbury and referred to by the right hon. Member for Down, South (Mr. Powell). The right hon. Member dealt with two issues. The first one he sought to persuade me to accept on logical grounds. He recognised that the second one might not be wholly logical, and he tried to persuade me in order to encourage the planting of woodlands.

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        I hope to show him that there is no logic in either case.
        The right hon. Gentleman said that because we are deferring the point at which capital transfer tax will be charged, it is illogical to tax the woodland at the final point of sale. He said that if a man owns woodlands and dies there will be no capital transfer tax at that point, and therefore it will be taxed at a later date when the woodlands are sold or mature. With respect to the right hon. Gentleman, what he said is somewhat illogical and a little churlish. The assets in question will now go through four or five generations without liability to tax. That is a substantial amount of relief. The right hon. Gentleman suggests that not only should there be no relief at the point of death but that later we should go back to that point and say that it should be taxed at the lowest value. The relief we are giving is quite substantial. It ensures that there will be no need to chop down woodlands because there will be no tax liability through any of these generations to which the hardwoods pass. Only at the point of sale will there be a tax liability. To suggest that we should add to the unfairness against other owners of assets, who have their assets taxed through every generation, by taking the lowest possible value of the woodland and taxing it at that rate is not logical. It is going much too far, and I cannot go along with that amendment.
        The next amendment concerns aggregation, a point raised by the right hon. Member for Down, South and the hon. Member for Cirencester and Tewkesbury. Various amendments have been tabled. One tabled by the right hon. Member for Down, South suggested that there should be no aggregation with the estate of the person dying. The amendment tabled by the hon. Member for Antrim, South (Mr. Molyneaux) suggested a mean, or average, rate. The right hon. Gentleman did not seek to persuade me on grounds of logic. He simply sought to persuade me on the ground that his amendment would encourage the planting of trees. We are seeking specifically to do that because we are ensuring that there is no tax liability throughout the whole of the 150 years, if that is what it is, before the trees are chopped. That is quite a substantial relief.
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        There is no tax liability. [Interruption.]
        The hon. and learned Member for Dover and Deal (Mr. Rees) said that he had an interest in these matters. He must recognise that the burden of the case is not to help the small woodland owner who has nothing else—the small woodland owner does not need to have non-aggregation of other assets, since he does not have any. We are talking about the wealthy woodland owner who has other assets as well as his woodland. If they do not have many other assets, there is no problem. This group of amendments is designed essentially to help the wealthy woodland owners. I suggest to the hon. Gentleman that their representations go too far. We have given substantial relief in this schedule and yet they still want more. I am sorry to have to say that they want more not for the small woodlands owner but for the very wealthy.
        Mr. MacCormick: Rubbish.
        Mr. Barnett: The hon. Member's comment from a sedentary position is about as relevant as his speech was.
        Mr. Ridley: The Chief Secretary is not quite right. Even a small and poor woodlands owner has other assets in the form of the land, as I keep telling him. There is no point in his being made to pay on the land. It does not help the exemption for the trees. This non-aggregation amendment is an alternative to the amendment dealing with allowing the land. If we do not aggregate the land and the trees there will be a lower rate on the trees at the time they are sold.
        Mr. Barnett: I am sorry to have to tell the hon. Gentleman that he does not seem to be seeing the wood for the trees —or the wood for the land. I dealt with the amendment on land. I shall be happy to go over it again but I thought that the Opposition wanted to make progress. I dealt with that amendment and said that I did not feel able to accept it for reasons that I gave. For the reasons that I have just given I do not feel able to go along with the argument in favour of non-aggregation.
        The hon. Member for Cirencester and Tewkesbury and others dealt with Amendment (kk) concerning income tax, capital gains tax and corporation tax. The hon. Member raised some of these

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        matters in Committee. I said then that he had raised an interesting point, namely, that woodlands should be taxed for income tax and corporation tax. I pointed out that in the main they are not subject to income tax now. Nor are they subject to capital gains tax. I see the hon. and learned Member for Dover and Deal looking at me quizzically. I assure him that no capital gains tax is payable on the sale of woodlands.
        Mr. Rees: I appreciate that. I hope that the right hon. Gentleman is coming to the point I made, namely, that it is not true to say that woodlands are not subject to income tax. They may be under Schedule B, although I agree that that is not usually a heavy impost. Since I have declared an interest I will say that I am assessable, with a great many other people, under Schedule D. I would like the right hon. Gentleman to take that into account in replying.
        Mr. Barnett: The hon. and learned Member will appreciate that I cannot deal with his personal tax affairs because I do not know anything about anyone's personal income affairs. I can tell him, and he has recognised this, that in the main there is no income tax. Tory Members have naively failed to recognise that in the main not only is there no liability to income tax but woodlands owners are in a very favourable position as regards income tax. During the years before the trees are matured, maintenance costs can be set off against the owner's other income. This is the owner for whom the hon. Member for Buckingham (Mr. Benyon) asked me to provide relief—the owner who has other assets with other income. That other income would be relieved from tax because of the way the income tax system works and because there are no profits, only expenses, and all those expenses are set off against his other income.
        There is, therefore, not only no income tax liability on woodlands ; there is a negative income tax, in that there is a set-off against other income. When the trees come to maturity, as the hon. and learned Member for Dover and Deal recognised, in the main they are subject to tax at a tiny level under Schedule B. Amendment (kk) is therefore unnecessary—[Interruption.] Before the hon.
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        and learned Member has apoplexy, let me assure him that I am coming to his other point.
        Mr. John Tomlinson: Do not stop him!
        Mr. Barnett: My hon. Friend the Member for Meriden (Mr. Tomlinson) is acting in an uncharacteristic manner. I am sure he would not want me to do the hon. and learned Gentleman any harm.
        The other amendment related to interest on moneys invested. Again, I do not feel able to agree that this should be allowed as a set-off for capital transfer tax. This is, first, because there is already a substantial set-off for income tax purposes and, secondly, because, as has been said, when trees are sold, invariably new trees—saplings, seeds or whatever—are planted—in land, I am assured. There are already grants available for such planting, and I do not feel able to go further and give additional tax relief.
        6.45 p.m.
        The right lion. Member for Down, South spoke about Amendment (t). He thought there might be a little obscurity here. The relief for woodlands is framed so that when the charge to capital transfer tax is made on the proceeds of a sale the charge is made in respect of only the last previous owner's death. Amendment (t) would alter this, so that the tax would be chargeable in respect of each preceding death on which the relief had been given. I am sure that that is not what the right hon. Member intended.
        Mr. Powell: As I pointed out, the amendment is for the purpose of clarification. If the right hon. Gentleman is now saying that it all reverts to the last relevant death out of a series of perhaps four generations, what has happened to his argument to the effect that if other amendments we have been discussing were accepted we would be moving right back to the original death, 100 or 120 years ago?
        Mr. Barnett: I thought that that was the purport of the other amendments. I hope that I have satisfied the right hon. Gentleman that there is no need for this amendment.
        The hon. and learned Member for Dover and Deal referred to Amendment (bbb). If the timber is sold off and income

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        tax is borne on the net sale proceedings it would in the main be under Schedule B, as we have both recognised. [Interruption.] I am sorry ; we shall have to leave it that I recognise that. It could be a harsh solution to take those proceedings under the capital tax regime. This is the purport of the hon. and learned Gentleman's case. In practice, substantial sales of timber are hardly likely to come fully within the charge to income tax precisely because the assessment will come under Schedule B. That is why the hon. and learned Gentleman, in his peregrinations through the Revenue courts, may not have come across timber cases too often. They never paid any tax.
        Mr. Peter Rees: I am infinitely obliged to the Chief Secretary for giving way. Will he address himself to the point put to him. It is very likely—or it is at least possible—that the transferee, when he comes to cut will have to pay tax under Schedule D. It would be easy for me to demonstrate that he may have to pay well over 100 per cent. if, if I understand the right hon. Gentleman correctly, such a person will have to pay capital transfer tax on the net proceedings of the sale and income tax under Schedule D. It is not good enough for the Chief Secretary to slide away from this point by saying that we all know that this person will be assessed under Schedule B. This is not so, unless the right hon. Gentleman can give us the assurance that in every case the transferee will be able to opt for Schedule B just before capital transfer tax comes to be paid. Will he give the House that assurance? If not, will he face the fact that he may well be imposing a charge to capital transfer tax and income tax amounting to well over 100 per cent. in some quite simple cases?
        Mr. Barnett: I do not accept those extreme examples. In Standing Committee the hon. and learned Gentleman gave us many examples, all of which were misguided or misplaced. He should know, as indeed should the right hon. Member for Cambridgeshire (Mr. Pym), that in most cases they will be taxed under Schedule B—[Interruption.] I doubt whether anybody would opt to pay income tax under a regime higher than that used in Schedule B.
        Mr. Francis Pym: It is an option which an owner can make for
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        his lifetime. It must apply to all his woodlands. I do not know whether the right hon. Gentleman has comprehended the nature of that option. It may not be possible for such a person to avoid that income tax.
        Mr. Barnett: It would be strange for a man to opt to pay income tax at a higher level when he can pay tax under Schedule B at a lower level.
        The matter of dedication was mentioned. There was no question of misleading anybody. The most modern dedication scheme was introduced only in October 1974. Therefore, it would be well known to anybody using the scheme that there was to be a capital transfer tax. It was mentioned in March 1974 and there was a White Paper on the subject in July. Therefore, there is no question of any bad faith.
        I was asked whether we had had consultations with the Forestry Commission about dedication schemes. I am happy to say that we have had such discussions. The commission was consulted particularly about this feature of the relief—that is to say, that trees planted must come within the dedication scheme. The commission is aware of all these points. 'The new dedication scheme—basis three—goes down as far as woodlands of one hectare in size, or about two and a half acres, and will take in small woods. The new dedication scheme modifies the proposed scheme moving from a preoccupation with timber production to a more broadly-based concept of social benefit. It is possible that there may be some isolated copses or uneconomically-planted woodlands which the Forestry Commission would be unwilling to accept into dedication schemes under the present criteria. I accept that, but in the main it is extremely unlikely that that type of small area would be highly valuable for purposes of CTT.
        Mr. Beith: Will the right hon. Gentleman consider the situation in which there is a series of small environmental plantings, all of very much less than two and a half acres?
        Mr. Barnett: If there are such small plantings the value is likely to be small, and therefore the CTT is also likely to be small.
        Mr. Pym: Did the right hon. Gentleman's consultations with the Forestry Commission take in matters other than dedication? If so, what advice did he have about those other general matters?
        Mr. Barnett: I had consultations with the Chairman of the Forestry Commission and many others. As the right hon. Gentleman will know from the advice which he received when in office, it is not the custom—it is certainly not mine—to tell the House or anybody else what that advice is.
        Mr. Cormack: Will the right hon. Gentleman say how many consultations he had with representatives of the forestry workers, and also with the Timber Trade Federation?
        Mr. Barnett: I thought that the people who came to see me represented not only their capital but the people who worked for them. That was the impression they gave me.
        I think I have dealt with the greater part, if not all, of the amendments which have been brought to my attention. There seems to be a wholly false assumption about the whole question of capital transfer tax in relation to forestry and woodlands generally. There is no reason whatever to assume that CTT has been responsible for any drop in planting [HON.
        MEMBERS : "Oh."]. If that is the case, it is a most peculiar Opposition argument. They are suggesting that the major reason for planting trees is to be able to escape estate duty.
        Mr. Cormack: The Chief Secretary has made a ridiculous statement. The fact that there was so much uncertainty when the Government's scheme was first mooted is obvious, since they did not plant trees to the tune of some 30 million.
        Mr. Barnett: That is precisely what I said—namely, that the Opposition appear to be arguing that the reason why owners did not plant trees was that they were no longer able to obtain estate duty relief [An HON. MEMBER : "What about the profit?"] I do not know how that affects their profit. We are talking about estate duty. Nobody is talking about profitability ; we are talking about the tax. The argument has been that only because of the existence of estate duty relief were
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        trees planted—[HON. MEMBERS : "No.") What on earth are the Opposition talking about then? What is the burden of their case? The profitability has not changed. The profitability is the same before and after CTT. The schedule which I have presented to the House gives substantial relief to a specific and important asset—namely woodlands. The amount of relief given passes over a number of generations. It is very generous to a particular asset, as opposed to many other assets which, equally, have a small economic return.
        I hope that the Opposition will examine what they are suggesting. They are suggesting that we should give further relief not so much to small woodland owners but to the very wealthy woodland owners who will already be given substantial relief by the provisions of the schedule. I think they are asking me to go very much further now, and I must ask my right hon. and hon. Friends to resist any amendment to the schedule.
        Mr. Hector Monro: Before he sits down, will the right hon. Gentleman deal with two points which many of us have raised on innumerable occasions? [HON. MEMBERS : "He has already sat down."] First, what is the position regarding unemployment in forestry in the future, and, secondly, what is the situation in regard to imports in the years ahead?
        Mr. Nott: I congratulate my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) on a clear, concise and moderate introduction of these amendments, despite the fact that the names of his hon. Friends appear to have been taken off the Amendment Paper inadvertently. The manner in which he opened the debate was evidence of the fact that we can get along perfectly well with just my hon. Friend's name against these important amendments.
        Many protests have been made about the rushed nature of these complicated matters. We are not aware of any substantive consultations which have taken place between the Treasury and forestry interests between the end of the Committee stage and Report. It may well be that the right hon. Gentleman the Chief Secretary has had one meeting with outsiders, but we are not aware that consultations have taken place.

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        Since the whole basis on which forestry is to be taxed under the CTT has been changed between Committee and Report stages, it would have been desirable if there had been much fuller consultation.
        I have a telegram which was sent by the Vice-Chairman of the Forestry Committee of Great Britain to the Chancellor of the Exchequer, emphasising the regrettable lack of consultation and unnecessary haste. The Government fail to understand that forestry is a long-term industry and deserves long-term and mature consideration. We do not believe the new clause has received that full and proper consideration which it deserves.
        We do not expect Treasury Ministers to have a detailed knowledge of every single specific industry and in dealing with woodlands we are embarking upon a technical area of the tax law. I hesitate to intervene between such experts as the Chief Secretary and my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) but in a moment I should like to refer to the option available between Schedule B and Schedule D, because I think it is important.
        7.0 p.m.
        The debate has fallen into several categories. We must deal first with the amendment which seeks to place the valuation on the same date basis as the rate of tax. The right hon. Member for Down, South (Mr. Powell) referred to the matter at some length. The amendment was mentioned as one of our two major amendments by my hon. Friend the Member for Cirencester and Tewkesbury. The Chief Secretary said that it was illogical for the right hon. Gentleman to say that death should be taken as the point for the rate and valuation because the Government had already given substantial concessions. He went on to say that the request was churlish. This shows a total lack of understanding on the part of the Chief Secretary of the fact that we are dealing with a particular and special industry which, throughout the whole of our estate duty legislation, had been recognised as such.
        What may well happen now is that the trees will be felled before maturity. Under the legislation before us it is possible to conceive tax being payable on rates of capital transfer tax which
        106
        were prevailing 100 years earlier. I do not believe that it is logical to put on the statute book a system which could lead to somebody paying a rate of tax when he sells, say, an oak tree, which had been settled 100 years before the sale.
        The Chief Secretary said that the right hon. Gentleman was churlish in suggesting that there was something illogical about this. I see nothing illogical about it at all. Indeed, the illogicality lies in the new proposal which the Chief Secretary is bringing forward.
        Mr. Powell: The Chief Secretary kicked the bottom out of that argument by pointing out that the words in paragraph 2 caused paragraph 3 to refer to the latest and not the earliest of a series of deaths and successions.
        Mr. Nott: The right hon. Gentleman also referred to that, and I shall come back to it later.
        The next most important amendment concerns the levying of capital transfer tax on the top slice. There is a feeling among the Chancellor's advisers—I am sure they have not changed their view since I was at the Treasury—that forestry and woodlands are a potent source of avoidance and are therefore to be deplored. I remember very well that when we were in office we had cause to look at the basis upon which woodlands were treated. I can remember very well the recommendations that were put forward to us. It is the task of Treasury Ministers to examine advice with great care. We cannot put a great industry like this in jeopardy because there is a feeling on the part of advisers, and it appears, on the part of the Chancellor of the Exchequer, that this whole area is motivated wholly by tax avoidance. That is simply not the case. To tax on the top slice is harsh and unfair.
        My hon. Friend the Member for Cirencester and Tewkesbury talked about the value of the land being exempt from the provisions of the schedeule. The Chief Secretary's reply was "We brought this new schedule forward because we were concerned that this was a case where we were dealing with growing crops ". I think that those were his words. We are not dealing, however, with a field of wheat ; we are dealing with a crop which may take 100 years or more to mature. When my hon. Friend asked that the

        107
        value of land should be included, he was absolutely right. How can it be sensible for the land upon which the trees are growing to bear four or five bites of capital transfer tax when the trees themselves are to exempted until they are sold? Surely this cannot be logical.
        I should like to give a personal example. I must here declare an interest. I have a farm of my own, on which I have been planting shelter belts. Since these are shelter belts for horticulture, I hope that the value of the land is not less than £500 an acre. It may be worth £1,000 an acre. I have planted 5,000 trees, and the planting was finished a few days ago. Although these trees may pass through five generations without capital transfer tax being payable, is it intended, or is it logical or sensible, that the land upon which they are growing, which may well have a value of up to £10,000 an acre, for all I know, in 100 years' time, to have to bear repeated slices of capital transfer tax through the generations, although the trees do not? The Chief Secretary has not answered that point.
        Mr. Joel Barnett: I hope that the hon. Gentleman has taken the point that the agricultural value of the land for capital transfer tax purposes will be the multiple of the rental value, which will be considerably lower than the figure he has given.
        Mr. Nott: I am well aware that the valuation of agricultural land is on a multiplier basis rather than a market value basis, but I cannot possibly say what the margin between a multiplier of the agricultural rents and agricultural value will be in a generation's time. It may well be that the concessions which the Government have made may not be valuable at all in a generation's time. I hope that it will be, but it may not be. [Interruption.] I agree that the margin is narrowing all the time.
        I turn to the question of the dedication scheme. The Chief Secretary said that he had consulted the Forestry Commission on the widening of the dedication scheme arrangements. The matter is extremely important, because as the schedule stands the scheme does not include a great deal of our woodland.
        108
        There was a dispute between my hon. and learned Friend the Member for Dover and Deal and the Chief Secretary about Schedule B and Schedule D. I find it difficult to believe that the majority of people who own small woodlands and who are therefore not in business as major woodland owners, will opt for taxation under Schedule B. I should have thought that the majority of people who own small amounts of woodland will pay tax under Schedule D. The Chief Secretary implied that the whole thing was a racket, because people who might be paying tax under Schedule D could offset their maintenance expenses and other expenses against tax throughout the period. He suggested that they were in some way having a double benefit. How can that be the case? If they are under Schedule D, they are merely offsetting allowable expenses against other income in the way allowed throughout the Schedule D arrangements. There is nothing different here from the normal taxation arrangements.
        The point made by my hon. Friend the Member for Cirencester and Tewkesbury about thinnings—known in some quarters as "underwood "—is also valid. When somebody inherits woodland, no capital transfer tax is paid. Is it the case that each year, as the thinnings are sent away to a pulp mill, capital transfer tax will arise when those thinnings are sold?
        My hon. Friend was absolutely right. It is nonsense if capital transfer tax, which is meant to be a capital tax, works as a revenue tax. It appears that, at great inconvenience and trouble to the accountants and others concerned, there would be a liability to the tax year by year as the thinnings or the underwood were sold to the pulp mills.
        Mr. Joel Barnett: The logic of what the hon. Gentleman is saying is that as thinning goes on throughout the period, year after year, there will never be any capital transfer tax. Is that what the hon. Gentleman is saying?
        Mr. Nott: I am saying that if a person inherited woodlands, and the capital transfer tax was not then payable, as he sold the thinnings year by year a piece of capital transfer tax would be payable each year.
        Mr. Joel Barnett: What is the alternative?
        Mr. Nott: My hon. Friend was making the point that an administrative burden of a revenue tax nature was then placed upon the woodland's owner, when we are dealing here with a capital transfer tax, which is presumably not meant to apply to individuals annually.
        I must protest that although we have had this debate attended by my hon. Friends the Members for Aberdeenshire, West (Mr. Fairgrieve), North Angus and Mearns (Mr. Buchanan-Smith), Fife, East (Sir J. Gilmour) and the hon. Members for Roxburgh, Selkirk and Peebles (Mr. Steel) and Argyll (Mr. McCormick), there has been nobody here from the Scottish Office. As far as I am aware, nobody from the Scottish Office was here for the recent debate. The forestry industry is a major industry in Scotland, and Ministers from the Scottish Office should have been here to listen to the debate.
        What is more, as far as I am aware no representative from the Ministry of Agriculture has been here. It would have been right and proper for Ministers from that Ministry to be present. The reason for their absence must be that they are embarrassed by the Treasury's measure.
        The Chief Secretary suggested that we were claiming that if it were not for avoidance we should have no woodlands. In fact, the estate duty arrangements which have long existed for woodlands were placed on the statute book because our forebears knew that it was a particular industry needing particular measures for its encouragement.
        It is monstrous for the Chief Secretary to say that the shortfall in planting this year, which I understand to be about 30 million trees, is not attributable to the tax, when the representatives of the Forestry Commission of Great Britain and all those concerned with the industry say specifically that the plantings have not taken place because of the muddle over the tax and the manner in which the original proposals were brought forward.
        in the Bill. If the right hon. Gentleman says that the total uncertainty that has prevailed is not the cause of the shortfall, he must think not only that my hon. Friends are fools but that all those who plant woodlands and everybody who advises them are fools as well.
        We seem to start from a different position from the Government in all these debates. The Opposition want to see our woodlands and rural employment preserved, whereas the Chief Secretary seems obsessed with removing any possibility of what he described as avoidance of capital transfer tax and any kind of special concession for special industries.
        In Scotland, one in six of the rural workers is engaged in forestry. More than half the rural workers in the private sector are engaged in the industry. They are greatly concerned about the way in which the whole business has been handled by the Government.
        When we saw in today's newspapers a picture of the Prime Minister planting a tree, we were ashamed to think that the Government should introduce this ill-thought-out measure. My hon. Friend said that we did not want any crumbs of comfort. We have had none. I hope that before the next Budget the Chief Secretary will have time to consult the woodland interests, look into the matter in greater depth, obtain a greater knowledge of the great industry, and introduce proper amendments to his original proposals.
        Question put and agreed to.
        Schedule read a Second time.
        Amendment proposed to the proposed schedule : (ii) in line 42, leave out ' highest ' and insert ' mean '.—[Mr. Powell.]
        Question put, That the amendment be made to the proposed schedule:
        The House divided : Ayes 255, Noes 272.

        Division No. 135]

        AYES

        [7.14 p.m.

        Adley, Robert

        Bennett, Sir Frederic (Torbay)

        Brittan, Leon

        Aitken, Jonathan

        Bennett, Dr Reginald (Fareham)

        Brotherton, Michael

        Alison, Michael

        Benyon, W.

        Brown, Sir Edward (Bath)

        Arnold, Tom

        Berry, Hon Anthony

        Buchanan-Smith, Alick

        Atkins, nt Hon H. (Spelthorne)

        Bitten, John

        Buck, Antony

        Awdry, Daniel

        Biggs-Davison, John

        Budgen, Nick

        Bain, Mrs Margaret

        Blaker, Peter

        Bulmer, Esmond

        Baker, Kenneth

        Boscawen, Hon. Robert

        Burden, F. A.

        Banks, Robert

        Bowden, A. (Brighton, Kemptown)

        Butler, Adam (Bosworth)

        Beith, A. J.

        Boyson, Dr. Rhodes (Brent)

        Carlisle, Mark

        Bell, Ronald

        Bradford, Rev Robert

        Carson, John

        Chalker, Mrs Lynda

        Howell, David (Guildford)

        Powell, Rt Hon J. Enoch

        Channon, Paul

        Howells, Geraint (Cardigan)

        Prior, Rt Hon James

        Churchill, W. S.

        Hurd, Douglas

        Pym, Rt Hon Francis

        Clark, Alan (Plymouth, Sutton)

        Hutchison, Michael Clark

        Raison, Timothy

        Clark, William (Croydon S)

        Irving, Charles (Cheltenham)

        Rathbone, Tim

        Clarke, Kenneth (Rushcliffe)

        James, David

        Rawlinson, Rt Hon Sir Peter

        Clegg, Walter

        Jenkin,Rt Hon P.(Wanst'd & W'df'd)

        Rees, Peter (Dover & Deal)

        Cockcroft, John

        Jessel, Toby

        Rees-Davies, W. R.

        Cooke, Robert (Bristol W)

        Johnson Smith, G. (E. Grinstead)

        Reid, George

        Cope, John

        Jones, Arthur (Daventry)

        Renton, Rt Hon Sir D. (Hunts)

        Cormack, Patrick

        Joseph, Rt Hon Sir Keith

        Renton, Tim (Mid-Sussex)

        Costain, A. P.

        Kershaw, Anthony

        Ridley, Hon Nicholas

        Craig, Rt Hon W. (Belfast E)

        Kilfedder, James

        Ridsdale, Julian

        Crawford, Douglas

        Kimball, Marcus

        Rifkind, Malcolm

        Critchley, Julian

        King, Evelyn (South Dorset)

        Roberts, Michael (Cardiff NW)

        Davies, Rt Hon J. (Knutsford)

        King, Tom (Bridgwater)

        Roberts, Wyn (Conway)

        Dean, Paul (N Somerset)

        Knight, Mrs Jill

        Ross, Stephen (Isle of Wight)

        Dodsworth, Geoffrey

        Knox, David

        Ross, William (Londonderry)

        Douglas-Hamilton, Lord James

        Lamont, Norman

        Rost, Peter (SE Derbyshire)

        du Cann, Rt Hon Edward

        Lane, David

        Sainsbury, Tim

        Durant, Tony

        Langford-Holt, Sir John

        St. John-Stevas, Norman

        Eden, Rt Hon Sir John

        Latham, Michael (Melton)

        Shaw, Giles (Pudsey)

        Edwards, Nicholas (Pembroke)

        Lawrence, Ivan

        Shelton. William (Streatham)

        Elliott, Sir William

        Lawson, Nigel

        Shepherd, Colin

        Emery, Peter

        Lester, Jim (Beeston)

        Shersby, Michael

        Evans, Gwynfor (Carmarthen)

        Lewis, Kenneth (Rutland)

        Silvester, Fred

        Ewing, Mrs Winifred (Moray)

        Lloyd, Ian

        Sims, Roger

        Eyre Reginald

        Leveridge. John

        Sinclair, Sir George

        Fairbairn. Nicholas

        Luce, Richard

        Skeet, T. H. H.

        Fairgrieve, Russell

        MacCormick, Iain

        Smith, Cyril (Rochdale)

        Farr, John

        McCrindle, Robert

        Smith, Dudley (Warwick)

        Fell. Anthony

        McCusker, H.

        Speed, Keith

        Finsberg, Geoffrey

        Macfarlane, Neil

        Spence, John

        Fisher, Sir Nigel

        MacGregor, John

        Spicer, Michael (S Worcester)

        Fletcher, Alex (Edinburgh N)

        Macmillan, Rt Hon M. (Farnham)

        Sproat, Iain

        Fletcher-Cooke, Charles

        McNair-Wilson, M. (Newbury)

        Stainton, Keith

        Fookes, Miss Janet

        McNair-Wilson, P. (New Forest)

        Stanbrook. Ivor

        Fowler, Norman (Sutton C'f'd)

        Madel, David

        Stanley, John

        Fox, Marcus

        Marshall, Michael (Arundel)

        Steel, David (Roxburgh)

        Fraser,Rt Hon H.(Stafford & St)

        Marten, Neil

        Steen, Anthony (Wavertree)

        Freud, Clement

        Mates, Michael

        Stewart, Donald (Western Isles)

        Fry, Peter

        Mather, Carol

        Stewart, Ian (Hitchin)

        Galbraith Hon. T. G. D.

        Maude, Angus

        Stokes, John

        Gardiner, George (Reigate)

        Maudling, Rt Hon Reginald

        Stradling Thomas, J.

        Gardner, Edward (S Fylde)

        Mawby, Ray

        Tapsell. Peter

        Gilmour, Rt Hon Ian (Chesham)

        Maxwell-Hyslop, Robin

        Taylor, Teddy (Cathcart)

        Gilmour, Sir John (East Fife)

        Mayhew, Patrick

        Tebbit, Norman

        Glyn, Dr Alan

        Meyer, Sir Anthony

        Temple-Morris, Peter

        Goodhart Philip

        Miller, Hal (Bromsgrove)

        Thomas, Dafydd (Merioneth)

        Goodhew, Victor

        Mills, Peter

        Thompson, George

        Goodlad, Alastair

        Miscampbell, Norman

        Townsend, Cyril D.

        Gorst, John

        Mitchell, David (Basingstoke)

        Trotter, Neville

        Gow, Ian (Eastbourne)

        Moate, Roger

        van Straubenzee, W. R.

        Gower, Sir Raymond (Barry)

        Monro, Hector

        Vaughan, Dr. Gerard

        Grant, Anthony (Harrow C)

        Montgomery, Fergus

        Viggers, Peter

        Gray, Hamish

        Moore John (Croydon C)

        Wainwright Richard (Colne V)

        Grieve, Percy

        More, Jasper (Ludlow)

        Wakeham John

        Griffiths, Eldon

        Morgan-Giles, Rear-Admiral

        Walters Dennis

        Grimond, Rt Hon J.

        Morris, Michael (Northampton S)

        Warren, Kenneth

        Grist, Ian

        Morrison, Charles (Devizes)

        Watt, Hamish

        Grylls,. Michael

        Morrison, Hon Peter (Chester)

        Weatherill, Bernard

        Hall, Sir John

        Neave, Airey

        Wells, John

        Hall-Davis, A. G. F.

        Nelson, Anthony

        Welsh, Andrew

        Hampson, Dr Keith

        Neubert, Michael

        Whitelaw, Rt Hon William

        Hannam, John

        Newton, Tony

        Wiggin, Jerry

        Harrison, Col Sir Harwood (Eye)

        Nott, John

        Wigley, Dafydd

        Hastings, Stephen

        Onslow, Cranley

        Wilson, Gordon (Dundee E)

        Havers, Sir Michael

        Oppenheim, Mrs Sally

        Winterton, Nicholas

        Hawkins, Paul

        Page, John (Harrow West)

        Wood, Rt Hon Richard

        Henderson, Douglas

        Page, Rt Hon R. Graham (Crosby)

        Young, Sir G. (Ealing, Acton)

        Heseltine, Michael

        Pardoe, John

        Hicks, Robert

        Parkinson, Cecil

        TELLERS FOR THE AYES:

        Higgins, Terence L.

        Penhaligon, David

        Holland, Philip

        Percival, Ian

        Mr. Spencer Le Marchant an

        Hordern, Peter

        Peyton, Rt Hon John

        Mr. James Molyneaux.

        Howe, Rt Hn Sir Geoffrey

        Pink, R. Bonner

        NOES

        Abse, Leo

        Ashton, Joe

        Barnett, Rt Hon Joel (Heywood)

        Allaun, Frank

        Atkins, Ronald (Preston N)

        Bates, Alf

        Anderson, Donald

        Atkinson, Norman

        Bean, R. E.

        Archer, Peter

        Bagier, Gordon A. T.

        Benn, Rt Hon Anthony Wedgwood

        Ashley, Jack

        Barnett, Guy (Greenwich)

        Bennett, Andrew (Stockport N)

        112

        113

        Bidwell, Sydney

        Gourlay, Harry

        Noble, Mike

        Bishop, E. S.

        Graham, Ted

        Oakes, Gordon

        Blenkinsop, Arthur

        Grant, George (Morpeth)

        Ogden, Eric

        Boardman, H.

        Hamilton, James (Bothwell)

        O'Halloran, Michael

        Booth, Albert

        Hamilton, W. W. (Central Fife)

        O'Malley, Rt Hon Brian

        Boothroyd, Miss Betty

        Hardy, Peter

        Orbach, Maurice

        Bottomley, Rt Hon Arthur

        Harper, Joseph

        Ovenden, John

        Boyden, James (Bish Auck)

        Harrison, Walter (Wakefield)

        Padley, Walter

        Bradley, Tom

        Hattersley, Rt Hon Roy

        Palmer, Arthur

        Bray, Dr Jeremy

        Hatton, Frank

        Park, George

        Brown, Hugh D. (Provan)

        Healey, Rt Hon Denis

        Parker, John

        Brown, Robert C. (Newcastle W)

        Hooley, Frank

        Parry, Robert

        Brown, Ronald (Hackney S)

        Horam, John

        Pendry, Tom

        Buchan, Norman

        Howell, Denis (B'ham, Sm H)

        Perry, Ernest

        Buchanan, Richard

        Hoyle, Doug (Nelson)

        Phipps, Dr Colin

        Butler, Mrs Joyce (Wood Green)

        Huckfield, Les

        Prentice, Rt Hon Reg

        Callaghan, Jim (Middleton & P)

        Hughes, Rt Hon C. (Anglesey)

        Prescott, John

        Campbell, Ian

        Hughes, Mark (Durham)

        Price, William (Rugby)

        Canavan, Dennis

        Hughes, Robert (Aberdeen N)

        Radice, Giles

        Cant, R. B.

        Hughes, Roy (Newport)

        Richardson, Miss Jo

        Carmichael, Neil

        Hunter, Adam

        Roberts, Albert (Normanton)

        Carter, Ray

        Irving, Rt Hon S. (Dartford)

        Roberts, Gwilym (Cannock)

        Carter-Jones, Lewis

        Jackson, Colin (Brighouse)

        Robertson, John (Paisley)

        Cartwright, John

        Jackson, Miss Margaret (Lincoln)

        Roderick, Caerwyn

        Castle, Rt Hon Barbara

        Jay, Rt Hon Douglas

        Rodgers, George (Chorley)

        Clemitson, Ivor

        Jeger, Mrs Lena

        Rooker, J. W.

        Cocks, Michael (Bristol S)

        Jenkins, Hugh (Putney)

        Roper, John

        Cohen, Stanley

        Johnson, James (Hull West)

        Rose, Paul B.

        Colquhoun, Mrs Maureen

        Johnson, Walter (Derby S)

        Ross, Rt Hon W. (Kilmarnock)

        Concannon, J. D.

        Jones, Alec (Rhondda)

        Rowlands, Ted

        Conlan, Bernard

        Jones, Barry (East Flint )

        Ryman, John

        Cook, Robin F. (Edin C)

        Jones, Dan (Burnley)

        Sandelson, Neville

        Corbett, Robin

        Judd, Frank

        Sedgemore, Brian

        Cox, Thomas (Tooting)

        Kaufman, Gerald

        Selby, Harry

        Craigen, J. M. (Maryhill)

        Kelley, Richard

        Shaw, Arnold (Ilford South)

        Cronin, John

        Kerr, Russell

        Sheldon, Robert (Ashton-u-Lyne)

        Cryer, Bob

        Kilroy-Silk, Robert

        Shore, Rt Hon Peter

        Cunningham, G. (Islington S)

        Kinnock, Neil

        Short, Rt Hon E. (Newcastle C)

        Cunningham, Dr J. (Whiteh)

        Lamble, David

        Short, Mrs Renée (Wolv NE)

        Dalyell, Tarn

        Lamborn, Harry

        Silkin, Rt Hon John (Deptford)

        Davidson, Arthur

        Lamond, James

        Silkin, Rt Hon S. C. (Dulwich)

        Davies, Bryan (Enfield N)

        Latham, Arthur (Paddington)

        Sillars, James

        Davies, Denzil (Llanelli)

        Leadbitter, Ted

        Silverman, Julius

        Davies, Ifor (Gower)

        Lee, John

        Skinner, Dennis

        Davis, Clinton (Hackney C)

        Lewis, Arthur (Newham N)

        Small, William

        Deakins, Eric

        Lewis, Ron (Carlisle)

        Smith, John (N Lanarkshire)

        Dean, Joseph (Leeds West)

        Lipton, Marcus

        Snape, Peter

        de Freitas, Rt Hon Sir Geoffrey

        Litterick. Tom

        Spearing, Leslie

        Delargy, Hugh

        Lomas, Kenneth

        Spriggs, Leslie

        Dell, Rt Hon Edmund

        Loyden, Eddie

        Stallard A. W.

        Dempsey, James

        Luard, Evan

        Doig, Peter

        Lyon, Alexander (York)

        Stewart, Rt Hon M. (Fulham)

        Dormand, J. D.

        Lyons, Edward (Bradford W)

        Stoddart, David

        Douglas-Mann, Bruce

        Mabon, Dr J. Dickson

        Stott, Roger

        Duffy, A. E. P.

        McCartney, Hugh

        Strang, Gavin

        Dunn, James A.

        McElhone, Frank

        Strauss, Rt Hon G. R.

        Dunnett, Jack

        MacFarquhar, Roderick

        Summerskill, Hon Dr. Shirley

        Dunwoody, Mrs Gwyneth

        McGuire, Michael (Ince)

        Taylor, Mrs Ann (Bolton W)

        Eadie, Alex

        Mackenzie, Gregor

        Thomas, Mike (Newcastle E)

        Edelman, Maurice

        Mackintosh, John P.

        Thomas, Ron (Bristol NW)

        Edge, Geoff

        Maclennan, Robert

        Thorne, Stan (Preston South)

        Ellis, John (Briggg & Scun)

        McMillan, Tom (Glasgow C)

        Tierney, Sydney

        Ellis, Tom (Wrexham)

        McNamara, Kevin

        Tinn, James

        English, Michael

        Madden, Max

        Tomlinson, John

        Ennals, David

        Mahon, Simon

        Tomney, Frank

        Evans, John (Newton)

        Marks, Kenneth

        Torney, Tom

        Ewing, Harry (Stirling)

        Marquand, David

        Urwin, T. W.

        Faulds, Andrew

        Marshall, Dr Edmund (Goole)

        Varley, Rt Hon Eric G.

        Fernyhough, Rt Hon E.

        Marshall, Jim (Leicester S)

        Wainwright, Edwin (Dearne V)

        Flannery, Martin

        Mason,Rt Hon Roy

        Walden, Brian (B'ham, L'dyw'd)

        Fletcher, Raymond (Ilkeston)

        Meacher, Michael

        Walker, Harold (Doncaster)

        Fletcher Ted (Darlington)

        Mellish, Rt Hon Robert

        Walker, Terry (Kingswood)

        Foot, Rt Hon Michael

        Millen, Bruce

        Ward, Michael

        Ford, Ben

        Miller, Dr M. S. (E Kilbride)

        Watkins, David

        Forrester, John

        Miller, Mrs Millie (Ilford N)

        Watkinson, John

        Fowler, Gerald (The Wrekin)

        Mitchell, R. C. (Soton, Itchen)

        Weetch, Ken

        Fraser, John (Lambeth, N'w'd)

        Molloy, William

        Wellbeloved, James

        Freeson, Reginald

        Moonman, Eric

        White, Frank R. (Bury)

        Garrett, John (Norwich S)

        Morris, Alfred (Wythenshawe)

        White, James (Pollok)

        Garrett, W. E. (Wallsend)

        Morris, Charles R. (Openshaw)

        Whitlock, William

        George, Bruce

        Morris, Rt Hon J. (Aberavon)

        Willey, Rt Hon Frederick

        Gilbert, Dr John

        Mulley, Rt Hon Frederick

        Williams, Alan (Swansea W)

        Ginsburg, David

        Murray, Rt Hon Ronald King

        Williams, Alan Lee (Hornch'ch)

        Golding, John

        Newens, Stanley

        Williams, W. T. (Warrington)

        114

        115

        Wilson, Alexander (Hamilton)

        Woodall, Alec

        TELLERS FOR THE NOSE

        Wilson, William (Coventry SE)

        Wrigglesworth, Ian

        Wise, Mrs Aurdey

        Young, David (Bolton E)

        Mr.Donald Coleman and

        Mr.Laurie Pavitt.

        Question accordingly negatived.
        Schedule added to the Bill.

      Schedule 4

        ADMINISTRATION AND COLLECTION CAPITAL OF TRANSFER TAX
        Amendments made: No. 135, in page 55, line 37, leave out 25th ' and insert 26th '.
        No. 137, in page 56, line 44, after 32', insert :
        `or (conditional exemption for certain buildings, etc. on death) '.
        No. 138, in page 56, line 44, after Act ', insert :
        ' or under paragraph 2 of Schedule (Relief for woodlands) to this Act '.
        No. 494, in page 56, line 46, leave out three ' and insert six'.—[Mr. Joel Barnett.]
        Sir Geoffrey Howe: I beg to move Amendment No. 697, in page 57, leave out lines 9 to 27 and insert :
        4.—(1) Where a settlement is made after 26th March 1974 by a settlor who was at the time domiciled in the United Kingdom and the trustees of the settlement arc not resident in the United Kingdom the settlor shall within three months of the making of the settlement or, if it was made before the passing of this Act, within three months of the passing of this Act, send a copy of the settlement to the Board and give the Board such particulars thereof as the Board may require for the purposes of this Part of this Act.
        (2) Where the trustees of a settlement made by a person domiciled in the United Kingdom at the time the settlement was made become not resident in the United Kingdom the settlor shall make a return to the Board within the time specified in subparagraph (1) above as if references therein to the making of the settlement were to the trustees becoming not resident in the United Kingdom.
        (3) If the settlor fails to comply with subparagraphs (1) or (2) above within the times therein stated or such long period as the Board shall allow, the settlement shall be void.
        (4) This paragraph shall not apply to the creation of any resulting, implied or constructive trusts or to the creation of any settlement by will.
        (5) Paragraph 12(5) of Schedule 5 to this Act applies for the purposes of this paragraph '.
        Mr. Speaker: With this it may be convenient to discuss the following amendments : No. 690, in page 57, line 9, after
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        person ' insert other than an individual '.
        No. 686, in page 57, line 10, after 'trade',insert:
        'Other than the trade of banking'.
        No. 434, in page 61, leave out lines 1 to 9.
        No. 139, in page 57, leave out lines 9 to 27.
        Sir G. Howe: Amendments Nos. 697 and 139 are directed to removing from the Bill or modifying the unnecessary and unjustifiable invasion of the privacy that exists between a taxpayer and his professional advisers. They are directed towards the section of the Bill that is becoming known as the "noopers' charter ". It is an area in which we believe the Government have made grave and unnecessary errors from the point of view of the collection of the tax, and damaging errors as regards the citizen and civil liberties. It is yet another instance where it is necessary to draw attention to the volume of protest outside the House at the way in which this legislation has been handled.
        In case the Chief Secretary has not observed it already, I draw his attention to the powerful criticism uttered on Saturday by the President of the Institute of Chartered Accountants whilst speaking in Sheffield. He said that the use of the guillotine on the last stages of this Finance Bill amounted to
        " the crassest folly for which the public generally, and the accountancy and legal professions, and the Inland Revenue in particular, will suffer endless hours of unproductive worry and argumentation to no beneficial end and significant waste of valuable human effort."
        He concluded with the warning that I echo ; namely :
        " the only effect of the present absurdities is to ensure the continued decline in respect for both Parliament and the law."
        Nowhere is the Government's determination to reduce respect for the law more evident than in the provisions of Schedule 4, paragraphs 4 and 11, which are the subject of the two amendments with which I am principally concerned at this stage. Paragraph 11, which is the subject of Amendment No. 434, gives

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        the Board of the Inland Revenue wide-ranging powers to inspect any property under very wide circumstances on terms that we regard as unjustifiable. Our amendment is to leave out paragraph 11.
        7.30 p.m.
        The worst wickedness arises in paragraph 4 and in the disingenuous, misleading way in which in our discussion in Committee the Chief Secretary sought to justify the provisions of the paragraph. It introduces a new principle whereby those concerned with advising a taxpayer are required, without any prior notice, from the Revenue authorities to make returns to the board, unprompted and uninvited, in relation to what their clients have been doing.
        The Chief Secretary suggested that precedents were to be found in the Income and Corporation Taxes Act 1970, and he referred to Section 481(3). However, that is not the case. It is true that the Inland Revenue has powers under Sections 443 and 453 of the 1970 Statute to require information from the parties to a settlement on written notice from an inspector. That is a great deal less extensive than the provisions in paragraph 4 of Schedule 4. Paragraph 4 provides for automatic notification not just by transferors but by their representatives and advisers as well.
        It is also true that Section 481(3) of the 1970 Act, wrongly cited as a precedent. enables the Commissioners to require by written notice information of a specified kind. But that again is no precedent for what is required here.
        The vice here is the provision whereby all advisers other than barristers are required to furnish names and addresses of settlors and trustees not merely in relation to any settlement which takes place under specified circumstances but where they have been concerned with its making—retrospectively, incidentally—and have reason to believe that certain circumstances arise.
        I see no reason why barristers should be excluded, unless it be because of a sense of guilt which has pervaded even the Chief Secretary's narrow mind and because he realises that it is unjustifiable in relation to other professional advisers.
        This is to impose far too wide a burden for which there can be no justification. It has been criticised bitterly by the pro-
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        fessional institutions—by the Law Society and the Institute of Chartered Accountants—and no significant justification for it has been brought forward.
        The author of the leading article in the New Law Journal of 27th February this year described this as "yet another damaging precedent." He set out clearly why it is wrong to allow the Revenue to advance in this respect still further the frontier of intrusiveness in relation to the taxpayer, and he pointed out :
        "…it is the nature of a precedent that it diminishes the onus of proving that the course of conduct proposed is justifiable, at least to the extent that that course of conduct has apparent features in common with the course of conduct sanctioned by the precedent itself."
        He therefore regards it as a dangerous departure from previous practice.
        The case was made even more powerfully in The Times on 10th February, and I adopt these words without qualification :
        " This would be a major attack on the professional obligations of secrecy about a client's affairs. It may be argued that, since it will be an offence for someone domiciied in this country to make such a settlement without notifying it to the authorities, these provisions …do no more than place a further obligation on `accessories after the fact' to inform those in authority."
        The Times acknowledges :
        " There is some force in this argument, but it must be balanced against the damage that would be done to the relations between a professional adviser and his clients."
        Let us examine how little force there is in the argument by looking at two previous pieces of legislation, both passed, not surprisingly, under Socialist administrations. The first is the Exchange Control Act 1947, about which Hugh Dalton wrote eulogistically in his autobiography. I recall that it has an unattractive legislative progeny. It was founded on emergency regulations passed under the 1939 emergency legislation. It imposed a tyrannous control on the transfer of funds outside this country, and it is to be regretted that it has been allowed to remain unamended on the statute book. But even that legislation contained in paragraph 1(3) of the Fifth Schedule:
        " Nothing in the preceding provisions of this paragraph shall be taken to require any person who has acted as counsel or solicitor for any person to disclose any privileged communication made to him in that capacity."
        That is right. The normal rules against disclosure exclude professional advisers

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        from the concept of accessories after or before the fact. If they did not, how could a professional adviser carry out his duties to his client?
        More recent, more pervasive and more extensive in its obligations is a statutory instrument passed in 1968 in relation to sanctions on exports to Rhodesia. It is Statutory Instrument No. 1020 of 1968, the Southern Rhodesia (United Nations Sanctions) (No. 2) Order. That imposes very wide prohibitions on the exportation of goods from the United Kingdom to Rhodesia and on their importation. It gives massive and extensive powers of entry, powers of search, very wide liabilities on any people connected with the making of such transactions. But even in that, when we come to Schedule 1 (Evidence and Information), we find the hallowed provision :
        " Nothing in the foregoing subparagraph shall be taken to require any person who has acted as counsel or solicitor for any person to disclose any privileged communication made to him in that capacity."
        The long tradition of the British legal system has been that whatever the extent of the obligations imposed on citizens, successive Governments have striven to preserve that privilege. It is because of the casual way in which this Government sweep that aside in relation to this tax that I move this amendment.
        Mrs. Winifred Ewing: Will the right hon. and learned Gentleman agree that it is very strange to be a member of the legal profession—in my case, the solicitor branch—and to find that the long-standing tradition of confidentiality will be partly thrown to the wind in certain respects? Is he aware that I support him on this matter?
        Sir G. Howe: I am grateful for the hon. Lady's support. I feel almost guilty, however, because of the special exemption made in favour of the Bar. I can see no justification for any discrimination between her and me.
        It is easy for Treasury Ministers and those who advise them to be persuaded "Here is a potential loophole and an area where we should take wide ranging powers. Let us stop it up in advance." But they should not take that action in that way to create a precedent which is without justification. It may be that some revenue will pass through the net because
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        of this, but that would be a small price to pay for preserving the principle to which the hon. Member for Moray and Nairn (Mrs. Ewing) has drawn attention.
        Amendment No. 697 asserts a respectable, practicable and workable principle that the obligation of notification shall be placed on the settlor, and we suggest it by way of substitution for paragraph 4. If the Chief Secretary asserted that there was some defect in our draftsmanship, I should regard that as a slender and irrelevant excuse. Our intention is clear. and he should accept it. However, we would support as an alternative the Liberal amendment which seeks to delete the offending paragraph altogether.
        Balancing the importance of preserving professional privilege in this respect and the importance of not creating a very dangerous new precedent—an obligation upon professional advisers to notify over a wide, ill-defined area without notice and without requirement from the Inland Revenue—against the marginal advantage to the Revenue of including this paragraph, I hope the Chief Secretary will accept the amendment in one form or another.
        Again, according to The Times:
        " Were the Bill to pass into law with this section unchanged, it would have undesirable consequences.… It is an established principle of British tax law that it is the obligation of the client and not the adviser to make the necessary fiscal declarations. There seems to be insufficient reason to change that by introducing provisions that would be very difficult to enforce."
        I suggest that there is not only insufficient reason but no possible justification. I hope that the Chief Secretary has for once at least arrived in the House armed with a white sheet and/or sackcloth and/or ashes and is prepared to accept the amendment with the appropriate sense of shame for what he has been trying to do.
        Mr. Graham Page: It has been a long-established principle that in order that justice should properly be administered there should be confidentiality between a client and his legal adviser so that they may communicate frankly and unreservedly. For the solicitor or barrister this is part of the larger principle of confidentiality between advisers. This principle is clearly recognised by the courts in that no legal adviser, be he

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        barrister or solicitor, can be obliged to disclose that confidentiality in the court except with the client's consent. Unless the client knows that he has the protection afforded by the unqualified operation of this principle, he will not communicate freely with his legal advisers for fear that something he may say will come into the hands, in this instance, of the Inland Revenue or some other Government authority, and a serious curtailment of the rights of the individual to unfettered legal advice and representation then arises.
        Paragraph 4 of Schedule 4 erodes the principle of the privilege of client and legal adviser. It requires
        " any person, in the course of a trade or profession "
        to disclose certain information. I am at a loss to understand why it includes "trade or profession ". This matter concerns mainly the legal and accountancy professions. We have never quite gathered from the Chief Secretary in previous debates on this subject why "trade" was included. Nevertheless, anyone who
        " has been concerned with the making … of a settlement "
        has to disclose certain information.
        It might be said that he has to disclose only the names and addresses of certain persons. But the very fact that he discloses the names and addresses of, for example, the trustees of a settlement implies that those trustees
        " are not or will not be resident in the United Kingdom ".
        Otherwise he is under no obligation to give the names and addresses. Therefore, he is disclosing a confidence between himself and his client that the trustees of a settlement will not be resident in the United Kingdom. How on earth does he look into the crystal ball and decide that someone will not be resident in the United Kingdom at some future date? In those circumstances he has to give the names and addresses, and by doing that he is disclosing that he knows certain facts about both the settlor and the trustees.
        7.45 p.m.
        Indeed, paragraph 4 (3) brings into play another paragraph from Schedule 5. According to that paragraph, if the adviser discloses the names and addresses
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        to the Revenue, he is implicitly giving information about those persons.
        When it was thought necessary to erode the principle of privilege between the legal adviser and his client for the purpose of Part XVII, Chapter III, of the Income and Corporation Taxes Act 1970, headed "Transfer of Assets Abroad ", which deals with only a minor part of income and corporation tax law, it was done with some specific provisos. For example, Section 481, having said that certain particulars should be given on receipt of notice from the Inland Revenue, goes on to provide in subsection (3):
        " Notwithstanding anything in subsection (2) of this section, a solicitor shall not … in relation to anything done by him on behalf of a client, be compellable under this section, except with the consent of his client, to do more than state that he is or was acting on behalf of a client, and give the name and address of his client ".
        It goes on specifically to indicate cases when that name and address should be given—for example, a body corporate, and so on. In Committee the Chief Secretary quoted this section as a precedent for Schedule 4, paragraph 4, but it goes nowhere near being a precedent for that provision.
        One major difference is that under Section 481 of the Income and Corporation Taxes Act 1970 the information is required to be given only on notice by the Inland Revenue requesting it. There is a great difference between requiring legal advisers, as it were, to volunteer information about their clients and their doing so on receipt of a specific notice for that information from the Board of Inland Revenue.
        The principle that a legal adviser can be obliged, albeit by statute if this paragraph is accepted by the House, to give information about his client's affairs whenever certain matters with which he is dealing for the client are specified in a statute is a serious erosion of the privilege between solicitor and client. Therefore, I suggest that there is no need for the Chief Secretary to press for the inclusion of this paragraph.
        Another grave distinction between Schedule 4, paragraph 4, and Section 481 of the 1970 Act is that in the Bill there is no express inclusion of anything which is privileged. Whenever there has been any erosion of this privilege between legal

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        adviser and client on previous occasions, the House has seen fit to put in a specific clause such as that which I have read from Section 481—that a solicitor shall not be, in relation to anything done on behalf of his client, compellable except with the consent of his client—in short, that a solicitor shall not be compelled to breach the privilege of his client.
        I say "the privilege of his client" deliberately, because this is not the privilege of the legal adviser. It is the privilege of the client, and, therefore, of the ordinary citizen, that he shall be enabled to consult his legal adviser frankly and freely and receive advice in the same spirit.
        The Chief Secretary should accept the amendment readily. Although in principle there is a great distinction between this paragraph and the paragraph which is in the Bill, the amendment would provide the Revenue with more information than would the paragraph in the Bill. Our paragraph would give the information in the proper way. It would oblige the potential taxpayer to provide the Revenue with full information about the settlement and about the residence of the trustees.
        In arguing this matter in Committee I proposed to the Chief Secretary that he should replace Schedule 4(4) by a direct duty on the taxpayer. I argued that the Chief Secretary should not seek to get this information by the back door as it were, that he should not seek to get the information by obliging legal advisers to disclose their client's affairs. I argued that clients should not be required to disclose information on notice, but should disclose it in a voluntary way, and then it should be only the name and address.
        The amendment goes about it in the right way, but putting an obligation on the taxpayer to provide the Revenue with details of settlements. I should have thought that the Chief Secretary would jump at this and say that this was a reasonable amendment which breaks no established principles of law but merely requires the taxpayer to give information. There is no doubt but that if this paragraph were written into the Bill legal advisers would say to clients concerned "Here is the law. You must send the Revenue a copy of this settlement ".
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        I suppose that the Chief Secretary, with that benign smile which he is now putting on, will say "There would be terrible avoidance of tax if this were done ". I wonder whether he can identify avoidance of tax merely because names and addresses have not been given on previous occasions. Does he believe that his paragraph will be effective, or will he accept the amendment as providing a far better means of getting the information?
        Mr. John Pardoe:Amendment No. 139 covers the same ground and, as I have already indicated, I reserve my position to ask for a separate vote on it. The reason I felt that this amendment, which was tabled in Committee, should be tabled again for the House to consider was that, though I entirely endorse and support Amendment No. 697, which was moved by the right hon. and learned Member for Surrey, East (Sir G. Howe), it occurred to me that the Government might hide from the principle behind some minutiae or trivia of the amendment—in other words, that it might be possible for the Chief Secretary to say "There is much to be said for what the Opposition have said, but the third comma in the fourth line is not quite in the right place. Therefore, I cannot accept the amendment ".
        Just in case the Chief Secretary tries to evade the principle—this is very much a debate on principle—we have in reserve Amendment No. 139 which simply strikes out the powers which paragraph 4 gives to the Inland Revenue.
        Paragraph 4 contains provisions requiring professional advisers to inform the Revenue of foreign settlements. In our view and in the view of many on both sides of the House—though I doubt whether we shall have much support in the Lobby when it comes to it—this is an objectionable principle.
        The provision is objectionable in terms of history and in terms of our whole professional development over a very long time. It is, first, a gross interference in the professional relationship between the professional adviser and his client. Secondly, it is counter-productive, because it will make people furtive about their affairs.
        I am tempted to ask what exactly is a professional relationship. I suppose it

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        is one for which one is paid if one is the professional adviser. I can imagine a situation in which certain sorts of professional advisers will put a notice on their desk, facing the client's chair, saying "If you intend to reveal anything which could possibly come within the scope of this provision I must advise you that the moment you utter those words you are not paying me for my advice."
        Mr. Graham Page: I am wondering what the position of Members of the House is when their constituents tell them about a settlement which they have made.
        Mr. PardoeThat is a very interesting point. I am never quite sure whether a Member is in a professional relationship with his constituents if he is not professionally qualified. I imagine that he is not. I can see that the courts will have a field day on this.
        It is an objectionable provision, thirdly, because it is unenforceable in the case of foreign advisers. No doubt we shall hear from the Chief Secretary how he intends to enforce it. It is objectionable, fourthly, because it poses a vague and unrealistic question for the British adviser.
        I shall amplify those four points for the benefit of the Chief Secretary. In this country—indeed, in many other countries—professional privilege has, over the years, come to be regarded as of vital importance. This is not just one of those things dreamed up by professional people. I am not a professional man. I do not have a professional qualification, other than the votes I obtained to get to the House, if that is one. However, I believe that the confidentiality between the professional adviser and his clients is of the utmost importance, and that we should be extremely foolish if we took it lightly : This provision will prejudice the relationship in precisely those areas where it most needs to be nurtured.
        The provision is counter-productive and will make people furtive in their affairs, because those who wish to escape their tax liabilities will have no difficulty in seeking advice anonymously, through foreign agents. It is possible that a flourishing industry will set up on the other side of the Channel, or in Ireland, or elsewhere, composed of British tax advisers, who will then have to establish that they themselves are not resident or
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        domiciled here, quite apart from advising trustees whether they are resident here. Those seeking the advice of such professional people will have to be advised "If you tell me what you propose to do I may have to tell the Revenue." This is contrary to public policy, and it is a pretty pointless exercise.
        8.0 p.m.
        The provision also purports to apply to a French advocate or notary as well as to a Channel Islands adviser. Indeed, the provision would be grossly unfair if it were to apply only to British advisers. Yet how does the Revenue propose to enforce it? Foreign advisers, like foreign taxpayers, owe no duty to the United Kingdom, and I cannot see that it is, therefore, in the least enforceable. Above all else, the provision involves the professional adviser deciding on two points which in many cases cannot possibly be answered by him. A man's domicile is often wholly uncertain.
        I remember a debate shortly after I came into the House—it must have been in the late 1960s—when Lord Hailsham was replying to an amendment of mine which sought to remove the right of South Kensington and Chelsea voters to buy country houses in my constituency and register themselves there to vote in Chelsea or Kensington. I said that it ought to be possible in this House to define where one lived and where one was registered to vote. I remember the noble Lord giving me a long lecture—he was then a shadow Law Officer—on the difficulties of defining that sort of thing in English law. If it is difficult to define it as between South Kensington and Cornwall, it is even more difficult for some professional adviser to define where trustees live, or will live—which is pretty futuristic. It is particularly difficult for him in cases where a foreign settlement is under consideration.
        The provision requires an answer to the question, "Where was the settlor domiciled?" Even disregarding the fact that the provision does not explain what is the relevant time at which the question has to be answered, it is one which the professional adviser, in honesty, cannot answer either way. Similarly, the provision requires an answer to the question, "Where will the trustees be resident?" and often he cannot say that for certain, either.

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        To add to the ludicrous nature of the provision, a professional adviser does not have to make a return if someone else has done it. I think that is a useless provision, since he has no power to find out whether the others involved have made a return. Suppose he asks them, or a client, and takes the client's word that no one has done it. Is that sufficient? No professional adviser owes a duty to anyone other than his client—certainly not to other advisers—so why should one tell another what he has done or not done?
        It is not true, as the Chief Secretary said in Committee, that this is the same thing as had been done in previous cases. He quoted the relevant Act. This is an extension of the existing powers of the Inland Revenue. Let us make no mistake about that. At present the Inland Revenue has powers to require information under Section 481 of the Income and Corporation tax Act 1970, but the Revenue has to ask for it first. That is an important difference. Under that Act the adviser is under no duty to supply information except in answer to this question.
        It is of some interest to quote the words of Mr. Justice Ackner, in a case which I suppose is really the classic of its sort in this matter—Clinch v. IRC. He said :
        " Had such powers been reserved for use in the detection of the most serious offences in the criminal calendar, doubtless there would have been, not acclamation, but a public outcry, judged by the emotion that has been generated by the recent suggestion of a very learned Law Reform Committee that a judge should be allowed to suggest to a jury that silence could, if they thought fit, be considered by them as some evidence of the accused's guilt."
        It seems to me, therefore, that we are being asked by the Government to advance into the field of tyrannical interference in the affairs of the individual and, in particular, into the affairs of an individual and his professional adviser.
        The Chief Secretary, in Committee, expressed himself as rather surprised at the language used by hon. Members in describing this provision. He said that he was shocked at such words as "monstrous ". In fact, it is not just Members of Parliament who whip up this kind of thing for the benefit of the Committee stage. On 27th February a letter was written to The Times by three very
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        learned Members of the Bar, one of whom, Mr. Leolin Price, QC, said :
        " The proposal would have us adopt the practice of totalitarian States ; for it has been their hateful practice—in Nazi Germany and Soviet Russia and elsewhere—to compel citizens to spy on their neighbours … It is easy to find reasons for any new demand that is made on behalf of the State. It is also fatally easy to step on to the slippery path to tyranny …"
        The excuses, the reasons which the right hon. Gentleman advanced in Committee, will no doubt be advanced again today—that the Inland Revenue cannot have its hands tied behind it, and must not be disadvantaged in finding the tax avoiders. No hon. Member on either side of the House wants to ease the path of those who break the law. At the same time, we cannot allow a situation to creep into our tax affairs in which the end always justifies the means.
        There has been a great deal of controversy recently about the visit to this country of the former head of the KGB. I notice that the Secretary-General of ASTMS, Mr. Clive Jenkins, said in a television interview the other day that the head of the KGB was no different from the head of the British Secret Service. I thought that was a monstrous parallel. If this provision is passed, he would have done far better to say that the correct parallel might well be drawn between the head of the KGB and the President of the Board of Inland Revenue, because the Inland Revenue is becoming an organisation somewhere between the CIA and the KGB.
        Mr. Esmond Bulmer: I support Amendment No. 697. I think it is absolutely true that when taxes go too far—that is to say, when they go beyond people's willingness to pay them—the law is undermined. We have seen the same thing in industrial relations in the last two years. In Holland it was found that a wealth tax between 1½ per cent. and 2 per cent. represented the difference between people's readiness to pay or not. If one remembers that inflation is running in excess of 20 per cent. in this country, capital gains tax at the present time represents a wealth tax more severe than that operating anywhere else in Western Europe.
        In this Bill there is capital transfer tax which can inflict upon a family a tax in excess of 100 per cent. of the asset.

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        In this situation I have no doubt that the threshold has been crossed. The Government and the Revenue recognise this in the offending paragraph 4. I believe the effect will be as the hon. Member for Cornwall, North (Mr. Pardoe) has pointed out, that people will go overseas for advice. I do not need to say any more about that.
        Secondly, I think that those who perhaps do not think in those terms will tend to revert to do-it-yourself advice. They will go to quarters which are perhaps not reputable and will cause the Revenue a lot more trouble. I believe it is axiomatic that the Revenue can function efficiently only with the help of responsible professionals. To the extent that the Bill in its present form makes this less likely, it is doing a disservice to the Revenue and to the Government.
        The Government continue to miss the simple truth that if they try to close every loophole they will inflict grave economic damage on this country. We have seen it in forestry, and I believe that we shall see it in jobs. The Chancellor of the Exchequer has said that it is not possible to calculate how much revenue has been lost by evasion. Neither is it possible to calculate how many jobs will be lost because people will say that they cannot pay the capital transfer tax and will for that reason refrain from investing.
        It has been said that Britons are Romans in the course of becoming Italians. There is, I believe, a real danger that, as these taxes ravage and the fires of inflation burn, we shall, indeed, become a nation of fiddlers. That process will not be stopped by forcing the professions to abandon confidentiality. It will be stopped, or, at least, it will be redressed, if the Government tackle inflation firmly, and if they reduce the confiscatory levels of taxation which they propose.
        Mr. Ian Percival: Hon. Members have made a series of telling points, and, to avoid repetition, I shall dwell only on the wider aspect of this matter, though, before I do so, I must say that I agree wholeheartedly with everything said about the seriousness of the proposed breach of the principles of confidentiality which we have all for so long observed.
        This is yet another instance of a Government putting administrative con-
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        venience before the rights of the individual. It is an obnoxious and dangerous practice, of which we have seen far too much in the last 10 years. It must stop.
        The whole life of this country has for a long time depended to a very large extent upon respect for and observance of the law. One of the reasons for this respect for and observance of the law has been that people have recognised that, although not always successful, the purpose of the law, or one of its main purposes, has been to protect the weak from the strong, to protect the individual from the State.
        Now, however, time and again we see the law being changed to give more strength to the already strong—in this instance, to the administration—at a time when most individuals already feel that the balance between the administration and the individual has become wholly wrong, that there is, indeed, no balance or anything approaching the balance that there should be, and that what is needed is more protection for the individual against the administration, not more power to the administration against the individual.
        It is a thoroughly bad development when individuals feel, and rightly feel, that the law is constantly being used to give more strength to the already strong and is being used less and less to protect the individual from the strong.
        There will be two practical consequences of this process unless we stop it. It will bring the law further into disrepute. It pains me to have to use the words "further into disrepute" since they connote that it has already been brought substantially into disrepute, and that is a terrible thing to have to recognise. But we delude ourselves if we do not recognise that one of the results of our activities as law makers in this House has been to bring the law substantially into disrepute. Our task is to stop it falling further into disrepute.
        The second inevitable consequence is that if we allow the law to fall further into disrepute the temptation to ignore it will increase. It will be ironic if we here, who all say—sincerely, I am sure—that the laws of our country should be observed by all, make those laws so badly

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        as to render it inevitable that people pay less and less regard to them.
        I understand, of course, that it would be very convenient administratively for the gentlemen in Whitehall and for Ministers to have these powers. It may well be that, without them, somebody would escape the net. But that is an argument to which there is no end. One can go on thinking of more and more things which would make it easier for the administrators to administer.
        The further invasion of the rights of individuals entailed in gaining the small advantage of administrative convenience which these provisions represent is too high a price to pay. The giving up of that minimal or marginal administrative convenience, on the other hand, would be but a small price to pay for recognising for once that the rights of individuals are a lot more important in many instances than administrative convenience of the kind we are discussing here.
        I hope that, both on such general grounds and for the detailed reasons advanced today, the Government will give way.
        8.15 p.m.
        Mr. Ian Gow: I support what was said by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) in moving his amendment. I do so for four principal reasons.
        The primary liability to give information to the Revenue ought to lie with the prospective taxpayer and not with his professional advisers. I declare an interests here, in that I am a practising solicitor, and the principle of confidentiality between client and professional adviser is, for me, of the first importance. I hope that the Chief Secretary will tell us what discussions he had with the chartered accountants, the certified accountants, the Law Society, and the Bar Council. Presumably, he had discussions with all those bodies, not least in order to exclude barristers from the provisions of paragraph 4—the part of the schedule which we find so objectionable.
        My second objection to paragraph 4 is that it is drafted in an extremely sloppy way. When the Chief Secretary was dealing with this matter in Committee—this was on 18th February—his hon. Friend
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        the Member for Nottingham, East (Mr. Dunnett) raised the question whether a will amounted in law to a settlement. It is well known that after the death of a testator trusts frequently come into operation. I hope that the Chief Secretary will deal with that matter tonight, because it is one of immense practical significance for chartered accountants and solicitors.
        Sir Geoffrey Howe: It appears that Amendment No. 144 in the name of the Chancellor of the Exchequer is intended to meet that point by dealing separately with any settlement made by will, but my hon. Friend may care to give consideration to the possibility which strikes me, that although intended to meet the point it fails to do so because it separates any settlement made by will and any other settlement, so that the sub-paragraph would read :

        "(a) any settlement made by will, or

        (b) any other

        settlement if such a return in relation to "—
        and so on. It seems probable that it will apply exactly as it did as originally drafted. Perhaps the Chief Secretary, if not my hon. Friend, will give thought to that. I do not think that the right hon. Gentleman can be saved by the printer from the consequences here.
        Mr. Gow: I am grateful to my right hon. and learned Friend, since what he says emphasises my point. The Bill and the Chief Secretary's amendments are drafted in a sloppy way. Even on Amendment No. 144, what is the date from which the settlement made by a will operates? We all know that a will speaks from death. Does the Chief Secretary's amendment refer to the date of the will or the date of the death?
        I wish to continue with my criticism of the drafting of paragraph 4 of the schedule. What is meant by the words
        "in the course of a trade or profession carried on by him … has been concerned with the making … of a settlement and knows or has reason to believe … that the trustees of the settlement are not or will not be resident in the United Kingdom."?
        How can a professional man—a chartered accountant or solicitor—possibly know who the trustees of a will, the executors of a will or the trustees of a settlement are to be in the future, and whether or not they will be resident in the United Kingdom? This is pure crystal ball gazing.

        133
        In Standing Committee the Chief Secretary failed to answer the point when it was raised by the hon. Member for Nottingham, East on 18th February.
        Why are barristers to be excluded from the provision? The Opposition can only assume that as a result of a guilty conscience, and as a sop to his conscience, the Chief Secretary has exempted barristers. I urge the Government to accept that a principle of the greatest importance is at stake here. The obligation to make a disclosure should rest with the taxpayer when he completes his tax return each year. It would be a perfectly simple matter for the Chief Secretary to ask, in the tax return form, whether the taxpayer had made a settlement during the previous 12 months. It the Chief Secretary is prepared to listen to arguments he should accept the amendment, which seeks to reinforce the principle that we have followed down the centuries, that of confidentiality between a professional man and his client.
        If the Government persist in their intention the consequence will be that professional men will set up business overseas—perhaps in the Republic of Ireland—and the Chief Secretary will not get his information. It is time the Government stopped setting up this growing network of informers. I hope that the Chief Secretary will accept the amendment.
        Mr. Joel Barnett: May we first get one thing absolutely clear? We are not here discussing the average taxpayer on PAYE. Paragraph 4 deals with settlements and trusts. We can do without the gross exaggeration which has emanated from the Opposition benches. Conservatives have made the most far-fetched speeches imaginable. They have reached the height of absurdity. We are talking here about trusts and settlements which are often sophisticated tax avoidance schemes. We are asking only that the solicitor or other professional adviser should give the name and address of the settlor. That is the extent of this so-called monstrosity. It is nonsense for the Conservatives to talk about its being a snooper's charter. If there were disclosure with consent of the client there would, of course be no breach of privilege, and a solicitor would not be disclosing anything that the client was not himself obliged to disclose—
        Sir G. Howe: That is not what the Government are providing for.
        Mr. Barnett: The hon. and learned Gentleman must control himself. I have only just begun, and I shall be dealing with all the points he raised. If the client is not prepared to consent to the information being disclosed there is at least the possibility that he is contemplating evasion of tax, and not avoidance. If there were evasion, no privilege would be involved, at least to that extent.
        When I hear hon. Members talking in the way they have been I am astonished. We must be clear what we are talking about. When they say that this is a great infringement of personal liability they seem to forget that many democratic countries have much wider powers than we are endeavouring to take —[An HON. MEMBER : "East Germany? "] The hon. Member should know better than to say that, but perhaps he does not. Other democratic countries take much wider powers to ensure that when there is a tax on the statute book it is paid. That is why they take those powers, and that is why we give powers to the extent we do to the Inland Revenue. Here we are talking about the possibility, which we know exists, of settlements being arranged in a way that the Revenue would never find out about. We discussed this matter in Standing Committee at great length.
        We cannot go to a foreign professional man and obtain information, because we do not have the power. Frequently, however, a professional man in this country will know about a professional man abroad who is setting up a particular trust. It is not asking too much that the Revenue should have the name and address of the settlor and the trustee. That is all that paragraph 4 seeks to ensure.
        I now turn to the amendment moved by the right hon. and learned Member for Surrey, East (Sir G. Howe), not the Liberal amendment, which wants to go the whole hog and remove the paragraph altogether. The right hon. and learned Gentleman's amendment would provide that in place of paragraph 4 there should be a sanction of nullity. I venture into these matters with great trepidation. When I see distinguished Conservative lawyers present I am reluctant to venture into such

        135
        areas, but I shall deal with some of the fairly straightforward points.
        Where a United Kingdom settlor makes an overseas settlement it would place on the settlor the obligation to supply a copy of the settlement and any other necessary information to the board, and if he failed to do so the settlement would be void. Paragraph 4 broadly requires certain persons concerned with the making of a settlement to inform the Revenue if they know the trustee will not be resident in the United Kingdom.
        The method the amendment chooses to deal with the matter was considered when the Bill was being prepared, but we rejected it as being impractical. The idea of imposing a sanction of nullity is to be found in the income tax legislation of some countries, and it would enable the Revenue to disregard, for tax purposes, transactions entered into for the purpose of avoiding tax. Provisions of this kind have created considerable problems in practice, because when one disregards what has happened in reality it is not always easy to know what should be hypothetically substituted for it. In any event, the function of an "annihilation" provision for capital transfer tax would be quite different from its function for income tax. Despite the practical difficulties it may be a sensible aim, in income tax matters, to say that a man should still be treated as taxable on the income of which he has sought to divest himself.
        On the other hand, it scarcely makes sense, in the context of capital transfer tax, to penalise a man for trying to evade tax when he transfers his property by saying that he is to be treated as still having it, which is what the amendment would do. This would be to wipe out the effect of the charge, which would be a rather strange method of rewarding attempted evasion of the tax.
        I understand that the right hon. and learned Gentleman may support the amendment on the footing that the sanction of nullity would not be effective for capital transfer tax purposes, but would be effective for all other purposes. If that is so, the intention would require to be spelled out rather more explicitly than it is.
        136
        8.30 p.m.
        Apart from the reasons that I have just given, there is another very important one. Besides the fact that the United Kingdom legislature cannot effectively impose a sanction of nullity if a transaction is governed by foreign law—and nine times out of 10, settlements of this kind would be made with overseas trustees—the property transferred when a settlement is made will be held by trustees, who will be under a legal duty, enforceable in the jurisdiction where they live, to give effect to the terms of the settlement. It would be a completely empty gesture for the House of Commons to say that the property still belonged to the settlor, which is what the amendment would do.
        Sir G. Howe: I acknowledge the skill with which the right hon. Gentleman has read the analysis of our amendment. Does he acknowledge, first, that any difficulties of the imperfections of the amendment would be overcome by accepting the Liberal amendment to delete the paragraph altogether? Secondly, does he acknowledge that the fact that he has had to appeal to the traditions of democratic countries unnamed by way of precedent proves that this is an innovation without precedent in the tax law of this country? Thirdly, does he acknowledge that when he says that this is not of general application but applies only to settlors, that does not affect the fact that it is a departure of principle, that it is an innovation just as damaging, if it affects millions of people in the magistrates' courts, as if it affects settlors in one jurisdiction? Does he acknowledge those three things—first, that the Liberal amendment would knock it out ; secondly, that there is no precedent in this country ; thirdly, that it is an important departure of principle?
        Mr. Barnett: I recognise that the Liberal amendment would knock it out, but I am not prepared to recommend my hon. Friends to accept that amendment. It is true that we are extending our present law in these matters—I have never sought to deny it—but if we are putting a tax on the statute book, it is right that the Revenue should be able to enforce it if people seek to evade it, particularly when it is a tax that enormously reduces the extent to which

        137
        the former estate duty could be avoided. Clearly, opportunities will be taken wherever possible to find whatever loopholes may be available, and what the right hon. and learned Gentleman is seeking to do is to put in another loophole.
        Mr. Gow Mr. Gow rose—
        Mr. Barnett: I am still replying to the right hon. and learned Gentleman. I said that it was with some trepidation that I entered upon these legal discussions with right hon. and learned and hon. and learned Gentlemen opposite. I am honoured and flattered that the right hon. and learned Gentleman has recognised that I have taken the point that he was trying to make and that he has appeared to recognise that his own amendment would not deal with the problem. I hope that he will appreciate that all his amendment would do would be simply to cancel out any transaction that was a virtual form of evasion, so that there would be no tax where there should be tax.
        Mr. Gow: The right hon. Gentleman has now conceded that there is a breach of an established principle. He has sought to justify it on the ground that it will not affect many people. Surely the number of people affected by a breach of principle is irrelevant. The Government must be the champion of all and not just the champion of what they call the big battalions.
        Mr. Barnett: The hon. Gentleman must understand that what is on the statute book now is not necessarily right for all time. If he is saying that, it is a strange philosophy that he is attempting to put to the House. I am saying that if the Revenue is left without these powers, and it has been without these powers for many years, enormous opportunities will be available for a small minority of people to use trusts and settlements to avoid tax liability.
        If we are putting a new tax on the statute book, it is not unreasonable to provide that the Revenue shall have power to enforce it. If that is extending a principle, I accept and support it.
        Mr. Powell: Is there any limitation on personal liberty that could not be justified on exactly the arguments that the right hon. Gentleman is putting?
        Mr. Barnett: We are not talking about any extension. We are talking about an extension to trusts and settlements set up specifically by a small number of people who are seeking to avoid tax. It would be the height of absurdity to suggest that the Inland Revenue should tie at least one hand behind its back when dealing with this kind of person. That would be nonsense. I am sorry, but I cannot accept it.
        Sir G. Howe: Surely the right hon. Gentleman accepts that almost all the law enforcement authorities, be they the Inland Revenue or any other, have so far managed to govern a free society with one hand tied behind their backs, and that it is a principle that a professional adviser shall not be required, without notice and without the consent of his client, to inform upon his client to the authorities of the State? We have survived through the centuries, upholding that principle and being dependent upon it. Does the Chief Secretary suggest that the new tax is an innovation of such catastrophic importance that that principle should be overthrown? Where do we go from here? Why is it justified?
        Mr. Barnett: The right hon. and learned Gentleman is right in saying that this principle has lasted for a long time, but during that time many people have avoided their fair share of tax whilst the vast majority of ordinary taxpayers have paid theirs. I cannot believe that what the right hon. and learned Gentleman is seeking to do is to ensure that that kind of situation should continue. I am not prepared to recommend my hon. Friends to support the amendment.
        Mr. David Howell: The Chief Secretary has gone too far this time, and I believe he knows it, with his uncharacteristic outburst at the end containing as it did the absurd statement, which he will regret when he reads it in Hansard, about how many people evade their fair share of tax.
        Mr. Graham Page: The Chief Secretary did not talk about evading. He was talking all the time about avoiding tax. Why should not people avoid paying tax? Why do they have to be snooped on if they are doing a legal act?
        Mr. Howell: My right hon. Friend is correct. We are dealing with a Government and a Chief Secretary who believe

        139
        that the act of life is a loophole to avoid death. Therefore, for those who are not prepared to die and be liable for estate duty the loophole of life must, because of the Chief Secretary's way of looking at things, be made much more difficult.
        The right hon. Gentleman has gone too far. There is no precedent for this. Section 481(3) provides no precedent for the new provisions in paragraph 2 of the schedule. Under Section 481(3) it is the Revenue which calls upon the solicitor or the agent making the return, but that is not the case under this paragraph. This paragraph breaches the principle of privileged communication between a solicitor and his client or whoever in the broad terms of the paragraph is concerned with making the settlement. Secondly—and the Chief Secretary did not mention this when he spoke about what the Revenue was being asked to do—it places the onus or obligation on a solicitor or whoever is concerned with the making of the settlement.
        These are new principles without precedent, and the Chief Secretary has sought to defend them both here and in Committee upstairs by what might be called a housemaid's baby talk. First, he used the argument "Do not worry. It is only just names or addresses. It is a small matter of giving that information ". Secondly, he used the argument "Do not worry. It is only a small amount of privacy that is being surrendered." I should like to take both those thin ends of larger wedges and examine the sharpness of them with my thumb.
        I invite the House to think first about the phrase "only names and addresses "We know that it is a small step from there to "If he is not at that address, where did he go? If he is no longer at that address, when did he leave? What are his or her movements? What were his or her movements after a certain time? Why did he go? Who was he with? What was he seeking? What was he trying to avoid? "We know the cataclysm of questions that can follow from the innocent matter of the name and address. We have heard it happen in other countries, be they the Chief Secretary's democracies
        140
        to which he irrationally refers, or those where the word "democracy" is not used in a way which we would recognise. We know what a large wedge that is, and we know how much can follow from that simple question "Only your name and address, please ; that is all we want. The only obligation is to provide the name and address."
        We come to the second easy little phrase that pops in almost unobtrusively "just a small amount of privacy ". How the Chief Secretary measures a small amount of privacy I do not know. Privacy is becoming increasingly valued as it diminishes, and it diminishes fast. The more it diminishes, the more crucial it is. When a Minister says that by decree—it is little less than that with the guillotine on the debate—a small further amount of privacy is to be removed, we ask "What will there be in exchange? "What has the Minister given to the community? What has the Minister given in the eyes of the people who govern the affairs of the country to be sacrificed against this further surrender of privacy?
        We are told nothing, except some generalisations from the Chief Secretary about many people not having paid their fair share of tax and having avoided tax by not dying. He seems to think that it is time they did die so that they could pay this ill-chosen tax instead of estate duty. That is a silly argument related to a dangerous and serious principle on which we are being asked to give way.
        There are other difficulties with the Government's proposals and their Amendment No. 144. I know that the Chief Secretary is trying to meet the point made by the hon. Member for Nottingham, East (Mr. Dunnett) in Committee about settlements under will. As the hon. Gentleman rightly said, how is one to know whether from 26th March—remember, the legislation runs from a year ago—one has been concerned in making a will which might have led to a settlement which might become liable under this provision? It is impossible to know. I am doubtful whether Amendment No. 144 meets the need to rule out all settlements under a will. Although it rules them out, it immediately rules them in again by the additional provisions in the rest of the

        141
        amendment. It would be fair for the House to have a better explanation of that than the one which the Chief Secretary gave.
        Another aspect raised in Committee but not this evening is the chilling one of retrospection. We are almost reduced to shrugging our shoulders at each new retrospective incursion the Government make, regardless of whether they were in power, which Parliament was sitting at the time and whether a previous Parliament overruled them. All these propositions, courtesies and customs have been thrown out.
        Here is another. Because of the retrospective nature of the legislation, confidential discussions which took place between March and November between clients and solicitors, agents or other advisers are not confidentially protected. When it became clear that the Government were going much further, although there had been no indication of that beforehand, those privileged confidential discussions became not confidential at all. By a law which the participants did not know about at the time, which was not threatened and which was not on the statute book, if the Bill reaches the statute book those conversations at that time will become not privileged and not confidential.
        That is a monstrous and lethally sinister move of a kind that makes Government's other retrospective efforts in the Bill look relatively pale and paltry. It stretches into the most intimate and detailed relationships between the professional adviser and his client which we have succeeded in defending over many years and through many crises. When the pressure has been, in war and in peace, to do things which may infringe liberty for the greater good, we have succeeded in defending this precious privilege, amongst others.
        8.45 p.m.
        That is a triumph and a victory for the basis of our liberties. Now it is to go because the Chief Secretary is worried about all those people who were undermining the principles and being unfair in insisting on escaping the death duties which he believes should have applied to all. The right hon. Gentleman has said that all that is being asked is that
        142
        the Revenue shall have the names and addresses. He added one other category.
        That is just not true. Many hon. Members respect the Chief Secretary and believe that he has had a rough deal at the hands of some of his colleagues. He is no doubt in great difficulty even now, not only on this Bill but on other matters of public expenditure as he tries to keep at bay the maniacs in his Government, who would inflate public expenditure to the point when the pound is hardly worth the paper it is written on. We appreciate the difficulties he is under. Why does he stand up and tell us something that is not true?
        The schedule not only enables the Revenue to have the names and addresses—that is an incursion into privilege about which we have complained—but it places the obligation on the citizen-informer, on the agent of his own volition, to give the names and addresses required. This is not in response to a request by the Revenue, as under Section 481, not in response to a normal provision or request of any kind from the authorities.
        It would not only be names and addresses. This is a shabby piece of work, shabbier than much of the work that the Chief Secretary has had to undertake at the behest of his colleagues in the name of Heaven knows what. Of all the aspects of this lethal tax, this is the nastiest, and my hon. and right hon. Friends should have no hesitation whatever in supporting the amendments. If there are difficulties in the drafting of our amendment, we accept them. I urge my hon. and right hon. Friends to support the Liberal Amendment No. 139 and to wipe this vicious provision out of this vicious Bill.
        Question put, That the amendment be made :—
        The House proceeded to a Division—
        Miss MARGARET JACKSON and Mr. JOHN ELLIS were appointed Tellers for the Noes but, no Member being willing to act as Teller for the Ayes, Mr. DEPUTY-SPEAKER declared that the Noes had it.
        Amendment negatived.
        Amendment proposed: No. 139, in page 57, leave out lines 9 to 27.—[Mr. Pardoe.]
        Question put, That the amendment be made :—
        The House divided: Ayes 240, Noes 264.

        Division No. 136.]

        AYES

        [8.48 p.m.

        Adley, Robert

        Gow, Ian (Eastbourne)

        Morrison, Charles (Devizes)

        Alison, Michael

        Gower, Sir Raymond (Barry)

        Morrison, Hon Peter (Chester)

        Arnold, Tom

        Grant, Anthony (Harrow C)

        Neave, Airey

        Atkins, Rt Hon H. (Spelthorne)

        Gray, Hamish

        Nelson, Anthony

        Awdry, Daniel

        Grieve, Percy

        Neubert, Michael

        Bain, Mrs Margaret

        Griffiths, Eldon

        Newton, Tony

        Baker, Kenneth

        Grist, Ian

        Nott, John

        Banks, Robert

        Grylls, Michael

        Onslow, Cranley

        Bell, Ronald

        Hall, Sir John

        Oppenheim, Mrs Sally

        Bennett, Sir Frederic (Torbay)

        Hall-Davis, A. G. F.

        Page, John (Harrow West)

        Bennett, Dr Reginald (Fareham)

        Hampson, Dr Keith

        Page, Rt Hon R. Graham (Crosby)

        Benyon, W.

        Hannam, John

        Pardoe, John

        Berry, Hon Anthony

        Harrison, Col Sir Harwood (Eye)

        Parkinson, Cecil

        Biffen, John

        Havers, Sir Michael

        Penhaligon, David

        Biggs-Davison, John

        Hawkins, Paul

        Percival, Ian

        Blaker, Peter

        Henderson, Douglas

        Peyton, Rt Hon John

        Boscawen, Hon. Robert

        Heseltine, Michael

        Pink, R. Bonner

        Bowden, A. (Brighton, Kemptown)

        Hicks, Robert

        Powell, Rt Hon J. Enoch

        Boyson, Dr. Rhodes (Brent)

        Holland, Philip

        Prior, Rt Hon James

        Brotherton, Michael

        Hordern, Peter

        Pym, Rt Hon Francis

        Brown, Sir Edward (Bath)

        Howe, Rt Hn Sir Geoffrey

        Raison, Timothy

        Buchanan-Smith, Alick

        Howell, David (Guildford)

        Rathbone, Tim

        Buck, Antony

        Howells, Geraint (Cardigan)

        Rees, Peter (Dover & Deal)

        Budgen, Nick

        Hunt, John

        Rees-Davies, W. R.

        Bulmer, Esmond

        Hurd, Douglas

        Renton, Rt Hon Sir D. (Hunts)

        Burden, F. A.

        Hutchison, Michael Clark

        Renton, Tim (Mid-Sussex)

        Butler, Adam (Bosworth)

        Irving, Charles (Cheltenham)

        Ridley, Hon Nicholas

        Carlisle, Mark

        James, David

        Ridsdale, Julian

        Carson, John

        Jenkin, Rt Hon P. (Wanst'd & W'df'd)

        Rifkind, Malcolm

        Chalker, Mrs Lynda

        Johnson Smith, G. (E. Grinstead)

        Roberts, Michael (Cardiff NW)

        Channon, Paul

        Jones, Arthur (Daventry)

        Roberts, Wyn (Conway)

        Clark, Alan (Plymouth, Sutton)

        Joseph, Rt Hon Sir Keith

        Ross, Stephen (Isle of Wight)

        Clark, William (Croydon S)

        Kershaw, Anthony

        Ross, William (Londonderry)

        Clarke, Kenneth (Rushcliffe)

        Kilfedder, James

        Rost, Peter (SE Derbyshire)

        Clegg, Walter

        King, Evelyn (South Dorset)

        Sainsbury, Tim

        Cockcroft, John

        King, Tom (Bridgwater)

        St. John-Stevas, Norman

        Cooke, Robert (Bristol W)

        Knight, Mrs Jill

        Shaw, Giles (Pudsey)

        Cope, John

        Knox, David

        Shelton, William (Streatham)

        Cormack, Patrick

        Lamont, Norman

        Shepherd, Colin

        Costain, A. P.

        Lane, David

        Shersby, Michael

        Crawford, Douglas

        Langford-Holt, Sir John

        Silvester, Fred

        Critchley, Julian

        Latham, Michael (Melton)

        Sims, Roger

        Davies, Rt Hon J. (Knutsford)

        Lawrence, Ivan

        Sinclair, Sir George

        Dean, Paul (N Somerset)

        Lawson, Nigel

        Skeet, T. H. H.

        Dodsworth, Geoffrey

        Le Marchant, Spencer

        Smith, Dudley (Warwick)

        Douglas-Hamilton, Lord James

        Lester, Jim (Beeston)

        Speed, Keith

        du Cann, Rt Hon Edward

        Lewis, Kenneth (Rutland)

        Spence, John

        Durant, Tony

        Lloyd, Ian

        Spicer, Michael (S Worcester)

        Eden, Rt Hon Sir John

        Luce, Richard

        Sproat, Iain

        Edwards, Nicholas (Pembroke)

        MacCormick, Iain

        Stainton, Keith

        Elliott, Sir William

        McCrindle, Robert

        Stanbrook, Ivor

        Emery, Peter

        Macfarlane, Neil

        Stanley, John

        Evans, Gwynfor (Carmarthen)

        MacGregor, John

        Steel, David (Roxburgh)

        Ewing, Mrs Winifred (Moray)

        Macmillan, Rt Hon M. (Farnham)

        Steen, Anthony (Wavertree)

        Eyre Reginald

        McNair-Wilson, M. (Newbury)

        Stewart, Donald (Western Isles)

        Fairbairn, Nicholas

        McNair-Wilson, P. (New Forest)

        Stewart, Ian (Hitchin)

        Fairgrieve, Russell

        Marshall, Michael (Arundel)

        Stokes, John

        Farr, John

        Marten, Neil

        Stradling Thomas, J.

        Fell, Anthony

        Mather, Carol

        Tapsell, Peter

        Finsberg, Geoffrey

        Maude, Angus

        Taylor, Teddy (Cathcart)

        Fisher, Sir Nigel

        Maudling, Rt Hon Reginald

        Tebbit, Norman

        Fletcher, Alex (Edinburgh N)

        Mawby, Ray

        Temple-Morris, Peter

        Fletcher-Cooke, Charles

        Maxwell-Hyslop, Robin

        Thompson, George

        Fookes, Miss Janet

        Mayhew, Patrick

        Townsend, Cyril D.

        Fowler, Norman (Sutton C'f'd)

        Meyer, Sir Anthony

        Trotter, Neville

        Fox, Marcus

        Miller, Hal (Bromsgrove)

        van Straubenzee, W. R.

        Fraser, Rt Hon H. (Stafford & St)

        Mills, Peter

        Vaughan, Dr. Gerard

        Freud, Clement

        Miscampbell, Norman

        Viggers, Peter

        Fry, Peter

        Mitchell, David (Basingstoke)

        Wainwright, Richard (Colne V)

        Galbraith Hon. T. G. D.

        Moate, Roger

        Wakeham. John

        Gardiner, 'George (Reigate)

        Molyneaux, James

        Walker, Rt Hon P. (Worcester)

        Gardner, Edward (S Fylde)

        Monro, Hector

        Walters, Dennis

        Gilmour, Sir John (East Fife)

        Montgomery, Fergus

        Watt, Hamish

        Glyn, Dr Alan

        Moore, John (Croydon C)

        Weatherill, Bernard

        Goodhart Philip

        More, Jasper (Ludlow)

        Wells, John

        Goodhew, Victor

        Morgan, Geraint

        Welsh, Andrew

        Goodlad, Alastair

        Morgan-Giles, Rear-Admiral

        Whitelaw, Rt Hon William

        Gorst, John

        Morris, Michael (Northampton S)

        Wiggin, Jerry

        Wigley, Dafydd

        Wood, Rt Hon Richard

        TELLERS FOR THE AYES:

        Wilson, Gordon (Dundee E)

        Young, Sir G. (Ealing, Acton)

        Mr. A.J. Beith and

        Winterton, Nicholas

        Mr. Cyril Smith.

        NOES

        Abse, Leo

        Fernyhough, Rt Hon E.

        Marquand, David

        Allaun, Frank

        Flannery, Martin

        Marshall, Dr Edmund (Goole)

        Anderson, Donald

        Fletcher, Raymond (Ilkeston)

        Marshall, Jim (Leicester S)

        Ashley, Peter

        Fletcher Ted (Darlington)

        Mason, Rt Hon Roy

        Ashley, Jack

        Foot, Rt Hon Michael

        Meacher, Michael

        Ashton, Joe

        Ford, Ben

        Mellish, Rt Hon Robert

        Atkins, Ronald (Preston N)

        Forrester, John

        Millan, Bruce

        Atkinson, Norman

        Fowler, Gerald(The Wrekin)

        Miller, Dr M.S.(E Kilbride)

        Bagier, Gordon A.T

        Fraser, John (Lambeth, N'w'd)

        Miller, Mrs Millie (Ilford N)

        Barnett, Guy (Greenwich)

        Freeson, Reginald

        Mitchell, R.C (soton, Itchen)

        Barnett, Rt Hon Joel (Heywood)

        Garrett, John (Norwich S)

        Molly, William

        Bates, Alf

        Garrett, W.E.(Wallsend)

        Moonman, Eric

        Bean, R. E.

        George, Bruce

        Morris, Alfred (Wythenshawe)

        Benn, Rt Hon Anthony Wedgwood

        Gilbert, Dr John

        Morris, Charles R. (Openshaw)

        Bennett, Andrew (Stockport N)

        Ginsburg, David

        Mullley, Rt Hon Frederick

        Bidwell, Sidney

        Golding, John

        Mulley, Rt Hon Frederick

        Blenkinsop, Arthur

        Gourlay, Harry

        Murray, RT Hon Ronald King

        Boardman, H

        Graham,Ted

        Newens, Stanley

        Booth, Albert

        Grant, George (Morpeth)

        Noble, Mike

        Boothroyd, Miss Betty

        Hamilton, James (Bothwell)

        Oakes, Gordon

        Bottomley, Rt Hon Arthur

        Hamilton, W. W (Central Fife)

        Ogden Eric

        Boyden, James (Bish Auck)

        Hardy Peter

        O'Halloran Michael

        Bradley, Tom

        Harper, Joseph

        Orbach, Maurice

        Bray Dr Jeremy

        Harrison, Walter(Wakefield)

        Ovenden, John

        Brown, Hugh D. (Provan)

        Hatton, Frank

        Padley, Walter

        Brown, Robert C.(Newcastle W)

        Healey, Rt Hon Denis

        Palmer, Arthur

        Brown, Ronald (Hackney S)

        Hooley, Frank

        Park, George

        Buchan, Norman

        Hooley, John

        Parker, John

        Buchanan, Richard

        Howell, Denis(B'ham, Sm H)

        Pavitt, Laurie

        Butler, Mrs Joyce(Wood Green)

        Hoyle, Doug (Nelson)

        Pendry, Tom

        Callaghan, Jim (Middleton & P)

        Huckfield, Les

        Perry, Ernest

        Campbell, Ian

        Hughes, Rt Hon C.(Anglesey)

        Phipps, Dr Collin

        Canavan, Dennis

        Hughes, Mark (Durham)

        Prentice, Rt Hon Reg

        Cant, R. B.

        Hughes, Robert(Aberdeen N)

        Prescott, John

        Carmichael, Neil

        Hughes, Roy (Newport)

        Price, William (Rugby)

        Carter, Ray

        Hunter, Adam

        Radice, Giles

        Carter-Jones, Lewis

        Irving, Rt Hon S (Dartford)

        Richardson, Miss Jo

        Cartwright, John

        Jackson, Colin (Brighouse)

        Roberts, Albert (Normanton)

        Castle, Rt Hon Barbara

        Jay, Rt Hon Douglas

        Roberts, Gwilym (Cannock)

        Clemitson, Ivor

        Jeger, Mrs Lena

        Robertson, John (Paisley)

        Cocks, Michael (Bristol S)

        Jenkins, Hugh (Putney)

        Roderick, Caerwyn

        Cohen, Stanley

        Johnson, James (Hull West)

        Rodgers, George (Chorley)

        Coleman, Donald

        Johnson, Walter (Derby S)

        Rooker, J.W.

        Colquhoun, Mrs Maureen

        Jones, Alec (Rhondda)

        Roper John

        Concannon, J. D.

        Jones, Barry(East Flint)

        Rose Paul B.

        Conlan, Bernard

        Jones, Dan (Burnley)

        Ross, Rt Hon W.(Kilmarnock)

        Cook, Robin F. (Edin C)

        Judd, Frank

        Rowland, Ted

        Corbett, Robin

        Kaufman, Gerald

        Ryman, John

        Cox, Thomas (Tooting)

        Kelley, Richard

        Sandelson, Naville

        Craigen, J. M. (Maryhill)

        Kerr, Russell

        Sedgemore, Brain

        Cronin, John

        Kilroy-Silk, Robert

        Selby, Harry

        Cryer, Bob

        Kinnock, Neil

        Shaw, Arnold(Ilford South)

        Cunningham, G. (Islington S)

        Lambie, David

        Sheldon, Robert(Ashton-u-Lyne)

        Cunningham, Dr J. (Whiteh)

        Lamborn, Harry

        Shore Rt Hon Peter

        Dalyell, Tarn

        Lamond, James

        Short, Rt Hon E.(Newcastle C)

        Davidson, Arthur

        Latham, Arthur (Paddington)

        Short, Mrs Renée(Wolv NE)

        Davies, Bryan (Enfield N)

        Lee, John

        Silkin, Rt Hon John(Deptford)

        Davies, Denzil (Llanelli)

        Lever, Rt Hon Harold

        Silkin, Rt Hon S.C.(Dulwich)

        Davies, Ifor (Gower)

        Lewis, Arthur (Newham N)

        Sillars, James

        Davis, Clinton (Hackney C)

        Lewis, Ron (Carlisle)

        Silverman, Julius

        Deakins, Eric

        Lipton' Marcus

        Skinner, Dennis

        Dean, Joseph (Leeds West)

        Litterick, Tom

        Small, William

        Delargy, Hugh

        Lomas, Kenneth

        Smith, John (N Lanarkshire)

        Dell, Rt Hon Edmund

        Loyden, Eddie

        Snape, Peter

        Dempsey, James

        Luard, Evan

        Spearing, Nigel

        Doig, Peter

        Lyon, Alexander(York)

        Spriggs, Leslie

        Dormand, J. D.

        Lyons, Edward(Bradford W)

        Stallard, A.W.

        Douglas-Mann, Bruce

        Mabon, Dr J Dickson

        Stewart, Rt Hon M.(Fulham)

        Duffy, A. E. P.

        McCartney, Hugh

        Stoddart, David

        Dunn, James A.

        McElhone, Frank

        Stott, Roger

        Dunnett, Jack

        McGuire, Michael (Ince)

        Strang, Gavin

        Eadie, Alex

        Mackenzie, Gregor

        Strauss, Rt Hn G. R.

        Edge, Geoff

        Mackintosh John P.

        Summerskill, Hon Dr Shirley

        Ellis, Tom (Wrexham)

        Maclennan, Robert

        Taylor, Mrs Ann (Bolton W)

        English, Michael

        McMillan Tom (Glasgow C)

        Thomas, Jeffrey (Abertillery)

        Ennals, David

        McNamara Kevin

        Thomas, Mike (Newcastle E)

        Evans, John (Newton)

        Madden Max

        Thomas, Ron (Bristol NW)

        Ewing, Harry (Stirling)

        Mahon, Simon

        Thorne, Stan (Preston South)

        Faulds, Androw

        Marks Kenneth

        Tierney, Sydney

        146

        147

        Tinn, James

        Ward, Michael

        Williams, Alan Lee (Hornch'ch)

        Tomlinson, John

        Watkins, David

        Williams, W. T. (Warrington)

        Tomney, Frank

        Watkinson, John

        Wilson, Alexander (Hamilton)

        Torney, Tom

        Weetch, Ken

        Wilson, William (Coventry SE)

        Urwin, T. W.

        Wellbeloved, James

        Wise, Mrs Audrey

        Varley, Rt Hon Eric G.

        White, Frank R. (Bury)

        Woodall, Alec

        Wainwright, Edwin (Dearne V)

        While, James (Pollok)

        Young, David (Bolton E)

        Walden, Brian (B'ham, L'dyw'd)

        Whitlock, William

        TELLERS FOR THE NOES:

        Walker, Harold (Doncaster)

        Willey, Rt Hon Frederick

        Miss Margaret Jackson and

        Walker, Terry (Kingswood)

        Williams, Alan (Swansea W)

        Mr. John Ellis,

        Question accordingly negatived.
        9.0 p.m.
        Mr. Ray Mawby: On a point of order, Mr. Deputy Speaker. I have made inquiries in various parts of the House on the question of hot food. I was assured in a number of areas, especially those areas that normally serve the staff with hot beverages, that gas was unavailable. Therefore, not only hon. Members, but members of the staff are denied hot beverages. Upon inquiry I have found that gas supplies to the building have not been cut. All those who are engaged in strike action should at least stand up and be counted and admit that they are on strike, or work properly to enable the staff to be supplied with hot beverages and whatever else is required.
        Mr. Bob Cryer:Further to that point of order—
        Mr. Deputy Speaker (Sir Myer Galpern): Let me deal with one point of order at a time. While I do so, perhaps the hon. Gentleman could bring me in a hot cup of tea. I do not know that the Chair can help the hon. Member for Totnes (Mr. Mawby). There are no facilities available. The proper quarter to which he should address his complaints is the Chairman of the Catering Committee. If he does that I shall certainly support him, because I am feeling rather chilly sitting up here.
        Mr. Cryer: Further to that point of order, Mr. Deputy Speaker. I cannot bring you a hot cup of tea, because tea is not available. I am sure you will appreciate that this is because of an industrial dispute which is taking place. Is it in order for members of the Opposition to put forward silly and superfluous points of order which can only worsen an industrial dispute? Is it not characteristic of the sort of situation which brought this country to its knees in February 1974?
        Mr. Deputy Speaker: We must not get ourselves involved in points of order in order to generate some heat. The trouble
        148
        with points of order is that one does not know what any hon. Member will say until he has said it. It may be silly or wise. It is a matter of opinion.
        Amendment made : No. 140, in page 57, line 12, leave out 25th ' and insert 26th '.—[Mr. Joel Barnett.]
        Amendment proposed : No. 144, in page 57, line 23, leave out ' any ' and insert—

        '(a) and settlement made by will, or

        (b) any other '.—[Mr. Joel Barnett.]

        Mr. Graham Page: The amendment was not dealt with when we debated a previous group of amendments, although it was mentioned and a question was asked about it. Perhaps the Chief Secretary would be good enough to answer it now, if I repeat it.
        The amendment seeks to deal with the point about a settlement made by will, but as it is printed on the Notice Paper it seems that the words following those to be omitted apply to both (a) and (b). It may be that printing those words on another line would enable us to see it correctly. Perhaps the Chief Secretary will see that that is done, so that the latter part of paragraph 4(2) does not apply to his new line
        "(a) any settlement made by will ".
        Mr. Powell: I join in complaining of the lax drafting of the amendment, which is no doubt due to the fact that it was produced so hastily, and that it is a result of second thoughts.
        It is not good drafting that the sense of a statute should depend upon the division of a sentence by the letters "a "and" b ", or upon punctuation. The amendment will make nonsense unless (a) and (b) are treated as introducing a separation of meaning into sub-paragraph 2.
        All that was necessary in order to produce an elegant amendment, with the effect which the Government desired, was to insert, in line 12, after "settlement" the words "other than a settlement made by will ".

        149
        The amendment is an indication of the slovenly work we are bound to get if we attempt to pass a Finance Bill in the way we are doing.
        Mr. Joel Barnett: I am sorry that both the right hon. Member for Crosby (Mr. Page) and the right hon. Member for Down, South (Mr. Powell) find the drafting inelegant and slovenly. It at least does what they both want. It carries out all undertaking I gave in Committee to exclude will settlements from paragraph 4. Not being as well versed in grammar, elegance or slovenly drafting as both right hon. Gentlemen, I took advice on the matter, and I am advised that the amendment meets the objectives which we all have.
        The right hon. Member for Crosby suggested that the words
        " has already been made by another person "
        in sub-paragraph (2) would qualify (a) as well as (b). I am advised that it would he possible to produce that result only by a most perverse lay-out. That is not the case with the amendment, which I hope will be acceptable to the House.
        Mr. David Howell: If we had a proper amount of time to discuss the Bill, we should send the amendment back to the kitchen to be heated up and served again in better form. It is one more example of the unholy muddle over the Bill. We need another stage to discuss the Bill, and it looks more and more as though the next Finance Bill will provide it. In the meantime, we shall have to take it as it is.
        Mr. Barnett: The hon. Gentleman knows that he and his hon. Friends had ample opportunity to debate the Bill, and they refused to take the opportunity.
        Amendment agreed to.
        Mr. Joel Barnett: I beg to move Amendment No. 495, in page 61, line 14, at end add:
        'or, in the case of a transfer made after 5th April and before 1st October in any year otherwise than on death, at the end of April in the next year'
        Mr. Deputy Speaker(Sir Myer Galpern): With this it may be convenient to consider the following amendments to the amendment :
        Amendment (a), in line 2, leave out '1st October' and insert ' 31st December '.
        Amendment (b), in line 2, leave out ' April ' and insert September '.
        It may also be convenient to consider Amendment No. 550, in page 61, line 14, at end insert:
        ' or when the tax has been agreed in writing between the person liable to pay and the Board, or has been determined and specified in a notice under paragraph 6 above, whichever is the later '.
        Mr. Barnett: The amendment honours a Government commitment to reconsider the due date for tax on lifetime transfers and the date from which interest on that tax is to run. Together with a number of consequential amendments, it provides that in each case the date is to be the later of either six months from the end of the month in which the transfer occurs, or the 30th April following the end of the tax year in which the transfer is made. The consequential amendments increase from three to six months the time allowed for payment of tax on works of art which cease to be exempt.
        I know that this does not go quite as far as some hon. Members wanted, but it is not an unreasonable way of dealing with the matter.
        Mr. John MacGregor: As a result of the lengthy debates that we had on Schedule 4, paragraph 12 in Standing Committee we have at least this crumb of comfort. We are grateful for it, but in view of the fairly large plate of goodies that we offered the Chief Secretary we must have expected at least a slice of cake. This is an improvement, but I do not think that it goes far enough. I do not wish to delay the House for too long, but I should mention that in Standing Committee there were two main arguments for trying to get some amendment of the time in which people are to be allowed to pay the tax.
        The first main argument was that of administrative convenience. That was concerned mainly with administrative convenience for the taxpayer and his advisers, and not so much with the convenience of the Revenue. There are two main points to be made about administrative convenience. The first is that despite this change there is still a difference between the time at which the taxpayer has to deliver his accounts on chargeable transfers and the time at which payment of the tax has to be made.

        151
        Despite the Government's amendment, the only month, as I understand it, in which the taxpayer will find that he is having to deliver both his account and his tax at the same time will be April. He is allowed 12 months for the delivery of his account, but in most cases the period ranges from anything between six to 12 months—it is 12 months in the case of April—for the payment of tax. Although we pressed him on this matter in Standing Committee, the Chief Secretary still has it the wrong way round. He is asking most taxpayers to pay their tax first and to give the Revenue the information later as to the basis on which the tax has been assessed.
        The second point to be made on the administrative convenience argument is that relating to normal tax returns. The majority of taxpayers usually make only one return a year. They may now find themselves having to make one return for income and a separate return both for payment of the capital transfer tax and for their accounts for the tax. There is no other tax which involves this very hasty requirement for the payment of the tax shortly after the end of the tax year. For the capital transfer tax, and in the case of every chargeable transfer, the right hon. Gentleman is asking for about three weeks from the end of the tax year for a taxpayer to pay his tax in many cases, when in nearly every other form of tax there is a much longer period.
        Amendments (a) and (b) have been designed to try to help the situation. I realise that they are not totally neat models. I accept that there is a small drafting mistake in Amendment (b), in that it should read "2nd April" and not "1st April ". I call only say that that is due to the haste with which many of us had to draft our amendments to the Government amendment. I am sure that that is a point that applies to many other amendments. Such errors are due entirely to the lack of time that we had to draft our amendments correctly. But by the amendment we were trying to achieve in Standing Committee a situation in which a taxpayer would be given a reasonable period, between three and six months after the end of the tax year, in which to submit his return and pay his tax.
        152
        The second main argument relates to the time that it takes to value many of the assets involved in chargeable transfers. It is to that point that Amendment No. 550 relates. In Standing Committee the Chief Secretary at one point said that we had misunderstood the purpose of the tax in talking of a year of assessment. On the year of assessment the right hon. Gentleman said :
        " There is, of course, no such thing as far as capital transfer tax is concerned. Capital transfer tax is not an annual tax as such, and under the Bill as it stands it is due six months after the lifetime transfer. That is the reason for the misunderstanding about the fact that the due date for payment of tax can sometimes come before the actual return is delivered."— [Official Report, Standing Committee A, 18th February 1975 ; c. 2037.]
        But in some cases in the capital transfer tax there is a year of assessment—for example, in all the exemptions under Schedule 6 to which the £1,000 a year relates—and the Bill itself states what the year is, and also with reference to exemptions out of income.
        9.15 p.m.
        I do not think that that is a strong enough argument. It would be right still to look at the end of the year of assessment as the right date from which to begin to assess the chargeable transfer. In many cases there will be a considerable time lag before, even between the taxpayer and the Revenue, the value the asset has been agreed, and there is nothing in the Bill to allow the taxpayer to pay his tax after the valuation has been agreed. That is quite different from the situation in relation to capital gains tax, which is another capital tax and not an income tax, where the taxpayer is given the alternative of three months after the end of the year of assessment or 30 days after the assessment has been agreed with the Revenue. Some provision of that kind would also be justified in relation to the payment of the capital transfer tax.
        There is one final matter in relation to the time that it will often take to value the asset. That is the point which the Chief Secretary made in Committee when he said that under estate duty executors were given 12 months from the death to assess the tax payable and to pay it. Again we come back to the point which we have had to make time after

        153
        time to the Chief Secretary about the capital transfer tax, that the chargeable transfer in life is a totally different form of tax. There will be many cases where taxpayers will not know until the end of the year what chargeable transfer they should return and, therefore, what tax they should be paying.
        I have mentioned the exemptions—the exemption out of income and the £1,000 exemption. Now the situation has been complicated by a Government amendment, which we welcome, to give the small gifts exemption of £100. But it makes it more difficult for the taxpayer to know at what point he moves into the chargeable transfer area. There is also the question of deemed transfers, which again he will not now have to pay until 1976. Even so, there will be a complication for the taxpayer.
        Having listened to the arguments of the Chief Secretary in Committee and having re-read them and reconsidered the matter, it still seems to me that the taxpayer will be put in some difficulty if the Government insist on this early payment of tax and because he has to make his return for tax at a different point from that at which he pays the tax.
        For reasons of progress, I doubt whether the Opposition will press these amendments. But I hope that the Chief Secretary will reconsider for the next Finance Bill the valid argument that it would still be right to bring into line the point at which the taxpayer has to make his return and to pay his tax, and that this should be either three or six months after the end of the tax year in which the chargeable transfers took place, with provision for the later payment where agreement has still not been reached as to the value between the taxpayer and the Revenue, as outlined in Amendment No. 550. If the right hon. Gentleman cannot agree to do that, I hope at least that he will ensure reasonable interpretation by the Inland Revenue, when it comes to enforcing the payment of this tax from people with chargeable transfers, to take account of these arguments.
        Mr. Ridley: I do not think that these provisions are yet right. This is a very suitable candidate for the next stage of this Bill, which we understand is now to be the next Finance Bill itself. I am sure that we all look forward to another
        154
        attempt to improve this monstrous, outrageous abortion of a tax. I am prepared to debate as many Bills in a row as may be necessary to make some dint in the thick skins of Treasury Ministers.
        I want to ask what happens in the case of a very protracted valuation dispute. I heard the other day of a private company and a dispute about the valuation of shares which went on for eight years.
        What is the taxpayer supposed to do under capital transfer tax? I presume that he is to pay on some mythical value and the matter will be adjusted at a later stage.
        With life-time transfer accumulations there could be some difficulties. If the transferor had agreed to pay the tax and, after a period of years while a dispute was going on, decided not to pay, the Revenue would have recourse to the transferee for the tax. Any other transfers of value made in the meantime would suddenly attract a lower rate of tax because the transferor would go down several slices in the table as he would have made a much smaller gift eight years before. The Revenue would then have to reimburse many people who had paid tax at an inflated value because of the change of mind of the transferor.
        Will the revenue make those repayments? If so, how long will it take to make repayments of capital transfer tax to those who have overpaid? If we are to make the taxpayer hustle to pay the tax, we ought also to make the Revenue hustle to repay in cases where there has been overpayment. It seems that the interaction of the valuation clauses and the long time that it will take to make valuations in some cases, together with the short time to pay, have not been properly thought out. I hope that the Chief Secretary will have another look at this matter.
        Mr. Joel Barnett: I am very hurt by the comments made by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). I think he must be getting tired to describe my hon. Friend and myself in that way. It really is not good enough. Had I been inclined to accept the amendment, I should have been put off a bit by the hon. Gentleman talking to me in that exaggerated way.

        155
        The hon. Member for Norfolk, South (Mr. MacGregor), who usually reads his briefs on these matter very well, said that the tax could be payable within three weeks. Under our amendment, the tax could not be payable in less than six months. It is either not less than six or more than 12 months.
        Mr. MacGregor: Perhaps I should clarify the situation. I meant to say, if I did not, three weeks after the end of the tax year. I was trying to make the point that it would be much simpler for taxpayers to deal with their tax relating to the past year at the one time. The taxpayer is being asked to pay this tax and to make his assessment within three weeks of the end of the tax year, whereas in all other cases it is much longer.
        Mr. Barnett: The hon. Gentleman knows that under our amendment he would have rather longer than that. The taxpayer would have a minimum of six months.
        The hon. Member for Cirencester and Tewkesbury gave us an example of a protracted dispute. I hope that the hon. Gentleman is listening. It does not really matter, because he can read it in Hansard. If there is a dispute, the Revenue cannot enforce payment while the first appeal is pending. That is dealt with in Paragraph 21, sub-paragraphs (1) and (2).
        I assure the hon. Member for Norfolk, South that the Inland Revenue will always give a reasonable interpretation of these matters, as it does with all taxes. I hope that the hon. Gentleman will agree that the amendment goes a long way to meet the points made in Committee. I hope, therefore, that it will be acceptable to the House.
        Amendment agreed to.
        Amendments made : No. 797, in page 61, line 19, at end insert :
        ' (2A) So much of the tax chargeable on the value transferred by a chargeable transfer made within three years or, as the case may be, one year of the death of the transferor as—

        (a) exceeds what it would have been had the transferor died more than three years after the transfer ;

        (b) is tax for which, by virtue of section 26(2A) of this Act, only a charity or only a political party is liable ;

        shall be due six months after the end of the month in which the death occurs '.
        No. 148, in page 61, line 20, after '32', insert :
        or (conditional exemption for certain buildings, etc. on death)'.
        No. 149, in page 61, line 20, after Act ', insert :
        or paragraph 2 of Schedule (Relief for woodlands) to this Act '.
        No. 496, in page 61, line 21, leave out three ' and insert six '.
        No. 787, in page 62, line 37, after ' 4 ', insert 6(2), 12 or 14 '.
        No. 801, in page 62, line 46, at end insert :
        '(aa) references to the time six months after the end of the month in which that date falls were references to the time when the tax would be due if it were not payable by instalments ;
        No. 788, in page 62, line 47, at end insert :
        'or, if the transfer is made under paragraph 6, 12 or 14 of Schedule 5 to this Act, to the trustees of the settlement '.
        No. 789, in page 63, line 33, after entitled ', insert in possession '.
        No. 790, in page 63, line 33, at end insert :
        '(except in a case where no individual is so entitled) '.
        No. 791, in page 64, line 27, after 4 ', insert 6(2), 12 or 14 '.
        No. 802, in page 64, line 35, leave out from to ' to end of line 36 and insert :
        ' the time six months after the end of the month in which the death occurred were references to the time when the tax would be due if it were not payable by instalments ; and '.
        No. 154, in page 64, line 49, at end insert :
        ' 14A. Tax chargeable on such a chargeable transfer as is mentioned in paragraph 4 of Schedule (Relief for woodlands) to this Act may, if the person paying the tax by notice in writing to the Board so elects, be paid at his option either by eight equal yearly instalments or by sixteen equal half-yearly instalments, of which the first shall be payable six months after the end of the month in which the transfer is made '.
        No. 155, in page 65, line 3, at beginning insert (a)'.
        No. 156, in page 65, line 5, after 'business ', insert :
        'or
        (b) is payable by instalments under paragraph 14A above '.
        No. 157, in page 65, line 27, leave out (1) ' and insert (1)(a) '.
        No. 792, in page 65, line 34, at end insert:
        '(5A) The reference in sub-paragraph (5) above to the same transferor includes, in relation to chargeable transfers which are made under paragraph 6, 12 or 14 of Schedule 5 to this Act, the assumed transferor referred to in paragraph 6(4) of that Schedule'.
        No 161, in page 66, line 37, after '32(4)', insert:
        ' or subsection (6) of section (conditional exemption for certain buildings, etc. on death)'.
        No. 803, in page 66, line 39, leave out 'any' and insert:

        '(a) an amount of tax charged on the value transferred by £ chargeable transfer made after 5th April and before 1st October in 1975 or any later year and otherwise than on death remains unpaid after the end of the period ending with April in the next year ; or

        (b) an'.

        No. 804, in page 66, line 40, leave out 'a' and insert 'any other'.—[Mr. Joel Barnett.]
        Mr. Deputy Speaker: With the permission of the House, I will put the question on the next batch of amendments together—No. 805, No. 162, No. 806 and No.798.
        Mr. Nott: I am sorry to interrupt you, Mr. Deputy Speaker, but I must say that this is the most impossible Finance Bill that has ever been presented to the House. Would you be so kind as to ask whether the Government will let us know on which page of the Notice Paper these Government amendments appear so that we can keep pace with what is going on? The Government have tabled hundreds of amendments—[Interruption.] They are on the Notice Paper, but it would greatly convenience the House if the Chief Secretary, when he believes an amendment to be a major one, would let us know on which page of the Notice Paper it appears. When we last debated the Bill the Government had tabled a manuscript amendment only an hour before it was read out and moved by the Government.
        Mr. Deputy Speaker: I think that I can help the hon. Gentleman. I will give the page numbers. On page 847—Amendments Nos. 805, 162, 806.
        Amendments made: No. 805, in page 66 line 43, leave out ' if ' and insert (c)'.
        No. 162, in page 66, line 44, after ' Act ', insert :
        ' or paragraph 2 of Schedule (Relief of woodlands) to this Act '.
        No. 806, in page 66, line 45, leave out ' three ' and insert six '.— [Mr. Joel Barnett.]
        Mr. Deputy Speaker: On page 848, Amendment No. 798.
        Amendment proposed, No. 798, in page 67, line 3, at end insert:
        ' (1A) Sub-paragraph (1) above shall apply in relation to tax for which, under section 26(2A) of this Act, only a charity or only a political party is liable, and in relation to such an excess as is mentioned in section 27(3A) of this Act, as if the chargeable transfer had been made on the death of the transferor. '.— (Mr. Joel Barnett.]
        Mr. Nott: Perhaps the Government would like to explain a little to us about the amendment. I thought I heard the Chief Secretary saying a few moments ago—I say this with the best of humour—that it should be easy enough to follow these matters. We will be patient with the Chief Secretary. We are in very good humour about this. We will wait. We should like to hear what the amendment is about.
        Mr. Joel Barnett: It is exactly as set out on the Notice Paper.
        Mr. Deputy Speaker: I hope that the hon. Gentleman is satisfied with that explanation. The Question is—
        Mr. Ridley: I am not quite satisfied with the explanation of what the amendment does.
        Mr. Joel Barnett: Perhaps I can help the hon. Gentleman. It is possible that the hon. Gentleman has not read all the others. This amendment is consequential upon the others.
        Mr. Ridley: I have on a previous occassion had to mimic a Treasury Minister answering a debate on an amendment. I should hate to do that again at this more serious and august stage of the Bill. The Chief Secretary, if he is challenged by my hon. Friend the Member for St. Ives (Mr. Nott) to say what the amendment seeks to do, should be able to do this. He has a very large number of folders on the bench. I notice with horror and consternation that they are bright red. Surely amongst all those papers there is just one piece of paper which will tell the right hon. Gentleman what the amendment seeks to do.
        Mr. Joel Barnett: I thought I told the hon. Gentleman. He cannot have been listening. I told him that this amendment was consequential upon Government amendments, which perhaps he had not read, providing reduced rates of tax for lifetime transfers and unlimited exemption for lifetime gifts to charity and to political parties. This is perfectly understandable. If the hon. Gentleman had read the amendment clearly he would have seen that it was consequential upon the others.
        Amendment agreed to.
        Amendment proposed: No. 165, page 72, line 11, leave out 'he' and 'insert' that other person'.—[Dr. Gilbert.]
        9.30 p.m.
        Mr. Graham page: May I have an explanation of this amendment? In fact, I think I can probably explain it to the Chief Secretary if he has not got the explanation handy. This is a very import amendment. The right hon. Gentleman may have the explanation in his head. He certainly did not have the last one in his head.
        This is a case in which a person is required to inform the Board of Inland Revenue if he happens to know of an error made by any other person. I presume that this is just a matter of drafting. This is one of what we have labeled the snooping provisions. It is most extraordinary. If a piece of paper happens to blow over one's garden wall and one reads it, to discover that someone else has not disclosed something by way of tax, a duty is imposed on the reader of that piece of paper to report the fact to the Board of Inland Revenue, and one suffers a penalty for not doing so.
        This is a provision of the utmost width. The public ought to realize what is being done, which the Chief Secretary has said is necessary, because of this entirely new tax imposed on the public. If the Chief Secretary is prepared to give the reason for amending what he first put in the Bill, the House might allow him to have this amendment.
        Mr. Joel Barnett: I am surprised at the right hon. Gentleman for getting so excited about these points at this time of night.
        This amendment relates to paragraph 30, which deals with the situation where
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        information furnished to the Revenue for capital transfer tax purposes is afterwards discovered to have been incorrect in some material respect. Subparagraph (1) applies where the person who discovers the error is the same person as supplied the information in the first place. The right hon. Gentleman will recall that we had a little discussion about the interpretation of this paragraph in Committee. In fact, it went on at some length.
        Subparagraph (2) deals with the case where the person who discovers the error is a person liable for tax to which the information was relevant but is not himself the one who provided the information in the first place. Those who were present or who have read Hansard will recall that there was some confusion about the interpretation, and I promised to look at it to see whether I could clarify the matter.
        The present amendment deals with what was thought to be an ambiguity in subparagraph (2) which has apparently contributed to a misunderstanding of the scope of the provision. I hope the amendment leaves no further misunderstanding of the sort which gave rise to the stuff that we had in Committee, and which the right hon. Gentleman has given us again, about snoopers. I see that he is smiling. He knows it is a lot of rubbish. I hope the amendment will clarify the matter beyond doubt.
        Amendment agreed to.
        Amendment made: No. 166, in page 75, line 23, at end insert:
        '41 A. Section 44(3) of the Finance Act 1950 and section 3(3) of the Finance Act (Northern Ireland) 1951 (certificate of prospective amount of estate duty) shall, notwithstanding their repeal by this Act, have effect with the necessary modifications in relation to tax for which trustees of a settlement may become liable under section 25(6) of this Act'.—[Dr. Gilbert.]

      Schedule 5

        SETTLED PROPERTY
        Amendments made: No. 168, in page 76, line 45, leave out from beginning to
        ', and' in line 47 and insert:
        ' In the application of this Schedule to Scotland, any reference to an interest in possession in settled property is a reference to an interest of any kind under a settlement actually being enjoyed by the person in right of that interest'.
        No. 169, in page 77, line 20, at end insert:
        ' (2) In determining whether property comprised in a settlement which became so comprised before 10th December 1974 is excluded property section 43 of this Act shall be disregarded.'
        No. 170, in page 77, line 36, at beginning insert :
        'The Treasury may from time to time by order made by statutory instrument prescribe a higher and a lower rate for the purposes of this paragraph ; and '
        No. 171, in page 77, line 42, leave out from amount ' to but ' in line 3 on page 78, and insert:

        '(a) shall, if tax is chargeable by reference to the value of that part, be taken to be not less than it would be if the property pro. duced income at the higher rate so prescribed ; and

        (b) shall, if tax is chargeable by reference to the value of the remainder, be taken to be not more than it would be if the property produced income at the lower rate so prescribed ;

        No. 172, in page 79, line 7, at end insert :
        ' (5A) If the interest comes to an end and on the same occasion the settlor's spouse becomes beneficially entitled to the settled property, then if—

        (a) the settlor's spouse is then domiciled in the United Kingdom and resident (within the meaning of the Income Tax Acts) in the United Kingdom in the year of assessment in which the interest comes to an end ; and

        (b) neither the settlor nor the settlor's spouse had acquired a reversionary interest in the property for a consideration in money or money's worth ;

        tax shall not be chargeable under this paragraph '.
        No. 173, in page 79, line 16, leave out ' 26th ' and insert 27th '.
        No. 175, in page 79, line 35, at end insert :
        ' unless the transaction is such that, were the trustees beneficially entitled to the settled property, it would not be a transfer of value '.
        No. 179, in page 81, line 6, at end insert :
        ' unless the transaction is such that, were the trustees beneficially entitled to the settled property, it would not be a transfer of value '.
        No. 180, in page 81, line 15, at end insert :
        'and the appropriate Table for the purposes of those paragraphs (including the calculation of any tax that would have been chargeable as mentioned in paragraph 7(2)(a) below) is
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        the Second Table set out in section 35(2) of this Act '.
        No. 181, in page 81, line 16, at beginning insert :
        ' The reference in sub-paragraph 4(a) above to the tax payable on a capital distribution does not include any tax which is payable by a person to whom a distribution payment is made ; and '.
        No. 182, in page 81, line 19, at end insert :
        '(5A) Notwithstanding sub-paragraph (1) above, a distribution payment which is made to the settlor or the settlor's spouse shall not be a capital distribution if the settlor or, as the case may be, the settlor's spouse is domiciled in the United Kingdom at the time the payment is made and resident (within the meaning of the Income Tax Acts) in the United Kingdom in the year of assessment in which it is made '.
        No. 183, in page 81, line 19, at end insert:
        '(6) Sub-paragraph (2) above shall not be taken to apply in the case of a person who, on surviving another person for a specified period, becomes entitled to an interest in possession as from the other person's death '.
        No. 184, page 81, line 19, at end insert :
        ' (7) Where a person entitled to an interest in possession in part of the property comprised in a settlement became so entitled as a member of a class, sub-paragraph (2) above shall not apply on his becoming entitled, as such a member, to an interest in possession in another part of that property, if he becomes so entitled on the death under full age of another member of that class.'
        No. 185, in page 82, line 8, leave out 26th ' and insert 27th '.
        No. 187, in page 82, line 18, leave out 25th ' and insert 26th '.
        No. 189, in page 83, line 13, leave out 25th and insert 26th '.
        No. 191, in page 83, line 40, after for ', insert paragraph 17B(2) below or '
        No. 192, in page 83, line 42, leave out 26th ' and insert 27th '.
        No. 194, in page 83, line 47, after for ' insert paragraph 17B(2) below or '.
        No. 195, in page 84, line 37, at end insert :
        'or, if the following conditions are satisfied, an interest in possession to which a company is beneficially entitled, the conditions being—

        (a) that the business of the company consists wholly or mainly in the acquisition of interests in settled property ; and

        (b) that the company has acquired the interest for full consideration in money or

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        money's worth from an individual who was beneficially entitled to the interest '.—[Dr. Gilbert.]

        Dr. Gilbert: I beg to move Amendment No. 196, in page 85, line 43, leave out ' January 1976' and insert ' April 1980 '.
        Mr. Speaker: With this it will be convenient to take the following amendments:
        No. 197, in page 86, line 8, leave out ' twenty ' and insert ' forty '.
        No. 430, in page 86, line 8, leave out ' twenty ' and insert ' fifty '.
        No. 198, page 86, line 15, and the sub-amendments thereto.
        No. 609, in page 87, line 3, at end insert :
        ' (5) For the purposes of this paragraph it shall be assumed that a beneficiary will become entitled to, or to an interest in possession in, settled property on or before attaining the age of 25 years if such is the effect of the trusts of the settlement for the time being in force notwithstanding that those trusts may be altered by the exercise of a power of appointment or otherwise'.
        Dr. Gilbert: We have material here for a fairly long debate, and I do not know how long hon. Members wish to take on this group of amendments. However, I ought to report to the House a matter which I have already communicated to the hon. and learned Member for Dover and Deal (Mr. Rees), arising from a question which he raised in Standing Committee. The passage is to be found at cols. 1966–7 of the Official Report of 17th February.
        The hon. and learned Gentleman asked what would need to be the date of the relevant transfer to give rise to a charge to tax some time during the coming year, 1976. It seemed to us at that time that the wording of the question was not precise, but in retrospect I think that it is clear enough from the context that the information which the hon. and learned Gentleman was seeking was in answer to this question: which trusts with nonresident trustees will be unaffected by the postponement of the first relevant anniversary for the periodic charge—and will these have to pay the annual charge in the calendar year 1976—and which will have payment of their first annual charge deferred?
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        I hope that I have construed the hon. and learned Gentleman's question correctly. I see that I have, and I am grateful for his acknowledgement.
        The full answer is that the annual charge would be payable in the calendar year 1976 if the relevant transfer arose in the period between 1st April 1970 and 31st December 1975, or at appropriate dates at 10-year intervals before those dates. There would be no annual charge in the calendar year 1976 where the relevant transfer was in the period between 31st December 1965 and 31st March 1970, or, again, at appropriate dates in the previous decades.
        The effect of this is that the postponement of the date of the first relevant anniversary for the periodic charge will defer the date on which the annual charge becomes payable for trusts which would have had an anniversary date of 1st January 1976 to 31st March 1980, but will not give rise to a deferment of the first annual charge for trusts with anniversary dates from 1st April in year zero of the decade to 31st December in year 5 of the decade.
        I apologise if I inadvertently misled the Committee. It is a rather technical point, and I hope that what I have just said will clarify the matter.
        Mr. Peter Rees: I am sure that I speak for the whole House when I say that we are grateful for the Financial Secretary's pellucid statement, which will, no doubt, give wide satisfaction and clarification both within and outside the House.
        We now approach Schedule 5, which deals with the whole web of fiduciary relationships and interests under settlements. With a great economy of verbiage, we disposed of the whole of Schedule 5 in Standing Committee between four o'clock one afternoon and half-past eight the next morning. I do not think that even the hon. Member for Luton, West (Mr. Sedgemore), whose imagination is sometimes a little feverish—if I may say that in his absence, though I am sure that his hon. Friends the Members for Keighley (Mr. Cryer) and for Bolsover (Mr. Skinner) will defend his reputation, honour and interest should I unwittingly trench upon them—will complain that on that occasion and on those matters the Opposition were filibustering.

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        The measure of the complexity of this schedule is evidenced by the fact that on between 20 and 30 points which we drew to the attention of Treasury Ministers the Financial Secretary, with his customary urbanity and insight in these detailed matters, agreed to take the matter away for further thought. Some of those points have come back, but a great number have not.
        Some hon. Members, mainly to be found on the Government benches, would say that in our society in the latter half of the twentieth century there is no place for settlements—that fiduciary relation. ships and interests under trusts are outworn trappings of a feudal age. I hope that I have picked the right phraseology, though it is not phraseology with which I have much sympathy, for the fact is that most settlements were devised long after the end of the feudal era.
        I have no doubt that there are hon. Members on the Labour benches—perhaps even the hon. Member for Keighley (Mr. Cryer), to whom I judge that I am not doing an injustice, having heard his interventions—who would think that this whole question could have been disposed of by a one-clause Bill which merely said that henceforth all property should be vested in the State. There might have to he a complicated schedule dealing with the administrative arrangements, but I have no doubt that the hon. Gentleman and the Financial Secretary would be well capable of exposing and expounding the complexities of such a schedule. I do not believe that such a Bill would commend itself to the country. We are entitled to ask what the Chancellor's long-term objectives might be, and this is an appropriate point at which to ask that question.
        Mr. Robert Adley: I do not wish to steal my hon. and learned Friend's thunder, for which he has become rightly famous in the last few days. While he is putting that question to the Chancellor, however, will he consider whether the right hon. Gentleman should now or at some time tell us just how far his former membership of the Communist Party influences his thinking in these matters.
        Mr. Rees: It was perceptive of my hon. Friend to have raised that question, because it is right that the country should know the cast of mind of those who
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        preside over its destiny. I do not think any of us is impugning the loyalty or good faith of the Chancellor, and if I were to seek to do so I am sure that you would call me sharply to order, Mr. Speaker, and I would be the last to want to expose myself to your rebuke. We are, however, entitled to ask about and analyse the thought processes of those who take major decisions on our behalf. This is a point upon which I shall hope to touch further in my brief intervention.
        Mr. Dennis Skinner: Like the hon. Member for Epping Forest (Mr. Biggs-Davison)?
        Mr. Rees: The hon. Member for Bolsover (Mr. Skinner) is quite entitled to probe and lay bare our innermost thoughts, aspirations and ambitions. We must leave the country to judge how far we are doing it justice in what we are seeking to achieve. The hon. Member has made a comment about one of my hon. Friends, and I believe that my hon. Friend can look after himself, but the comment is not particularly germane to the points I wish to raise about the schedule. No doubt if the hon. Member catches your eye, Mr. Speaker, he will be able to explore the question he raises.
        I recall to the House that in his period as Secretary of State for Defence the Chancellor committed us to seven defence reviews, and he is therefore well versed in what are colloquially called "salami tactics ". It may be that we are gradually approaching the situation of the one-clause Bill, where all property is to he vested in the State. We have not quite reached that position in this Bill, but we are entitled to judge the Bill against that background.
        I recall—because, Mr. Speaker, possibly like you, I read my copy of The Times this morning—that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) detected as one of the Chancellor's prime political qualities a "brutal cleverness ". Of course it always takes a candid friend to expose us for what we are to the audience of the country. It may be that a brutal cleverness is what Mr. Shelepin required to carry him to the head of the KGB, but I wonder whether that is the quality which the country requires of its Chancellor of the Exchequer.

        167
        I shall leave the right hon. Member for Sparkbrook to explore that point, because it was he who made it. It is unfortunate that I should have to discuss the Chancellor in his absence, but since he is nominally piloting the Bill through the House, no doubt my remarks will be retailed to him and no doubt, as on Thursday, he will come in very quickly if he feels that his honour and motives have been impugned. That, of course, is far from my intention this evening, as it was on Thursday.
        9.45 p.m.
        It was a Government pronouncement that settled property was not to be treated any more harshly than property held by an individual absolutely and beneficially. That would be a very correct proposition. Indeed, as one ploughs deeper into the Bill—I use the word "ploughs" advisedly, because one has to plough very deeply to get its inwardness at times —one realises what discrimination there has been against those who have an interest in a settlement against property held by trustees. One asks oneself why this should be. It would not be putting it too highly to say that over a generation this tax will kill off settlements.
        I would only remind the House of that poignant line in the Ballad of Reading Gaol :
        " Yet each man kills the thing he loves ".
        There we have it : obviously the Chancellor really loves settlements. He has the heart of a Chancery lawyer ; not the head. His heart is in Lincoln's Inn, but his head, steeped in the subtleties of dialectical materialism, rests in Highgate Cemetery, alongside Karl Marx.
        I hope that I have not taken too much of the time of the House with a few general observations, but it is right that we should view this provision in its broad context and in its setting against the whole background of this odious tax. I now come to one or two technical matters. Technical, I describe them, but their impact is brutal. Knowing the Financial Secretary's warm heart and the sensitive way in which he responded to our overtures in Committee, and his keen interest in the technicalities of the Bill, I should like to put them to him.
        First, he will recall that in Committee I raised what I called, in a kind of legal
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        shorthand the commorientes. This is the case, often encountered in practice, of a person leaving property to, say, his widow if she survives him for a month. It is the kind of case where both are involved in, say, a motor accident and, under the presumptions of the law, the younger is presumed to have survived, if for only a fraction of time, the death of the other. The words often used are: "I leave to my widow, if she should survive me by one month, my property ".
        Under the Bill as originally drawn that would have involved two charges to the capital transfer tax, one on the death of the husband and a second on the death of the wife. The Financial Secretary saw the force of the objections from our side of the Committee to that arrangement, and I notice that in response to our overtures he has put down Amendment No. 183.
        I ask him to have a further look at that amendment, because, although I recognise his warmth of heart, I am not absolutely confident that he has grasped the technical details. I hate to accelerate the pace of the debate, because I should like to give the Financial Secretary time to receive the timely support and sustenance that he always receives from the Official Box in the course of our debates on these technical matters. I pay tribute to the ready and speedy way in which slips of paper come down like confetti on the devoted head of the Financial Secretary. On this occasion more than one piece of paper may have to be passed to him.
        I ask him to look again at Amendment No. 183, because it seems to proceed on the premise that interest given to the survivor at the expiration of the specified period relates to the date of death. That may be so in some cases, but it is not true in all. He has an interest contingent upon his surviving for a specified period, and the interest, even if survivorship takes place, does not relate back to the date of death. Amendment No. 183 will not achieve the purpose which I hope the Financial Secretary intends and which was very much in my mind when I drew his attention to this point during our epic debates on that long night.
        The second point, which is again of a slightly technical nature, relates to class gifts, and this again I raised in Committee, and again I assume, in response to

        169
        our overtures, the Financial Secretary has put down Amendment No. 184. I am sorry that the point is of such a technical nature that the hon. Member for Bolsover should lose his appetite for our debates.
        Mr. Dennis Skinner:Not yet.
        Mr. Rees: We shall welcome his intervention later.
        It is true that the Financial Secretary has covered the case where there is a possible charge when a member of a class dies so that his interest passes to the surviving members of the class, but what happens when someone is born after a person has achieved an interest in a trust fund, but only a defeasible interest, so that in part his interest is defeated by a subsequent birth? If the Financial Secretary is prepared to cover the one point he should be prepared to cover the other, and I hope that he will look again at Amendment No. 184.
        I am conscious that I am going into the schedule in a certain amount of depth—
        Mr. Speaker: Order. I am getting a little troubled. I thought that the House had passed Amendment No. 184.
        Dr. Gilbert: And Amendment No. 183.
        Mr. Speaker: I do not think that we can job back to that extent.
        Mr. Rees: I am grateful for your guidance Mr. Speaker, but I am not seeking to go back. I am merely pointing out that the amendments have not completely covered the points put to the Financial Secretary in Committee, and I have no doubt that he will wish to advance from Amendments Nos. 183 and 184. The point I am making is relevant, because, unless we get some assurance from the Financial Secretary on this matter, many people will be disposed to alter their settlement and take advantage of the amendment which we are debating even though a penalty is imposed. But if some kind of assurance were forthcoming that would not be necessary. I hope that on that basis, Mr. Speaker, you will regard me as being within order.
        Then I come to maintenance and accumulation settlements. These are very
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        much within the scope of the Government amendment, because unless they are covered by paragraph 14 they are settlements which are treated as not having an interest in possession, and if that is so they are subject to this swingeing periodic charge which bears particularly hardly on settled property.
        As I said in Committee, most maintenance and accumulation settlements are subject to some overriding power of appointment, so it cannot be said that a person on achieving a specified age will achieve a vested interest in possession. I say that he may achieve it. The Financial Secretary does not seem to have taken that point on board, because he has not cured that difficulty. Indeed, there is another provision which may vitiate the whole point of Amendment No. 609 and may deprive any maintenance and accumulation settlement of any relief. I hope that the Financial Secretary will address himself to this.
        The Financal Secretary, with his deep knowledge of this matter, will recall Section 32 of the Trustee Act, which allows trustees to advance part of a settled property in favour of persons who may not have an immediate interest in possession. They can override the life interest only with the consent of the life tenant.
        Let us assume a case in which a person is given an interest contingent on his attaining the age of 25. Between 18 and 25 he could consent to appointment in advance by the trustees under Section 32 which would override his interest. In that kind of case it could not be said with certainty that the beneficiary would obtain a vested interest. The Financial Secretary has not chosen to deal with that. Unless he does, it means that the relief given by Schedule 5 will be practically valueless. I hope that the Financial Secretary will look once again at that point.
        Next I come to the question of the assignment by a life tenant of his interest for value. Owing to a peculiarly unfortunate definition of an interest in possession, if a life tenant, an individual, had assigned his life interest to a reversionary company or an institution under the Bill as originally drawn that would not have counted as an interested possession and there would have been a periodic charge.

        171
        Again, the Government have partially responded to the arguments we put forward in Committee, but only where an interest has been assigned to a company whose main business it is to acquire reversionary interests. That is a very narrow range of companies. I call to mind only two or three which embark wholly or mainly on that type of business. A great number of life tenants assign their life interests to institutions or insurance companies. They will be excluded from the relief afforded by the amendment. Again, I ask the Financial Secretary—knowing the sympathetic way in which he views these matters which we have turned up in an unpartisan spirit—to give us some assurances on that matter. I recognise that at this late stage in the debates it may be impossible for him to give more than a verbal assurance. But we have the exhilarating prospect that within a matter of weeks we shall be coming back to these matters and it would foreshorten our debates if the Financial Secretary would give us some generous assurances now.
        Finally on my technical points, I come to the position of settlements in foreign resident trustees. One of the harshest and least-thought-out provisions is the one that seeks to saddle a settlor with the liability for the periodic charge that may arise in that situation. There must be numberless cases in which a settlor who set up his settlements when he was domiciled and resident abroad comes to these shores, whether for a job or another purpose and divests himself of the settlement which he has set up in foreign resident trustees. Apparently, he is to be saddled with the liability for the periodic charge on that settlement. He may have completely divested himself of that property and have no resources to meet that charge. I cannot believe that the Financial Secretary wants to achieve that, and I hope that lie will go back to that point.
        I come now to Amendments Nos. 196 and 198, which are in response to overtures in Committee and are designed to permit people to rearrange their settlements so that they are no longer discretionary settlements where there is not an interest in possession designed to permit them to appoint life interests or absolute interests and there would not
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        be this swingeing periodical charge. I am glad that the Financial Secretary realised how harsh the position might be, but the remedial amendments he seeks to introduce do not go nearly far enough. If discretionary settlements are socially undesirable, instead of some residual penalty as there is under Amendments Nos. 196 and 198 there should be positive encouragement. Why is there any charge at all? Why should not the trustees be entitled to appoint out of discretionary settlements an absolute or life interest without any penalty whatever?
        10.0 p.m.
        We drew the Financial Secretary's attention to the difficulty of piloting through the Chancery Division the many appointments and variations that might be necessary. He took that point on board and we are grateful. I point out that in the original White Paper, which has been subject to the closest scrutiny, like the texts of the early Fathers, there was absolutely no mention of the likelihood that there would be any charge if an interest in possession was created out of a settlement where there was no interest in possession. In reliance on that I am informed by people outside who are conversant with these matters that many appointments were made last year. Is it fair that those appointments should be retrospectively saddled with a measure of capital transfer tax?
        For the future, people are on notice. They will have to make a calculation as to whether it is right to pay the penalty which the Financial Secretary seeks to exact or whether they should leave their settlements in their existing form and pay the periodic charge. I believe that these amendments, although right in principle, are shot through with a touch of meanness which has characterised this Bill throughout.
        The capital transfer tax has been justified on many occassions by many Government spokesmen in these terms. They suggest that it is only perfecting the estate duty introduced by Sir William Harcourt in 1894. They say that estate duty was an avoidable tax and, as though they were carrying on the great work of that notable Liberal Chancellor, they are deciding to plug the loopholes, which, had he envisaged them, he would undobtedly have done 80 years ago.

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        There is apparently a virtue in repetition. I have heard the same theme from the Chancellor, the Chief Secretary and the Financial Secretary. I have even heard a noble Lord sing this theme. This is obviously the hard selling line. I tell the Chancellor and his colleagues that the mere assertion of something that is quite inaccurate does not make it true. I have searched the debates of 1894 in vain for any suggestion that Sir William Harcourt intended to impose a tax on lifetime transfers.
        Anyone conversant with the 1894 Finance Act will notice that there was to be only one charge on settlements—when they were set up—and that they were to be free from charges thereafter. This tax involves an entirely novel departure. It is a travesty of language to say that the old estate duty should have been put right because there were so many loopholes in it. It was never designed
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        to catch lifetime gifts. If it were, no doubt, three, if not four, Labour Governments who were charged with the administration of the tax would have put it right.
        I cannot believe that the Chancellor, whom we know from our exchanges to be, underneath his gruff exterior, a man of exquisite sensitivity, really believes that the epitaph on his tomb should be :
        " As Chancellor of the Exchequer he used his considerable powers to extract howls of anguish from his compatriots."
        I do not believe that is how he would like to be remembered by his sorrowing countrymen. There is always time for a death bed repentance. We shall not think the less of him if he comes in sackcloth and ashes and attends, for a moment, our debates on Schedule 5. He can emphasise his sensitivity, perhaps even his change of heart, by accepting our amendment.
        Dr. Gilbert: It is difficult to debate a group of amendments when most of the discussion on them has taken place on provisions which have already been passed by the House. However, I shall attempt to cast my mind back to some of the points raised by the hon. and learned Member for Dover and Deal (Mr. Rees). I think that it is right to comment briefly on some of his more general animadversions on our attitudes to trusts.
        The Government have no bias against settled property, and indeed we have no bias against discretionary settlements. My colleagues and I made that clear time after time in Standing Committee. We made clear that discretionary settlements in many cases are a beneficial social instrument.
        Mr. Cormack: The light has dawned.
        Dr. Gilbert: If the hon. Member for Staffordshire, South-West (Mr. Cormack) had been in the Standing Committee, he would have known that I said that time after time. Therefore, there is an excuse for the hon. Gentleman. However, there is no excuse for the hon. and learned Member for Dover and Deal who obviously in Standing Committee was not listening. However, he could have read what I said afterwards.
        We made it clear that we constructed this tax without any prejudice whatever against discretionary settlements. We recognise that in a great many circumstances they can be useful social instruments. We have never made it part of our case that discretionary settlements were set up primarily or exclusively for tax avoidance purposes. We have said that we see no reason to continue the incredible tax privileges enjoyed by discretionary settlements.
        The hon. and learned Gentleman appeared to suggest that if the result is to be an end to discretionary settlements it must follow that the vast majority of discretionary settlements have been set up for tax reasons. I do not accept that argument. I am not nearly so pessimistic about the future of discretionary as is the hon. and learned Gentleman. But all we have tried to do is to create a regime by which, as a result of the operation of the periodic charge, there will be, once every
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        30 years or so, the equivalent of a charge when free property is transferred from one generation to another. We have therefore made provision for offsets where chargeable occasions have arisen from discretionary trusts backwards to the two previous periodic charges. Such matters are subject to the amendments within this group but, as the hon. and learned Gentleman did not refer to them, I take it that he considers them to be of minor importance.
        I was asked how far Government Amendment No. 183 went. That amendment covers a situation where a testator gives his estate to a beneficiary. If that beneficiary survives for a certain period, as is commonly found in wills, that period of survival may be as short as seven days, but is commonly of the order of one month. The exact effect of the provision will depend on the words used. But in general terms there is no interest in possession created until that period which has been laid down in the will has expired. The result is that a tax charge would arise under paragraph 6(2) of the Schedule. It would be excessive to retain this charge in addition to the normal tax charge on the testator's estate on his death. Our amendment No. 183 was tabled to remove it.
        Our amendment also covers a situation in which the testator gives his estate to a beneficiary if he survives for, say, a month, when the gift takes effect at the end of the period. The gift includes any income for that period. Therefore, the beneficiary can then be regarded as having an interest in possession from the death of the testator.
        Mr. Peter Rees: I do not think that the hon. Gentleman has entirely grasped the point I was making, in that in most clauses of that kind the survivor does not become entitled to an interest in possession as from the other person's death. He becomes entitled as from the end of the specified period—not in every case, but in most cases. I should be grateful if the hon. Gentleman would address his mind to that point.
        Dr. Gilbert: I am not sure that I agree with the hon. and learned Gentleman. Is he saying that it would normally be from a specified date or !from the death of the

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        testator? As I understand it, most settlements are drawn in respect to a given period after the death of the testator.
        Mr. Peter Rees: The point is one of some legal subtlety. Perhaps the hon. Gentleman will wish to have assistance from one of the Law Officers. In most such cases that I have seen, the interest toes effect only from the end of the specified period for which the person must survive. The survivor takes his interest not retrospectively from the death but from the end of the period. I hope that I make the position absolutely clear. Perhaps the hon. Gentleman would care to take advice so that the House may be enlightened by a Law Officer.
        Dr. Gilbert: I certainly take the hon. and learned Gentleman's point on board. I think that what I have said covers the vast majority of cases, as I think the hon. and learned Gentleman was good enough to acknowledge.
        I now turn to Amendment No. 184. I said in Committee, as reported at col. 1754 of the Official Report of our Committee proceedings, that where a class of beneficiaries had been enlarged with the birth of a child into the class there should be no further charge when that child died under the age of majority and thus produced an increase in the income to which another member of the class would be entitled. Our amendment covers that situation and goes rather further, because its operation is not restricted to the death of a child whose birth may enlarge the class. It will apply to the death under the age of majority of any member of the class who increases the share of another member. I hope that that relates to the hon. and learned Gentleman's point.
        Mr. Peter Rees: I apologise for constantly interrupting the hon. Gentleman. I obviously did not put my point with sufficient clarity. I recognise that that situation is covered by Government Amendment No. 184. What I was saying was that a person's interest could be partially or even wholly defeated by the birth of another member, by an addition to the class by birth, rather than a contraction by death. As I understand the tax, that could give rise to a charge to duty. It does not seem to me
        178
        that that matter has been covered by the amendment.
        Dr. Gilbert: I take the hon. and learned Gentleman's point that where there is an increase in the number of individuals in a class there will be a chargeable transfer. I do not think that I gave any undertaking in Committee, that such a situation would be exempt as a chargeable transfer. I shall check what I said, but my recollection is that I recognised all along that there could be an anomalous situation in which a charge. able occasion was created by the birth of a child who subsequently died, so that one ended up with the same number of individuals, or maybe an identical group, who had been beneficiaries. Without the amendment, there could be two chargeable occasions. I recognised that that situation, I think without any prodding from the hon. and learned Gentleman on that occasion, was not appropriate to a second charge.
        10.15 p.m.
        I do not recall on any occasion giving an undertaking of the sort that has been suggested. Normally the addition of another individual to a class gives rise to a charge. However, as the hon. and learned Gentleman presses me, I shall look at my words again. I am fairly clear in my own mind that I was not, subject to correction, giving an assurance of the sort that he believed I was giving.
        The hon. and learned Gentleman asked me some questions in general about why we should have any charge on the distributions out of discretionary settlements. He was talking about Amendments Nos. 196 and 198. The answer is fairly clear. I am sure that the hon. and learned Gentleman appreciates the point. It was made many times in Standing Committee. It is not a point on which I am optimistic of convincing him any more than he would be optimistic of convincing me. When a discretionary settlement is terminated by the creation of an interest in possession or where there is a capital distribution out of a discretionary settlement there has clearly been a change in the ownership of the property and there has been a chargeable transfer. In our view that is a properly chargeable occasion.
        The hon. and learned Gentleman talked about arrangements having been made last year. I think that my right hon.

        179
        Friend the Chancellor made it clear in his Budget statement last March that there was to be a drastic overhaul of the tax treatment of discretionary settlements. Anyone who was so ill-advised—I do not expect that any of the hon. and learned Gentleman's clients were ill-advised—as to alter their affairs to create an interest in possession without waiting to see the terms of the Bill would have been placed in an unfortunate position. As always, we can only regret that people have been badly advised.
        The hon. and learned Gentleman asked about foreign resident trustees. He asked why we had annual charges or periodic charges for dealing with situations in which the trustees were nonresident. This matter was debated at great length in Standing Committee. In Clause 25 we have already met the point about the need to ensure that where there are two settlors in relation to a settlement the property should be apportioned between them. It is our view that it must be recognised that if the trustees are nonresident they may be unwilling to pay the periodic charge. For that reason we think it only reasonable to have an annual charge which will be offset against the 10-year charge, as that is a payment in advance. For that reason we consider it only reasonable that the settlors should be liable if the trustees do not pay the tax. That may not be agreeable to the hon. and learned Gentleman but that is why we have these provisions in the Bill.
        Mr. Lawson: I did not intend to intervene in this debate, but I feel obliged to do so after having heard what has been said. I shall try to make my remarks brief. I feel that we are in danger of losing sight of the wood for the trees. This is not a matter of petty detail but a question of principle. Paragraph 17 of the White Paper has been referred to and it is necessary to refer to it again. In the White Paper the Government stated clearly the broad principle to be applied to a settled property. Paragraph 17 reads :
        "in general the charge to tax should be neither greater nor smaller than on the charge to property held absolutely."
        The Government have gone back on that and introduced, as regards discretionary trusts, through the working of the periodic charge treatment far more severe than
        180
        is applied to property holding beneficiaries and many other kinds of trusts.
        The discretionary trust serves a very valuable purpose. I was glad to hear the Financial Secretary concede that tonight, as he did in Committee. The discretionary trust is of great importance to business and to many families, and it has a worthwhile social purpose. However, it was singled out for such harsh treatment by the Government that they were obliged in Committee to move an amendment allowing people to unwind their discretionary trusts, at a price—a small price in the first year, increasing in later years—and to rearrange their affairs.
        What justification can there be for this discrimination against the discretionary trust? If the Government feel obliged to allow people to unwind, why are they charging them a fee to do so? Why should not they be able to rearrange their affairs at no charge? Why should they even have to pay 10 per cent. of the charge? It is monstrous.
        Then there is the argument about the "periodicity" of the periodic charge. It is no good saying that it is assumed that the capital in the trust has been transferred notionally once every 30 years. There is no reason to suppose that a business beneficially owned would be transferred within a 30-year period. It could easily miss a generation, going from the grandparents to the grandchildren. In any event, the period during which it is held will be more than 30 years, because, even under this Government, the average life span is more than 30 years.
        Then there are the employees' trusts. This relates to Government Amendments Nos. 204, 206 and 207 to this schedule. Why have the Government seen fit to charge capital transfer tax to money which is put into employees' trusts? It seems monstrous, and it demands an explanation.
        Finally, we have the newspaper trusts. We heard a lot about this matter in Committee upstairs. The Government have still brought forward no amendment. I believe that they have given an undertaking outside this House to certain newspapers which will be gravely affected by the capital transfer tax. The Guardian and Scott Trust is one. The Government have said apparently that

        181
        they will see them right, that they are having drafting difficulties, but that something will be brought forward in due course, perhaps in the next Finance Bill. But the Government should tell us. We want to know what the Government intend to do about this very important matter of the newspaper trusts.
        Mr. Graham Page: The Financial Secretary omitted to deal with Amendment No. 609. This concerns the paragraph about trusts for the maintenance of children and the very beneficial paragraph which allows the maintenance to go to the children without charge to capital transfer tax.
        My hon. and learned Friend the Member for Dover and Deal (Mr. Rees) pointed out how, in the early part of the paragraph, it was said that these benefits applied only if the trust was for a person of a specified age not exceeding 25 years. As my hon. and learned Friend also pointed out, in very many cases of these trusts there is a power of appointment by which an age may be changed.
        The purpose of Amendment No. 609 is to make certain that trusts for accumulation and maintenance of children should apply even if there is that power of appointment. It merely deals with the fact that in the early stages the age has to be specified. In many cases it may be altered by the terms of the trusts. But in principle, even if the trusts contain that power to alter by appointment, the benefit should still apply.
        Mr. David Howell: We have many other important debates to cover in the pathetically little time left to us, so I shall be brief on this admittedly complicated subject. I think that my right hon. and hon. Friends have said enough to point to the basic dispute with the Government on this matter.
        For the benefit of those who did not follow the jungle of complexities in this matter in Committee, I should explain that the Government intend to impose upon discretionary trusts a kind of wealth tax, a periodic levy, which is a curious animal unrelated to the rest of the capital transfer tax. The Government intend to do that because they believe, as they have often said, that discretionary trusts are for the most part tax avoidance devices, although the Financial Secretary earlier said that he regarded them in some cases as beneficial
        182
        social instruments. I do not know whether that was to assuage our feelings on the matter or whether he has changed his view. However, it was a slightly different tune from the one that we heard before.
        As the Government gradually realised what they had done and as it dawned on them that there were many hundreds of discretionary trusts which had nothing to do with avoidance, what I might call their sporting instinct came to the top and they decided to give discretionary trusts a chance to escape. However, it was not a very good chance. For those who feel strongly about field sports, I think that this would be regarded as the cruel rather than the sporting side because, as soon as the gate is lifted, it is almost immediately lowered through the rising scale of percentage of the total tax set out in Government Amendment No. 198.
        We think that this manipulation, this sliding guillotine which falls slowly until it finally chops off any capital distribution from the discretionary trusts in 1980, is an unnecessary and absurd piece of proposed legislation.
        We cannot see why it is necessary to have even the 10 per cent. rate, as we argued in Committee, or the 12½ per cent. rate after 31st March 1976. Would it not be a less cruel form of field sport to allow a moratorium during which discretionary trusts could be rearranged?
        The Government's answer will no doubt be "We could not do that because, although we are pretending to let them escape, we know that they are really tax avoidance devices and we want them all in the net."
        That is not so. The truth is that trusts of this kind have been made in this country since the time of Napoleon. There are old trusts, new trusts, trusts for pensioners, trusts for benevolent purposes, trusts for former elderly employees—trusts for all kinds of employee arrangements—which appear not to be eased by the Government's other amendments which I believe are to be taken formally after we have discussed this group to do with employee arrangements.
        To summarise our feelings on the matter, we believe that the Government have designated all discretionary trusts as avoidance devices. Many forms of trusts which were formed long before and since

        183
        the estate duty legislation of 1894 for protective and other purposes are not avoidance devices but, in the excellent words of the Financial Secretary, benevolent social instruments.
        We cannot see what motive the Government have unless it is the cruel sporting one of insisting on this rising rate of tax on discretionary trusts until they come back fully into the net of the capital transfer tax after 1980.
        In most instances this will be a postponement of the difficulties. In Committee upstairs we discussed the problems of the shipping industry, which, by its very nature, has a large unquoted sector held in discretionary trusts. This proposal will not solve the shipping industry's problem ; it will postpone it. It will make sure that unquoted British shipping will be sold off after 1980 rather than immediately. That is of hardly any benefit to anyone.
        The Financial Secretary did not tackle the maintenance and accumulation settlement point which was put to him. Indeed, the hon. Gentleman did not answer the point made by my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) about the assignment of life interests to insurance companies. He left totally unsatisfactorily dealt with the whole question of why the Government want to place this rising percentage charge on discretionary trusts.
        I advise my hon. Friends to look at the nonsensical and unhelpful Amendment No. 198, and to recognise that it would be greatly improved if we were to add our Amendment (h) to it, and I strongly advise my right hon. Friend and hon. Friends to press that amendment to a Division.
        10.30 p.m.
        Dr. Gilbert: I will not detain the Committee long, as I know that the hon. Member for Guildford (Mr. Howell) wishes to move on to other debates. However, I must say a couple of things to the hon. Gentleman. It would make for the more expeditious transaction of our business if one set of his hon. Friends were not trying to get us to debate amendments which have already been passed and another of his hon. Friends did not start debating amendments we
        184
        had not yet reached. However, be that as it may.
        The next point which needs to be made is that my right hon. Friend and I are used to having our words misrepresented, but normally even the hon. Member for Guildford allows more than 10 minutes to pass before he tries to put words into my mouth which only a few minutes earlier I had been making clear were not the case. He has just said that we regarded all trusts, and discretionary settlements in particular, as tax avoidance devices. It could not have been more than five or six minutes ago that I was saying precisely the reverse. I do not know how many more times I have to say it—[Interruption]. By all means ; if the hon. Gentleman wants a further exposition of our philosophy in this matter. I shall be very happy to give it to him, I thought that hon. Members opposite wanted to pass on to other things. I am the last to want to draw out time at this stage of the debate, but hon. Members opposite must not tempt me too much, because the time has passed for turning the other cheek to many of the allegations which have been made.
        Mr. Tony Newton: I hesitate to interrupt the tremendous flow which the Financial Secretary is now generating, but has it not occurred to him that the more he emphasises the lack of hostility to discretionary trusts the stronger grows the case of my hon. Friend the Member for Guildford (Mr. Howell) for a moratorium instead of a charge?
        Dr. Gilbert: We made it quite clear many times in Standing Committee that we thought that a modest charge on an ascending scale was appropriate if only as an incentive to deal with the problems likely to arise in the courts with the conversions which might be expected of many discretionary settlements into other types of trust.
        I am sure that it will be within the recollection of the hon. Member for Braintree (Mr. Newton), who distinguished himself in Standing Committee by the moderation of his comments, that the criticism that my right hon. Friend and I were attracting on the question—[Interruption]. There were some hon. Gentlemen in Standing Committee who made some very constructive suggestions

        185
        many times over. The hon. Member for Braintree was certainly one of them. I am the first to acknowledge that. However, it will be within his recollection that the accusation against us in Standing Committee was that the charge was so small that it was not worth collecting, which is rather different from the complaint being made by others of his hon. Friends this evening.
        Mr. Nott: Perhaps the Financial Secretary will explain to me, because I was not on the Standing Committee, how, when the penalty escalates from 10 per cent. to 20 per cent. over the years, this will help the courts. Surely if the penalty increases it is more likely to push the thing into the early period rather than into the later period.
        Dr. Gilbert: Precisely so. The hon. Gentleman makes my point. I agree entirely. The intention was to push settlements into the early period, if possible, to give those concerned an incentive to go before the courts rather than to wait for the last possible moment, which would be the case if there were no charge. That is precisely the point. The point is not directed to the court, but to create a modest incentive to people who might be considering whether to convert to do it as early as possible because there will be a gradually increasing disincentive to do it later. That was the purpose, and I. am glad that I have the hon. Gentleman's assent to that point.
        The hon. Member for Blaby (Mr. Lawson) raised the question of newspaper trusts. I said in Standing Committee, as reported in column 2010, that it would take some time to find a satisfactory formulation to give effect to our intention, and that it might be necessary to discuss the problems involved with those concerned. It was, therefore, not possible to introduce this provision in this Finance Bill. I added that there was no great urgency to introduce the legislation because it would be a considerable time before any newspaper trust would have to pay capital transfer tax following our announcement that the

        Transitional relief for settlements made before 27th March 1974

        13A.—(1) In relation to a settlement made before 27th March 1974 paragraphs 6 to 12 above shall apply with the following modifications.

        5

        (2) Subject to sub-paragraphs (3) to (5) below, the rate at which tax is chargeable on 5 any capital distribution made before 1st April 1980 out of property comprised in the

        periodic charge would be deferred until 31st March 1980.
        Employee trusts fall to be discussed under Government Amendments Nos. 204, 206 and 207.
        I repeat what I said at the beginning of these remarks, that we have needed no bullying from hon. Members opposite or instruction from them about the value of discretionary trusts. It has always been clear to my right hon. Friend and myself that they were valuable interests. I never said that they were set up principally or exclusively for tax avoidance purposes.
        Mr. Graham Page: It seems to me that the hon. Gentleman is coming to the end of his peroration, and he has not dealt with Amendment No. 609.
        Dr. Gilbert: I apologise to the right hon. Gentleman for not dealing with Amendment No. 609. I shall do so in a moment. We have always made it clear that our sole purpose was to treat property passing through a discretionary trust on much the same basis as we would have done as between generations. It would have been free property.
        The right hon. Member for Crosby (Mr. Graham Page) asked me to turn to Amendment No. 609. This is in identical terms with Amendment No. 323 tabled in Committee. In our view, this amendment would leave the way wide open for any discretionary settlement to have a period of immunity from the periodic charge as long as the settlor set it up in the form of an accumulation and maintenance trust for minors but ensured that when a suitable opportunity occurred the trustees could exercise their powers of appointment to end the accumulation and maintenance trust. This would be an open-ended invitation to avoidance on a massive scale, and I am sure the right hon. Gentleman appreciates that point. That is why I am unable to commend that amendment to my hon. Friends.
        Amendment agreed to.
        Amendment proposed : No. 198, in page 86, line 15, at end insert :

        10

        settlement (but not on any capital distribution which, under paragraph 9 above, is treated as made out of property comprised in a separate settlement made after 26th March 1974) shall be the following percentage of the rate at which it would be chargeable apart from this paragraph, that is to say—

        (a) 10 per cent. if the capital distribution is made before 1st April 1976 ;

        (b)12½ per cent. if it is made after 31st March 1976 but before 1st April 1977 ;

        (c)15 per cent. if it is made after 31st March 1977 but before 1st April 1978 ;

        (d)17½ per cent. if it is made after 31st March 1978 but before 1st April 1979 ; and

        (e)20 per cent. if it is made after 31st March 1979.

        15

        (3) Where any capital distribution made after 31st March 1976 but before 1st April 1977 could not have been made except as the result of some proceedings before a court, this paragraph shall have effect in relation to it as if it had been made before 1st April 1976.

        20

        (4) Sub-paragraph (2) above does not apply in relation to a capital distribution treated as made under paragraph 12(2) above.

        25

        (5) Sub-paragraph (2) above does not apply—

        (a)in relation to a capital distribution treated as made under paragraph 6(2) above, unless the person becoming entitled as mentioned therein ; or

        (b)in relation to a capital distribution treated as made under paragraph 14(3) below, unless each of the beneficiaries referred to therein ; or

        (c)in relation to a distribution payment made for the benefit of any person, unless that person ;

        is an individual who is domiciled in the United Kingdom at the time the capital distribution is made and resident (within the meaning of the Income Tax Acts) in the United Kingdom in the year of assessment in which it is made.

        30

        (6) In this paragraph expressions defined for the purposes of paragraphs 6 to 10 above have the same meanings as in those paragraphs '.—[Dr. Gilbert.]

        Amendment proposed to the proposed the amendment (h)in line 10. leave out '10' and insert '1'—[sir G Howe]
        Question put That the amendment to the proposed amendment to the proposed amendment be made:—
        The House divided:Ayes 249,Noes 293

        Division No. 137.]

        AYES

        [10.40 p.m.

        Adley, Robert

        Costain, A. P.

        Griffiths, Eldon

        Aitken, Jonathan

        Craig, Rt Hon W. (Belfast E)

        Grist, Ian

        Alison, Michael

        Critchley, Julian

        Grylls, Michael

        Arnold, Tom

        Crowder, F. P.

        Hall, Sir John

        Atkins, Rt Hon H. (Spelthorne)

        Davies, Rt Hon J. (Knutsford)

        Hall-Davis, A. G. F.

        Awdry, Daniel

        Dean, Paul (N Somerset)

        Hampson, Dr Keith

        Baker, Kenneth

        Dodsworth, Geoffrey

        Hannam, John

        Banks, Robert

        Douglas-Hamilton, Lord James

        Harrison, Col Sir Harwood (Eye)

        Beith, A. J.

        du Cann, Rt Hon Edward

        Harvie Anderson, Rt Hon Miss

        Bell, Ronald

        Durant, Tony

        Hastings, Stephen

        Bennett, Sir Frederic (Torbay)

        Eden, Rt Hon Sir John

        Havers, Sir Michael

        Bennett, Dr Reginald (Fareham)

        Edwards, Nicholas (Pembroke)

        Hawkins, Paul

        Berry, Hon Anthony

        Elliott, Sir William

        Hayhoe, Barney

        Biffen, John

        Emery, Peter

        Heseltine, Michael

        Biggs-Davison, John

        Eyre Reginald

        Hicks, Robert

        Blaker, Peter

        Fairbairn, Nicholas

        Higgins, Terence L.

        Boscawen, Hon. Robert

        Fairgrieve, Russell

        Holland, Philip

        Bowden, A. (Brighton, Kemptown)

        Farr, John

        Hordern, Peter

        Boyson, Dr. Rhodes (Brent)

        Fell, Anthony

        Howe, Rt Hn Sir Geoffrey

        Bradford, Rev Robert

        Finsberg, Geoffrey

        Howell, David (Guildford)

        Braine, Sir Bernard

        Fisher, Sir Nigel

        Howells, Geraint (Cardigan)

        Brittan, Leon

        Fletcher, Alex (Edinburgh N)

        Hunt, John

        Brotherton, Michael

        Fletcher-Cooke, Charles

        Hurd, Douglas

        Brown, Sir Edward (Bath)

        Fookes, Miss Janet

        Hutchison, Michael Clark

        Bryan, Sir Paul

        Fowler, Norman (Sutton C'f'd)

        Irving, Charles (Cheltenham)

        Buchanan-Smith, Alick

        Fox, Marcus

        James, David

        Buck, Antony

        Fraser, Rt Hon H. (Stafford & St)

        Jenkin, Rt Hon P. (Wanst'd & W'df'd)

        Budgen, Nick

        Freud, Clement

        Jessel, Toby

        Bulmer, Esmond

        Fry, Peter

        Johnson Smith, G. (E. Grinstead)

        Burden, F. A.

        Galbraith. Hon. T. G. D.

        Jones, Arthur (Daventry)

        Butler, Adam (Bosworth)

        Gardiner, George (Reigate)

        Jopling, Michael

        Carlisle, Mark

        Gardner, Edward (S Fylde)

        Joseph, Rt Hon Sir Keith

        Carson, John

        Gilmour, Sir John (East Fife)

        Kaberry, Sir Donald

        Chalker, Mrs Lynda

        Glyn, Dr Alan

        Kershaw, Anthony

        Channon, Paul

        Goodhart,. Philip

        Kilfedder, James

        Clark, Alan (Plymouth, Sutton)

        Goodhew, Victor

        Kimball, Marcus

        Clark, William (Croydon S)

        Goodlad, Alastair

        King, Evelyn (South Dorset)

        Clarke, Kenneth (Rushcliffe)

        Gorst, John

        King, Tom (Bridgwater)

        Clegg, Walter

        Gow, Ian (Eastbourne)

        Knight, Mrs Jill

        Cockcroft, John

        Gower, Sir Raymond (Barry)

        Knox, David

        Cooke, Robert (Bristol W)

        Grant, Anthony (Harrow C)

        Lamont, Norman

        John

        Gray, Hamish

        Lane, David

        Cormack Patrick

        Grieve, Percy

        Langford-Holt, Sir John

        Latham, Michael (Melton)

        Nelson, Anthony

        Sinclair, Sir George

        Lawrence,Ivan

        Neubert, Michael

        Skeet, T. H. H.

        Lawson, Nigel

        Newton, Tony

        Smith, Cyril (Rochdale)

        Lester. Jim (Beeston)

        Nott, John

        Smith, Dudley (Warwick)

        Lewis, Kenneth (Rutland)

        Onslow, Cranley

        Speed, Keith

        Lloyd, Ian

        Oppenheim, Mrs Sally

        Spence, John

        Loveridge, John

        Page, John (Harrow West)

        Spicer, Michael (S Worcester)

        Luce, Richard

        Page, Rt Hon R. Graham (Crosby)

        Sproat, Iain

        McCrindle, Robert

        Pardoe, John

        Stainton, Keith

        McCusker, H.

        Parkinson, Cecil

        Stanbrook, Ivor

        Macfarlane, Neil

        Penhaligon, David

        Stanley, John

        MacGregor, John

        Percival. Ian

        Steel, David (Roxburgh)

        Macmillan, Rt Hon M. (Farnham)

        Peyton, Rt Hon John

        Steel, Anthony (Wavertree)

        McNair-Wilson, M. (Newbury)

        Pink, R. Bonner

        Stewart, Ian (Hitchin)

        McNair-Wilson, P. (New Forest)

        Powell, Rt Hon J. Enoch

        Stokes, John

        Marshall, Michael (Arundel)

        Pym, Rt Hon Francis

        Stradling Thomas, J.

        Marten, Neil

        Raison, Timothy

        Tapsell, Peter

        Mates, Michael

        Rathbone, Tim

        Taylor, Teddy (Cathcart)

        Mather, Carol

        Rawlinson, Rt Hon Sir Peter

        Tebbit, Norman

        Maude, Angus

        Rees, Peter (Dover & Deal)

        Temple-Morris, Peter

        Maudling, Rt Hon Reginald

        Rees-Davies, W. R.

        Thatcher, Rt Hon Margaret

        Mawby, Ray

        Renton, Rt Hon Sir D. (Hunts)

        Townsend, Cyril D.

        Maxwell-Hyslop, Robin

        Renton, Tim (Mid-Sussex)

        Trotter, Neville

        Mayhew, Patrick

        Ridley, Hon Nicholas

        Tugendhat, Christopher

        Meyer, Sir Anthony

        Ridsdale, Julian

        van Straubenzee, W. R.

        Miller, Hal (Bromsgrove)

        Rifkind, Malcolm

        Vaughan, Dr. Gerard

        Mills, Peter

        Roberts, Michael (Cardiff NW)

        Viggers, Peter

        Miscampbell, Norman

        Roberts, Wyn (Conway)

        Wainwright, Richard (Colne V)

        Mitchell, David (Basingstoke)

        Ross, Stephen (Isle of Wight)

        Wakeham John

        Moate, Roger

        Ross, William (Londonderry)

        Walker, Rt Hon P. (Worcester)

        Moiyneaux, James

        Rossi, Hugh (Hornsey)

        Walters, Dennis

        Monro, Hector

        Rost, Peter (SE Derbyshire)

        Weatherill, Bernard

        Montgomery, Fergus

        Royle, Sir Anthony

        Wells, John

        Moore, John (Croydon C)

        Sainsbury, Tim

        Whitelaw, Rt Hon William

        More, Jasper (Ludlow)

        St. John-Stevas, Norman

        Wiggin, Jerry

        Morgan, Geraint

        Shaw, Giles (Pudsey)

        Winterton, Nicholas

        Morgan-Giles, Rear-Admiral

        Shelton, William (Streatham)

        Wood, Rt Hon Richard

        Morris, Michael (Northampton S)

        Shepherd, Colin

        Young, Sir G. (Ealing, Acton)

        Morrison, Charles (Devizes)

        Shersby, Michael

        TELLERS FOR THE AYES:

        Morrison, Hon Peter (Chester)

        Silvester, Fred

        Mr.W. Benyon and

        Neave, Airey

        Sims, Roger

        Mr. Spencer Le Marchant.

        NOES

        Abse, Leo

        Cocks, Michael (Bristol S)

        Evans, John (Newton)

        Allaun, Frank

        Cohen, Stanley

        Ewing, Harry (Stirling)

        Anderson, Donald

        Coleman, Donald

        Ewing, Mrs Winifred (Moray)

        Archer, Peter

        Colquhoun, Mrs Maureen

        Faulds, Andrew

        Ashley, Jack

        Concannon, J. D.

        Fernyhough, Rt Hon E.

        Ashton, Joe

        Conlan, Bernard

        Flannery, Martin

        Atkins, Ronald (Preston N)

        Cook, Robin F. (Edin C)

        Fletcher, Raymond (Ilkeston)

        Atkinson, Norman

        Corbett, Robin

        Fletcher Ted (Darlington)

        Bagier, Gordon A. T.

        Cox, Thomas (Tooting)

        Foot, Rt Hon Michael

        Bain, Mrs Margaret

        Craigen, J. M. (Maryhill)

        Ford, Ben

        Barnett, Guy (Greenwich)

        Crawford, Douglas

        Forrester, John

        Barnett, Rt Hon Joel (Heywood)

        Cronin, John

        Fowler, Gerald (The Wrekin)

        Bates, All

        Crosland, Rt Hon Anthony

        Fraser, John (Lambeth, N'w'd)

        Bean, R. E.

        Cryer, Bob

        Freeson, Reginald

        Benn, Rt Hon Anthony Wedgwood

        Cunningham, G. (Islington S)

        Garrett, John (Norwich S)

        Bennett, Andrew (Stockport N)

        Cunningham, Dr J. (Whiteh)

        Garrett, W. E. (Wallsend)

        Bidwell, Sydney

        Dalyell, Tarn

        George, Bruce

        Bishop, E. S.

        Davidson, Arthur

        Gilbert, Dr John

        Blenkinsop, Arthur

        Davies, Bryan (Enfield N)

        Ginsburg, David

        Boardman, H.

        Davies, Denzil (Llanelli)

        Golding, John

        Booth, Albert

        Davies, Ifor (Gower)

        Gould, Bryan

        Bottomley, Rt Hon Arthur

        Davis, Clinton (Hackney C)

        Gourlay, Harry

        Boyden, James (Bish Auck)

        Deakins, Eric

        Graham, Ted

        Bradley, Tom

        Dean, Joseph (Leeds West)

        Grant, George (Morpeth)

        Bray, Dr Jeremy

        Delargy, Hugh

        Hamilton, James (Bothwell)

        Brown, Hugh D. (Provan)

        Dell, Rt Hon Edmund

        Hamilton, W. W. (Central Fife)

        Brown, Robert C. (Newcastle W)

        Dempsey, James

        Hardy, Peter

        Brown, Ronald (Hackney S)

        Doig, Peter

        Harper, Joseph

        Buchan, Norman

        Dormand, J. D.

        Harrison, Walter (Wakefield)

        Buchanan, Richard

        Douglas-Mann, Bruce

        Hatton, Frank

        Butler, Mrs Joyce (Wood Green)

        Duffy, A. E. P.

        Hayman, Mrs Helena

        Callaghan, Jim (Middleton & P)

        Dunn, James A.

        Healey, Rt Hon Denis

        Campbell, Ian

        Dunnett, Jack

        Heffer, Eric S.

        Canavan, Dennis

        Dunwoody, Mrs Gwyneth

        Henderson, Douglas

        Cant, R. B.

        Eadie, Alex

        Hooley, Frank

        Carmichael, Neil

        Edge, Geoff

        Horam, John

        Carter, Ray

        Ellis, John (Brigg & Scun)

        Howell, Denis (B'ham, Sm H)

        Carter-Jones, Lewis

        Ellis, Tom (Wrexham)

        Hoyle, Doug (Nelson)

        Cartwright, John

        English, Michael

        Huckfield, Les

        Castle, Rt Hon Barbara

        Ennals, David

        Hughes, Rt Hon C. (Anglesey)

        Clemitson, Ivor

        Evans, Gwynfor (Carmarthen)

        Hughes, Mark (Durham)

        Hughes, Robert (Aberdeen N)

        Millan, Bruce

        Small, William

        Hughes, Roy (Newport)

        Miller, Dr M. S. (E Kilbride)

        Smith, John (N Lanarkshire)

        Hunter, Adam

        Miller, Mrs Millie (Ilford N)

        Snape, Peter

        Irving, Rt Hon S. (Dartford)

        Mitchell, R. C. (Soton, Itchen)

        Spearing, Nigel

        Jackson, Colin (Brighouse)

        Molloy William

        Spriggs, Leslie

        Jackson, Miss Margaret (Lincoln)

        Moonman. Eric

        Stallard, A. W.

        Jay, Rt Hon Douglas

        Morris, Alfred (Wythenshawe)

        Stewart, Donald (Western Isles)

        Jeger, Mrs Lena

        Morris, Charles R. (Openshaw)

        Stewart, Rt Hon M. (Fulham)

        Jenkins, Hugh (Putney)

        Morris, Rt Hon J. (Aberavon)

        Stoddart, David

        Jenkins, Rt Hon Roy (Stechford)

        Mulley, Rt Hon Frederick

        Stott, Roger

        John, Brynmor

        Murray, Rt Hon Ronald King

        Strang, Gavin

        Johnson, James (Hull West)

        Newens, Stanley

        Strauss, Rt Hon G. R.

        Johnson, Walter (Derby S)

        Noble, Mike

        Summerskill, Hon Dr Shirley

        Jones, Alec (Rhondda)

        Oakes, Gordon

        Taylor, Mrs Ann (Bolton W)

        Jones, Barry (east Flint)

        Ogden, Eric

        Thomas, Dafydd (Merioneth)

        Jones, Dan (Burnley)

        O'Halloran, Michael

        Thomas, Mike (Newcastle E)

        Judd, Frank

        O'Malley, Rt Hon Brian

        Thomas, Ron (Bristol NW)

        Kaufman, Gerald

        Orbach, Maurice

        Thompson, George

        Kelley, Richard

        Ovenden, John

        Thorne, Stan (Preston South)

        Kerr, Russell

        Padley, Walter

        Tierney, Sydney

        Kilroy-Silk, Robert

        Park, George

        Tinn, James

        Kinnock, Neil

        Parker, John

        Tomlinson, John

        Lamble, David

        Parry, Robert

        Torney, Tom

        Lamborn, Harry

        Pendry, Tom

        Urwin, T. W.

        Lamond, James

        Perry, Ernest

        Varley, Rt Hon Eric G.

        Latham, Arthur (Paddington)

        Phipps, Dr Colin

        Wainwright, Edwin (Dearne V)

        Leadbitter, Ted

        Prentice, Rt Hon Reg

        Walden, Brian (B'ham, L'dyw'd)

        Lee, John

        Prescott, John

        Walker, Harold (Doncaster)

        Lewis, Arthur (Newham N)

        Price, C. (Lewisham W)

        Walker, Terry (Kingswood)

        Lewis, Ron (Carlisle)

        Price, William (Rugby)

        Ward, Michael

        Lipton, Marcus

        Radice, Giles

        Watkins, David

        Litterick, Tom

        Reid, George

        Watkinson, John

        Loyden, Eddie

        Richardson, Miss Jo

        Watt, Hamish

        Luard, Evan

        Roberts, Albert (Normanton)

        Weetch, Ken

        Lyon, Alexander (York)

        Roberts, Gwilym (Cannock)

        Weitzman, David

        Lyons, Edward (Bradford W)

        Robertson, John (Paisley)

        Wellbeloved, James

        Mabon, Dr J. Dickson

        Roderick, Caerwyn

        Welsh, Andrew

        McCartney, Hugh

        Rodgers, George (Chorley)

        White, Frank R. (Bury)

        MacCormick, Iain

        Rodgers, William (Stockton)

        White, James (Pollok)

        McElhone, Frank

        Rooker, J. W.

        Whitehead, Phillip

        MacFarquhar, Roderick

        Roper, John

        Whitlock, William

        McGuire, Michael (Ince)

        Rose, Paul B.

        Wigley, Dafydd

        Mackenzie, Gregor

        Ross, Rt Hon W. (Kilmarnock)

        Willey, Rt Hon Frederick

        Mackintosh, John P.

        Rowlands, Ted

        Williams, Alan (Swansea W)

        Maclennan, Robert

        Ryman, John

        Williams, Alan Lee (Hornch'ch)

        McMillan, Tom (Glasgow C)

        Sandelson, Neville

        Williams, Rt Hon Shirley (Hertford)

        McNamara, Kevin

        Sedgemore, Brian

        Williams, W. T. (Warrington)

        Madden, Max

        Selby, Harry

        Wilson, Alexander (Hamilton)

        Magee, Bryan

        Shaw, Arnold (Ilford South)

        Wilson, Gordon (Dundee E)

        Mahon, Simon

        Sheldon, Robert (Ashton-u-Lyne)

        Wilson, William (Coventry SE)

        Marks, Kenneth

        Shore, Rt Hon Peter

        Wise, Mrs Audrey

        Marquand, David

        Short, Rt Hon E. (Newcastle C)

        Woodall, Alec

        Marshall, Dr Edmund (Goole)

        Short, Mrs Renée (Wolv NE)

        Wrigglesworth, Ian

        Marshall, Jim (Leicester S)

        Silkin, Rt Hon John (Deptford)

        Young, David (Bolton E)

        Mason, Rt Hon Roy

        Silkin, Rt Hon S. C. (Dulwich)

        Meacher, Michael

        Sillars, James

        TELLERS FOR THE NOES:

        Mellish, Rt Hon Robert

        Silverman, Julius

        Miss Betty Boothroyd and

        Mikardo, Ian

        Skinner, Dennis

        Mr. Laurie Pavitt.

        Question accordingly negatived
        Amendment agreed to
        Amendments made : No. 199, in page 86, line 44, at end insert:
        ' (4) Where the conditions stated in paragraphs (a) and (b) of sub-paragraph (1) above are satisfied at any time when there is only one beneficiary, they shall not be treated as ceasing to be satisfied on his death or on his attaining the specified age, if they would again be satisfied on the birth of another person.'
        No. 200, in page 87, leave out lines 4 to 12.
        No. 204, in page 88, leave out lines 6 and 7 and insert:
        '(1)Where settled property is held on trusts which, either indefinitely or until the end of
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        a period (whether defined by a date or in some other way) do not permit any of the settled property to be applied otherwise than for the benefit of '.
        No. 206, in page 88, leave out lines 16 to 18 and insert:
        'then, subject to sub-paragraph (2) below, this paragraph applies to that settled property or, as the case may be, applies to it during that period.
        (2) Where any such class is defined by reference to employment by or office with a particular body this paragraph applies to the settled property only if the class comprises all or most of the persons employed by or holding office with that body '.
        No. 207, in page 88, line 44, leave out sub-paragraphs (4) to (6) and insert:
        ' (5) Where this paragraph applies to any settled property, tax which would otherwise

        193
        be chargeable at a relevant anniversary under paragraph (12)(1) above shall be deferred until either a capital distribution is made or this paragraph ceases to apply to the settled property and when any deferred tax becomes chargeable it shall be charged—

        (a)at the rate at which it would be chargeable if the relevant anniversary fell on the date on which the tax becomes chargeable ; and

        (b)on an amount determined in accordance with the following provisions of this paragraph.

        (6) Where any deferred tax becomes chargeable when this paragraph ceases to apply to the settled property it shall be chargeable on an amount equal to the current value of the settled property.
        (7) Where any of the deferred tax becomes chargeable when a capital distribution is made—

        (a)it shall he chargeable on an amount determined under sub-paragraph (8) below ; and

        (b)the amount of the tax shall reduce the amount on which tax is chargeable on that capital distribution (and if it exceeds that amount the excess shall reduce the amount on which tax is chargeable on the next capital distribution, and so on).

        (8) So far as any tax which would otherwise be chargeable on a relevant anniversary becomes chargeable when a capital distribution is made it shall be charged on an amount (in this sub-paragraph referred to as the first amount) equal to the proper proportion of the current value of the property out of which the capital distribution is made : and where the capital distribution is made after the next relevant anniversary and, accordingly more than one deferred tax becomes chargeable

        (a)the second deferred tax shall be charged on the first amount less the amount of the first deferred tax ; and

        (b)the third deferred tax (if any) shall be charged on the amount found under paragraph (a) above less the amount of the second deferred tax ;

        and so on.
        (9) For the purposes of this paragraph—

        (a)the current value of any property is its value at the time any tax deferred under this paragraph becomes chargeable ; and

        (b)the proper proportion of the current value of any property out of which a capital distribution is made is the proportion which the amount on which tax is chargeable on the capital distribution bears to that current value ;

        and in this paragraph "close company" and "participator" have the same meanings as in section 37 of this Act, "relevant anniversary" has the same meaning as in paragraph 12 above and "year" has the same meaning as in paragraph 2 of Schedule 6 to this Act'.
        No. 208, in page 89, line 31, at end insert:
        'Protective trusts
        17A.—(1) This paragraph applies to settled property held on trusts to the like effect as
        194
        those specified in section 33(1) of the Trustee Act 1925 ; and in this paragraph "the principal beneficiary "and" the trust period" have the same meanings as in that section.
        (2) Where this paragraph applies to any settled property—

        (a)tax shall not be charged under paragraph 4(2) above on the coming to an end during the trust period of the principal beneficiary's interest in the property ; and

        (b)a distribution payment made out of the settled property for the benefit of the principal beneficiary shall not be a capital distribution.

        (3) Sub-paragraphs (5) to (9) of paragraph 17 above shall apply where this paragraph applies to any settled property as if the references to that paragraph were references to this paragraph and references to that paragraph ceasing to apply to the settled property included references to the coming to an end of the trust period.'.—[Dr. Gilbert.]
        Dr. Gilbert: I beg to move Amendment No. 209, in page 89, line 31, at end insert:
        ' Trusts for benefit of mentally disabled persons
        17B.—(1) This paragraph applies to settled property held on trusts under which, during the life of a mentally disabled person, no interest in possession in the settled property subsists and which secure that any of the settled property which is applied during his life is applied only or mainly for his benefit.
        (2) Where this paragraph applies to any settled property, then—

        (a)if the mentally disabled person is the settlor, neither the making of the settlement nor any addition made by him to the settled property shall be a chargeable transfer; and

        (b)a distribution payment made out of the settled property for the benefit of the mentally disabled person shall not be a capital distribution.

        (3) Sub-paragraphs (5) to (9) of paragraph 17 above shall apply where this paragraph applies to any settled property as if the references to that paragraph were references to this paragraph and references to that paragraph ceasing to apply to the settled property included references to the death of the mentally disabled person.
        (4) In this paragraph "mentally disabled person" means a person who by reason of mental disorder within the meaning of the Mental Health Act 1959 is incapable of administering his property or managing his affairs '.
        This additional paragraph, 17B, provides relief for discretionary trusts set up for the benefit of mentally handicapped persons. In substance the effect of this provision is similar to that of the Government amendment on protective trusts—the new paragraph 17A.
        This separate relief for trusts for the mentally disabled provides that while

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        the mentally disabled person is still alive the trust fund will be relieved from the normal discretionary regime. This is subject to two conditions. The first is that the funds must be applicable only or mainly for his benefit. The second is that capital distributions to other individuals will be chargeable in the normal way.
        I think that it is self-explanatory and that is as far as I wish to go at this stage, unless the House wishes to hear further from me.
        Mr. Peter Rees: I wish to intervene only briefly, because the Chief Secretary said in Committee, perhaps inadvertently, that none of the so-called thalidomide trusts would be subject to tax. He gave as his reason that they were charitable settlements. As I understand the position, it is true that the main settlement set up by Distillers is a charitable settlement but, as the right hon. Gentleman recollects, and no doubt this is the basis of Amendment No. 208, if not of Amendment No. 209, there have been one or two other settlements set up by individual thalidomide children with the consent and approval of the court. Indeed, these are paralleled in other cases where they are set up on a discretionary basis for these children. They are not necessarily mentally handicapped, although they may be physically handicapped, but they are very often under the age of 18.
        My hon. Friend the Member for Rushcliffe (Mr. Clarke) and I have tabled Amendment No. 552, which is marshalled with Amendments Nos. 208 and 209 and I should like with suitable immodesty, to think that it is better than the Government amendments. I hope, therefore, that the Chief Secretary will look a little more closely at it, because I am sure we both have the same objective in mind. If 1 may have the right hon. Gentleman's attention—
        Mr. Deputy Speaker (Mr. George Thomas): Order. The difficulty is that the hon. and learned Member is making his speech to an amendment which has not been selected by Mr. Speaker.
        Mr. Rees: I am grateful to you, Mr. Deputy Speaker. I see that in my enthusiasm for my amendment I pencilled it in and assumed that it had received your indirect benevolence.I
        196
        understand the Chief Secretary's difficulty, but, with his habitual resource, and without any prompting by his officials, no doubt he will give his undivided attention not only to Amendments Nos. 208 and 209 but to Amendment No. 552. As we are both focussed on the same objective, I trust that he has given his usual diligent attention to all the amendments on this point. I hope that he will canvass their respective merits, if only to convince the House and myself that his amendments are superior in scope and function to Amendment No. 552.
        Dr. Gilbert: The main burden of the hon. and learned Gentleman's remarks was directed to the question of thalidomide trusts. I understand that the damages paid to the thalidomide victims will be fit. The hon. and learned Gentleman is right. The original trusts are charitable, and there will be subsequent trusts that will be protective. Our new relief will ensure that the interest for children will not be adversely affected.
        I think that the hon. and learned Gentleman is subject to a little confusion on more than one point on this group of amendments. It is not my right hon. Friend the Chief Secretary who is answering the debate, nor was it my right hon. Friend who spoke on this subject in Committee upstairs. I referred to thalidomide trusts and gave an assurance about them, because I thought they would be covered by the regime for charitable trusts. It was only when we discovered that that was not the case that we introduced Amendment No. 208 to set up new paragraph 17A to the schedule, which covers the point the hon. and learned Gentleman has in mind.
        Mr. Graham Page: We are dealing in this group with the amendments to amendment No. 209 which add blind persons to the category of mentally disabled persons. It is extremely difficult to draw the line when one starts to consider persons with disability. The amendments seek to give relief to trusts which are for the benefit of blind as well as mentally disabled persons. There is a good case for saying that blindness is a well-defined disability which deserves the benefits which are given to protective trusts and disabled persons by Amendments Nos. 208 and 209. Will the Financial Secretary say why he rejects

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        the amendments to include blind persons under the beneficial Amendment No. 209?
        11.0 p.m.
        Dr. Gilbert: With the leave of the House, Mr. Deputy Speaker. I did not refer to the amendments because the hon. and learned Member for Dover and Deal (Mr. Rees) did not refer to Amendment No. 209 and I was trying to help the Opposition to make progress.
        The right hon. Member for Crosby (Mr. Page) is right in saying that there is no problem in identifying the blind, and various income tax reliefs are given to them in fiscal legislation. There is a difference between those who are mentally handicapped and those who are physically handicapped. Although we all have the greatest sympathy with the physically handicapped in the difficulties they encounter, there is not the same need to set up a special type of discretionary trust the help them handle their affairs as there is for the mentally handicapped. I think I carry the House with me on that.
        I am grateful to the right hon. Gentleman for not seeking to make this an emotional matter. Treasury Ministers sometimes have the difficult job of saying that they think that the relief should go to the mentally disabled. The physically handicapped are in a different category. If a discretionary trust comes into existence for their benefit it is not impossible to create a protective life interest for those individuals which will attract the reliefs available under Amendment No. 208.
        Amendment agreed to.
        Amendment made: No. 211, in page 90. line 26, leave out ' 26th ' and insert ' 27th '.—[Mr. Joel Barnett.]

      Schedule

        EXEMPT TRANSFERS
        Mr. Joel Barnett: I beg to move Amendment No. 215, in page 92, line 17, leave out from beginning to ' are '.
        Mr. Deputy Speaker: With this it will be convenient to consider the following amendments:
        No. 216, in page 92, line 17, leave out from beginning to ' are ' and insert:
        198
        'unless exempt by virtue of any other paragraph of this Schedule'.
        No. 218, in page 92, line 20, after ' values ', insert:
        '(if any) fall short of £1,000, the amount by which they so fall short shall, in relation to the next following year, be added to the £1,000 mentioned in sub-paragraph (1) above; and where they'.
        Amendment (a), in line 2, leave out' the next following year ' and insert ' succeeding years'.
        Amendment (b), in line 3, after ' above ', insert:
        ' and if in the following year relief has not been fully given for the amount by which these values fall short of £1,000 on the basis that all transfers of value in that year are first attributed to the sum of £1,000 applicable to that year a person may make a claim requiring any portion by which those values fell short to be carried forward and, as far as may be, deducted from chargeable transfers made in any of the six subsequent years'.
        No. 443, in page 92, line 21, after ' made ', insert ' in the year '.
        No. 444, in page 92, line 26, at end insert:
        ' and
        (c) shall be attributed to amounts brought forward from an earlier year rather than a later year'.
        No. 459, in page 92, line 29, at end insert:
        ' (4) For the avoidance of doubt the exemption contained in this paragraph is in addition to those contained elsewhere in this Act and is not to be restricted by virtue of any other transfers of value which are exempt transfers by virtue of any other section of this Act or paragraph of any Schedule to this Act having been made within the same year'.
        No. 224, in page 92, line 45, at end insert:
        ' Small gifts to same person
        3A.—(1) Transfers of value made by a transferor in any one year by outright gifts to any one person are exempt to the extent that the values transferred by them (calculated as values on which no tax is chargeable) do not exceed £100.
        (2) In this paragraph "year" has the same meaning as in paragraph 2 above '.
        Amendment (a), in line 1, leave out ' outright'.
        Amendment (c), in line 2, leave out' by outright gifts'.
        Amendment (b), in line 3, after ' £100 ', insert:
        ' or in the case of persons not connected with the transferor £200'.
        Amendment (e), in line 3, at end insert:
        'and this exemption will be additional to all the exemptions in this Part of this Act.'.
        No. 808, in page 93, line 6, leave out sub-paragraph (a).
        No. 403, in page 93, line 9, at end insert:
        ' and this exemption will be additional to all the exemptions in this Part of this Act'.
        No. 747, in page 93, line 42, at end insert:
        ' and these exemptions will be additional to all other exemptions in this Part of this Act.'.
        No. 746, in page 93, line 43, at end insert:
        ' and this exemption will be additional to all the exemptions in this Part of this Act.'.
        No. 748, in page 98, line 30, at end insert:
        ' 13A. Where on the death of any spouse, the transfer of value chargeable under section 22(1) of this Act does not exceed £15,000, the amount of the difference between the amount chargeable and £15,000 shall be deducted from the transfer of value chargeable under section 22(1) of this Act on the death of the other spouse.'
        Mr. Barnett: Amendment No. 215 is essentially a drafting amendment. Paragraph 2(1) of Schedule 6 provides that transfers of value made by transferors in any one year and not exempt under any other provision are to be exempt if they are under £1,000. The amendment deletes
        " and not exempt under any other provision "
        The amendment clarifies a point raised in Committee. I shall be happy to deal with other matters if hon. Gentlemen refer to them.
        Mr. David Howell: The amendment is one of a series of important Government amendments. I hope that in due course we shall be able to make the Chief Secretary happy by allowing him to elaborate upon them, if that is what makes him happy.
        The Chief Secretary said that Amendment No. 215 is just a drafting amendment. I hope he is right about that. I raised this matter earlier as a puzzling amendment which we looked forward to discussing when we reached Schedule 6, if we did. With a few minutes in hand we shall have the privilege, by courtesy of the Government, of being allowed to discuss the schedule.
        200
        It is a little puzzling. It has attracted outside comment, too. It could be that this amendment, which is said to be purely a drafting amendment, could have a devastating effect. The way it has been read by expert commentators, and by some of my right hon. and hon. Friends is not as being a drafting amendment at all but as an amendment which would have the effect of excluding some of the other provisions under which small gifts are exempt from capital transfer tax.
        For instance, another Government amendment, to which the Chief Secretary did not refer, makes a provision for small gifts of £100 to be relieved. We would like to be absolutely sure that this omission of the words
        " and not exempt under any other provision "
        does not knock out Amendment No. 224 which is included in this group. We would like elaboration on this in due course.
        This set of amendments also includes an important amendment, No. 218, to which my right hon. and hon. Friends have tabled a number of amendments proposing that its effect be modestly extended. In particular, we have tabled Amendment (b) which makes the modest proposal that the roll-over for the first £1,000 of gifts from the transferor, which is currently exempt, should be extended not merely into "the following year, as by Government Amendment No. 218, but for the subsequent six years. This is a reasonable addition to an amendment which in itself is obviously an improvement on a situation in which there was no roll-over.
        Those are our initial reactions to an extensive set of Government amendments on which we would like to hear more in due course. With the leave of the House, I will make some final comments after my right hon. and hon. Friends have spoken.
        Mr. Joel Barnett: I am sorry that Conservative Members think that this amendment goes wider than I have indicated. The words we are deleting:
        " "and not exempt under any other provision "
        are, we are advised, unnecessary. What they say goes without saying. The Bill provides a range of exemptions which is increased with the amendments we have tabled on Report. Any transfer which

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        is exempted by any of the other provisions of the Bill is left out of account and does not, therefore, come within the ambit of the £1,000 annual exemption.
        Government Amendment No. 218 allows unused amounts of the £1,000 annual exemption to be carried forward for one year. This again arises out of discussion in Committee when it was suggested that without some kind of rollover for succeeding years, it would be hard on a man who did not have the £1,000 in a given year.
        The hon. Member for Guildford (Mr. Howell) referred to the Opposition amendment which would roll over the figure for six years. That goes much further. There are two amendments, one of which would roll it forward indefinitely. That would be wholly unacceptable. The second one turns it into a six-year roll-over. This would be excessive in addition to the exemptions already in the Bill.
        Amendment No. 224 provides for the exemption of outright gifts not exceeding £100 to any one recipient in the tax year. The example was advanced in Committee that some Opposition Members were likely to make gifts of up to £100 a year, say, to the dustman or some such recipient, and that that might be subject to CTT. We arranged to table an amendment to help those hon. Gentlemen who might have been so caught.
        If there are any other points, I should be happy to deal with them.
        Mr. Lawson: Will the Chief Secretary explain the point of principle which lies behind the denial of roll-over for a period of six years? It is incomprehensible. If one taxpayer is able to give away £6,000 in slices of £1,000 a year but another taxpayer, because of the form in which he holds the assets and his circumstances, cannot give £1,000 a year in those slices but can give only £6,000 at the end of six years, why should the second taxpayer be put in a much worse position than that in which the first taxpayer finds himself?
        The Chief Secretary will remember from the example quoted in Standing Committee involving the famous shop that it is intended that the money should be transferred in slices. It might be difficult for some people to do it in slices of £1,000 and thereby incur unneces-
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        sary stamp duty. Therefore, why is there discrimination between one taxpayer and another?
        Mr. MacGregor: I should like to follow up what has been said so far, before dealing specifically with Amendment No. 808.
        It would appear that there is discrimination in applying the principle of rollover as between those whose assets are tied up and those who may not be so well off. I can envisage the situation in which those who are most able to take advantage of the £1,000-a-year exemption are those who are wealthy enough to give away £1,000 each year. Our proposal, which seeks to give roll-over for six years, will ease the problem of those who have their assets tied up.
        The provision still does not go beyond what the Government wish to do. The Government have accepted the principle of £1,000 in any one year. However, our suggestion eases the position and removes some of the discrimination against those in less favourable situations to take advantage of situation.
        I wish to refer to Amendment No. 808, which was tabled following the debate in Committee on normal expenditure made out of income. The amendment seeks to remove the condition that it must be normal expenditure by the transferor. It was made clear that "normal" would be interpreted as "habitual ". I have a slight worry that the transferor who is giving some transfer out of his income but who is giving it for only one or two years will not get the exemption out of this provision because he will not have done it as part of normal expenditure, and will receive exemption only if he is shown to have given that type of gift for a number of years habitually.
        It would appear that for the purposes of CTT all that one needs to be concerned with is that the expenditure was made out of income and was in accordance with the usual standard of living. I wish to ask whether it is necessary to include the fact that this should be part of the normal expenditure of the transferor. It will favour those who are in the habit of giving regular gifts, but for those who wish to give sums out of income for a brief period it appears that they will not be able to do so because of the reference of the need to be part

        203
        of the normal expenditure. If I am wrong, I hope that the Chief Secretary will say so. Since we have not been able to debate the matter fully on Report, I believe the matter deserves to be examined in time for the next Finance Bill.
        11.15 p.m.
        Mr. Ridley: I suppose that I must give grudging thanks that at least the point has been met to the extent that the £1,000 can be rolled over for an extra year. It was part of my case in Committee that it should be accumulatable—if that is the right word—and should be available for each year. That would have made a great difference to those who may not have so much money and who have their money invested long term. It would have given them an advantage at the expense of the very rich person, who could easily find £1,000 every year out of his capital. I cannot see why the Government will not accept the six-year proposal, which would involve no loss to the Revenue but which would greatly ease the problems of some people who are far from liquid and who will not be able to find the money easily.
        Paradoxically, I think that the effect of the £1,000 allowance will be to cause practically everybody who can find it to give £1,000 a year to his children which he would not otherwise have given. There are already advertisements in the newspapers saying how to claim the £1,000 allowance for capital transfer. This rush to distribute £1,000, which in many cases should not be distributed, is a result of this evil legislation. It would have been much better not to have it, but the Government have insisted on doing it. I believe that shares, money and business will start to be broken up. to be cut into small salami slices and distributed to children long before it is necessary, so that the annual £1,000 allowance may be claimed. I ask the Government to reconsider the matter. Why it should not be accumulated is beyond me.
        Another point is that the fact that the £1,000 is available to both parents effectively means that with a little manipulation each parent can give £1.000 for each year without any trouble, if they have the money. But it is hard on one-
        204
        parent families. There are many reasons —divorce, death or sometimes failure to marry in the first place—why one-parent families exist. For them, the relief is effectively halved.
        My hon. Friend the Member for Blaby (Mr. Lawson) said that he had one wife and four children. It would clearly be more advantageous if he had four wives and no children. There will be four-parent families, where the original parents have been divorced and have re-married. Four sets of allowances will be available to them.
        That is the sort of muddle and unhappy situation into which the Government have got us through the whole structure of the tax. I ask the Government to make a special concession in the next stage of the Bill, which starts next month, to allow one-parent families to have a double concession. On all grounds of equity it will be unfair if they do not do that.
        The £1,000 will become worth much less every year as a result of inflation. I hope that there will be a proper review of the figure, and that it will be changed as the value of money falls. I know that the Government's intention is to inflate merrily and busily destroy the value of our money, so that even the meagre £1,000 a year will become virtually valueless. We have seen many figures in our tax law eroded by inflation, and the Government do nothing to change them. It is difficult to find an opportunity to make the necessary changes.
        I hope that the Government will give an undertaking to keep these figures under review. I hope that they will change them frequently and make them worth what they are intended to be worth. I am grateful for the small concession that has been obtained, but I hope that the Government will go further and deal with the problem of one-parent families. That should find favour in their eyes.
        Mr. Graham Page: This group of amendments deals with the roll-over and the accumulation during the one year. As regards the roll-over of £1,000, it can be taken forward for the next year and £2,000 can be given in one year. Am I correct in thinking that the 24th March 1974 to 5th April 1974 was one year under the Bill? If that is so, for this year, and before 5th April, we can give £2,000. I do not know whether the Chief

        205
        Secretary can confirm that. It seems that that can happen from the terms of the Bill.
        I now turn to the accumulation for one year. It is not clear from the Bill and the amendments whether Amendment No. 224 allows gifts of £100 and whether we have to take those sums of £100 into account against the £1,000 gifts which are already exempt by the Bill. That is what I mean by the accumulation for this year. That must apply to all other exemptions under Schedule 6. Are we to add them all together or take one from the other? If 10 instalments of £100 are given, does that make up the £1,000 under the Bill as it stands? I hope that that is not so. I hope that all the exemptions apply consecutively and that they are not to be lumped together.
        Mr. Gow: I have an inbuilt prejudice against the indexation of taxation. Despite that prejudice, when we have inflation running at its present rates I agree with the suggestion made by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) about the exemption figure of £1,000 which appears in Schedule 6. The provisions of the Bill are retrospective to 26th March. They are retrospective to a date practically a year ago. If we take the purchasing value of £1,000 on 26th March 1974 and we take its purchasing value today we shall find that it has declined by rather more than 20 per cent.
        I hope that the Chief Secretary, for the limited period during which the present administration is in office, will give an undertaking that the limits in the Bill will be indexed to take account of the appalling rates of inflation which we are suffering under the disgraceful administration of this Government. It is all very well for the right hon. Gentleman to nod his head in the way to which we have become accustomed, but this is a serious matter. If the Government were saying that a correct figure for the exemption was £1,000 on 26th March 1974, how can the Chief Secretary say that the same figure is the correct exemption today?
        My right hon. Friend the Member for Crosby (Mr. Page) had an extremely important point to raise when he referred to the concession to which the Chief Secretary referred—namely, a gift to a
        206
        transferee not being a person connected with the transferor. My right hon. Friend made a point about the number of wives and children that we have. I suffer from the misfortune—
        Mr. Ron Lewis: How many?
        Mr. Gow: Just the one wife and two children. It would have been very much better if I had been able to reverse the process. I hope that the Chief Secretary will address himself seriously to this matter when he replies.
        Mr. James Wellbeloved: The more I listen to this short debate, the more I become concerned about the concessions which my right hon. and hon. Friends appear to have made as a result of the debates in Standing Committee. I am tempted to say to my hon. Friend that, when we come to the "roll-over" amendment and Amendment No. 224, we should plead with the Chief Secretary to withdraw these concessions. if he does not, I shall be tempted to go into the Division Lobby against them.
        It appears from many of the speeches to which we have listened to be almost a yearly occurrence in some quarters to pass to one's children in cash the sum of £1,000. I must confess that I know of no one within my immediate circle of acquaintances who is so endowed with the good fruits of this earth that he can do that. What is more, when I come to the wrong concession in Amendment No. 224, I can think of no one working in the factories of Erith and Crayford on the shop floor who could even make a gift of £100 to his children. I hope that my right hon. Friend the Chief Secretary can be persuaded to withdraw these concessions. If he does not, it may be that sufficient of us will go into the "No" Lobby to ensure that the Government do not implement these two concessions.
        I came into the Chamber prepared to accept that my right hon. and hon. Friends had their responsibilities to those people who voted Labour in the last General Election in the right perspective. But when I see them bowled over—
        Mr. Joel Barnett: No.
        Mr. Wellbeloved: My right hon. Friend says "No ". but there must have been some pretty heavy pressure put on him.

        207
        I remind him that, at a time when he is saying that there is not sufficient public money available for some extremely desirable projects in my own area, he is making a concession of this kind. I come from an area where a Conservative-controlled council only last week decided to deny opportunities for retired citizens to have five meals a week at a pop-in luncheon parlour and reduced it to one. I feel a little bitter when I hear hon. Members asking for people to have the right to roll over for three, four, five or six years the ability to pass over £1,000 a year as and when they can lay their hands on the necessary liquid assets. When I think of the disadvantages endured by working people in my constituency and those of others of my hon. Friends, I say in all seriousness to my right hon. and hon. Friends that they have made unreasonable and unnecessary concessions to the Opposition. I hope that my hon. Friends will join me in opposing them.
        Mr. Pardoe: The hon. Member for Erith and Crayford (Mr. Wellbeloved) has made an extraordinary attack on the Bill, which is a tax on generosity. I do not see why he should choose this moment to launch his attack, and I have no intention of spending time on what he said, except to say that in the view of most hon. Members on the Opposition benches the Chief Secretary has made all too few concessions.
        Mr. Wellbeloved: Too many.
        Mr. Pardoe: It is about one of the right hon. Friend's so-called concessions that I am particularly concerned. I doubt very much whether Amendment No. 215 is a concession at all. I cannot understand what the right hon. Gentleman feels he has done by leaving out the words
        "… and not exempt under any other provision."
        The trouble is that the reasons which the Chief Secretary has advanced and the explanations which he has given are entirely opposite to the advice of a very large number of people outside this House who specialise in these matters.
        Therefore, it would be helpful, other than the speech made by the right hon. Gentleman and the explanation that he has given, if we could have some. detailed
        208
        explanation by the Inland Revenue in the form of this extra-statutory explanation—namely, Press releases through the Press Office—of how the Government see the £1,000 if this amendment is carried.
        11.30 p.m.
        Mr. Joel Barnett: I am sorry that the outside advice tendered to the hon. Member for Cornwall, North (Mr. Pardoe) is that the £1,000 exemption will not stand on its own. My inside advice is that it is exactly as I told the House earlier. The Revenue will be putting out an explanatory note on the Bill when we have Third Reading shortly. Therefore, I shall be happy for him to look at it with his outside advisers.
        Mr. MacGregor: Does the Chief Secretary agree that there would be no misunderstanding at all if he left the Bill as it was, because it was crystal clear to everyone?
        Mr. Barnett: That was not what was said in Committee upstairs. It was the reverse there. Because of what was said in Committee upstairs we had another look at this matter and found that the words which are to be removed by Amendment No. 215 were unnecessary. I assure the hon. Gentleman that, on the best advice I have received, the effect of Amendment No. 215 will be that the £1,000 will stand on its own. I cannot go beyond that.
        Mr. Pardoe: Will the right hon. Gentleman consider amendment No. 216, which is linked with this amendment, which will make the whole matter clear? Amendment No. 216 seeks to insert,
        " unless exempt by virtue of any other paragraph of this Schedule ".
        Mr. Barnett: I do not know what virtue the hon. Gentleman sees in that amendment. In any event the phrase now in the Bill will be removed by Amendment No. 215. It may be that the hon. Gentleman has not had an opportunity to take further advice. I see the hon. Member for Blaby (Mr. Lawson), always ready to help in these matters, is helping him a little further.
        We have again come back to whether £1,000 a year is sufficient or should be allowed to accumulate over the years because of the man who would not have £1,000 in a given year. This matter

        209
        arose over what hon. Gentlemen were inclined to call the Gilbert and Sullivan shop, about which they had a lot of fun upstairs. The only reason that they found it so amusing was that they genuinely did not understand the problems of the small shopkeeper. This has become clear throughout our debates. Indeed, it has become even more clear to my hon. Friends who have heard this on Report, particularly those who heard it upstairs.
        As is made clear in Clause 39, which will be in operation from 1976—we must not get too excited—interest-free loans would not be subject to capital transfer tax. It would be a simple matter to make a nominal loan of £1,000 and for the recipient—that is, the shop or small business—to lend it back again interest-free and there would be no liability to capital transfer tax. There is no need to spread the loan over six years or more. Indeed, that would be tantamount to increasing the £15,000 exemption which is already in the Bill. I know that even if I were mindful to make such a further concession, I should have considerable trouble from some of my hon. Friends. I assure them that I have no such intention.
        The hon. Member for Cirencester and Tewkesbury (Mr. Ridley), always good measure, excelled himself when he talked about the meagre £1,000 a year. That is not enough for the hon. Gentleman. Indeed, he finds it a trifling sum. Hon. Gentlemen opposite live in some strange world where everybody is in a position to give £1,000 a year quite easily. Indeed, he said "Everybody is now giving away £1,000 a year. Who is not giving away £1,000 a year? "In Cirencester and Tewkesbury this must be happening every year, but in Heywood and Royton and most points north of Watford that does not happen all that often. [Interruption.] It is true that we do not generally understand the hon. Gentleman. It is difficult to follow the point of his argument. I thought that we had been pretty lair—indeed, as my hon. Friend said, more than reasonable.
        The right hon. Member for Crosby (Mr. Page) talked about the gifts of up to £100 not being taken against the £1,000 a year allowance. I am happy to say that that cannot happen, because the £1,000 will stand on its own. The right
        210
        hon. Gentleman, with his usual perception—this comes of sleeping with the Bill day and night over the weeks and months —made it clear that, as the tax came into operation before 5th April 1974, there are two years up to 5th April 1975.
        The hon. Member for Eastbourne (Mr. Gow), who does not like indexation, wants indexation for this tax. I have a feeling that that was only because he did not like to incur the displeasure of his hon. Friend the Member for Blaby. Indeed, I saw the hon. Member for Blaby scowling at him. We all know the obsession of the hon. Member for Blaby with indexation. He thinks that it is a panacea for all our problems.
        Mr. Gow: The Chief Secretary is wrong. I said that I objected to indexation in principle because it tends to condone inflation as a permanent evil, but I argued in favour of indexation while we have the present Government in office.
        Mr. Barnett: That is a very strange argument. Even the lion. Member for Blaby is glowering at the hon. Gentleman. That was an absolutely disgraceful comment. I cannot accept the argument for indexing the tax, but, as my hon. Friend and I have indicated all along, the rates will be kept under constant review and we will be coming back to the tax again and again in future Finance Bills, so we shall have opportunities to consider the matter. The Government will review these matters regularly.
        We kept coming back to estate duty time and again for 80 years, and Conservative Governments always failed to do anything about it. It is now clear that Conservatives are delighted not to have done anything about it. Indeed, they would have preferred to have kept it.
        I hope that my right hon. and hon. Friends will resist the Opposition amendments. I think we have been very fair already—indeed, as my hon. Friend said, probably too fair.
        Mr. David Howell: We are running true to form at 20 minutes to the twelfth hour, in the t we are busy having to postpone further consideration of aspects of this Bill to the next stage—that is, to the next Finance Bill, which is already looming up. It looks as though that will be handled with exemplary skill by my

        211
        right hon. and hon. Friends in instructing Treasury Ministers what it is about.
        These several amendments bring home better than anything has so far done the complete schizophrenia of the Labour administration in dealing with tax administration. On the one hand, throughout the Bill everyone from the Chancellor downwards, or "alongwards ", has been sneering at the vast sums of £1,000 a year which so few people have to pass on.
        Mr. Cormack: Where is the Chancellor?
        Mr. Howell: On the other hand, the Chancellor has been telling us in the Daily Express—the Chancellor is not here very much, but he speaks in the Daily Express occasionally—that it is through the agency of the provision for the £1,000 a year exemption and now the roll-over to £2,000 a year that it will be possible for the small trader, for the garage owner, for the owners of the shop in the High Street, for the owner of the small business in the market town, to hand on his business to his son without incurring a prohibitive liability to tax. Indeed, the Chancellor, the Chief Secretary and the Financial Secretary have made a virtue of this loophole. Here we have the schizophrenia. On the one hand £1,000 is a criminally large amount of money to have. On the other hand, it is the only means by which, according to the Government, the worst iniquities of this tax can be avoided.
        We have amendment (b) which would slightly alleviate the matter by extending the roll-over to six years. It will not remove the worst effects of this tax for the very good reason, which hon. Members opposite have difficulty in understanding, that one cannot unscramble a business and dish out the so-called wealth involved in productive assets, thousand by thousand or five thousand by five thou-
        sand. It is not possible to pull down a wall or demolish a counter in a shop or sell a petrol pump and dispose of the proceeds to one's children. This gives rise to the fatuities of the Gilbert and Sullivan shop.
        The Labour administration do not begin to understand what immense damage this tax will do to small and medium-sized private family businesses in the constituencies of hon. Members, but they will know about it when the letters come in about the redundancies. Be sure of that. They will know about it when the unemployment starts in the family businesses in their constituencies.
        In the meantime, we have other business to turn to in the remaining minutes allowed us by this vicious guillotine. I therefore urge my hon. Friends to vote on Amendment (b) which we shall move when we are allowed to do so to show our rejection of the spirit and intention behind this amendment.
        Amendment agreed to.
        Amendment proposed : No. 218, in page 92, line 20, after ' values ', insert
        ' (if any) fall short of £1,000, the amount by which they so fall short shall, in relation to the next following year, be added to the £1,000 mentioned in sub-paragraph (1) above ; and where they '.—[Mr. Joel Barnett.]
        Amendment proposed to the proposed amendment : (b), in line 3, after ' above ', insert
        'and if in the following year relief has not been fully given for the amount by which these values fall short of £1,000 on the basis that all transfers of value in that year are first attributed to the sum of £1,000 applicable to that year a person may make a claim requiring any portion by which those values fell short to be carried forward and, as far as may be, deducted from chargeable transfers made in any of the six subsequent years '.—[Mr. David Howell.]
        Question put, That the amendment to the proposed amendment be made :—
        The House divided : Ayes 246, Noes 293.

        Division No. 137.]

        AYES

        [10.40 p.m.

        Adley, Robert

        Bennett, Dr Reginald (Fareham)

        Brittan, Leon

        Aitken, Jonathan

        Benyon, W.

        Brotherton, Michael

        Alison, Michael

        Berry, Hon Anthony

        Brown, Sir Edward (Bath)

        Arnold, Tom

        Bitten, John

        Bryan, Sir Paul

        Atkins, Rt Hon H. (Spelthorne)

        Biggs-Davison, John

        Buchanan-Smith, Alick

        Awdry, Daniel

        Blaker, Peter

        Buck, Antony

        Baker, Kenneth

        Boscawen, Hon. Robert

        Budgen, Nick

        Banks, Robert

        Bowden, A. (Brighton, Kemptown)

        Bulmer, Esmond

        Beith, A. J.

        Boyson, Dr. Rhodes (Brent)

        Burden, F. A.

        Bell, Ronald

        Bradford, Rev Robert

        Carlisle, Mark

        Bennett, Sir Frederic (Torbay)

        Braine, Sir Bernard

        Carson, John

        Chalker, Mrs Lynda

        Hunt, John

        Parkinson, Cecil

        Channon, Paul

        Hurd, Douglas

        Penhaligon, David

        Clark, Alan (Plymouth, Sutton)

        Irving, Charles (Cheltenham)

        Percival, Ian

        Clark, William (Croydon S)

        James, David

        Peyton, Rt Hon John

        Clarke, Kenneth (Rushcliffe)

        Jenkin, Rt Hon P. (Wanst'd & W'df'd;

        Pink, R. Bonner

        Clegg, Walter

        Jessel, Toby

        Powell, Rt Hon J. Enoch

        Cockcroft, John

        Johnson Smith, G. (E. Grinstead)

        Pym, Rt Hon Francis

        Cooke, Robert (Bristol W)

        Jones, Arthur (Daventry)

        Raison, Timothy

        Cope, John

        Jopling, Michael

        Rathbone, Tim

        Cormack, Patrick

        Joseph, Rt Hon Sir Keith

        Rawlinson, Rt Hon Sir Peter

        Costain, A. P.

        Kaberry, Sir Donald

        Rees, Peter (Dover & Deal)

        Craig, Rt Hon W. (Belfast E)

        Kershaw, Anthony

        Rees-Davies, W. R.

        Critchley, Julian

        Kilfedder, James

        Renton, Rt Hon Sir D. (Hunts)

        Crowder, F. P.

        Kimball, Marcus

        Renton, Tim (Mid-Sussex)

        Dean, Paul (N Somerset)

        King, Evelyn (South Dorset)

        Ridley, Hon Nicholas

        Dodsworth, Geoffrey

        King, Tom (Bridgwater)

        Ridsdale, Julian

        Douglas-Hamilton, Lord James

        Knight, Mrs Jill

        Rifkind, Malcolm

        du Cann, Rt Hon Edward

        Knox, David

        Roberts, Michael (Cardiff NW)

        Durant, Tony

        Lamont, Norman

        Roberts, Wyn (Conway)

        Eden, Rt Hon Sir John

        Lane, David

        Ross, Stephen (Isle of Wight)

        Edwards, Nicholas (Pembroke)

        Langford-Holt, Sir John

        Ross, William (Londonderry)

        Elliott, Sir William

        Latham, Michael (Melton)

        Rossi, Hugh (Hornsey)

        Emery, Peter

        Lawrence, Ivan

        Rost, Peter (SE Derbyshire)

        Eyre Reginald

        Lawson, Nigel

        Royle, Sir Anthony

        Fairbairn, Nicholas

        Le Marchant, Spencer

        Sainsbury, Tim

        Fairgrieve, Russell

        Lester, Jim (Beeston)

        St. John-Stevas, Norman

        Farr, John

        Lewis, Kenneth (Rutland)

        Shaw, Giles (Pudsey)

        Fell, Anthony

        Lloyd, Ian

        Shelton, William (Streatham)

        Finsberg, Geoffrey

        Loveridge, John

        Shepherd, Colin

        Fletcher, Alex (Edinburgh N)

        Luce, Richard

        Shersby, Michael

        Fletcher-Cooke, Charles

        McCrindle, Robert

        Sims, Roger

        Fookes, Miss Janet

        McCusker, H.

        Sinclair, Sir George

        Fowler, Norman (Sutton C'f'd)

        Macfarlane, Neil

        Skeet, T. H. H.

        Fox, Marcus

        MacGregor, John

        Smith, Cyril (Rochdale)

        Fraser, Rt Hon H. (Stafford & St)

        Macmillan, Rt Hon M. (Farnham)

        Smith, Dudley (Warwick)

        Freud, Clement

        McNair-Wilson, M. (Newbury)

        Speed, Keith

        Fry, Peter

        McNair-Wilson, P. (New Forest)

        Spence, John

        Gardiner, George (Reigate)

        Marshall, Michael (Arundel)

        Spicer, Michael (S Worcester)

        Gardner, Edward (S Fylde)

        Marten, Neil

        Sproat, Iain

        Gilmour, Rt Hon Ian (Chesham)

        Mates, Michael

        Stainton, Keith

        Gilmour, Sir John (East Fife)

        Mather, Carol

        Stanbrook, Ivor

        Glyn, Dr Alan

        Maude, Angus

        Stanley, John

        Goodhart Philip

        Maudling, Rt Hon Reginald

        Steel, David (Roxburgh)

        Goodhew, Victor

        Mawby, Ray

        Steen, Anthony (Wavertree)

        Goodlad, Alastair

        Maxwell-Hyslop, Robin

        Stewart, Ian (Hitchin)

        Gorst, John

        Mayhew, Patrick

        Stokes, John

        Gow, Ian (Eastbourne)

        Meyer, Sir Anthony

        Stradling Thomas, J.

        Gower, Sir Raymond (Barry)

        Miller, Hal (Bromsgrove)

        Tapsell, Peter

        Grant, Anthony (Harrow C)

        Mills, Peter

        Taylor, Teddy (Cathcart)

        Gray, Hamish

        Miscampbell, Norman

        Tebbit, Norman

        Grieve, Percy

        Mitchell, David (Basingstoke)

        Temple-Morris, Peter

        Griffiths, Eldon

        Moate, Roger

        Thatcher, Rt Hon Margaret

        Grimond, Rt Hon J.

        Molyneaux, James

        Townsend, Cyril D.

        Grist, Ian

        Monro Hector

        Trotter, Neville

        Grylls, Michael

        Montgomery, Fergus

        Tugendhat, Christopher

        Hall, Sir John

        Moore, John (Croydon C)

        van Straubenzee, W. R.

        Hall-Davis, A. G. F.

        More, Jasper (Ludlow)

        Vaughan, Dr. Gerard

        Hampson, Dr Keith

        Morgan, Geraint

        Viggers, Peter

        Hannam, John

        Morgan-Giles, Rear-Admiral

        Wainwright, Richard (Colne V)

        Harrison, Col Sir Harwood (Eye)

        Morris, Michael (Northampton S)

        Wakeham. John

        Harvie Anderson, Rt Hon Miss

        Morrison, Charles (Devizes)

        Walker, Rt Hon P. (Worcester)

        Havers, Sir Michael

        Morrison, Hon Peter (Chester)

        Walters, Dennis

        Hawkins, Paul

        Neave, Airey

        Weatherill, Bernard

        Hayhoe, Barney

        Nelson, Anthony

        Wells, John

        Heseltine, Michael

        Neubert, Michael

        Whitelaw, Rt Hon William

        Hicks, Robert

        Newton, Tony

        Wiggin, Jerry

        Higgins, Terence L.

        Nott, John

        Winterton, Nicholas

        Holland, Philip

        Onslow, Cranley

        Wood, Rt Hon Richard

        Hordern, Peter

        Oppenheim, Mrs Sally

        Young, Sir G. (Ealing, Acton)

        Howe, Rt Hn Sir Geoffrey

        Page, John (Harrow West)

        TELLERS FOR THE AYES:

        Howell, David (Guildford)

        Page, Rt Hon R. Graham (Crosby)

        Mr. Adam Butler and

        Howells, Geraint (Cardigan)

        Pardoe, John

        Mr. Fred Silvester.

        NOES

        Abse, Leo

        Barnett, Guy (Greenwich)

        Booth, Albert

        Allaun, Frank

        Barnett, Rt Hon Joel (Heywood)

        Boothroyd, Miss Betty

        Anderson, Donald

        Bates, Alt

        Bottomley, Rt Hon Arthur

        Archer, Peter

        Bean, R. E.

        Boyden, James (Bish Auck)

        Ashley, Jack

        Benn, Rt Hon Anthony Wedgwood

        Bradley, Tom

        Ashton, Joe

        Bennett, Andrew (Stockport N)

        Bray, Dr Jeremy

        Atkins, Ronald (Preston N)

        Bidwell, Sydney

        Brown, Hugh D. (Provan)

        Atkinson, Norman

        Bishop, E. S.

        Brown, Robert C. (Newcastle W)

        Bagier, Gordon A. T.

        Blenkinsop, Arthur

        Brown, Ronald (Hackney S)

        Bain, Mrs Margaret

        Boardman, H.

        Buchan, Norman

        214

        215

        Buchanan, Richard

        Heffer, Eric S.

        Ovenden, John

        Butler, Mrs Joyce (Wood Green)

        Henderson, Douglas

        Padley, Walter

        Callaghan, Jim (Middleton & P)

        Hooley, Frank

        Park, George

        Campbell, Ian

        Horam, John

        Parker, John

        Canavan, Dennis

        Howell, Denis (B'ham, Sm H)

        Parry, Robert

        Cant, R. B.

        Hoyle, Doug (Nelson)

        Pendry, Tom

        Carmichael, Neil

        Huckfield, Les

        Perry, Ernest

        Carter, Ray

        Hughes, Rt Hon C. (Anglesey)

        Phipps, Dr Colin

        Carter-Jones, Lewis

        Hughes, Mark (Durham)

        Prentice, Rt Hon Reg

        Cartwright, John

        Hughes, Robert (Aberdeen N)

        Prescott, John

        Castle, Rt Hon Barbara

        Hughes, Roy (Newport)

        Price, C. (Lewisham W)

        Clemitson, Ivor

        Hunter, Adam

        Price, William (Rugby)

        Cocks, Michael (Bristol S)

        Irving, Rt Hon S. (Dartford)

        Radice, Giles

        Cohen, Stanley

        Jackson, Colin (Brighouse)

        Reid, George

        Coleman, Donald

        Jackson, Miss Margaret (Lincoln)

        Richardson, Miss Jo

        Colquhoun, Mrs Maureen

        Jay, Rt Hon Douglas

        Roberts, Albert (Normanton)

        Concannon, J. D.

        Jeger, Mrs Lena

        Roberts, Gwilym (Cannock)

        Conlan, Bernard

        Jenkins, Hugh (Putney)

        Robertson, John (Paisley)

        Cook, Robin F. (Edin C)

        Jenkins, Rt Hon Roy (Stechford)

        Roderick, Caerwyn

        Corbett, Robin

        John, Brynmor

        Rodgers, George (Chorley)

        Cox, Thomas (Tooting)

        Johnson, James (Hull West)

        Rodgers, William (Stockton)

        Craigen, J. M. (Maryhill)

        Johnson, Walter (Derby S)

        Rooker, J. W.

        Crawford, Douglas

        Jones, Alec (Rhondda)

        Roper, John

        Cronin, John

        Jones, Barry (East Flint)

        Rose, Paul B.

        Crosland, Rt Hon Anthony

        Jones, Dan (Burnley)

        Ross, Rt Hon W. (Kilmarnock)

        Cryer, Bob

        Judd, Frank

        Rowlands, Ted

        Cunningham, G. (Islington)

        Kaufman, Gerald

        Ryman, John

        Cunningham, Dr J. (Whiteh)

        Kelley, Richard

        Sandelson, Neville

        Dalyell, Tam

        Kerr, Russell

        Sedgemore, Brian

        Davidson, Arthur

        Kilroy-Silk, Robert

        Selby, Harry

        Davies, Bryan (Enfield N)

        Kinnock, Neil

        Shaw, Arnold (Ilford South)

        Davies, Denzil (Llanelli)

        Lambie, David

        Sheldon, Robert (Ashton-u-Lyne)

        Davies, Ifor (Gower)

        Lamborn, Harry

        Shore, Rt Hon Peter

        Davis, Clinton (Hackney C)

        Lamond, James

        Short, Rt Hon E. (Newcastle C)

        Deakins, Eric

        Latham, Arthur (Paddington)

        Short, Mrs Renée (Wolv NE)

        Dean, Joseph (Leeds West)

        Leadbitter, Ted

        Silkin, Rt Hon John (Deptford)

        Delargy, Hugh

        Lee, John

        Silkin, Rt Hon S. C. (Dulwich)

        Dell, Rt Hon Edmund

        Lewis, Arthur (Newham N)

        Sillars, James

        Dempsey, James

        Lewis, Ron (Carlisle)

        Silverman, Julius

        Doig, Peter

        Lipton, Marcus

        Skinner, Dennis

        Dormand, J. D.

        Litterick, Tom

        Small, William

        Douglas-Mann, Bruce

        Loyden. Eddie

        Smith, John (N Lanarkshire)

        Duffy, A. E. P.

        Luard, Evan

        Snape, Peter

        Dunn, James A.

        yon, Alexander (York)

        Spearing, Nigel

        Dunnett, Jack

        Lyons, Edward (Bradford W)

        Spriggs, Leslie

        Dunwoody, Mrs Gwyneth

        Mabon, Dr J. Dickson

        Stallard, A. W.

        Eadie, Alex

        McCartney, Hugh

        Stewart, Donald (Western Isles)

        Edge, Geoff

        MacCormick, Iain

        Stewart, Rt Hon M. (Fulham)

        Ellis, John (Brigg & Scun)

        McElhone, Frank

        Stott, Roger

        Ellis, Tom (Wrexham)

        MacFarquhar, Roderick

        Strang, Gavin

        English, Michael

        McGuire, Michael (Ince)

        Strauss, Rt Hon G. R.

        Ennals, David

        Mackenzie, Gregor

        Taylor, Mrs Ann (Bolton W)

        Evans, Gwynfor (Carmarthen)

        Mackintosh, John P

        Thomas, Dafydd (Merioneth)

        Evans, John (Newton)

        Maclennan, Robert

        Thomas, Jeffrey (Abertillery)

        Ewing, Harry (Stirling)

        McMillan, Tom (Glasgow C)

        Thomas, Mike (Newcastle E)

        Ewing, Mrs Winifred (Moray)

        McNamara, Kevin

        Thomas, Ron (Bristol NW)

        Faulds, Andrew

        Madden, Max

        Thompson, George

        Fernyhough, Rt Hon E.

        Magee, Bryan

        Thorne, Stan (Preston South)

        Flannery, Martin

        Mahon, Simon

        Tierney, Sydney

        Fletcher, Raymond (Ilkeston)

        Marks, Kenneth

        Tinn, James

        Fletcher Ted (Darlington)

        Marquand, David

        Tomlinson, John

        Foot, Rt Hon Michael

        Marshall, Dr Edmund (Goole)

        Torney, Tom

        Ford, Ben

        Marshall, Jim (Leicester S)

        Urwin, T. W.

        Forrester, John

        Mason, Rt Hon Roy

        Varley, Rt Hon Eric G.

        Fowler, Gerald (The Wrekin)

        Meacher, Michael

        Wainwright, Edwin (Dearne V)

        Fraser, John (Lambeth, N'w'd)

        Mellish, Rt Hon Robert

        Walden, Brian (B'ham, L'dyw'd)

        Freeson, Reginald

        Mikardo, Ian

        Walker, Harold (Doncaster)

        Garrett John(Norwich S)

        Millan, Bruce

        Walker, Terry (Kingswood)

        Garrett, W. E. (Wallsend)

        Miller, Dr M. S. (E Kilbride)

        Ward, Michael

        George, Bruce

        Miller Mrs Millie (Ilford N)

        Watkins, David

        Gilbert, Dr John

        Mitchell, R. C. (Soton, Itchen)

        Watkinson, John

        Ginsburg, David

        Moiloy, William

        Watt, Hamish

        Golding, John

        Moonman, Eric

        Weetch, Ken

        Gould, Bryan

        Morris, Alfred(wythenshawe)

        Weitzman, David

        Gourlay, Harry

        Morris, Charles R. (Openshaw)

        Wellbeloved, James

        Graham, Ted

        Morris, Rt Hon J(Aberavon)

        Welsh, Andrew

        Grant, George (Morpeth)

        Mulley, Rt Hon Frederick

        White, Frank R. (Bury)

        Hamilton, James (Bothwell)

        Murway, Rt Hon Ronald King

        White, James (Pollok)

        Hamilton, W. W. (Central Fife)

        Newens, Stanley

        Whitehead, Phillip

        Hardy, Peter

        Noble, Mike

        Whitlock William

        Harper, Joseph

        Oakes, Gordon

        Wigley, Dafydd

        Harrison, Walter (Wakefield)

        Ogden, Eric

        Willey, Rt Hon Frederick

        Hatton, Frank

        O'Halloran, Michael

        Williams, Alan(Swansea W)

        Hayman, Mrs Helena

        O'Malley, Rt Hon Brian

        Healey, Fit Hon Denis

        Orbach, Maurice

        Williams, Alan Lee(Hornch'ch)

        216

        217

        Williams, Rt Hon Shirley (Hertford)

        Wilson, William (Coventry SE)

        Young, David (Bolton E)

        Williams, W. T. (Warrington)

        Wise, Mrs Audrey

        TELLERS FOR THE NOES

        Wilson, Alexander (Hamilton)

        Woodall, Alec

        Mr. Laurie Pavitt and

        Wilson, Gordon (Dundee E)

        Wrigglssworth. Ian

        Mr. David Stoddart.

        Question accordingly negatived.
        Amendment agreed to.
        Mr. Joel Barnett: I beg to move Amendment No. 220, in page 92, line 28, leave out 26th ' and insert 27th '.
        This amendment ensures that this excellent tax will start on 27th March, If it had not been for the irresponsibility of the Opposition, we should have had a proper debate on Third Reading. Instead, we have wasted two days of the Report stage because of the antics of the Opposition.
        There was every opportunity for the Opposition to debate the Bill and this tax properly. They refused to do so. They did not want to do so. What they have sought to do has been to keep estate duty, a tax that had been steadily avoided. Capital transfer tax is an excellent tax. What is more, by their procedures and antics over the past few months, the Opposition—
        Mr. Graham Page: On a point of order, Mr. Deputy Speaker. I cannot connect anything that the Chief Secretary is saying at the moment with the amendment that he is proposing.
        Mr. Deputy Speaker: Patience is a virtue.
        Mr. Barnett: I am sorry that the right hon. Gentleman does not like to hear about this tax. It will start on 27th March. It will help small shopkeepers.
        Sir G. Howe: On a point of order, Mr. Deputy Speaker. The amendment now being moved by the Chief Secretary manifests that the debate is ending, as it began, with a correction by the Government.
        Hon. Members: That is not a point of order.
        Mr. Deputy Speaker: Order. There is no need to get excited. I am sure that the right hon. and learned Gentleman will come to a point of order.
        Sir G. Howe: The debate is ending as it began—
        Hon. Members: What about the point of order?
        Mr, Deputy Speaker: Debating points are not made points of order. If it is a point of order, I shall, of course take it, but not ii it is a debating point.
        Sir G. Howe: The point I am making is this. This; is one of a long series of Government amendments to the same effect—it replaces one date by another. We have dealt with all those preceding it as a matter of routine and each and every one ha ; been moved formally This is an acknowledgement that the Government made z profound mistake even as to the date when the tax would begin.
        Mr. Deputy Speaker: Order. It is not fair to draw the Chair into the argument betweer the two sides as to which shall have tie last word. If the right hon. and learned Gentleman has a point of order, he should quickly make it or sit down.
        Sir G. Howe: Thank you, Mr. Deputy Speaker. As this is a routine admission that this is a 5overnment mistake, one of many that they have made, is it in order for the Chief Secretary—
        Mr. Deput3 Speaker Mr. Deput3 Speaker rose—
        Several Hon. Members Several Hon. Members rose—
        Mr. Deputy Speaker: Order. Right hon. and hon. Members should resume their seats when the occupant of the Chair stands up.
        Sir John Hall: On a point of order, Mr.,Deputy Speaker.
        Mr. Deputy Speaker: Sir John Hall.
        Mr. Joel Barnett: On a point of order, Mr. Deputy Speaker.
        Mr. Deputy Speaker: I have called Sir John Hall for a point of order.
        Sir John Hall: On a point of order. Can you advise the House, Mr. Deputy Speaker, how the rights of hon. Members are to be safeguarded? You will be aware that the Report stage—
        It being Twelve o'clock Mr. DEPUTY SPEAKER proceeded pursuant to the order[4th March], to put forthwith the Questions an amendments to the Bill, moved

        219
        by a Minister of the Crown, of which notice had been given.
        Amendments made : No. 220, in page 92, line 28, leave out ' 26th' and insert 27th '.
        No. 222, in line 30, leave out 26th' and insert 27th '.
        No. 224, in line 45, at end insert:
        ' Small gifts to same person
        3A.—(1) Transfers of value made by a transferor in any one year by outright gifts to any one person are exempt to the extent that the values transferred by them (calculated as values on which no tax is chargeable) do not exceed £100.
        (2) In this paragraph "year" has the same meaning as in paragraph 2 above '.
        No. 226, in page 93, line 6, after that ', insert (taking one year with another) '
        No. 228, in line 38, at end insert :
        '(a) in the case of gifts within sub-paragraph (2) below by a parent of a party to the marriage, £5,000 ; '
        No. 230, in line 39, after of ', insert other '.
        No. 233, in page 94, line I, leave out sub-paragraph ' and insert paragraph '.
        No. 237, in page 95, line 9, leave out made by any one transferor '.
        No. 239, in page 95, leave out lines 12 to 17 and insert:
        (b) so far as made on or within one year of the death of the transferor, do not exceed £100,000.
        (2) Notwithstanding anything in paragraph 6 of Schedule 5 to this Act, where property is given to a charity by the making of a distribution payment within the meaning of that paragraph, the distribution payment is not a capital distribution for the purposes of that Schedule '.
        No. 243, in line 27, leave out £50,000 ' and insert £100,000 '.
        No. 244, in line 27, at end insert :
        ' (5) In its application to Northern Ireland, sub-paragraph (4) above shall have effect as if for the references to section 121 of and Schedule 26 to the Finance Act 1972 there were substituted references to Article 5 of and Schedule 2 to the Finance (Northern Ireland) Order 1972 '.
        No. 794, in line 27, at end insert:
        `Gifts to political parties
        9A.—(1) Subject to the provisions of Part II of this Schedule, transfers of value are exempt to the extent that the values transferred by them—

        (a) are attributable to property which becomes the property of a political party qualifying for exemption under this paragraph ; and

        220

        (b) so far as made on or within one year of the death of the transferor, do not exceed £100,000.

        (2) A political party qualifies for exemption under this paragraph if, at the last general election preceding the transfer of value, —

        (a) two members of that party were elected to the House of Commons ; or

        (b) one member of that party was elected to the House of Commons and not less than one hundred and fifty thousand votes were given to candidates who were members of that party '.

        No. 793, in page 96, line 34, leave out preceding '.
        No. 795, in page 98, line 15, after ' paragraph ', insert 9A '. —[Mr. Joel Barnett.]

      Schedule 7

        MISCELLANEOUS EXEMPTIONS AND RELIEFS
        Amendments made : No. 249, in page 102, line 10, after all ', insert known '.
        No. 251, in line 13, leave out from ' are ' to persons '.
        No. 252, in page 106, line 4, after Act ' insert
        'and nothing in section 43 of this Act shall be taken to affect the interpretation of any such provision '.
        No. 253, in line 11, after first ` tax ', insert
        ' or is chargeable on or by reference to death or gifts inter vivos '. —[ Mr. Joel Barnett.]

      Schedule 8

        RELIEF FOR AGRICULTURAL PROPERTY
        Amendments made : No. 257, in page 107, line 34, leave out from replaced ' to two ' in line 35 and insert
        ' other agricultural property and was so occupied by him for a period which, when added to any period during which he so occupied the replaced property, comprised at least '.
        No. 441, in page 108, line 11, at end insert
        ' (3A) Where the agricultural property had, at some time before the transfer, been occupied by the transferor for the purposes of agriculture and was, throughout the period between that time and the transfer, so occupied by a member of his family, the conditions in sub-paragraph (1) above shall be treated as satisfied if they would have been satisfied had the transfer occurred at that time '.
        No. 261, in line 34, at end insert
        ' (5A) For the purposes of sub-paragraph (1) above occupation by a company which is controlled by the transferor shall be treated as

        221
        occupation by the transferor ; and for this purpose the question whether any company is controlled by the transferor shall be determined as for the purposes of paragraph 13 of Schedule 4 to this Act '.
        No. 262, in line 37, at end insert
        ' (7) For the purposes of sub-paragraph (3A) above, a person is a member of the transferor's family if he is the transferor's spouse or a relative of the transferor or of the transferor's spouse or is the spouse of such a relative ; and "relative" means ancestor, lineal descendant, brother, sister, uncle, aunt, nephew or niece, "spouse" includes former spouse, and an adopted person shall be treated as the child of the person or persons by whom he was adopted and an illegitimate person as the child of his mother and reputed father '.
        No. 264, in page 109, line 9, leave out from replaced ' to two ' in line 10 and insert
        ' other agricultural property and was so occupied by it for a period which, when added to any period during which it so occupied the replaced property, comprised at least'.
        No. 270, in page 110, line 21, at end insert
        ' or such other multiple of that rental value as the Treasury may from time to time by order made by statutory instrument prescribe'.
        No. 276, in line 37, at end insert
        ' but taking into account any order under subparagraph (1) above '.
        No. 227, in line 43, leave out from beginning to a ' in line 44 and insert
        'No order shall be made under this paragraph unless a draft of it has been laid before and approved by '.
        No. 279, in line 45, at end insert
        'Channel Islands and Isle of Man
        9A. This Part of this Schedule applies in relation to land or activities carried on in the Channel Islands or the Isle of Man as if the land were situated or the activities were carried on in the United Kingdom ; and the multiplied rental value of agricultural property in the Channel Islands or the Isle of Man shall be the same fraction of its agricultural value as in the case of agricultural property in Northern Ireland '.—[Mr. Joel Barnett.]

      Schedule 9

        VALUATION
        Amendments made : No. 284, in page 113, line 38, leave out ' 26th' and insert 27th '.
        No. 286, in page 114, line 17, leave out 26th ' and insert 27th '.
        No. 288,in page 115, line 33, leave out
        'sub-paragraph (2) below ' and insert:
        'the following provisions of this paragraph'.
        No. 289,line 47, at end, insert:
        '(3) Sub-paragraph (1) above does not apply where the policy is one under which the sum assured becomes payable only if the person whose life is insured dies before the expiry of a specified term or both before the expiry of aspecified term and during the life of a specified persor and which, if that specified term ends, or can, under the policy, be extended so as to end, more than three years after the making of the insurance, satisfies the condition that, if neither the person whose life is insured nor the specified person dies before the expiry of he specified term—

        (a) the premiums are payable during at Is of that term and at yearly ervals ; and

        (b) the premiums payable in any one lye months are not more than twice the premiums payable in any other such period.

        (4) where the policy is one under which—

        (a) the benefit secured is expressed in le of which is published and subject to fluctuation; and

        (b) the payment of each premium secures to the policy of a specified number of such units ;

        then if the value, at the time of the transfer of the units allocated to the policy of premiums is less than the aggregate of what the respective values of the units were at the time of allocation, the value to be taken under sub-paragraph (1) above as a minimum shall be reduced by the difference '.—[Mr. Joel Barnett.]

        Schedule 10

          AMENDMENT OF ESTATE DUTY ENACTMENTS
          Amendments made : No. 290, in page 123, line 28, after transfer ', insert made on death
          No. 291, page 124, line 20, leave out paragraph 4.
          No. 292, in line 31, at end insert made on death '.
          No. 293, in page 125, line 20, leave out paragraph 8.—[Mr. Joel Barnett.]
          Mr. DEPUTY SPEAKER then proceeded pursuant to Order [4th March], to put forthwith the Question, That the Bill be now read the Third time : —
          The House divided : Ayes 278, Noes 253.

          Division No. 139.]

          AYES

          [12 midnight

          Abse, Leo

          Archer, Peter

          Atkins, Ronald (Preston N)

          Allaun, Frank

          Ashley, Jack

          Atkinson, Norman

          Anderson, Donald

          Ashton, Joe

          Bagier, Gordon A. T.

          Barnett, Guy (Greenwich)

          George, Bruce

          Molloy, William

          Barnett, Rt Hon Joel (Heywood)

          Gilbert, Dr John

          Moonman, Eric

          Bates, Alf

          Ginsburg, David

          Morris, Alfred (Wythenshawe)

          Bean, R. E.

          Golding, John

          Morris, Charles R. (Openshaw)

          Benn, Rt Hon Anthony Wedgwood

          Gould, Bryan

          Morris, Rt Hon J. (Aberavon)

          Bennett, Andrew (Stockport N)

          Gourlay, Harry

          Mulley, Rt Hon Frederick

          Bidwell, Sydney

          Graham, Ted

          Murray, Rt Hon Ronald King

          Bishop, E. S.

          Grant, George (Morpeth)

          Newens, Stanley

          Blenkinsop, Arthur

          Hamilton, James (Bothwell)

          Noble, Mike

          Boardman, H.

          Hamilton, W. W. (Central Fife)

          Oakes, Gordon

          Booth, Albert

          Hardy, Peter

          Ogden, Eric

          Boothroyd, Miss Betty

          Harper, Joseph

          O'Halloran, Michael

          Bottomley, Rt Hon Arthur

          Harrison, Walter (Wakefield)

          O'Malley, Rt Hon Brian

          Boyden, James (Bish Auck)

          Hatton, Frank

          Orbach, Maurice

          Bradley, Tom

          Hayman, Mrs Helene

          Ovenden, John

          Bray, Dr Jeremy

          Healey, Rt Hon Denis

          Padley, Walter

          Brown, Hugh D. (Provan)

          Heffer, Eric S.

          Park, George

          Brown, Robert C. (Newcastle W)

          Hooley, Frank

          Parry, Robert

          Brown, Ronald (Hackney S)

          Horam, John

          Pavitt, Laurie

          Buchan, Norman

          Howell, Denis (B'ham, Sm H)

          Pendry, Tom

          Buchanan, Richard

          Hoyle, Doug (Nelson)

          Perry, Ernest

          Butler, Mrs Joyce (Wood Green)

          Huckfield, Les

          Phipps, Dr Colin

          Callaghan, Jim (Middleton & P)

          Hughes, Rt Hon C. (Anglesey)

          Prentice, Rt Hon Reg

          Campbell, Ian

          Hughes, Mark (Durham)

          Prescott, John

          Canavan, Dennis

          Hughes, Robert (Aberdeen N)

          Price, C. (Lewisham W)

          Cant, R. B.

          Hughes, Roy (Newport)

          Price, William (Rugby)

          Carmichael, Neil

          Hunter, Adam

          Radice, Giles

          Carter, Ray

          Irving, Rt Hon S. (Dartford)

          Richardson, Miss lo

          Carter-Jones, Lewis

          Jackson, Colin (Brighouse)

          Roberts, Albert (Normanton)

          Cartwright, John

          Jackson, Miss Margaret (Lincoln)

          Roberts, Gwilym (Cannock)

          Castle, Rt Hon Barbara

          Jay, Rt Hon Douglas

          Robertson, John (Paisley)

          Clemitson. Ivor

          Jeger, Mrs Lena

          Roderick, Caerwyn

          Cocks, Michael (Bristol S)

          Jenkins, Hugh (Putney)

          Rodgers, George (Chorley)

          Cohen, Stanley

          Jenkins, Rt Hon Roy (Stechford)

          Rodgers, William (Stockton)

          Coleman, Donald

          John, Brynmor

          Rooker, J. W.

          Colquhoun, Mrs Maureen

          Johnson, James (Hull West)

          Roper, John

          Concannon, J. D.

          Johnson, Walter (Derby S)

          Rose, Paul B.

          Conlan, Bernard

          Jones, Alec (Rhondda)

          Ross, Rt Hon W. (Kilmarnock)

          Cook, Robin F. (Edin C)

          Jones, Barry (East Flint)

          Rowlands, Ted

          Corbett, Robin

          Jones, Dan (Burnley)

          Ryman, John

          Cox, Thomas (Tooting)

          Judd, Frank

          Sandelson, Neville

          Craigen, J. M. (Maryhill)

          Kaufman, Gerald

          Sedgemore, Brian

          Cronin, John

          Kelley, Richard

          Selby, Harry

          Crosland, Rt Hon Anthony

          Kerr, Russell

          Shaw, Arnold (Ilford South)

          Cryer, Bob

          Kilroy-Silk, Robert

          Sheldon, Robert (Ashton-u-Lyne)

          Cunningham, G. (Islington S)

          Kinnock, Neil

          Shore, Rt Hon Peter

          Cunningham, Dr J. (Whiteh)

          Lambie, David

          Short, Rt Hon E. (Newcastle C)

          Dalyell, Tam

          Lamborn, Harry

          Short, Mrs Rençe (Wolv NE)

          Davidson. Arthur

          Lamond, James

          Silkin, Rt Hon John (Deptford)

          Davies, Bryan (Enfield N)

          Latham, Arthur (Paddington)

          Silkin, Rt Hon S. C. (Dulwich)

          Davies, Denzil (Llanelli)

          Leadbitter, Ted

          Sillars, James

          Davies, Ifor (Gower)

          Lee, John

          Silverman, Julius

          Davis, Clinton (Hackney C)

          Lewis, Arthur (Newham N)

          Skinner, Dennis

          Deakins, Eric

          Lewis, Ron (Carlisle)

          Small, William

          Dean, Joseph (Leeds West)

          Lipton, Marcus

          Smith, John (N Lanarkshire)

          Delargy, Hugh

          Litterick, Tom

          Snape, Peter

          Dell, Rt Hon Edmund

          Loyden, Eddie

          Spearing, Nigel

          Dempsey, James

          Luard, Evan

          Spriggs, Leslie

          Doig, Peter

          Lyon, Alexander (York)

          Stallard, A. W.

          Dormand, J. D.

          Lyons, Edward (Bradford W)

          Stewart, Rt Hon M. (Fulham)

          Douglas-Mann, Bruce

          Mabon, Dr J. Dickson

          Stott, Roger

          Duffy, A. E. P.

          McCartney, Hugh

          Strang, Gavin

          Dunn, James A.

          McElhone, Frank

          Strauss, Rt Hon G. R.

          Dunnett, Jack

          MacFarquhar, Roderick

          Taylor, Mrs Ann (Bolton W)

          Dunwoody, Mrs Gwyneth

          McGuire, Michael (Ince)

          Thomas, Jeffery(Abertillery)

          Eadie, Alex

          Mackenzie, Gregor

          Thomas, Mike (Newcastle E)

          Edge, Geoff

          Mackintosh, John P.

          Thomas, Ron(Bristol NW)

          Ellis, Tom (Wrexham)

          Maclennan, Robert

          Thomas, Ron (Bristol NW)

          English, Michael

          McMillan, Tom (Glasgow C)

          Thorne, Stan (Preston South)

          Ennals, David

          McNamara, Kevin

          Tierney, Sydney

          Evans, John (Newton)

          Madden, Max

          Tinn, James

          Ewing. Harry (Stirling)

          Wagee Bryan

          Tomlinson, John

          Faulds, Andrew

          Mahon, Simon

          Torney, Tom

          Fernyhough, Rt Hon E.

          Marks, Kenneth

          Urwin, T. W.

          Flannery, Martin

          Marquand, David

          Varley, Rt Hon Eric G.

          Fletcher, Raymond (Ilkeston)

          Marshall, Dr Edmund (Goole)

          Wainwright, Edwin (Dearne V)

          Fletcher Ted (Darlington)

          Marshall, Jim (Leicester S)

          Walden, Brian (B'ham, L'dyw'd)

          Foot, Rt Hon Michael

          Mason, Rt Hon Roy

          Walker, Harold (Doncaster)

          Ford, Ben

          Meacher, Michael

          Walker, Terry (Kingswood)

          Forrester, John

          Mellish, Rt Hon Robert

          Ward, Michael

          Fowler, Gerald (The Wrekin)

          Mikardo, Ian

          Watkins, David

          Fraser, John (Lambeth, N'w'd)

          Millan, Bruce

          Watkinson, John

          Freeson, Reginald

          Miller, Dr M. S. (E Kilbride)

          Weetch, Ken

          Garrett, John (Norwich S)

          Miller, Mrs Millie (Ilford N)

          Weitzman, David

          Garrett, W. E. (Wallsend)

          Mitchell. R. C. (Soton, Itchen)

          Wellbeloved, James

          224

          225

          White, Frank R. (Bury)

          Williams, Alan Lee (Hornch'ch)

          Woodall, Alec

          White, James (Pollok)

          Williams, Rt Hon Shirley (Hertford)

          Wrigglesworth, Ian

          Whitehead, Phillip

          Williams, W. T. (Warrington)

          Young, David (Bolton E)

          Whitlock, William

          Wilson, Alexander (Hamilton)

          TELLERS FOR THE AYES:

          Willey, Bt Hon Frederick

          Wilson, William (Coventry SE)

          Mr. John Ellis and

          Williams, Alan (Swansea W)

          Wise, Mrs Audrey

          Mr. David Stoddart.

          NOES

          Adley, Robert

          Glyn, Dr Alan

          Maxwell-Hyslop, Robin

          Aitken, Jonathan

          Goodhart. Philip

          Mayhew, Patrick

          Alison, Michael

          Goodhew, Victor

          Meyer, Sir Anthony

          Arnold, Tom

          Goodlad, Alastair

          Miller, Hal (Bromsgrove)

          Atkins, Rt Hon H. (Spelthorne)

          Gorst, John

          Mills, Peter

          Awdry, Daniel

          Gow, Ian (Eastbourne)

          Miscampbell, Norman

          Bain, Mrs Margaret

          Gower, Sir Raymond (Barry)

          Mitchell. David (Basingstoke)

          Baker, Kenneth

          Grant, Anthony (Harrow C)

          Moate, Roger

          Banks, Robert

          Gray, Hamish

          Monro, Hector

          Beith, A. J.

          Grieve, Percy

          Montgomery, Fergus

          Bell, Ronald

          Griffiths, Eldon

          Moore John (Croyden C)

          Bennett, Sir Frederic (Torbay)

          Grist Ian

          More, Jasper (Ludlow)

          Bennett, Dr Reginald (Fareham)

          Grylls Michael

          Morgan, Geraint

          Benyon,W.

          Hall, Sir John

          Morgan-Giles, Rear-Admiral

          Berry, Hon Anthony

          Hall-Davis, A. G. F.

          Morris, Michael (Northampton S)

          Biffen, John

          Hampson, Dr Keith

          Morrison, Charles (Devizes)

          Biggs-Davison, John

          Hannam, John

          Morrison, Hon Peter (Chester)

          Blaker, Peter

          Hannam, John

          Neave, Airey

          Boscawen, Hon. Robert

          Harrison, Col Sir Harwood (Eye)

          Nelson, Anthony

          Bowden, A. (Brighton, Kemptown)

          Harvie Anderson, Rt Hon Miss

          Neubert, Michael

          Boyson, Dr. Rhodes (Brent)

          Hastings Stephen

          Newton, Tony

          Braine, Sir Bernard

          Havers, Sir Micheel

          Nott, John

          Brittan, Leon

          Hawkins, Paul

          Onslow, Cranley

          Brotherton, Michael

          Hayhoe, Barney

          Oppenheim, Mrs Sally

          Brown, Sir Edward (Bath)

          Henderson, Douglas

          Page, John (Harrow West)

          Bryan, Sir Paul

          Heseltine, Michael

          Page, Rt Hon R. Graham (Crosby)

          Buchanan-Smith, Alick

          Hicks, Robert

          Pardoe, John

          Buck, Antony

          Higgins, Terence L.

          Parkinson, Cecil

          Budgen, Nick

          Holland, Philip

          Penhaligon, David

          Bulmer, Esmond

          Holland, Peter

          Percival, Ian

          Burden, F.A.

          Howe, Rt Hn Sir Geoffrey

          Peyton, Rt Hon John

          Burden, F. A.

          Howell David (Gulldford)

          Pink, R. Bonner

          Carlisle, Mark

          Howells. Geraint (Cardign)

          Pym, Rt. Hon Francis

          Chalker, Mrs Lynda

          Hunt, John

          Raison, Timothy

          Channon, Paul

          Clark, Alan (Plymouth, Sutton)

          Hurd, Douglas

          Rathbone, Tim

          Clark, William (Croydon S)

          Irving, Charles (Cheltenham)

          Rawlinson, Rt Hon Sir Peter

          Clarke, Kenneth (Rushcliffe)

          James, David

          Rees, Peter (Dover & Deal)

          Clegg, Walter

          Jenkin, Rt Hon P.(Wanst'd & W'df'd)

          Rees, Davies, W.R.

          Cockcroft, John

          Jessel, Toby

          Cooke, Robert (Bristol W)

          Johnson Smith, G.(E.Grinstead)

          Reid George

          Cope, John

          Jones, Arthur (Daventry)

          Renton, Rt Hon Sir D. (Hunts)

          Cormack, Patrock

          Jopling Michael

          Renton, Tim (Mid-Sussex)

          Costain, A.P.

          Joseph, Rt Hon Sir Keith

          Ridley, Hon Nicholas

          Crawford, Douglas

          Kaberry, Sir Donald

          Ridsdale, Julian

          Critchley, Julian

          Kershaw, Anthony

          Rifkind, Malcolm

          Crowder, F.P.

          Kilfedder, James

          Roberts, Michael (Cardiff NW)

          Dean, Paul (N Somerset)

          Kimball, Marcus

          Roberts, Wyn (Conway)

          Dodsworth, Geoffrey

          King, Evelyn (South Dorset)

          Ross, Stephen (Isle of Wight)

          Douglas-Hamilton, Lord James

          King, Tom (Bridgwater)

          Rossi, Hugh (Hornsey)

          du Cann, Rt Hon Edward

          Knight Mrs Jill

          Rost, Peter (SE Derbyshire)

          Durant, Tony

          Knox, David

          Royal, Sir Anthony

          Eden, Rt Hon Sir John

          Lamont, Norman

          Sainsbury, Tim

          Edwards, Nicholas (Pembroke)

          Lane, David

          St. John-Stevas, Norman

          Elliott, Sir William

          Lamont, Norman

          Shaw, Giles (Pudsey)

          Emery, Peter

          Lane, David

          Shelton, William (Streatham)

          Evans, Gwynfor (Carmarthen)

          Lawrence Ivan

          Shepherd, Colin

          Ewing, Mrs Winifred (Moray)

          Lawson, Nigel

          Shersby, Michael

          Eyre Reginald

          Le Marchant, Spencer

          Sims, Roger

          Faibairn, Nicholas

          Lester Jim (Beeston)

          Sinclair, Sir George

          Fairgrieve, Russell

          Lewis, Kenneth (Rutland)

          Skeet, T.H.H.

          Farr, John

          Lloyd, Ian

          Smith, Cyril (Rochdale)

          Fell, Anthony

          Loveridge, John

          Smith, Dudley (Warwick)

          Finsberg, Geoffrey

          Luce, Richard

          Speed, Keith

          Fisher, Sir Nigel

          Mac Cormick, Iain

          Spence, John

          Fletcher, Alex (Edinburgh N)

          Mc Crindle, Robert

          Spicer, Michael (S Worcester)

          Fletcher, Miss Janet

          MacGregor, Neil

          Sproat, Iain

          Fowler, Norman (Sutton C'f'd)

          MacGregor, John

          Stanley, John

          Fox, Marcus

          Macmillan, Rt Hon M. (Farnham)

          Steel, David (Roxburgh)

          Fraser, Rt Hon H. (Stafford & St)

          McNair-Wilson, M. (Newbury)

          Steen, Anthony (Wavertree)

          Freud, Clement

          McNair-Wilson, P. (New Forest)

          Stewart, Donald (Western Isles)

          Fry, Peter

          Marshall, Michael (Arundel)

          Stewart, Ian (Hitchin)

          Gardiner, George (Reigate)

          Marten, Neil

          Stokes, John

          Gardner, George (S Fylde)

          Mates, Michael

          Stradling Thomas, J.

          Gilmour, Rt Hon Ian (Chesham)

          Maudling, Rt Hon Reginald

          Tapsell, Peter

          Gilmour, Sir John (East Fife)

          Mawby, Ray

          Taylor, Teddy (Cathcart)

          226

          227

          Tebbit, Norman

          Wiggers, Peter

          Wigley, Dafydd

          Temple-Morris, Peter

          Wakeham, John

          Wilson, Gordon (Dundee E)

          Thatcher, Rt Hon Margaret

          Walker, Rt Hon P. (Worcester)

          Winterton, Nicholas

          Thomas, Dafydd (Merioneth)

          Walters, Dennis

          Wood, Rt Hon Richard

          Thompson, George

          Watt, Hamish

          Young, Sir G. (Ealing, Acton)

          Townsend, Cyril D.

          Weatherill, Bernard

          Trotter, Neville

          Wells, John

          TELLERS FOR THE NOES:

          Tugendhat, Christopher

          Welsh, Andrew

          Mr. Adam Butler and

          van Straubenzee, W. R.

          Whitelaw, Rt Hon William

          Mr. Fred Silvester.

          Vaughan, Dr. Gerard

          Wiggin, Jerry

          Question accordingly agreed to.
          Bill read the Third time and passed.

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

    EDUCATION (NORTHUMBERLAND)
    12.12 a.m.
    Mr. A. J. Beith: I am grateful to the Under-Secretary of State for Education and Science, the hon. Member for Putney (Mr. Jenkins), for agreeing to reply to the debate tonight. I know that his hon. Friend the Member for Durham, North-West (Mr. Armstrong) the other Under-Secretary, would have liked to be here ; he has had the courtesy to explain to me why he is unable to be present.
    I look forward to the Under-Secretary's reply, knowing that he will have been well briefed by the Department and will take careful note of what is said.
    After the party political divisions of the evening we turn to a subject which does not, in Northumberland at least, arouse party controversy to the same extent because the principle of comprehensive education is not now a party political issue there. Indeed, it is a Conservative-dominated county council which for 10 years has been committed to reorganising on comprehensive lines as quickly as local circumstances will permit. The arguments that have taken place have been about the particular pattern of reorganisation and the timing.
    Several areas of Northumberland have already been reorganised and others are fairly well advanced. There are difficulties, there are teething troubles. There are troubles which sometimes seem slightly larger than that in some areas. Nevertheless, considerable progress has been made. The Coquet Valley, part of my constituency, has been reorganised.
    228
    The reorganisation in the Berwick district is now proceeding, and the county council has been helpful in recognising the anxieties of the parents about the building programme and trying to meet them halfway.
    The areas that remain to be reorganised are the most difficult ones, particularly the Alnwick area, for which the county has recently put forward proposals for discussion. The education authority recognises that no scheme for the Alnwick area is likely to be entirely satisfactory without substantial re-building. Its present proposals have attracted few supporters, and the strongest criticis of them include those who are keen to see comprehensive education but regard this scheme as the worst possible way to introduce it.
    What I hope the Minister will concede tonight is that Northumberland is in no way a "backsliding" authority in regard to comprehensive education and that he will not put pressure on the authority to rush into this particular scheme for Alnwick if, after discussion, it is found to be unacceptable.
    It is difficult to foresee acceptance by the local community of a high school based on the totally inadequate facilities and site of the Alnwick Secondary Modern School. I mention this not because they are matters about which the Minister need be concerned at this stage, but to illustrate why there is considerable controversy. The secondary modern school is already surrounded by houses and the site cannot be extended ; the access roads are unsatisfactory. The site is already saturated by buildings and there obviously is not sufficient room for expansion. The main original buildings of the school, built in 1939, would be completely inadequate for the purposes of a high school and could be regarded as obsolete. Some of the other parts of the school are unsuitable, except for the most modern blocks. Therefore, it would be difficult to accommodate a high school on the site.

    229
    The one school in Alnwick which would be suitable for the development of a high school is the Duchess's School, a modern school, with which I have been most familiar because of the three election counts in which I have taken part—particularly memorable since they were nail-biting and cliff-hanging affairs. The exterior of that school has become familiar to a wider public, too, because it has figures on television screens each time the long-awaited count has been declared. There is in that building the basis for a modern high school. Although there are some problems on that site, too, there is a feeling among many people that it would be better place for a high school.
    There are further difficulties in the proposals for the Alnwick area. For example, the proposed high school serving Ample and sited in South Broomhill is questionable, particularly in respect of its prospects of establishing a viable sixth form. It is thought by some that this sixth form work might be better concentrated in Alnwick. 1 do not seek detailed comment from the Minister on this matter, but I put it forward to illustrate the difficulties.
    The parents whose children will attend these schools and the teachers must have the chance to hammer out a workable scheme with the education authority. At the moment there is a fear, implicit in the county council's attitude, that unless we rush into the present proposals the Minister will push the county into an even less satisfactory scheme. In Northumberland there is no suggestion of a rearguard attempt to hang on to selection and it would be quite inappropriate for the Minister's shadow to be cast over the discussions. I hope that he will not only remove that shadow but go further and recognise that if, as I believe, the Alnwick area cannot be reorganised without new building, money will be found to enable it to proceed. I hope we shall not be pushed rashly into any proposals. A "camping-out" comprehensive is the last thing we want.
    I turn to some further aspects of comprehensive reorganisation in a scattered area, since there have been some serious difficulties over a wider area than Alnwick alone. I hope the Minister will give some indication of what advice the Department gives and what study has been
    230
    made of these problems. In adopting a three-tier system, with middle schools for the nine to 13 age group, Northumberland left itself with difficulties which I feel could have been avoided if instead it had opted for a sixth-form college, with a middle school from 11 to 16, at least in some of the rural areas.
    As it is, some children are having to board at the middle school from the age of nine in so Tie parts of the country. I find that situation far from satisfactory. Although the number of children involved is not large, many parents are worried at the prospect of children having to board at an early age. Living as they do in an isolated situation, these parents accept the need for boarding or long travel-toschool distances for the sake of their children's education when they are older, but they find it hard to accept at nine.
    Furthermore, some village primary schools becorie threatened with closure once the nine-year-old to 11-year-old groups are taken out of them. The reduction of the age range of the school by two years cuts the roll to a point at which closure is threatened. We have bussing on a colossal scale to convey children to distant schools. The further away the middle schools and high schools are, the more of this additional transport there is.
    The three-t er scheme leaves no function for some existing schools: an excellent secondary school at Belford, built in 1960, is threatened with redundancy under the county's proposals.
    No one should pretend that there is a simple, ideal scheme for reorganisation in Northumberland, but there would have been many advantages in applying an alternative scheme to some of the rural areas. My personal preference is for the sixth-form co lege pattern, which could have been considered more fully for the Alnwick area, in conjunction with one of the other are is, and which might have done away with the need to develop a high school at South Broomhill.
    The county quotes as a reason for rejecting the sixth-form college scheme that the Department of Education and Science requires at least 500 pupils for a sixth-form college. To apply such a high minimum in an area of low population like Northumberland would be absurd. I hope that the Minister will say here

    231
    and now that he would not take so inflexible a line, particularly if there was a chance to associate further education work with the college. Although such a unit might be below the minimum size for normal sixth form college purposes, because it had a further education element it would be much more acceptable for some areas of the county. For most parts of the county the decision has been made, and that possible pattern of reorganisation is no longer open. If that has been, in part at least, because of a rigid line by the Department, I hope that it will not make the same mistake elsewhere, and that it will make it possible for the county to consider the sixth-form college system in its remaining areas.
    There is no college of further education in North Northumberland. Those who need such facilities must go to Ashington, Tyneside or Edinburgh. For someone living in Berwick this means a round trip of over 120 miles, often involving staying away from home for 13 hours in the day. That is a tremendous discouragement to young people who could benefit from further education. Many young people who are put off by the early start and late return fail to get the opportunities that they should have, because they are unwilling to undertake courses involving so much travelling, or drop out after they have started such courses. The ones who persevere often decide that they will be much better off if they move to where the college is. They take up lodgings there and stay to get a job. Therefore, if they acquire new skills, these skills are not brought back to the area. Those people are added to the depopulation statistics, which are severe in our part of the country. They represent a further drain of skilled people from the area.
    Obviously, the population of the area would not be enough to support a large college, but a substantial part of the Borders region of Scotland would benefit from the development of further education facilities in Berwick, and could help to finance it. I hope that no red tape—or "tartan tape "—will be put in the way of co-operation between the authorities on either side of the Border. The former local authorities of Northumberland and Berwickshire were agreed in principle and were moving in that direc-
    232
    tion. I hope that the English and Scottish Government Departments will be ready to work together and make cross-border co-operation on the issue possible.
    Such facilities could be provided more economically if they were attached to an existing school, such as the new high school at Berwick. There is a need for flexibility and inventiveness to fill a severe gap in the education system of Northumberland. I understand that Northumberland County Council has been seeking such a development since 1972, but has still not gained departmental approval. I hope that it will not be long delayed.
    To sum up, on secondary education I ask the Minister to recognise that Northumberland must be helped and encouraged to sort out the problem of Alnwick, with full and genuine discussion with parents and teachers. There should be no pressure to get off to a bad start. As regards further education, I hope that the Minister will recognise how badly we are served, and that he will give favourable consideration to proposals emanating from the Northumberland authority for developments at Berwick.
    12.15 a.m.
    The Under-Secretary of Slate for Education and Science (Mr. Hugh Jenkins): I am grateful to the hon. Member for Berwick-upon-Tweed (Mr. Beith) for the pleasant manner in which he referred to the fact that he is not getting the first team, as it were, and for the fact that he is willing to accept me as a stand-in on this occasion. I have spent some part of today acquainting myself with the subject of the debate. I hope that the hon. Gentleman will find not only that I am properly briefed but that I have succeeded in understanding the brief. I thank him for the way in which he has so clearly presented the argument. He has made it possible for someone who is not readily familiar with the subject to follow the case that he is making on both of the main issues that he has brought before the House.
    The hon. Gentleman will be well aware from Circular 4/74 that it is the Government's intention to end selection in secondary education. As he has said, there is no argument about that. We

    233
    have made it clear on a number of occasions that local education authorities are expected to press on with reorganisation as quickly as possible. As the hon. Gentleman properly said, there can be no complaint about the general policy and attitude of the Northumberland authority on this matter.
    It was not long after the publication of the circular that the Northumberland Education Authority produced a document dealing with the reorganisation of Alnwick and Amble school district. They are the only areas in Northumberland for which secondary reorganisation proposals have not been implemented or approved by the Secretary of State. My right hon. Friend has expressed satisfaction with the progress that Northumberland has made.
    I pay tribute to the care with which the authority has formulated its proposals in the past. I understand that the discussion document in connection with Alnwick and Amble was approved by the education committee as a basis upon which discussions with teachers, managers, governors and parents should proceed. It is no more than that. The discussions are still taking place, and it is the intention of the authority to press ahead to complete the secondary reorganisation in its area. The details are a matter for the authority to formulate, but we are not leaving the matter at that.
    The hon. Gentleman said that there are problems in some areas which should be recognised by the Government and that there should not be pressure to run into an unsatisfactory scheme. I believe that to be one of his main points. I understand him to say that we should not rush ahead with a scheme which might not be regarded subsequently as the one which everybody wished to adopt. I can give the hon. Gentleman the assurance that he seeks with no equivocation.
    The Government made it clear in Circular 4/74 that there is more than one pattern of secondary reorganisation which is acceptable. We have never suggested that a uniform pattern must be adopted over the whole area of a large county. Because a particular formula has been adopted in some parts of the county it does not necessarily mean—and it does not mean the contrary—that the same pattern has to be adopted throughout the area or in the case that we have under
    234
    discussion. The relative advantages of various type: of education must depend to a great extent on practical considerations such as the availability of buildings and staff and the geography of the area, and not only upon the distribution of the population but whether it is increasing, static or even declining. There are also other purely educational considerations, such as the arrangements for sixth-form work and the deployment of the staff available. M y right. hon. Friend takes the view that these considerations are decisions for individual local education authorities to make after due consultation with local interests. As we all know, those consultations are taking place currently.
    I am, of course, aware that successive Secretaries of State have approved the proposals for a middle school system for the area for which the Northumberland authority has so far made proposals. However, this does not mean that a similar system has to be adopted for Alnwick and Amble. If the scheme that the authority has put forward seems, after appropriate consideration, to be unacceptable locally, no doubt it will have another look at the problem and decide either to reaffirm or to came up with some variation in the proposals now under discussion. Officials of the; Department and inspectors are always ready to give informal advice on the understanding that the final decision on what is ultimately to be submitted to the. Secretary of State is a matter solely for the local education authority.
    Dr. Keith Hampson: That is a most important point. The hon. Gentleman seemed to imply that a certain constraint had been placed on a particular system—that is, a sixth-form college system—when he said that it required a school of 500 pupils. Is the Department that rigid, or is it prepared to be flexible in a rural area?
    Mr. Jenkins: We are not as rigid as that. There are certain problems. It is not sufficient to have forms of education which are satisfactory in other respects but arc not educationally satisfactorily. We have to make that qualification. But we are not laying down hard and fast rules on this. There are certain problems in rural areas which make it difficult sometimes to reach conclusions which in

    235
    other ways we should like to reach. But the Department has no hard and fast rule which says "No. This may not be done ". However, it is true that in consultation with the local education authority mutual conclusions are sometimes reached that a solution which may seem practicable then proves to be impracticable. This may be one such case. But the implied rigidity to which the hon. Gentleman referred is not so rigid as he suggested.
    The hon. Gentleman touched on the problem of transport. Transport arrangements seem to work quite satisfactorily because not only is the road system good but it is not heavily trafficked. No child of nine is compelled to board if his parents do not wish him to, because arrangements are made for him to travel to school daily. I understand that there are no nine or 10-year olds in the boarding house at Rothbury at present.
    The procedure laid down in Section 13 of the 1944 Education Act is that when proposals have been submitted to the Secretary of State the authority must then give public notice of this, and the managers or governors of any voluntary school affected by the proposals or any 10 or more local government electors for the area have the opportunity during the ensuing two months of forwarding objections to the proposals to the Secretary of State. All the points that have been mentioned and any others which arise may be submitted as objections. After he has considered the proposals and the objections, the Secretary of State will decide whether or not to approve the proposals. It is important that not only the proposals but the objections to the proposals can be, and will be, considered by the Secretary of State. Even if he approves, he may, of course, make some modifications to the proposals coming forward to him.
    Because the Secretary of State has the statutory powers, it would be wrong of me to comment on the various local objections that the hon. Gentleman has so ably voiced. He himself suggested that it would be wrong to comment now on the various local objections. To do so might appear to prejudice the Secretary of State's decision before objections had been lodged. However, I assure the hon. Gentleman that his points about the organisation of schools, about time and
    236
    cost involved in transporting children to school and about the desire of communities to retain their own schools will all be taken into account and given careful consideration. I emphasise that no decisions have been reached by the local education authority, and still less by my right hon. Friend. I suppose that it would be true to say that, formally, my right hon. Friend is not yet seized of the problem, so the hon. Gentleman can be assured that he has not closed his mind to it.
    Mr. Beith: What the hon. Gentleman says is true. However, his right hon. Friend's attitudes are to some extent predicted, and this influences people in what they think may be possible.
    Mr. Jenkins: I understand that view That is why I was giving the hon. Gentleman these assurances.
    The hon. Member asked about resources. In this respect I cannot give him much hope because this is an area where no great growth in the secondary school population can be expected. The circular makes it clear that authorities are expected to form their proposals on the basis of their existing resources. Of course, I cannot anticipate what the future will bring, but the authority would be wise to plan on the basis of existing accommodation.
    I now turn to the other matter raised by the hon. Member—further education. The Government accept that further education should be available to those who want it as far as can reasonably be managed.
    In recent speeches my right hon. Friend has re-emphasised the need for both higher education and lower-level courses, particularly provision for the 16 to 19year-olds. But the responsibility is with the local education authority, and the Northumberland authority has shown that it recognises this by its transport arrangements to Ashington College.
    It is unfortunate that people from the Berwick area and, to a lesser extent, those from Alnwick have to travel so far for further education, although I understand that Ashington College does have some hostel accommodation.
    In his speech the hon. Member suggested that further education provision

    237
    should be made at Berwick and at Alnwick. I understand that the local education authority has put forward proposals for provision only at Berwick. Even so, the problem will be whether or not the scale of the demand would be sufficient to make any facility viable. It is no good having a college or an outpost of a college which is not only uneconomic but lacks the necessary academic strength. Nevertheless, my right hon. Friend will give these proposals careful consideration. If there seems to be a good case for provision in North Northumberland, we shall certainly do our best to find the capital allocation necessary for any buildings required.
    The hon. Member suggested that students from across the border could
    238
    help to strengthen the further education facilities at Berwick. We will, of course, also look into this matter, but it is questionable whether a sizeable Scottish invasion can be expected, even if on this occasion it might be more welcome than in the past.
    I understand and welcome the hon. Member's concern for satisfactory education in his area. I assure him that the Government share this concern and will seek to support the Northumberland authority to whatever extent my right hon. Friend finds possible and practicable.
    Question put and agreed to.
    Adjourned accordingly at twenty-two minutes to One o'clock.

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  Housing (Consumption of Resources)
  Local Authority Mortgages
  Local Authority Mortgages
  Housing Stock
  Housing Stock
  M40 (Extension)
  M40 (Extension)
  A259
  A259
  A21
  A21
  Rent Act 1974
  Rent Act 1974
  New Towns
  New Towns
  Buildings (Safety)
  Buildings (Safety)
  Rents
  Rents
  Housing Associations (Grants)
  Housing Associations (Grants)
  Bus Fares
  Bus Fares
  Water Pollution Control
  Water Pollution Control
  Waste Paper
  Waste Paper
  Government Transport
  Government Transport
  Construction Industry
  Construction Industry
  Environmental Board (Scotland)
  Environmental Board (Scotland)
  Allotments
  Allotments
AGRICULTURE, FISHERIESAND FOOD
  Food Production
  Food Production
  Rents
  Rents
  Beef
  Beef
  Sugar
  Sugar
  Eggs
  Eggs
  Milk
  Milk
  Fishing Grants
  Fishing Grants
FOREIGN AND COMMONWEALTH AFFAIRS
  Northern Ireland
  Northern Ireland
  China (Hong Kong Representation)
  China (Hong Kong Representation)
  Hong Kong
  Hong Kong
  Mexico
  Mexico
  Falkland Islands
  Falkland Islands
  Simonstown Agreement
  Simonstown Agreement
  Passports
  Passports
NORTHERN IRELAND
  Cease-fire Murders
  Cease-fire Murders
  IRA Internees
  IRA Internees
PRICES AND CONSUMER PROTECTION
  Bread
  Bread
  Housing
  Housing
  Local Government Participation
  Local Government Participation
INDUSTRY
  Process Plants (Investment)
  Process Plants (Investment)
  Planning Agreements
  Planning Agreements
  Workers' Co-operatives
  Workers' Co-operatives
  Requirements Boards
  Requirements Boards
  British Steel Corporation
  British Steel Corporation
  Government Aid
  Government Aid
  Regional Policy
  Regional Policy
  National Shipbuilding Corporation
  National Shipbuilding Corporation
  Chrysler Corporation
  Chrysler Corporation
  Northern Region
  Northern Region
  Aerospace
  Aerospace
  Birmingham
  Birmingham
  National Enterprise Board
  National Enterprise Board
  Aviation and Shipbuilding(Nationalisation)
  Aviation and Shipbuilding(Nationalisation)
  Waste Management Advisory Council
  Waste Management Advisory Council
  Essex (New Jobs)
  Essex (New Jobs)
  Information (Confidentiality)
  Information (Confidentiality)
  Knowsley Industrial Estate
  Knowsley Industrial Estate
  Kirkby
  Kirkby
  Postal Services
  Postal Services
  Ebbw Vale
  Ebbw Vale
  Industrial Development Certificates
  Industrial Development Certificates
  Forklift Trucks
  Forklift Trucks
  EEC Regional Fund
  EEC Regional Fund
  Waste Paper
  Waste Paper
  Tobacco
  Tobacco
  Merseyside
  Merseyside
  Telephone Cables (Prices)
  Telephone Cables (Prices)
DEFENCE
  Harrier Aircraft
  Harrier Aircraft
  Housing (Ex-Service Men)
  Housing (Ex-Service Men)
  Jetstream Aircraft
  Jetstream Aircraft
  Masirah
  Masirah
  TAVR (Training)
  TAVR (Training)
NATIONAL FINANCE
  Nationalised Industries
  Nationalised Industries
  Disabled Persons and One-Parent Families
  Disabled Persons and One-Parent Families
  Value Added Tax
  Value Added Tax
  Capital Transfer Tax
  Capital Transfer Tax
  Unemployment
  Unemployment
  Incomes and Production
  Incomes and Production
  Banks
  Banks
  Public Works Loan Board
  Public Works Loan Board
  Capital Gains Tax
  Capital Gains Tax
  PAYE Administration
  PAYE Administration
  Dividend Income Taxation
  Dividend Income Taxation
OVERSEAS DEVELOPMENT
  Falkland Islands
  Falkland Islands
SCOTLAND
  Dover House
  Dover House
  Schools (Social and Recreational Activities)
  Schools (Social and Recreational Activities)
  Housing Expenditure
  Housing Expenditure
  Environment Preservation
  Environment Preservation
  Caravans
  Caravans
SOCIAL SERVICES
  Wives and Mothers
  Wives and Mothers
  Mentally-Handicapped Children
  Mentally-Handicapped Children
  Dentists
  Dentists
  Hospitals (Maidstone)
  Hospitals (Maidstone)
  Vasectomy
  Vasectomy
  Benefits (Strikers and Dependants)
  Benefits (Strikers and Dependants)
WALES
  EEC Grants and Loans
  EEC Grants and Loans

Preamble
The House met at half past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Ely.
The Marquess of Normanby—Took the Oath.
The Lord Hemphill—Took the Oath.

CONSERVATION OF NATURE CONVENTION
Lord CHELWOOD: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government why they have not yet ratified the International Union for the Conservation of Nature's Convention on International Trade in Endangered Species, whether they will now do so, and whether they intend to introduce a licensing system for the importation of all species in the Convention.
Lord MELCHETT: My Lords, we have made it clear that we hope shortly to be in a position to ratify the Convention. Complex discussions are still in progress, but I hope to be able to make a full statement during the Second
2
Reading debate on 20th March on the Endangered Species Bill to be introduced by my noble friend Lord Wynne-Jones.
Lord CHELWOOD: My Lords, I am most grateful to the noble Lord for that reply. Will the noble Lord agree that licensing facilities would be a great deal easier if only a small number of seaports and airports had such facilities for the identification, handling and care of imported wild birds, mammals and other animals?
Lord MELCHETT: My Lords, it may well be that this would facilitate matters, but I am afraid that I am not in a position to say whether or not it would at this moment. I would ask the noble Lord to wait for the full Statement which I have said I shall be making.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, does the ratification or its implementation require legislation by Parliament? If it does, will the noble Lord consider introducing the necessary legislation in this House rather than the other House?
Lord MELCHETT: My Lords, the answer to the first part of the noble and learned Lord's question is that legislation is not necessary. However, it is possible that consolidation of existing legislation would be desirable, and that will be done as soon as possible.
Lord CRAIGTON: My Lords, is the noble Lord aware that we should be very glad if this could be pressed on with at the greatest possible speed? Is the noble Lord further aware that

3
nine of the fifty-eight nations who signed the Convention have already ratified it and that the last one was the first European country; namely, the Federal Republic of Germany? If Britain could be the tenth, we should have the honour of bringing this Convention into operation.
Lord MELCHETT: My Lords, Her Majesty's Government are well aware of the urgency of this matter, but, as I have said, we are pressing ahead with the complicated discussions as fast as we possibly can. May I say that the noble Lord is two nations ahead of me—I understood that only seven countries have so far actually ratified the Convention.
Lord CRAIGTON: My Lords, Peru and West Germany were the last two.
Lord CHELWOOD: My Lords, as six Government Departments are involved in this matter in one way or another, will the noble Lord say which Department is responsible for coordinating the Government's attitude?
Lord MELCHETT: My Lords, the Department of the Environment is responsible for this.

EEC: REGIONAL DEVELOPMENT FUND PROPOSALS
2.39 p.m.
Baroness WARD of NORTH TYNE-SIDE: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a Statement giving details of how it it is proposed to allocate the EEC Regional Fund between the various parts of the United Kingdom entitled to benefit.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Lord Beswick): My Lords, the arrangements for the Regional Development Fund have only recently been agreed and the Council of Ministers has not yet formally adopted them. The Government have not decided the use to be made of our receipts from the Fund.
Baroness WARD of NORTH TYNE-SIDE: My Lords, may I ask whether the noble Lord would kindly set out in detail all the various sections of the EEC which make grants from one source or another? I understand that very many grants are already in operation. Is the noble Lord aware that for the interests of the community as a whole in the United Kingdom, it would be very much simpler if we could all know exactly what grants have been made and what operations are already in action? It would be very helpful if we could have this information so that we should all know exactly where we stand and what money is in fact forth-coming at present.
Lord BESWICK: My Lords, I will consider what the noble Baroness has said and see whether I can help her, but the Question relates to the Regional Development Fund. As I have said, this has not yet been approved and therefore I cannot give her any more information about it.
Lord SELSDON: My Lords, may I ask the noble Lord whether he would care to draw more attention to the work of the European Investment Bank, and whether he is aware that the European Investment Bank has substantial funds available for allocation to regions of the United Kingdom? May I further ask the noble Lord whether something could be done to communicate the work of the European Investment Bank throughout the United Kingdom, particularly to British industry in the regions?
Lord BESWICK: My Lords, it might be helpful if the noble Lord were to put down a Question on this matter and then the information could be disseminated that way.
Lord HALE: My Lords, does the noble Lord recall that in the debate on the European Communities Bill, the then Leader of the House said that the Regional Fund would be an answer to the problems of Oldham? Will the noble Lord therefore resist any attempt to preempt the distribution in favour of any particular district until the problems of Oldham have been looked at?
Lord BESWICK: My Lords, I think that it is highly unlikely that Oldham, or any other area, would stand or fall as the result of what is given out of this particular Fund.
Lord CAMBPELL of CROY: My Lords, since the first payments from the Fund are not due until September and a Referendum is planned for June, should it not be made unmistakably clear in the development areas that these are chickens still to be hatched and that for fruitful incubation what first need to be counted are a large number of ballot papers in favour of Britain remaining in the European Community?
Lord BESWICK: My Lords, the development area should realise that this is a very small chicken. The net amount of money forthcoming will be about £20 million per annum ; and as the national Government are already distributing, or will be distributing, this year £430 million for regional aid, I do not think this £20 million will make much difference either way.
Baroness WARD of NORTH TYNESIDE: My Lords, in view of the noble Lord's answers to various supplementary questions, that there is certain information available, what is the difficulty in letting us have full details (as he was kind enough to say that he could) and why is it necessary to put down separate Questions when the answer as to the position has been given to various other noble Lords? It would help if we could have an answer quickly. May I apologise for being one of those people who tiresomely always wants quick rather than long-drawn-out answers?
Lord BESWICK: My Lords, I have already said that I will try to help the noble Baroness; but if she wants an Answer to a Question then, with respect, it would be helpful if she would put down the Question to which she wanted an Answer.
Lord CAMBPELL of CROY: My Lords, is not the position that about £290 million has been granted in grants and loans from the EEC in the first two years from the European Investment Bank, the Social Fund and also from the Coal and Steel Community, and that in the next three years about £160 million is due if present arrangements are concluded under the Regional Fund?
Lord BESWICK: My Lords, there is no need to tell the noble Lord that the Question relates to the EEC Regional Fund. I have told him that the net
6
amount coming to this country will be about £20 million a year. We are distributing £430 million this year from national funds. Therefore, it would be unwise and unfair to indicate to any areas that any of their projects depend on our getting any sums from this particular Fund. If the noble Lord wants to talk about any other funds, then he should put down a Question and I will give him the net figures.
Lord WYNNE-JONES: My Lords, is my noble friend telling us that this is really chicken feed for unhatched chickens?
A noble Lord: Addled ones!

EEC: REGIONAL DEVELOPMENT FUND PROJECTS
Baroness WARD of NORTH TYNE-SIDE: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether grants are available from the EEC Regional Fund for (a) the construction of a new fish quay at North Shields; and (b) the Kielder Dam project.
Lord BESWICK: My Lords, some assistance will be available from the Fund towards the cost of infrastructure projects directly linked with industrial or service activities which qualify for assistance. It is not possible to say at this stage whether these or any other particular projects will fall in this category though the Government would be prepared to consider the schemes mentioned as potential candidates.
Baroness WARD of NORTH TYNE-SIDE: My Lords, while thanking the noble Lord for that Answer, may I ask whether he is aware (as I am sure he is, as I understand it) that fishing ports are already being built in certain parts of United Kingdom? Since fishing ports require fish quays and it takes a lot of money and time to build fish quays, would it not be more helpful to the fishing industry to get on with the grant for the North Shields fish quay without further delay?
Lord BESWICK: Yes, my Lords, I agree absolutely with what the noble Baroness has said. All I am able to tell her in answer to the Question on the Order Paper is that on this particular project I cannot give any definite answer about assistance from the Regional Fund.
Baroness WARD of NORTH TYNE-SIDE: But, my Lords, there is not anything in this Question which refers to the Regional Fund.
Lord BOOTHBY: My Lords, may I ask the noble Lord whether he is aware of the need for grants for fish quays in the North of Scotland which may exceed the need in North Shields?
Lord BESWICK: Yes, my Lords, I am certain that what the noble Lord has said is correct. In answer to the supplementary to the supplementary question put by the noble Baroness, the Question I was answering was:
" To ask Her Majesty's Government whether grants are available from the EEC Regional Fund…"
I thought that that was what the noble Baroness put on the Order Paper.

AID TO DEVELOPING COUNTRIES
2.47 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what was the amount received in the United Kingdom during the last recorded year in payment of interest, dividend and profit arising from loans and investments from public and private sources made to the developing countries.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I am afraid that figures are not available in a form which makes it possible to break them down in the way for which my noble friend has asked. However, loans and investments from Government sources and the Commonwealth Development Corporation led to receipts of about £35 million in 1973. Receipts from direct investment by private interests (other than oil) were
8
approximately £250 million in 1972, of which £104 million was reinvested in the developing countries.
Lord BROCKWAY: My Lords, I thank the noble Baroness for that Answer. Would she agree that if, in addition to the two figures she gave, we include the return on investments which she was not able to give, it is clear that we received from the developing countries more each year than we give in aid?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I cannot accept the implication of my noble friend's supplementary question, because the two figures are not comparable. To put it broadly, we are living in a mixed economy. The private investment companies always invest with the agreement of the local governments ; those Governments gain from taxation, the standard of living rises, production increases, and it is from the increases in production that profits come back to this country. I do not think that this kind of situation ought to be compared with our aid programme which is done on a different basis.
Lord HARVEY of PRESTBURY: My Lords, can the noble Baroness say how much capital was involved in bringing in these considerable sums?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I am afraid I do not have those figures.
The Earl of COWLEY: My Lords, can the noble Baroness tell us why the Government have refused to take part in the Paris Club talks to reschedule Chile's foreign debt, and can she justify the decision on purely economic grounds? Also, are the Government willing to underwrite the potential losses incurred by British companies if Chile declares a moratorium on its foreign debt?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, can the noble Earl justify asking that question on a totally different matter?
Lord BARNBY: My Lords, the noble Baroness said in the first part of her Answer that the figures were not available but, subsequently, figures were then paraded. Would the noble Baroness not agree that returns from Commonwealth development are hardly comparable with

9
the straight loans made by the Government? Would it not be appropriate in those calculations to have some kind of offsetting of the notional interest which would accrue from the large volume of interest-free loans which have been made to developing countries? Also, might I ask the noble Baroness whether she would take into account the deferment resulting from the failure to meet maturing loans which have been recycled on a basis different from the one on which they were originally given?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I do not entirely follow the noble Lord all the way in the first part of his question. As he knows, the Commonwealth Development Corporation operates on a basis which is different from that used for the rest of our aid. Roughly speaking, it does not make a profit, but equally it does not make a loss. Of the £33 million or £35 million which came back to us in 1973, quite a proportion came back from the CDC. As to the last part of the questtion, I think that was slightly wide of the original Question put by my noble friend, but I will have a look at it.
Lord ORR-EWING: My Lords, is the noble Baroness aware that we give aid of nearly £100 million a year to India, and that we have a deficit in our balance-of-payments of nearly another £100 million? Do the noble Baroness and the Government think that we are getting due credit for the amount of assistance that we give, which is the greatest amount that any country gives to that sub-continent?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I think that the aid programme of Her Majesty's present Government is very much praised in all parts of the world and gets us immense credit from the developing countries, whether they be in Asia, Africa or the Pacific.
Lord BROCKWAY: My Lords, may I ask the Minister, in view of the fact that it is suggested that the capital invested in developing countries should be taken into account, whether it is not a fact that tribal authorities were cheated of large mineral resources and land, which were received for a song by those who now control them and on whose capital investment interest is is demanded?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I think this is a rather Byzantine labyrinth, into which I should not follow my noble friend.

GOVERNMENT STATEMENTS AND EASTER RECESS
2.53 p.m.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House, my noble friend the Leader of the House will repeat a Statement on the unofficial action by industrial civil servants at a convenient moment after 3.30 p.m. He will then make a Statement on the provision of facilities in this House. Noble Lords will be glad to hear that dinners will be provided this evening. On a different subject, I think it would be helpful if I indicated that we expect to take the Committee stage of the Trade Union Bill to the end of Amendment No. 10 this evening. The discussion of Amendments relating to the Press will be held tomorrow. For this purpose, the noble Lord, Lord Goodman, will not be moving Amendments Nos. 6 and 7 today but will put them down again at a later point in the Bill for debate tomorrow. Again on a different subject, may I also announce that, subject to the progress of Business, the House is expected to rise for the Easter Recess on Thursday, 27th March until Tuesday, 8th April.
Lord HAILSHAM of SAINT MARY-LEBONE: My Lords, I am sure the House is very grateful to the noble Baroness. I do not think I need comment on these various statements, except to say that we are very grateful to those who are providing us with dinner despite the difficulties.

NURSING HOMES BILL [H.L.]
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I beg leave to introduce a Bill to consolidate certain enactments relating to nursing homes. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read la.— (The Lord Chancellor.)
On Question, Bill read la; and to be printed.

EUROPEAN PARLIAMENT
2.55 p.m.
The LORD PRIVY SEAL (LORD SHEPHERD): My Lords, I beg to move the Motion that stands in my name on the Order Paper.
Moved, That the Lord Bethell be designated a member of the European Parliament in the place of the Earl of Mansfield.—(Lord Shepherd.)
The LORD CHANCELLOR: The Question is that this Motion be agreed to—
The Earl of LAUDERDALE: My Lords, before the Question is put, may I draw your Lordships' attention to one or two anomalies, if not improprieties in this Motion? I should like first to congratulate the noble Earl, Lord Mansfield, on his graduation to the Front Bench and the merry company of the Whips. In what I shall have to say there is no criticism whatever of the noble Lord, Lord Bethell, who is an author of repute and a historical researcher of horrifying resource, as I have had personal occasion to discover. He was a nimble-witted, alert and perceptive member of the May-bray-King Committee, a man of much experience in European affairs and one might even say that he is
" A Corinthian, a man of mettle, a good boy".
There is no doubt that he is admirably suited to the proposed appointment, if only the appointment were altogether proper in the first place.
My first knowledge of the Motion standing in the name of the noble Lord the Leader of the House was when I saw the Order Paper on my return from Scotland during the weekend. So far as I can see, the Motion was put down on Thursday night and therefore your Lordships have been given fewer than one single Sitting day's notice of it. Though I could have moved a manuscript Amendment today and would have been, in other circumstances, anxious to do so, I realised it would involve inconvenience to the House and its Officers; so with your Lordships' indulgence I shall simply recall
12
an Amendment which I have moved on two former occasions ; namely in December 1972 and October 1973. I shall read it out:
" At end insert:
‖ for the remainder of this Session; and those Lords designated Members of the European Parliament thereafter shall only be so designated after a process of election '."
Questions of propriety do arise, sweetly interwoven with a theme of political irony, the flavour and humour of which it would be a pity not to savour and enjoy. The irony lies in this: the Leader of the Party opposite now backtracks on all previous attitudes of his Party and takes steps to sustain the British delegation to the European Assembly. The operation bears the marks of a deathbed conversion, for which, of course, we are grateful, a conversion not only to the European Assembly which has been much criticised by the Party opposite, but also to the principle of consensus politics so firmly eschewed in rather greater matters not so very long ago.
In seeking a substitute delegate, it appears that the noble Lord the Leader of the House was not happy about the qualifications of those behind him on the Back-Benches, despite the abundance of talent to be had over there. Of course, the name of the noble Lord, Lord Shinwell, comes readily to mind. Not only was the noble Lord apparently unhappy about the talents on his own Benches but he appears to have ignored the rich stores of originality and talent on the Cross-Benches. Among the Cross-Benchers, of course, the name of the noble Lord, Lord Wigg, comes readily to mind. Rather than searching his own Benches, the Cross-Benches, or even the Liberal Benches, he grasps like a drowning man at anything that can help, and he appeals to the Opposition Chief Whip—a Chief Whip ever courteous, ever glad, ever willing to oblige. So much, my Lords, for the ironies, upon which I will not dwell unduly because I wish to spare the feelings of the noble Lord the Leader of the House.
However, questions of principle are involved in this matter which were best summed up by my noble friend Lord Balfour of Inchrye when he spoke in the first debate on this subject on 20th

13
December 1972 (at col. 1105 of the Official Report) and said:
"We are infringing the independence of the Legislature by allowing the Executive this power of nomination."
In the proposition that the noble Lord, Lord Bethell, shall fill the place vacated by the noble Earl, Lord Mansfield, we in this House are offered no choice of candidates; we are given no opportunity of an election. We are offered one nomination on a "take it or leave it" basis. It would hardly be fair to tax the Party opposite with the failure of their predecessors in Office to carry out my own Party Leaders' repeated pledges to think up something better than direct nomination by the Whips. But surely it ill becomes a Social Democratic Government to be the accomplice in a system of direct Whips' nomination to represent this Parliament and this Parliamentary Chamber at the European Assembly as it seeks urgently, valiantly and with zest to wrest Parliamentary power from the Commission and the Council. We have been told—indeed it has been trumpeted—throughout the controversies of recent years that the European Assembly was the democratic longstop for the officialdom that had been running the Community until of late.
Perhaps I may remind your Lordships of the practice of other countries in the Community. Belgium, Holland and Luxembourg each elect their delegates to the European Assembly from their Houses of Parliament; there is a process of democratic selection. Germany elects her representatives at Strasbourg from the Bundestag, and there is a process of election. France and Italy have an open and formal election, with candidates running against one another. The British practice of nominations, now thrice repeated, thrice condoned, sadly belies our democratic and Parliamentary pretensions and all the brave words that have been spoken by advocates of the Community—which, for information, may I say I now reluctantly support. Everything that was said in support of the Community was said in the ambit of the great Parliamentary traditions that Britain was to bring to the Community. And here we are, for the third time, proposing that a delegate to the European Assembly shall be nominated in effect by the Whips.
14
My Lords, so far from this being a worthy elective procedure, even the moderate interim suggestion put forward more than a year ago on the Floor of this House—that the selection of delegates to the Assembly in Strasbourg should be made by the Committee of Selection—has not fructified, and we are once again presented with this strange, bizarre procedure of nomination. Perhaps in the Government's laudable desire at any rate to sustain the Assembly in Strasbourg, one might say it is the solecism of power to command the ends and yet not to endure the means; one might even add of power and of the power of the Executive that prize chickens have bonny feathers but boney bodies.
My Lords, there are other points of irregularity in this curious affair which disfigures the Procedure of the House. For how long, it is fair to ask, is the noble Lord, Lord Bethell, to be nominated? What is the duration of his mandate? For how long are his colleagues authorised to speak for us? These questions have been posed before but answered in a fashion that I must presently recall. The rest of the British delegation to the European Parliament was not appointed by this Parliament; the delegation was not appointed by the last Parliament. The present delegation, save for the noble Lord, Lord Bethell, was appointed by the last Parliament but one: that is three Parliaments and four Sessions ago. My inquiries have led me to understand that no Motion has been placed before your Lordships' House either in this Parliament or in the last one to renew the mandate that was conferred on our delegation three Parliaments ago. The last time we debated this matter on 24th October 1973, the then Leader of the House used these words—and I paraphrase from col. 658 of the Official Report—The advice from the Clerk of the Parliaments was that the mandate ran for the duration of Parliament.
My Lords, I repeat that because this has not been gainsaid, and nor has it been pursued as I believe it should be: The advice from the Clerk of the Parliaments was that the mandate ran for the duration of Parliament—that is to say, until the Dissolution of February 1974. Of course, the issue has been debated whether indeed the mandate ever ran

15
that long; whether the appointment was not indeed a Sessional appointment rather than for the duration of Parliament. But taking the matter on its most generous interpretation; taking it that the declared doctrine is correct, that these delegates were named for the duration of a Parliament, that can mean only that our delegates' mandate ran out at least a year ago, in the Parliament before last.
So it is, I submit, constitutionally questionable whether our delegates to the European Assembly splendid as they are—and there is no criticism of the delegation as such—have any rightful standing whatever. Have they any right, lacking a Parliamentary mandate from this place, to draw their inadequate expenses for their endless service, for their costly attention and for their devoted overwork? Since I am not moving an Amendment, but only calling attention to an astonishing, indeed incredible, irregularity, I shall not seek to divide the House when the Lord Chancellor puts the Question on the Motion before us.
But at this critical moment of the Dublin Summit and in the shadow of the Referendum—may I remark in parenthesis, another constitutional anomaly of dubious merit—my concern is once again to give due warning. Last time I sought leave to withdraw my Amendment, and was given leave to do so. I warned that I might press it next time. Only because of the circumstances of today do I content myself by inviting the House, as it were, to take note of the situation. But if, as I hope, we remain in the Community, I wish to give warning to whichever Front Bench is in Office at the time that I shall have no compunction whatever in raising the matter again, and next time pressing it with vigour. A good cause makes a stout heart and a strong arm.
Baroness HYLTON-FOSTER: My Lords, before the noble Lord sits down, may I inform him that the noble Lord, Lord Wigg, does not sit on the Cross-Benches?
Lord BOOTHBY:
My Lords, while all will welcome the appointment of the noble Lord, Lord Bethell, and while I agree in principle with every-
16
thing that the noble Earl who has just spoken has said, may I put this to the noble Lord the Leader of the House? By common consent, we are passing through a great and critical crisis so far as the European Economic Community is concerned. It has started this morning in Dublin and it will go on for the next few days. Before we go into the greater details—with most of which I agree—that the noble Earl, Lord Lauderdale, has put forward, may I appeal to the Government to consider appointing to the European Parliament, even at this last moment, the Labour Members who rightly should be sitting there and without whom nobody can claim that our delegation is representative of the Parliament of this country?
3.11 p.m.
Lord BALFOUR of INCHRYE: My Lords, to your Lordships' relief, I assure you that I shall be very brief. Having taken some part in the similar debates which we had some years ago, I wish to comment upon the Motion before the House today. The Motion is as objectionable to me as the previous Motion was in 1972. Although I say that, there is nothing personal in the remarks which I make, because I have the greatest admiration for the noble Lord, Lord Bethell, in his performances in your Lordships' House. Also, I have the greatest personal admiration for the noble Lord, Lord Bethell. But, again, the selection is being made by the Government, who are the Executive. They are putting forward a Motion to the Legislature, and hitherto the Legislature has not been consulted. May I remind both Front Benches that the Executive are the servants, not the masters, of the Legislature? Lip service has been paid by successive Governments to the need for an electoral system, yet nothing, so far as we know, has happened.
When a similar Motion was proposed in 1972 by the noble Earl, Lord Lauderdale, the noble Lord the Deputy Leader of the House, Lord Beswick, expressed discontent with the Motion and said:
" Therefore, as a matter, shall I say, of self-protection, something of the kind suggested by the noble Earl would seem to be desirable ".
I hope that today the noble Lord, Lord Beswick, has not changed his view. The noble Lord, Lord Gladwyn, said to your Lordships' House that he was assured

17
that in a very short while there would undoubtedly be an electoral system. He said:
"I have no doubt that within one or two years—I am willing to go out on a limb and say certainly within three years—this body will by one means or another be directly elected ".
The noble Lord, Lord Gladwyn, has only nine months left before he has to go out on a limb. I do not know what kind of physical performance that will be. I shall be most interested to see what it is when it comes about.
I expect we shall be told that this is the best that can be done until there is a system of election. However, that is not good enough. By their nomination, we are giving power and patronage to the Executive. I may be told that the usual channels have been consulted. I never quite know what these "usual channels" are; perhaps other noble Lords may know much better than I do what they are. I do not know whether these" usual channels" are just the two Front Benches. I do not expect any help or support in my remarks from either of the Front Benches. If I may say so without offence, so far as the two Front Benches are concerned I would remind your Lordships of the old saying "dog doesn't eat dog". I do not know what the mysterious " usual channels " are, but may I remind your Lordships that magic circles are rather out of fashion just now. I do not think we want to rely too much and too long upon that system.
If the Assembly has abrogated to itself, as it has, the title of " Parliament ", I maintain that it is all wrong for the Executive to continue to nominate members to something which is called a "Parliament". Besides, I have yet to see how the action of the Government can be reconciled with the Treaty of Rome, the provisions of which your Lordships were reminded by the noble Lord, Lord Alport, in 1972. They read:
" The Assembly shall consist of delegates who shall be nominated by the respective Parliaments from among their members in accordance with procedures laid down by each member State ".
I do not know whether we have ever laid down a set procedure, so I cannot reconcile what we are doing with those provisions in the Treaty of Rome.
When I spoke last on this subject in 1972, I suggested that we should look at
18
an interim system such as the Common-wealth Parliamentary Association, of which I know that many of your Lords-ships are members, where we obtain a list of names and are then asked which of those names we wish to serve on the executive. That is a form of election, and I cannot see why we should not have some system such as that, so as to get away from this blanket power which is being given to the Executive. I think that we are entitled to ask the Government today—who, I repeat, are infringing the rights and responsibilities of the Legislature—to tell us three things. First, if we do stay in the European Economic Community, what progress has been made in forming an electoral system? Secondly, how do these usual channels work, and how did they work in this instance? How have the two magic circles worked? Finally, what objection is there to an interim measure of election along the lines of the Commonwealth Parliamentary Association, which I have just suggested to your Lordships?
Lord SLATER: My Lords, before my noble friend the Leader of the House replies, may I say in regard to the speech of the noble Earl, Lord Lauderdale, that it is about time he was seen to do his own work. He has talked about how representatives are appointed to the Council of Europe. The noble Earl ought to know that there is one individual from the other place who is sitting, as it were, in perpetuity on the Council of Europe, and also on this new Commission which has been set up in the EEC. He has been there ever since the Council of Europe was formed and, so far as the EEC is concerned, he is now a sitting member after giving up a junior post in Her Majesty's Government when the other Party were in power. I do not believe that points of view on matters of this importance should be expressed to the leaders of the present Government, who are not responsible for such appointments, by the noble Earl, Lord Lauder-dale, or by any other Member on the other side of the House.
Baroness SUMMERSKILL: My Lords, may I ask the Government how many women represent Britain in the EEC? If, as I suspect, the number is disproportionately small, may I ask why a woman should not be nominated today?
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, if I may say a word about this matter, I am sure that the noble Lord the Leader of the House will take careful note of everything that both of my noble friends have said, also of what has been said by the noble Lord, Lord Boothby, and of the two shorter speeches from the Benches opposite. I am sure that the noble Lord will wish to give them some kind of reassurance. On the other hand, I am not sure that the case against the Government has not been overstated. The Government have not nominated a representative, except in the sense that they have put a Motion before this House which this House can accept, reject, amend or adjourn, and this House therefore remains sovereign of its own procedure.
My own advice to my noble friends, for what it is worth, is to accept the Motion today for the following reasons. It is quite obvious that the present situation in the European Parliament, as regards the representation of this Parliament, is unsatisfactory if only for the reason given by the noble Lord, Lord Boothby, from the Cross-Benches. The whole situation will have to be thought out again at some time after June, which is not very far ahead. In the meantime, we have to get on for the next few months in one way or another. There seems to be general agreement in the House that as a person—apart from the noble Baroness, Lady Summerskill, who wishes to discriminate against him on the grounds of his sex—my noble friend Lord Bethell is in all respects except one a wholly suitable candidate. I would therefore suggest to my noble friends that we should on this occasion support the Government. I am aware of the warning given by my noble friend Lord Balfour of Inchrye about dog not eating dog, but I seem to spend most of my time biting the noble Lords opposite in the leg and I am very glad to find one occasion when I can support them.
Lord SHEPHERD: My Lords, it is when the noble and learned Lord bites my leg, or that of one on this side of the House, that I feel very secure. It is when he gives praise and support that I look behind to see whether the troops will still be with me. I am very grateful for what the noble and learned Lord has said. To the noble Lord, Lord
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Boothby, I would say that I do not myself regard the Dublin meeting as a great and critical crisis. I hope that this will be a conclusion of the renegotiation conducted by the British Government and the other Eight, in a sensible, sound and practical way, to overcome some of the difficulties which this Government foresaw when they took over office.
Lord BOOTHBY: My Lords, may I ask the noble Lord whether his own Party will send a delegation to the European Parliament?
Lord SHEPHERD: My Lords, the noble Lord must not be too spritely. That is what I was going to say. It will be for the Government to decide, as a consequence of the Referendum. I can only foresee that if the British people were to decide that the United Kingdom should remain within the European Community, it would be right and proper that members of the governing Party should participate in Strasbourg in the European Parliament.
I think the noble and learned Lord was slightly wrong when he said that this is a Government Motion; it is nothing of the sort. I am moving the Motion very much as a servant of your Lordships' House. Your Lordships decided some years ago that certain Members of your Lordships' House should go to the European Parliament, and you decided—I do not remember whether it was by a Division—the method of selection. As a consequence of the fact that the noble Earl, Lord Mansfield, is no longer able to go because he is now on the Front Bench, the Party opposite decided that he should be replaced. Your Lordships' House is a House of custom and practice and, as in the past, it has fallen to the Leader of the House, so it falls to me to move that the noble Lord, Lord Bethell, should join the European Parliament as a Member of the Conservative group.
In reply to the noble Lord, Lord Balfour of Inchrye, regarding the "usual channels", he is not going to lead me very far on that subject this afternoon. He knows as well as I do what the "usual channels" are. If one were to disclose them in full to the public eye, then much of the power and mystery of the "usual channels" would disappear. Therefore, my Lords, let us leave the "usual channels" to their role—a very useful

21
role which your Lordships' House could not do without. But they are very fair "usual channels".
My Lords, to the noble Earl, Lord Lauderdale, who asked about the length of time during which Members of your Lordships' House may sit in the European Parliament, I would say that I understand that before the Dissolution earlier last year a Motion of your Lordships' House was agreed under which those noble Lords designated as Members of the European Parliament should continue as such, notwithstanding any Prorogation or Dissolution, unless and until the House orders otherwise. My understanding is that if a person has been nominated and elected by your Lordships' House to the European Parliament, so he will remain until your Lordships' House decides otherwise.
If the noble Earl feels so passionately either about the group as a whole or about one individual, it is open to him to put a Motion on the Order Paper to be debated and voted upon. Therefore, if I may say so to the noble Earl in the greatest friendliness, it is up to him. If he feels so strongly, it is for him to put a Motion on the Order Paper and I suggest that he does do so, giving us due notice, so that the matter may be debated in depth and not raised upon what is an innocent and helpful—at least, it is meant to be helpful—Motion.
The Earl of LAUDERDALE: My Lords, would the noble Lord answer this question? He has quoted an occasion when the mandate was apparently extended. Would he give us the date? I made an inquiry of the Clerks this morning and was told there was no such Motion.
Lord SHEPHERD: My Lords, I do not have the date. That information was given to me and I have no reason to believe that it is not correct. I will give the noble Earl the date by correspondence, or if he wishes he can put down a Question on the Order Paper. But I am sure my noble friend Lady Summerskill wishes to know the answer to the question which she put. My Lords, it is not a matter of discredit or credit to us on this side of the House; it is merely for noble Lords opposite. Of the membership of your Lordships' House there is one noble Baroness.
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Whether noble Lords wish to change the balance is, I think, a matter entirely for them.
Baroness SUMMERSKILL: My Lords, may I ask my noble friend whether this represents grave discrimination, particularly in this year which is International Women's Year?
Lord SHEPHERD: My Lords, I should like to say to my noble friend that in your Lordships' House we are all equal. If the noble Baroness is putting the case that there ought to be three Conservatives as opposed to one in that case alone, that could be discrimination against my own sex. But this is really a matter for the Benches opposite and I do not think it is a question of discrimination. I believe that in your Lordships' House we regard ourselves as equal, one sex with another. To the noble Earl, Lord Lauderdale, I would say that the carrier pigeon has arrived and I understand that the date is 8th February 1974.
On Question, Motion agreed to.

TRADE UNION AND LABOUR RELATIONS (AMENDMENT) BILL
3.30 p.m.
Lord SHEPHERD: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, that the House do now resolve itself into Committee.—(Lord Shepherd)
On Question, Motion agreed to.
House in Committee accordingly.
[The Earl of LISTOWEL in the Chair.]
Clause 1 [Repeals of the principal Act]:
The CHAIRMAN of COMMITTEES (The Earl of Listowel): Before I call Amendment No. 1 I should point out to the Committee that if this Amendment is agreed to I cannot call Amendments Nos. 2 and 3.
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 1:
Page 1, line 8, leave out paragraph (a).
The noble Earl said. I beg to move Amendment No. 1 which is tabled in my name and that of my noble friend Lord Gowrie. If this Amendment were

23
adopted by your Lordships the effect would be to reprieve Section 5 of the Trade Union and Labour Relations Act, 1974. If one recalls the words of Section 5 or if, as some of us have fairly recently had cause to do, one reads those words and digests them thoroughly for the first time, at first blush one would think it almost inconceivable for any Government to resist this Amendment, and indeed it is almost inconceivable that any Government should contemplate a provision in our trade union law which would not include words which seem to be filled with good sense and what I might call natural justice.
It is a matter of the greatest regret, I think we must all agree, that the trade union movement has become so suspicious of what is, after all, the law of the land and in particular the courts which administer it. I suggest it is equally a matter of great regret that the trade union movement has determined that it shall pursue courses and that it shall control its affairs outwith the law. If I were going to be contentious I might almost say that the trade unions consider themselves above the law, but I will not say that. However, I do say it is obvious that they consider themselves and their affairs to be outside the law. However unsatisfactory this situation may be, it is one which we on this side of the Committee recognise. Therefore we shall do our best to live with the situation however much we dislike it and deplore it. So far as this Bill is concerned we do not like it for reasons that my noble friend Lord Gowrie gave during the Second Reading debate, and if it is not improper and out of order for me to do so I should like to convey to your Lordships his sense of regret at not being here today because his employment takes him away from your Lordships.
We regard this as a bad Bill. Nevertheless, I suppose it is capable of improvement, and it is our intention to exercise our undoubted rights as a revising Chamber to try to make the Government think again and to try, by constructive criticism, to inject some safeguards into the most unsatisfactory areas of this Bill. It is in this light and for these reasons that we have tabled Amendment No. 1. We have not—and we consider for a very good reason—
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tabled any of what I might term the consequential Amendments which were discussed during the Report stage in another place. Our reasons for this are simple. This Amendment is here, hoping that your Lordships, exercising your undoubted powers for constructive compromise and the ability to produce a route around what seems to be an intractable problem, will produce something acceptable both to the Government and to those on this side, of whatever Party, so that there emerges a compromise which will be useful and at the same time just. But I should say that we reserve our right to come back again at another stage if no satisfactory compromise is produced at this stage of the Bill.
Section 5 of the 1974 Act gives protection to the individual who has been excluded or expelled from trade union membership either in an arbitrary or discriminatory fashion. For these purposes the Amendment goes very much wider than the consideration of such matters as the closed shop or the Press. I concede at once that the persons who are likely to be affected and who would seek the protection of Clause 5 of the Act are small in number, but in my submission it does not mean that they should not have as full and as proper a protection as is possible.
For about a year there has been talk of a review body to be set up by the TUC to review such matters as are contained and laid down in Section 5, and while there has been a lot of talk nothing has been done, and as I understand the position as it is at the moment, the Government will not or cannot take action themselves. I understand the Government when they say over the matter of the closed shop that they are neutral. That is a point of view which they are entitled to take, but I suggest one must look at the other side of the coin. If the unions are now to be put in the position, at least on the Government's argument, where they were in 1971, certainly they will have greater power than existed before the passing of this Bill, and in my respectful submission they therefore should at least give their blessing to greater safeguards to those who may suffer harm under the Bill. I suggest that this Amendment would give Section 5 a reprieve. It is a modest safeguard, merely giving a

25
worker aggrieved by his exclusion or expulsion from his trade union, or branch, an opportunity to apply to an industrial tribunal and thereafter, if no declaration is made, recourse to the High Court.
The question therefore arises: if this safeguard is not acceptable to the Government, what safeguard could be? On both sides of the Committee I think we are very nearly agreed on what I might call two points. I am sure noble Lords opposite would agree that individuals must have some rights vis-à-vis the trade unions. The question is who—and by what method—is going to exercise that right.
The second matter about which I think there is probably agreement is enforcement. In the first instance, I think noble Lords would agree that if somebody is dissatisfied with the performance of his union in relation to himself it is right that he should take the matter up with the union. Only when there is no satisfaction or when he cannot get satisfaction or there is patently some injustice, even if one takes this on a subjective test, does the question then arise whether that appellate body should be purely internal to the union, internally managed, internally set up, or whether it should be under the aegis of an outside person or body such as the Secretary of State. As I have said, we have tabled this Amendment hoping that your Lordships will seize the opportunity to produce ideas and arguments. I beg to move.
3.40 p.m.
Lord SALMON: Some of my friends have told me that this Amendment is a very hot Party political potato, so hot indeed that no self-respecting Law Lord should attempt to handle it. For my part, I am convinced that it transcends any mere Party political issue. I am convinced that it is my duty to speak in support of this Amendment, although I should be equally content to accept the Amendment to be proposed by the noble and learned Lord, Lord Wigoder, and the noble Baroness, Lady Seear. If Section 5 is struck out of the Act, this would strike at the very root of a principle which all my life I have done my best to defend—the principle that the law of England will always protect individual liberty and the basic
26
right of every man not to be unreasonably or arbitrarily prevented from earning his living. It protects every man against any threats or any abuse of power, from whatever quarter those threats may come.
I want to make it plain that I do not regard legislation as a sensible means of promoting good relations between trade unions and employers. Section 5, however, has absolutely nothing to do with such relations. I am by no means against the closed shop; quite the contrary. It gives the trade unions the power which they require effectively to negotiate on behalf of their members, and it confers certain benefits upon employers, which most of them recognise. But the closed shop also confers enormous power on the trade unions over their own members. For a man to be expelled by his trade union is infinitely more damaging than for him to be unfairly dismissed by his employers. If he is dismissed by his employers, there are, after all, other employers; but if he is expelled by his trade union he is prevented from earning his living by the skills which he has worked to acquire. It is against the danger of a possible abuse of the power of expulsion in the context of a closed shop that Section 5 offers its protection to every man, not least the ordinary chap on the shop floor.
In this country, irrespective of persons, we live under the rule of law and the basic right of everyone to be protected by the law. To my mind, that is an immutable principle. If one starts tampering with the law, the individual liberty of everyone will be put in the greatest jeopardy. The lessons of history teach us that to confer absolute power on any man or institution, in the pious belief that the recipient can be completely trusted to use that power reasonably and fairly, has often led to tyranny and disaster. Our freedom depends on the rule of law. It would be a sad day for this country if Parliament were to put any group or institution, even a trade union, above the law, and to withdraw the protection of the law from any man. That is what this Bill does.
Of course I accept that none of the trade unions as at present constituted is in the slightest degree likely to exclude or expel anyone by unreasonable or arbitrary discrimination. But what of the

27
future, perhaps the not-very-far-distant future? We cannot shut our eyes to the fact that there are groups, very small numerically but extremely cohesive and tenacious, who have infiltrated the unions with the intention of seizing power if they can. Their objects and ideas are entirely different from those of the trade unions, which we all know and respect. Their avowed purpose is to wreck the Social Contract and the democratic system under which we live. Their ethos derives from foreign lands where individual liberty is dead, and where the courts and trade unions are mere tools of the Executive, to do its will. We should all be extremely optimistic or ingenuous were we to believe there is no danger that one of these groups may succeed in infiltrating the Executive of some trade union, and may then seize power. If they did succeed, some of the workers would no doubt then wake up and begin criticising the leaders of the Executive. Does anyone doubt that in such circumstances they would be threatened, that if they did not "shut up", they would be expelled? I believe there would be some shop floor hands with the courage to insist on their right of free speech, and I am equally convinced that when they did, they would be thrown out. With Section 5 struck off the Statute Book they would have no protection whatsoever. It seems to me that this is a fact that no one ought to ignore.
I ask the question: does anyone suppose that the TUC can have any influence over such a union as the one I have described? Such a union would have just as little regard for the TUC as it had for the rights of its own members whom it had expelled. Accordingly, I suggest it follows that a tribunal set up by the TUC to report upon any complaint which workers may make if expelled, would be only a pallid and completely ineffectual substitute for the safeguards now provided by the law under Section 5.
I ought to make it plain that I unreservedly accept that the TUC would set up an impartial tribunal, and that that tribunal would adjudicate fairly upon any complaint by a worker that he had been excluded or expelled from his union by unreasonable or arbitrary discrimination. As a realist, I cannot accept that with the best will in the world, which no one doubts, there would be the faintest
28
chance of the TUC being able to persuade or compel such a union to comply with the findings of the tribunal of the TUC. That is the danger. I beg those who want to discard Section 5 in its entirety to think again. A time may come when it will be badly needed. Can it conceivably do any harm to preserve the protection it provides for the ordinary man against an abuse of power, even if, happily, no such abuse ever occurs?
Industrial tribunals such as the one to which Section 5 refers, have been in existence for a very long time. There is no proposal even in the present Bill to discard them. They deservedly enjoy a very high reputation with everyone for the ability, the expertise and the complete impartiality with which they discharge their many and varied functions. Surely it is inconceivable that they would hold a worker's expulsion from his union as being due to unreasonable arbitrary discrimination if it could be justified on any reasonable grounds; for example, that the man had refused to pay his dues.
Section 5 has been in operation for over five months. During this time it has adjudicated over a number of disputes. No one denies that it has dealt with them satisfactorily. The operation of Section 5 has certainly caused no friction with the unions. It works. In the name of reason, why not leave it alone? Wantonly to sweep it away can serve only to undermine the pillars of our freedom and expose the working people of this country to dangers of oppression in the days to come.
I would add only this. If I am told that the removal of Section 5 would leave the right of recourse to the courts unimpaired, I answer, "Look at Section 1(b) of this Bill". It sweeps away Section 6, including that part of it which requires that the trade union rules:
"… shall be so framed as not to depart from or permit any departure from natural justice."
It is impossible to consider Section 5 in isolation. If Section 6 goes, the rules of a Communist dominated trade union—if ever such a union came into being—could be amended to allow the Executive to do what it likes, irrespective of the rules of natural justice. Indeed, the repeal of Section 6 might well be regarded as a mandate to make such an amendment. If this should happen, the Common Law, in my considered opinion, would be entirely

29
powerless to protect the working people of this country against oppression. I beg your Lordships not to allow Section 5 to be swept away, because it is in the end the only effective protection which the ordinary man on the shop floor would have in the circumstances I have postulated. If it goes, it could well herald the beginning of the end of individual liberty, and that would be something for which we should be execrated in the generations to come.
House resumed.

INDUSTRIAL CIVIL SERVANTS DISPUTE
3.53 p.m.
Lord SHEPHERD: My Lords, my noble friend the Chief Whip intimated immediately after Questions that a Statement would be made about the unofficial strike and circumstances surrounding our services. I have seen the Statement. There is very little in it, and I wonder whether your Lordships might think that we could have it put into Hansard, so that we could continue with our Committee stage. I am entirely in your Lordships' hands.
Lord BYERS: My Lords, I should like to support that suggestion. I have seen the Statement, and I think it would be much better to put it into Hansard.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I do not express any view about this, but in view of what the noble Lord the Leader of the House has said, the expression of opinion from the noble Lord, Lord Byers, and the silence with which both statements were received, I took it to be the wish of the House that that would be acceptable. I do not think it is for the Opposition to proceed to challenge that. I believe that is the will of noble Lords.
Lord SHEPHERD: My Lords, I am most grateful. If there are any circumstances which ought to be reported to your Lordships' House, I shall certainly do it tomorrow. But in my judgment the Statement at the moment would not be very helpful for the House.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, perhaps I may just say this. I should like to
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reiterate the gratitude that we feel for the catering arrangements which we have already enjoyed. Those responsible for the catering in this House always serve us well, but I think we appreciate it even more today.
The Statements referred to are as follows :
"My Lords, with permission I will repeat a Statement made in another place by my right honourable friend the Secretary of State for Employment. His words were as follows:
"As from this morning the industrial Civil Servants employed by the Property Services Agency on providing maintenance and services to Government buildings in the Whitehall area and to the Houses of Parliament have begun unofficial strike action for an undefined period. I understand that about 430 people may be involved.
"This unofficial action is being taken in support of a claim by the trade unions concerned on behalf of all industrial civil servants for an interim increase pending their next annual settlement in July.
"The Lord Privy Seal has recently met trade union representatives to discuss the unions' claim and pointed out the difficulties involved in reconciling an interim increase with the TUC guidelines. A response to the claim can be expected soon.
"My right honourable friend the Lord President will be dealing with the possible effects of this unofficial action on the business of the House. Services to Government Departments could also be affected.
"In the light of the position as I have described it I very much hope that those concerned will lift the unofficial action and return to normal working."

EFFECT ON THE FACILITIES OF THE HOUSE
"It is expected that there will be some disturbance to the facilities of the House but it it hoped that these will be kept to a minimum. Indeed, it will not be possible to predict how extensive they will be until we have some experience of the numbers involved in industrial action.
"It is not expected that electric lighting, heating and power will be seriously affected, and this includes the air conditioning system. The Refreshment Department will continue to function normally in so far as it is in their power to do and certain noble Lords will no no doubt be glad to hear that the Division Bells will be rung if necessary.
"On postal facilities, it is uncertain whether or not there will be regular deliveries to the Palace of Westminster and it would be prudent for Peers to post any outgoing mail in letter boxes outside.
"As to Parliamentary Papers, it is hoped that Peers in receipt of Papers by post will

31
continue to receive them, but there may be a very restricted supply of Papers available in the Printed Paper Office. The position relating to the printing of Hansard is not clear but every effort will be made to ensure that the papers necessary for the business of the House will continue to be made available."

TRADE UNION AND LABOUR RELATIONS (AMENDMENT) BILL
House again in Committee.
3.56 p.m.
Lord GORDON-WALKER: The noble and learned Lord, Lord Salmon, in his powerful speech talked about Section 5 being swept away, if it were opposed and the opposition carried. But, of course, this section has not been a permanent or long-lasting part of the law at all. The basic purpose of the Bill before your Lordships is to restore the position to what it was before 1971. If the noble and learned Lord, Lord Salmon, and others who think like him, feel so strongly about this, it is difficult to understand why they did not do something about it before 1971. The position was exactly the same then as it would be if the section were now, in his words, swept away.
Another objection to this section which I and many of my noble friends certainly oppose, is that it rests on the dangerous assumption that you can, in fact, control trade unions by law. This is something that has often been attempted. It arouses enormous and in the end irresistible opposition. I should think that your Lordships would by now have realised that you cannot control trade unions by law. This section restores some aspects of the Industrial Relations Act, in that it gives access to the High Court for the purposes of getting injunctions and so forth, which was exactly the part of the Industrial Relations Act objected to so bitterly by so many citizens and members of trade unions.
There are—and we must accept it—certain things that cannot be secured by law; it may be a pity, but, in fact, we all recognise this in other fields. We all realise that it would be impossible, for instance, to introduce prohibition by law, because it simply would not be observed, or to stamp out prostitution by law, because that would not be observed. We
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do not try to do these things, because we have learned from the experience of other countries that this kind of thing cannot be done by law. This applies if one tries to give special rights to people to go to law in trade union matters—not to a tribunal, because this talks about the High Court as well as tribunals—to get injunctions; then, if they are defied, the Court has to put a number of people in prison, and we know from long experience what happens thereafter. It is extremely unwise, in my submission, to have particularly subsection (4) of this section in the law.
The noble and learned Lord seemed to base a great deal of his argument—particularly at the end of his speech— upon his fear that some union, or unions, may be taken over and penetrated by Communists; he might have added Maoists and various other horrible people. This is the danger that the noble Lord, Lord Chalfont, was talking about the other day. We have heard this kind of thing for the whole of my lifetime, the last 40 years; there have always been people saying that this union is being penetrated, and it often is, and this Party is being penetrated, and it often is, and this National Union of Students' organisation is being penetrated, and it often is; but, before now we have always been wise enough to rely on trade unions and similar bodies themselves resisting this penetration and beating it off. Sometimes they are slow about it and do not realise what is happening, but over and over again in my lifetime in the end I have seen men rise up because they do not like what is being done in their name and throw out these people (who are always a tiny majority) who have penetrated them. This has been the case for decades.
In my submission, it is much wiser to rely on the good sense of members of trade unions and, for that matter the Labour Party and other similar bodies, to do as they have always done. We have always had this attempt at penetration. It has never led to the horrible results that the noble and learned Lord depicted, and, in my submission, it is far better in this respect, too, to rely on the tried methods which we have used in the past; relying on the good sense of our members of trade unions in this country to resist this kind of penetration which has been attempted for decades and which has never succeeded

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because it always produces the counter force that destroys them.
4.2 p.m.
Lord HOUGHTON of SOWERBY: Section 5 of the principal 1974 Act was put into the Bill on the Motion of the noble and learned Lord, Lord Hailsham of Saint Marylebone. That was on 22nd July 1974, and on that occasion I ventured to intervene in the debate. I said then that I had considerable sympathy with the purpose of the Amendment which is now Clause 5A of the principal Act of 1974. However, I wanted to await the further discussions that were taking place with the Trades Union Congress about the manner of the appeal to be provided for members of unions expelled or excluded from unions and to see whether something satisfactory could be provided, either by the trade union movement itself or independently of it. My survey of the whole situation, however, went further than trade unionists alone. My reason for that was was that in the discussions with the Trades Union Congress, on what is now called the Social Contract, this very point was raised because the Donovan Commission, which had not suggested that closed shops should be made unlawful, had nevertheless recommended that an independent tribunal should be created for the purpose of hearing appeals by employees who felt that they were being wrongfully refused permission or expelled from their unions with serious consequences to their employment.
But the members of the so-called Liaison Committee of the Trades Union Congress, who were looking at the Social Contract, raised the objection that the lawyers had their own disciplinary machinery as did the doctors and the accountants. Professional men can be expelled from their professional organisations and deprived of the right to follow their profession by a disciplinary committee upon which there is no lay member at all. It is entirely within the profession, leaving any person who is aggrieved with the right to appeal to the High Court. A trade unionist has the right to appeal to the High Court and nothing in any Bill has removed the Common Law right of a trade unionist to go to the High Court.
Lord HAILSHAM of SAINT MARYLEBONE: With respect, the noble Lord is wrong. I know that he
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does not mean to mislead the Committee, but there is no access that I am aware of, apart from Section 5, to the High Court for unreasonable exclusion or expulsion from a trade union. Under Section 5, of course, there is a right of access to the Industrial Tribunal. But there is no right apart from that, and it is precisely that right which is being removed if this Amendment is not passed. So far as doctors are concerned, of course they have a right of appeal to the Privy Council, which is not a medical body, and I think the noble Lord will see that the GMC, which is the disciplinary body, have members otherwise than of the doctors' profession.
Lord HOUGHTON of SOWERBY: I am grateful to the noble and learned Lord. I accept the correction that the right of appeal to the High Court by a trade unionist is for wrongful dismissal or if he were excluded from a union. As I understand it, if he were unfairly refused admission to a union which resulted in dismissal from his employment, he would have the right to go to the High Court to claim damages for wrongful dismissal. I think I am right about that position. As regards the General Medical Council and the right of appeal to the Privy Council, I accept what the noble and learned Lord has said.
When the Solicitors Bill was before the House of Commons, I was then leading on this subject for the Opposition, and I stressed very strongly indeed the neeed to include in any disciplinary machinery lay membership of the appeal tribunal. Eventually, when that Bill was passed, there was provision for lay membership of the disciplinary tribunal, although the majority of members of the tribunal were still solicitors. I mention this only because it was thrown at us by the Trades Union Congress when we raised this matter very firmly indeed in the discussion with them. The Trades Union Congress said, "Why are we thought to be unworthy of conducting disciplinary machinery of our own on lines comparable with that of the professional bodies? Why should trade unionists be thought to be unreliable in the administration of justice and fair dealing whereas the professional bodies retain rights which are not conceded to the trade union movement?" I think that was a fair point, though at the time, and

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in my own speeches in another place, I said that that was really no answer to the question. What should be done is that the fullest right of appeal to an independent tribunal should be extended to any person who was deprived of the opportunity of following his employment or vocation by arbitrary exclusion or expulsion from an organisation, membership of which was an indispensable condition of doing the job. That is a principle which I think one can reasonably adhere to, but, unfortunately, we are considering this matter in a very unhappy context.
I am bound to say that the Bill before the Committee today has become a political necessity to Her Majesty's Government because this is part of the Social Contract. This is part of the Labour Party's Manifesto. We are dealing today with the last threads of the Industrial Relations Act 1971, and as my noble friend Lord Gordon-Walker has just pointed out, nothing was done to amend trade union law in this respect in all the years up to 1971. Then it was included in an Act which the trade union movement found totally unacceptable. We all saw the unhappy consequences of the 1971 Act. The law was defied; it became unworkable. Happenings occurred which introduced new features into the behaviour of trade unionists; such as strikes for political—not industrial—purposes.
All that was a very sorry consequence of the foolish action of the Conservative Government in 1971. The Government of the day declined to discuss with the Trades Union Congress the main principles of their proposed legislation. They were prepared only to discuss matters incidental to the application of the principles which the then Government had resolved. That was a tragedy; it was a disaster. There was no peace, politically or industrially, so long as the Act remained on the Statute Book. As I told your Lordships on 22nd July 1974, I was concerned, on behalf of the Parliamentary Labour Party and the Trades Union Congress, from the beginning to the end of the talks on the Social Contract, and it was part of our agreement that the 1971 Act should be repealed in those respects and that we should accept some alternative basis for the hearing of appeals
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by aggrieved employees or trades unionists.
What has happened in the interval between 22nd July 1974 and now is that the Secretary of State for Employment has discussed the matter with the Trades Union Congress, and has impressed upon it the very strong desire in many quarters to see a tribunal set up which could be accepted as really independent and could be regarded as a reliable appeal tribunal, both from the point of view of the trades unions themselves and of their members. The Secretary of State, in a speech in another place on 12th February this year, explained that the Trades Union Congress was ready to set up a tribunal with an independent chairman and independent members. The chairman would be a distinguished person with legal qualifications and the tribunal would be completely independent. It would be set up in consultation with the Conciliation and Arbitration Service, with the chairman being appointed in consultation with the Secretary of State himself. What the Secretary of State urged upon another place was that Members should give this new machinery a trial and, if it did not work satisfactorily, other steps could be taken.
I know your Lordships will say that all we are talking about is the nature of the tribunal to which an aggrieved person shall go. That is quite true. On this Amendment we are not discussing the closed shop or anything else. We are discussing only the form of appeal-the way to exercise the right of appeal—in the case of an aggrieved person. The choice lies between a statutory tribunal and one of the kind which the Trades Union Congress is prepared to set up and which the Secretary of State recommended in another place should be accepted.
We are confronted with the fact that the House of Commons has, by a substantial majority, decided on the course which we are now asked in your Lordships' House to reverse. I believe this to be an important consideration. I am sorry to say—because the law is in an unsatisfactory state—that it is necessary, in my view, for the Government to discharge in full their pledges to the trade unions, and this is part of the understanding reached with them in the discussions leading up to the Social Contract.

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I think it would be wise for your Lordships to accept the advice, to let the Trades Union Congress have a go by allowing it to appoint this independent tribunal in consultation with the Secretary of State and the chairman of the Conciliation and Arbitration Service, and let them begin work and see how it goes. I feel that, whether we like it or not, the Trades Union Congress and the unions in general would have more confidence in a tribunal of this kind than in any alternative form of appeal.
I say this in conclusion. When all is said and done, and when an appeal is over, if there is any question of receiving back into employment a person who has had to leave, whose membership of a union has been restored and who might be expected to resume his employment, but who is not acceptable to members of the union it is extremely difficult to see how that decision of the tribunal can be enforced. It is the good will and the confidence behind such decisions that will achieve the purposes we have in mind. After all, we are dealing with the comradeship of a trade union and the other members of the trade union are entitled to have something to say on whom they shall have and whom they shall reject for membership of a union which provides the fraternity, the cover and the protection for which employees look to trades unions. However, because of the closed shop situation, we all admit that where the power of the union to decide who shall and who shall not be a member may deprive a person of his employment, some other right of appeal should be provided. That is what we are talking about now.
My strong advice is that your Lordships should accept what the Trades Union Congress proposes and what the Secretary of State recommends, and, if there is anything wrong with that, then further steps can be taken.
4.17 p.m.
Baroness BURTON of COVENTRY: I wonder whether I may ask the noble Lord, Lord Houghton, for his opinion on one point. I really wanted to speak on Amendment No. 5, but I should like to ask the noble Lord this question now. I accept the advice of the noble Lord and I think we all realise the authority with which he speaks, but I feel that there is a stumbling block. I was Chairman of
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the Council on Tribunals for six years, and my difficulty is one which really arises on Amendment No. 5. Why in this tribunal, which it is suggested should be set up by the TUC, is it not conceivable that the rules of procedure should be approved by the Council on Tribunals, which is not a judicial body and to which I believe no exception was taken in the past, prior to the 1971 Act? I wonder whether the noble Lord could comment on the point of the Council on Tribunal's procedure, because it concerns what he was talking about.
Lord HOUGHTON of SOWERBY: I do not think the Council on Tribunals came into the proposal which was made by the TUC.
Baroness WOOTTON of ABINGER: Perhaps either the noble and learned Lord, Lord Hailsham, or the Minister could clarify one point to which I do not see the answer. I believe it is the case that professional bodies have a right to expel members for unprofessional conduct—a matter which, with professional bodies, is usually defined. But do they have a right to expel members arbitrarily or to display unreasonable discrimination, which is what we are trying to guard against here? Would a member of a professional body, if he were excluded as a result of arbitrary or unreasonable discrimination, have a right of appeal?
Lord HAILSHAM of SAINT MARYLEBONE: If the noble Baroness will forgive me, I suggest that she is confusing two quite separate conceptions. If a person wants to become a doctor, barrister or solicitor, he has to pass certain examinations and, if he passes them and is otherwise of good character, he is then admitted to practice. That is a professional qualification and that is how he practises. In addition, there are disciplinary bodies that can expel for certain specified offences, one of which usually is behaving in a manner unworthy of the profession. In those circumstances, in the case of a barrister he has an appeal to the judges sitting as visitors of the barristers; in the case of the General Medical Council, which is a statutory disciplinary body, he has an appeal to the Judicial Committee of the Privy Council; and—I speak subject to correction by the noble and learned Lord the Lord

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Chancellor—if he is a solicitor he goes to the disciplinary committee which is not a committee of the Law Society itself but one for which the Master of the Rolls is responsible, and I think he can appeal to the Master of the Rolls from that. There is an ultimate appeal to an outside body in each case, the expulsion has to be for a defined offence, and the admission is on a professional qualification of passing certain examinations in skills and knowledge.
Baroness WOOTTON of ABINGER: But the expulsion about which we are talking is not for unprofessional conduct but for arbitrary discrimination or dismissal on unreasonable grounds.
Lord HAILSHAM of SAINT MARYLEBONE: One cannot turn a man out of the legal profession unreasonably, but only for a specified offence of the type I have been mentioning. The same is true of the medical profession, and I think certainly the dental profession. They all have slightly different rules but I think that, in general, this is true of all professions.
The LORD CHANCELLOR: So far as solicitors are concerned, there is an ultimate right of appeal to the High Court.
Lord HAILSHAM of SAINT MARYLEBONE: I thought that was the case, and I am obliged to the noble and learned Lord for that information.
4.23 p.m.
Lord LEE of NEWTON: When I listen to debates of this type I am reminded of the many years that were spent by people looking after huge numbers of workers, as I did, in, for example, an engineering factory—and that was long before the provision which is in Section 5 obtained. It is easy when discussing this issue to get oneself into a most artificial atmosphere, and as I look round this Assembly I see many of my noble friends who like myself, have spent most of their lives trying to get people into trade unions, not trying to throw them out. It really is remarkable to imagine that we should spend our days, and many of us our nights, trying to achieve that latter objective in order to produce some Machiavellian
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scheme by which we will sling them out. When I listened to the noble and learned Lord describe what could happen to our trade unions, I began to wonder whether he really believed that if those of us with practical experience felt that that could happen to our trade unions we would now be opposing this Amendment. If we really believed that, we should be moving it rather than opposing it.
Let us consider the atmosphere in which such events might happen. For many years I had charge of 30,000 people and I never once came across any of the issues which have been referred to by the noble and learned Lord or the mover of the Amendment. Indeed, if a member of a trade union believes that discrimination has worked adversely in his case he has a number of remedies. In the first place he can go to his branch, and if he feels, for example, that he is being victimised, he can put his case. Every trade union has rules and in most large unions there is always a final appeal court. In the case of my union we have a final appeal court which is composed entirely of lay people. Any individual member can take the executive council, the president, the secretary or any member of the official hierarchy of the union before that final appeal court. And I repeat that they are lay members who do not look kindly on officials who try to knock lay members about, if I may use that phrase. Knowing how that final appeal court operates, I say with respect that I would trust its decisions—decisions made by my colleagues—at least as far as I would trust the decisions of any judge or jury, because I am aware of their integrity and honesty. If, as my noble friend Lord Houghton of Sowerby pointed out, a man is still dissatisfied, he has a right of appeal against unfair dismissal.
We also have the fact that the TUC is proposing a tribunal arrangement and it is clear that in no way will that be a sort of cover-up for any individual trade union. Whenever a case from an individual trade union comes before that body, no member of that union will be permitted to take part in the making of its decision. Anyone who knows the set up in the British trade union movement, and especially of the General Council of the TUC, knows that they would bend over backwards to ensure that there was

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not the slightest chance of any such body being a rubber stamp for an individual trade union. I assure noble Lords that that would never happen. I therefore ask your Lordships when considering this sort of matter to recognise that one is sitting in judgment, as it were, on a trade union movement which can vie with any in the world for integrity and honesty. Despite what the noble and learned Lord was saying, it has proven itself over the years with the one exception when a certain minority group got charge of the ETU.
Lord SALMON: I want to make it plain that I was not casting the slightest doubt on the integrity of the present tribunals. Indeed, I went out of my way to say that nobody could possibly doubt them. I was simply trying to say that we should keep Section 5 or something like it in case the optimism which has been expressed against penetration succeeding in the future turns out, as unfortunately it may, to be unjustified.
Lord LEE of NEWTON: The British trade union movement has been in existence for the best part of 200 years and some years ago the TUC celebrated its centenary. The terrible things which some noble Lords seem to think might happen have not happened. I could understand such comments if they were directed at the CBI, which has no history behind it and which does not have the sort of experience which the British trade union movement has. I do not say this lightly, my Lords, but it could happen that some extremely Right-Wing people might take charge of the CBI; but I see nothing along those lines in the Amendment. Surely, with regard to the lawyers themselves, it is not asked that they should pass judgment on what could possibly happen in the coming by and by. They have to deal with facts, and I am asking the Committee to deal with them. None of those matters which have been asserted as being possibilities has ever come about. There is a series of checks at branch level, at the level of a final appeal court, at the level at which the TUC wishes to set up its tribunal and, finally, at law. Surely, those are enough checks for any people to put up with?
4.30 p.m.
Lord SHINWELL: The noble and learned Lord, when speaking in the course
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of the debate, warned the Committee with almost extreme gravity that if the Amendment were not passed it would be the end of liberty. That is what he said, but it comes rather quaintly from a member of a profession which, in the last century, and even at the beginning of this century, used its powers in the courts in order to prevent ordinary people associating freely in a trade union, and which placed every possible impediment in the way of reasonable organisation among working-class people. I remember the Osborne judgment, and the Taff Vale judgment. What is it that troubles the noble and learned Lord as, apparently, it troubles other noble Lords on the other side of the Committee? It is to afford protection for workers on the shop floor against arbitrary expulsion from a trade union. It would have been interesting had the noble and learned Lord, in the course of his speech, cited a substantial number of instances in which men had been expelled by their trade unions. We could then have formed some estimate of the gravity of the situation. The fact is that there have been few instances of men being expelled from their trade unions, taking into consideration the vast number of trade unionists in the United Kingdom and the substantial number of trade union organisations.
However, in the matter of affording protection for workers against indiscriminate and arbitrary action, let me ask this. If a matter has gone through the trade union branch, up to the executive council of a union and then—under the suggestion made by my noble friend Lord Houghton of Sowerby—a trade union tribunal is formed under the sponsorship of the Trades Union Congress, what is the situation? If there is no power vested in the trade union to expel a member, it is possible—indeed, highly probable—that the men on the shop floor who initiated the action to bring about his expulsion will find ways and means of dealing with the situation. It is not necessary to invoke the aid of law; it represents no difficulty whatever. Indeed, few of the cases have been cited. Ever since the Industrial Relations Bill was passed by your Lordships' House in 1971, few of the cases have been those where men have been "sent to Coventry"—to use the familiar expression.

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Many of my noble friends were not present when we debated the Industrial Relations Bill of 1971, which became an Act of Parliament. Overheated discussions ensued. Members of the present Opposition, who then occupied these Benches, were warned over and over again about their propositions which were found acceptable to a majority in your Lordships' House, but which were unacceptable to those of us now sitting on this side, who were sitting on the opposite side at the time. They were warned over and over again what would happen, and what we warned about has happened. There have been interminable disputes, chaos, upsets, disturbances, turbulence and all the rest of it. Is that a way to invoke the aid of law? To impose on a body of working-class people conditions which they regard as unacceptable has happened over and over again, as I have indicated, and those who have been responsible are those members of the noble and learned Lord's profession, those judges, vested with authority, who sought even to prevent trade union organisations existing at all—
Lord SALMON: I have never been, and certainly never will be, against the trade union movement. With regard to what my noble friend says about the past, I am not responsible for the sins of my fathers. I have always tried, and I do not think anyone doubts it, to discharge my duties quite impartially, and I have not today sought to defend the Act of 1971. I am not concerned with that.
Lord SHINWELL: I am not suggesting that the noble and learned Lord is responsible for the sins of his fathers. All I am suggesting is that he ought not now to commit any sin, of any sort. I want to protect him against himself, if I may say so with respect, and with all the reverence possible for a Law Lord. I must say that this debate is very nostalgic, because of what happened in the early part of the century. I appeal to the noble and learned Lord, Lord Hailsham of Saint Marylebone, for he will recall what happened when he occupied the Woolsack—how often we appealed to the then Government, myself in particular, and how, indulging in what might have been regarded at the time as a warning, we said: "Watch out, this is not going to
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do you any good; it is not going to do the country any good", and it did not. It possibly led to the defeat of Mr. Heath, and to the disarray that now exists in the Conservative Party.
Therefore, it seems to me that your Lordships' House will do itself no good, nor the United Kingdom any good, nor the working-classes, nor even the employer classes, by seeking to pass this Amendment. It is unnecessary. It is far better to dispose of something which has been a source of trouble. Of course, if Members on the other side of the Committee prefer otherwise, and want to use their majority against the minority on this side and against a decision taken in another place, they can please themselves. But if they do that, it will only invoke a further reaction against the very existence of this assembly. Better not do it!
Lord HANKEY: I said a good deal about this matter during the Second Reading debate and wish to say only a few words now. I should like to support my noble and learned friend behind me. He made an extremely powerful speech, and I was very impressed with it. I do not quite know about "protecting our-selves from our sins" or from our fathers', but I am quite clear that it is the duty of Parliament to protect our workers from unreasonable and arbitrary discrimination. I do not think that knocking out this most desirable section from the principal Act of 1974 can be, or really ought to be, justified by reference to the negotiations which took place between the Labour Party and the TUC— which did not bind anybody else—when the Social Contract was being prepared. Although I support the Social Contract, I do not think that that was a reasonable condition to make.
The workers are preserving the right of appeal to the industrial tribunals in the case of unfair dismissals, and I do not see therefore that it is altogether logical for them to object to protection against unfair or arbitrary discrimination by exclusion from a trade union when that is also to be referred to the industrial tribunals. I should have thought that the industrial tribunals had earned thanks from everybody for the excellent work they do and that this was pre-eminently a case where they ought to have a job to do. I do not think that we ought to let this section go.

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It is our duty to look at the substance of what is needed to protect our workers. I believe this is necessary in the new circumstances. I should like to say to noble Lords across the Gangway that we really have to consider this clause in the new circumstances which arise in the light of the Bill before us which will spread very much the application of the closed shop. The closed shop will mean that anyone excluded from a trade union will automatically be excluded from his job; he will not easily be able to find another job in the same industry. I think that this clause about the protection of the worker against exclusion from a union really receives a new importance in the light of the new circumstances which we are facing in this Bill. I shall vote for the Amendment.
4.41 p.m.
Lord PANNELL: I find an air of unreality pervading this Chamber this afternoon. I came into industry in the year 1918 and I left it in 1949 to come straight into this House. In the early part of my career there was a closed shop the other way: that is, that no employer would employ a trade unionist. I remember that after the General Strike I had to travel the length and breadth of the country where the employers' organisations had my photograph circulated as a man not to be employed—one of those types that the noble and learned Lord had in mind; although I have opposed the Communist Party all my life. It was only when things began swinging towards rearmament, to the Second World War, that the closed shop came into fashion, the balance shifted and the trade unionists were entitled to say who they would work with. Let me state a principle. The Liberal Party are very fond of speaking about the rights of the non-unionist; they never speak about the rights of the unionist. A non-unionist, they say, has the right to say that he will not belong to the trade union. But I and my fellow trade unionists have the right to say, "I shall not work with him." For example, if you get a hundred men in a job and one man is what they call (in the historic term) a "rat" or" knob-stick", they, equally, have the right to say that that man's past and that man's character is such that they will not work with him. The noble and learned Lord, Lord Hailsham of Saint Marylebone,

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made some point of the fact that when you are dealing with the noble professions, you are dealing with people who have qualifications for their job.
Lord HAILSHAM of SAINT MARYLEBONE: I made no point at all. The noble Lord is under a misapprehension. I replied to an invitation by the noble Baroness, Lady Wootton of Abinger, to reply to a question of fact. I made no point. I am longing to hear a member of the Government defend this clause.
Lord PANNELL: I recognise the noble and learned Lord's right to speak for the professions; but I speak with right for the filthy trades. That is what we are talking about here. Although he never meant to, the noble and learned Law Lord who opened the debate did so in terms which I found embraced an assumption as impertinent as it was unwarranted: that what was good for the professions was not good for trade; that what was good for solicitors and doctors was not good for engineers. If you speak about qualifications for doing a job, then very often the trade union ticket—and particularly my own trade union ticket—carries with it a qualification to do a job. There are various grades. There can be a closed shop within a particular grade where you do not recognise somebody outside that grade. I worked as a shop steward for about fourteen years in a closed shop immediately before coming to this House. I cannot remember any particular occasion when anybody was thrown out. There were certain people we would not have in, people who applied for jobs but who did not measure up to what we wanted. We were concerned with charge engineers, with responsibility over 300 square miles of territory; and qualifications entered into that.
We have to consider these things in context. It is very curious to think that when we debate the question of the journalist tomorrow, the argument will be put forward that this Bill does nothing but restore the Act to what it was before 1971. Before 1971, we managed to get on quite well in the trade union movement without this Section 5. Sitting next to me is the ex-Lord Chancellor who took that memorable case in 1961 known as the ETU case—which probably

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"busted" one of the greatest rackets of all time; so the trade union movement could look after itself before 1971.
There is another point to be stated. I rather thought that the noble and learned Law Lord got some of his brief from the speech of the noble Lord, Lord Chalfont, last week when he talked about all kinds of things happening. The cure for Communist infiltration is to attend your trade union branch, to attend the local Labour Party meeting. I would have asked a question of the noble Lord, Lord Chalfont, had I been able to do so last week, as to what missionary work he had done in either of those fields. If the Communists have not infiltrated into this country, it is because of the trade unions and the Labour movement; because, historically, anybody who understands anything about the Marxist dialectic knows that it is a well-known Communist technique to fragment the forces of the Left before they turn on to the Right. Therefore the historic mission of the Left in British politics has been to defend the Constitution and to defend the law.
We have done more to defend the law than all the Law Lords have ever done —in odd places, in trades union branches, in shop floor arguments. Everybody stood up to the heathen wherever they saw him. As a matter of fact some noble names have been associated with this. The late Lord Morrison did more in this respect than the noble Lord, Lord Chalfont, will do in a lifetime. If the Labour Party never went Communist, it is because the rank and file up and down the country stopped it; and the rank and file of the Labour Party cannot be dissociated from the rank and file of the trade union movement for they are often the same people. We have been the defenders of the British way of life; we have stopped infiltration. I doubt whether your Lordships—or most of you—would recognise a Communist if you saw one. You have not seen him. They have got in all kind of places. We smell them out and we chuck them out I have no doubt that, if it were a matter of throwing out a Communist, we should not have had that high-minded disquisition at the beginning of this debate.
Why do you throw people out? In the case of the trades it is very often, I have
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no doubt, because people fall below the level of the other people in the shop. In the case of a national dispute, a man goes in at his peril—I am speaking of an official dispute and not an unofficial one—and other people will not work with him. I have never known a non-unionist who has refused to take the benefits which a trade union has won on the shop floor; they are only too glad to do that. All kinds of things occur from long experience— far too long to speak about today—but we did without this legislation before 1971. It may not be an argument that will appeal to an unelected House, but the repeal of the 1971 Act has been in the Manifesto of my Party in two Elections, so if there is any mandate from the people to do this we have it.
Lord SHEPHERD: I wonder whether I may respond to the intervention of the noble and learned Lord, Lord Hailsham, who is most anxious to hear the views of Her Majesty's Government on this Amendment. He must be slightly naïve to expect that the Government's view has changed in any way since we debated this issue, because it must be placed to the responsibility of the noble and learned Lord that this part of the Act was included, against the advice of the present Government.
I should like to thank the noble Earl, Lord Mansfield, for the very moderate way in which he moved this Amendment. I thought he had a far greater understanding of the issue than the noble and learned Lord, Lord Salmon. If I may say so, the question of the infiltration of Communism into the trade union movement is completely and utterly irrelevant to the Amendment before us, and to the relevant section of the Act. I want to say that I agree with the noble Lord, Lord Pannell. I can speak from my own recollection. My father, who was a trusted Member of your Lordships' House, was national agent and chief organiser of the British Labour movement from 1923 to 1946. I suppose he broke up more constituency Labour Parties than any national agent has ever done.
We know a great deal about the Communist movement. I agree with the noble Lord, Lord Pannell, that it is the Labour movement which sees them, understands them and deal with them. The noble Lord said that his speech was not meant

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to be provocative. I suggest that he reads tomorrow's newspaper to see how he has been reported. He will not have the same response as I believe he would have wished. So far as I am concerned, nothing divorces Communism from Nazism or Fascism, and it was the trade union movement which stood up against Fascism in Spain, when the appeasers of the political Parties were in full swing. So do not let us hear any more about the position of the trade union movement.
The question before this Committee is about the right to work and to belong to a trade union. When I spoke in July, I drew attention to the relatively few cases that came before the courts because of failure within the union machinery to give natural justice to trade union members. I do not intend to repeat those figures this afternoon, but the Committee should be aware that since Section 5 was passed there have been eleven applications to tribunals under that section. Four have been heard; all have been dismissed, and two have been withdrawn. Of the four cases heard and dismissed, one (against the AUEW) was by an inveterate complainant, who had made at least thirty complaints under the Industrial Relations Act, who had twice had costs awarded against him for vexatious applications and had never had a finding in his favour. The tribunal found no evidence of arbitrary or unreasonable action by the union.
The second complaint concerned expulsion from the Medical Defence Union. It is doubtful whether that body is a trade union for the purposes of the Trade Union and Labour Relations Act, and the tribunal did not consider the case under Section 5, although they did consider a related unfair dismissal claim. The two other cases were complaints by NCB employees against APEX. The tribunal held that APEX acted in accordance with an agreement reached under the Bridlington principles in expelling the two complainants, who should properly have joined the NUM's clerical section instead. The two cases withdrawn involved complaints against the Union of Dyers, Bleachers and Textile Workers by members who resigned and were subsequently refused readmission. The difficulties were apparently resolved.
I set out those facts to show that the consequences and experience of Section
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5 are no different from those prior to the Industrial Relations Act. In fact, the number of cases brought against unions for unfair action is very small indeed. The aim of any safeguard is surely to enable an individual to continue to enjoy the benefits of union membership and, above all, to ensure that a man does not lose his job over non-membership.
Lord SALMON: I hope my noble friend will not think it discourteous of me if I leave, but I have to address a union this evening in Cambridge.
Lord SHEPHERD: I understand the difficulty of the noble and learned Lord, but it makes life rather difficult for the rest of us who have to take part in a Committee stage. A declaration of rights or a High Court injunction, such as Section 5 provides for, is no guarantee that these results will be achieved. They could have quite the opposite effect, by creating ill-feeling in an, individual's workplace—an experience we all know in regard to the Industrial Relations Act.
What I think we should seek to do is to see whether it is possible to devise machinery by which a man will get his job back. That, I should have thought, was the paramount duty. It is the Government's policy that safeguards should be provided for individuals who are deprived of union membership in a closed shop. Ministers have considered at various times the possibility that statutory provisions establishing a review committee along the lines recommended by Donovan might be included in an employment protection Bill, or that a code of practice might be included in that Bill rather than specific statutory provisions. They made it clear, however, that they would prefer to build upon existing union and TUC procedures to ensure that whatever was provided was fully effective, and that they wanted to discuss in more detail with the TUC precisely what form additional provision should take in order to be more effective in helping the individual.
Following extensive discussions between the Secretary of State for Employment and the TUC, the General Council of the TUC decided to set up an independent review committee to consider appeals from individuals who have been dismissed from

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their job as a consequence of being expelled from, or refused admission to, a union in a closed shop. The proposed review committee will have an independent person with legal qualifications as chairman and two other members. All three members will be appointed by the General Council in consultation with the Secretary of State for Employment and the Chairman of the Advisory, Conciliation and Arbitration Service. It will be completely independent of the TUC in reaching its decisions. The Committee's composition is in many respects similar to the review committee proposed by Donovan. That would have comprised a legal chairman and two members chosen from a panel of unionists appointed by the Secretary of State in consultation with the TUC. The detailed procedures under which the review committee will operate will be for the TUC to work out in relation to existing individual union procedures for processing grievances. But the review committee will have to be satisfied, before it considers an appeal, that an individual who has been dismissed following expulsion or exclusion from a union has exhausted all internal union procedures.
The intention is that the review committee should discuss a case with the union and individual concerned, with a view to resolving the matter by agreement. If that proves impossible, the review committee will make a recommendation as to whether or not tthe individual should be admitted or readmitted to the union, and, if so, under what conditions. There would be a clear responsibility on the part of the union to act on such a recommendation for the review committee. Any union which expelled a member or refused admission to an applicant in circumstances covered by this procedure would take such steps as are necessary to ensure that the individual is made aware of his rights, both within the union and as regards appeals to the TUC review committee. The General Council intend that this review committee should be ready in time to deal with any cases which might arise immediately after the repeal of Section 5. They have circulated member unions telling them of what is proposed and of the intention to put the proposal to the next Annual Congress for formal endorsement.
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I suggest there are very considerable advantages in the procedure decided upon by the TUC as compared with any statutory provision for appeals—particularly to a body divorced from the union organisation. Questions of exclusion and expulsion hinge primarily upon internal union organisation and affairs and can be most sensibly and competently dealt with within the union movement. But as a quasi-internal review body, the Committee's procedures can be properly coordinated with existing union and TUC procedures for dealing with complaints of unreasonable exclusion or expulsion and can take full account of the TUC's Bridlington principles in dealing with complaints of exclusion. Furthermore, if unions know that TUC machinery is available to pass judgment on their procedures and the way they are operated, they are more likely to ensure that an individual's complaints are fully and adequately dealt with under their own procedures than they are if the alternative is for the individual to appeal to a tribunal; this lessens the chance that an individual will finally be expelled or excluded.
I believe that the issue is a very simple one. We have had statutory machinery. It has been little used. We had no machinery before 1971. As a consequence of Donovan the trade union movement has improved its procedures. What we are suggesting is that we put trust into the trade union movement, a democratic organisation of some 10 million people; that they should use their machinery; that they should develop it as I have outlined, so that we can have the benefits of conciliation and judgment. Above all else, I believe that through this procedure and co-operation within the movement we are likely to see the number of cases to be relatively small and more men eventually going back to work alongside their mates where previously there had been difficulties. I suggest that what is at issue today is not a fundamental matter of great principle; it is to devise ways and means by which, among a group of men where there is difficulty, where one is expelled for one reason or another, there should be machinery to ensure that men can go back to work. I would suggest that all experience shows that it is within the trade union movement that we are likely to find it, and not

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within the courts of law which we have tried so recently and which so lamentably failed.
Baroness WOOTTON of ABINGER: Will the noble Lord, Lord Shepherd, state quite explicitly whether Section 5 of the principal Act stands? That would make the establishment of a closed shop agreement legal, or illegal. Does it prohibit a closed shop?
Lord SHEPHERD: No, it certainly does not.
Lord HAILSHAM of SAINT MARYLEBONE: Neither one nor the other. The closed shop is legal under the 1974 Act.
5.7 p.m.
Lord ROCHESTER: I should like to say just a few words on this Amendment, as I did on a similar Amendment at the time of our discussions on the Trade Union and Labour Relations Bill last July. May I begin by conceding a few points to noble Lords on the other side of the Committee. I do this speaking only for myself. In negotiating with trade unions for a number of years on behalf of a large organisation, I came to see some of the advantages of the closed shop in practice. I recall also that there was often machinery within the union concerned which enabled people under threat of expulsion successfully to appeal against that expulsion. In my experience it can be said that in general—I have to put it this way because I recall there were some exceptions—the closed shop did not of itself lead to illiberal practices. I wanted therefore to say to noble Lords on the other side—and I think I may call some of them "my noble union friends"—that I start by having some sympathy with the view that has been expressed on that side of the Committee this afternoon.
However, last July I supported, as did my colleagues on these Benches, the principle that, as under the Trade Union and Labour Relations Bill the closed shop was for the first time to have the sanction of the law in the sense that employers were enabled fairly to dismiss people who were not members of the appropriate union, common justice demanded that at the end of the day, after all the internal procedures had been exhausted, some legally enforceable and independent
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machinery should be set up under which in all cases people expelled from a union could have the right of appeal to an independent body. I am still of that opinion. It seemed to me of some significance that this afternoon this Amendment, which maintains protection of the individual in this way, had the support of a judge as eminent and respected as the noble and learned Lord, Lord Salmon.
I know well from my own experience that there are few issues on which trade union members feel more strongly than the issue of the closed shop. However, it seems to me that if this Amendment were accepted it would not be the case that there would be grave unrest among ordinary British working people. Even if there were a real danger of that happening, I suggest to your Lordships that it is still our duty to be constant in our support of the principle which, as I understand it, this Amendment seeks to preserve.
I was interested in what the noble Lord, Lord Houghton, had to say. I recall the impressive speech which he made last July accepting for himself the proposition that, in the closed shop situation, people expelled or excluded from a union should have the right of appeal to an independent body. I recall how nevertheless he asked us on that occasion not to insert a clause in the Bill which would have that effect, on the ground, as has been stated today, that the Government should first be given an opportunity to have further discussions with the Trades Union Congress. He has said this afternoon, and I respect his judgment, that we should leave it to the TUC itself to "have a go". That view has been confirmed by the noble Lord the Leader of the House. However, I suggest to your Lordships that we must judge the facts as they are.
At the moment, the facts are that there is to be no legal machinery, no provision for appeal to an independent body, because it is not the Secretary of State who is to set up a tribunal; rather, it is the TUC which is to set up its own review committee. I know that it has been said by the noble Lord the Leader of the House that the TUC will consult the Secretary of State and the Chairman of the Advisory, Conciliation and Arbitration Service on this matter. I know, too, that the Chairman of this committee is to be

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a man with legal qualification and that the other two members are to be independent of the union involved in the case. But it is because this committee is to be set up by the TUC that, in the eyes of some at least, it may be thought to have, even if it does not, in fact, have, a bias towards the union rather than towards the individual.
The phrase that "justice should not only be done but be seen to be done" has perhaps become a little hackneyed, but I suggest that this is an occasion when that phrase should have application. However wise the TUC may have been in the arrangements they have made for the setting up of this committee—I recall that in winding up our debate on Second Reading the noble Lord, Lord Jacques, gave it as his opinion that in this matter their wisdom had been infinite—I fear that, because of the genesis of this committee, it will be regarded by some people not as a truly independent body but rather, and I say this with no disrespect, merely as a creature in the image of the TUC. To be consistent with the decision which we took last July and in the name of simple and visible justice for the individuals who may be concerned, for this reason I should like to give my support to this Amendment.
Lord SHEPHERD: Before the noble Lord gives his support to this Amendment, because he is a very practical man may I pose this question: is it not the intention of the noble Lord to find some procedure whereby, if there is difficulty, a man should be taken back into the union and so get back to work? Does the noble Lord really think that in the present climate a legal body is likely to achieve that aim, as opposed to a body set up by the TUC? Which body does the noble Lord think would achieve the best result?
Lord ROCHESTER: I had hoped that I had made it clear that in the first instance I agree that the machinery within the union is the machinery which should be used. However, at the end of the day, given the closed shop situation, that for the first time it is possible for employers to dismiss people for not being members of a union, I feel it is right that there should be some legally enforceable and independent machinery.
5.14 p.m.
Lord GREENE of HARROW WEALD: Although I do not wish to prolong the debate for too long, I want to make one or two comments in connection with this matter. Reference has been made to the new arbitration tribunal being a creature of the TUC. This is an emotive expression. If it is a creature of the TUC, I think that the TUC has some responsibility to ensure that the decisions of that body are carried out. Whether the responsibility for the other procedure which is being suggested—that the matter should go to law—is as much the responsibility of the TUC as it would be if it were its own body that it was setting up in that connection, is a matter of opinion.
I have listened with interest to what has been said and, as I see it, there has been a turn-round of events. Some of my noble friends have said that the trade union movement was originally set up with a view to defending the workers of the country against their employers. If that is right, the situation has now been turned round: employers are now very concerned about defending the workers against the trade unions. This is a rather odd position.
The noble Lord who has left the Chamber to address the Cambridge Union—I understand that it is not the same kind of union as we are talking about now— made a remark in connection with the powers of the TUC over the trade union movement. First, we must be clear in our minds that the trade union movement consists of the people who are working on the shop floor. If one is concerned about defending an individual who may feel that he has been wronged, it must be made clear that the people who are responsible for laying down the rules of the trade union are the members; they are not laid down by the General Secretary or the Executive Committee. This happens only in exceptional circumstances where it becomes a legal matter and the Executive Committee have a legal responsibility to recommend a change of the rules so far as the union is concerned. Basically, however, the rules of the union are drawn up by the members. Consequently, there is a conflict of interest. If, for some reason or another, the trade union decides that a particular member is not to belong to the union, or he himself has left the union, I am assuming

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that the people who have drawn up the rules of the union are the people on the shop floor and that in those circumstances they have the right to adjudicate upon what should happen.
I had some experience, as many of us did, of what happened when the 1971 Act came into operation. Prior to that, we were left to deal with matters on our own. It could be alleged that, if one were trying to contest an Amendment which says that one does not want members to be expelled unreasonably, one is saying, "Oh, you do want people to be expelled unreasonably". I think one has to find out who set the hare chasing. It was not in the legislation prior to the 1971 Act. Therefore, there were very few occasions when this problem arose. The Government of the day, having passed the 1971 Act, used it on only one occasion. On no other occasion did they try to use the 1971 Act.
The other amazing matter is, that as I have been travelling around and talking to people recently—and though some remark was made in connection with the CBI, I am not one of those who wants to say anything derogatory about the CBI: they have their problems, as have the Trades Union Congress—I have found very few people in the CBI who want this Bill. I am wondering who is behind the two matters which we are now discussing. In those circumstances, I should have thought it would be in our interest to carry the Bill as it is and not become involved in these two problems, although it might be said that the understanding with the then Government and the TUC in connection with the Social Contract, which obviously everybody now accepts, has in it other things than wages, but the understanding between the Government and the TUC was in connection with removing these clauses. I am waiting to hear some employer say that he wants them. I am of the opinion that if there was a decision made in law that a member should be taken back into the trade union the responsibility will be placed on the employer and the trade union movement to solve the implications of the decision of the court.
In my experience the introduction of the law into industrial relations was not very good. Every agreement we made under the 1971 Act required an argument
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with the employer as to whether or not it was going to be legally binding. It was not really necessary to have any argument with the employer. Generally he agreed that he did not want his agreements to be legally binding. If they were legally binding and there had been any dispute the employer would have to go to court in order to enforce the agreement. So, even during the time of the operation of the 1971 Act, we got back to the situation whereby in a great many cases the employers opted for agreements to be not legally binding.
Prior to the time when we were involved with the Government in connection with the ballot, I thought I was quite capable of writing a general circular to my membership explaining the situation in connection with agreements between the employer and the union. But when it came to writing the circular arising from the exercise of going to the Industrial Relations Court, I found that in my office I had two leading counsel, a professor of law and three junior counsel, all writing out the circular which I used to do myself. I should have thought that employers would not want that sort of thing.
The relationships between both sides of industry in this country is good. The exceptions are the ones which get all the publicity. The noble Lord the Leader of the House has explained a number of cases which have arisen in recent times, where people have been expelled from their trade union. It all depends who wants to talk of these things. Some people say "Oh! well, there are only 10 million people in the trade unions, out of the 20 million people who are employed". I should have thought, if that were so and somebody was expelled from his trade union, that there were another 10 million places to which he could have gone. On the other hand, the trade union movement is so strong that it controls the situation and a chap is not likely to get any further employment in this country.
I would say this about the arrangements which the TUC have made. It is not really a creature of the TUC in that sense. The chairman is to be an independent man of legal training. We have a few such men in the trade union movement, and it would look a bit odd if we found our own solicitor from the membership of

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the TUC to sit. But the fact remains that he is to be an independent man of legal training, and the other two people will also be independent. I should have thought, if such machinery was in operation, that that would be the best way to arrive at a solution, if the position is as serious as people try to make out.
A noble Lord who has now left asked whether the TUC have some responsibility for the general operation of the trade union movement. Some of my noble friends have referred to the Bridlington agreement. I know of no occasion when any trade union has refused to operate a decision made under the Bridlington agreement. Until today there has been no challenge to the Bridlington agreement. When I say "challenge", I mean that no union has refused to operate the Bridlington agreement. I should have thought that if this new machinery was set up that would be the best solution.
I go back to what I said originally. The trade union movement does not want this Bill and I have had difficulty in finding any employers who want it. I believe they want to get back to the general understanding of good industrial relations, bearing in mind that the industrial relations in this country are good. It is the exceptions that get all the publicity. If the Amendment is not withdrawn I hope that even at this late stage the movers will give second thoughts to it. I cannot see how, if this Amendment is carried, it will improve the relationship between employer and employees, or will ease the situation. Even after a court has made a decision on this basis, it will still be left to the employer and employees to solve the problem. I should have thought that that would not in any way improve the industrial relations in this country and it would probably make them worse.
5.27 p.m.
Lord BERNSTEIN: We have had a very interesting speech from the noble Lord, Lord Greene of Harrow Weald, and all the points which trade union people wish to make have been made. The noble Lord, Lord Greene, said he has not heard of any employers saying they wished this clause to be waived. I remember the battle here during the passage of the Industrial Relations Bill when we had all night Sittings. I shall be corrected if I am wrong, but my recollect-
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tion is that no employer of labour on this side (then the Conservative Party) spoke in favour of the Bill. Certainly those with whom I have come into contact were not in favour of the Bill.
The noble Lord the Leader of the House has explained what will happen if this Amendment is withdrawn and if the Bill is operative without the emotional voting that will go on in the Library, the bars, and so on, if we go to a Division.
Lord HAILSHAM of SAINT MARYLEBONE: It is a very full Committee.
Lord BERNSTEIN: I have been an employer of some quantity of labour for about 40 years. When I say "I" I mean the company for which I work and whom I represent. In most cases we have had closed shops and seven active unions with which to deal. I cannot remember a case of anybody being thrown out of his union but I can remember many cases where members of a union have been disciplined for not doing their jobs properly and for disobeying union rules. I can speak of the days when the ETU was completely Communist-dominated and they behaved impeccably so far as we, the employers, were concerned.
When the Industrial Relations Bill was going through, we warned the Government of the day that they would cause nothing but trouble. Leaders of the Conservative Party over the years, like Churchill and Baldwin, have urged people not to use lawyers to settle industrial disputes. I urge you again to remember the speech made by the noble Lord, Lord Houghton of Sowerby, saying "Don't do something for which you may well be sorry at some later date". Sooner or later we have to accept that the decisions in trade unions will be settled by the trade unions in a happy relationship with employers. I have had unhappy relation-ships because I have had two strikes in my time among people with whom I have worked every day, but we have patched up our problems with mutual respect for each other.
We have another chance this time. I urge the Conservative Party and the people, whether they are in the Chamber at the moment or elsewhere in the House, to withdraw this Amendment and give the TUC a chance to do something worth while, which I think they will do.
5.31 p.m.
Lord GEORGE-BROWN: I wish to enter a dissident voice from the ranks of the trade union movement and to base it upon the last two speeches which have been made. My noble friend Lord Greene of Harrow Weald said, if I remember his words correctly, that we were trying to make the exception the case. He went on to say—and he was supported by the noble Lord, Lord Bernstein—that of course the trade unions and the employers could get along most happily together so long as we never made the exception the case. It is that text on which I wish to preach because with great respect more harm can be done to democracy everywhere if we raise the idea of the corporate State. So long as the employer and the trade union (meaning the leaders of the trade union) get along together, all will be happy, nice, convenient and comfortable. It may be that every now and again some individual will suffer, but do not let us worry too much about him because if you try to take care of him you will upset the general happiness of our relationship with each other.
The noble Lord, Lord Greene, said that the trade union movement originally came to birth and was formed to oppose authority which dealt harshly with individual workers, and he thought it was amusing that now, however many years later, we are being asked by what he called "authority" to take up the position they were then taking up. But if I might just remind the noble Lord, Lord Greene, the Tolpuddle Martyrs were a small group of individuals fighting those who then had power. Those of us who take a contrary view to him are recognising—and he clearly knows this as well as I do—that trade union leaders, whether they be lay members or executives, or full time officials, can also, and in some cases do, exercise power arbitrarily to the detriment of the individuals.
A noble Lord: Oh, No!
Lord GEORGE-BROWN: Oh yes, indeed. If my noble friend wishes to interrupt he may do so, but indeed they do and individuals suffer as a result. As one of those trade unionists who is also a Socialist and who is in favour of individuals, I would say there is a stronger case to be made out than my noble friend will accept, in favour of the law in the
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days when we are able to make the law— or help to make the law—as we were not in the days of the Tolpuddle Martyrs or the early members of the NUR or in the days of the matchgirls' strike, which helped to begin the NUGMW, or in the days of the dockers strike which helped to begin my own union. In days when the situation is quite different, there is a case for trade unionists who are also Socialists and not believers in the corporate State to take the view that trade unions also need restraining from acting arbitrarily and unfairly.
The references to the Bridlington Agreement are wide of the mark. How many times do I know that trade union leaders have met other trade union leaders and decided to tell a whole block of people—never mind about the one—that they cannot stay in membership of the union they have opted to join; they must be handed back to the union they have decided to leave, because the Bridlington Agreement was so operated. How many times has a TUC Committee done this, and done it not on the basis of what the members wanted, not on the basis of what was opted for by the fellows, but on the basis of "If you don't scratch my back, then I won't scratch yours" or, under the Old Pals' Act, "Don't take the members of the Transport Workers' Union into the NUGMW; don't take the chemical workers into the NUGMW." Those of us who have been trade union officials for most of our lives know that it works on that basis. The references to the Bridlington Agreement are very wide of the mark. All of us—myself included, when I was operating in this field, when I was a Minister and, I suppose, now— prefer that the even tenor of our ways be not disturbed.
Of course, the noble Lord, Lord Bernstein, of Granada, managed to get along very well with the ETU when it was Communist dominated. But we were shown in the courts the price the members of the ETU paid in order to be Communist dominated, so that the noble Lord, Lord Bernstein, got along with them exceedingly comfortably and well. Of course, this can happen; of course, employers—ICI, Courtaulds, any employer you like to mention—would prefer not to have life disturbed. That is true of all of us, but it does not make a case, with great respect to my noble

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friends, for what they are arguing in favour of today.
In my view the trade union movement is now strong enough not to need to force people into membership. We are strong enough today as we were not, even when I began, which is 50 years ago; we are strong enough now to "sweat out"—if that is the expression your Lordships like—the 10 per cent. who might not want to join us. Incidentally, it is no answer to say that since we are only 10 million the one who does not want to be in the NUR can leave and take one of the other 10 million jobs. My noble friend really was not serious when he put that forward. You cannot tell a man in the docks, or a lorry driver in my own union who wants to operate as a container lorry driver, that he can go and take a lorry driver's job anywhere else. The answer is that he cannot do so. We are pushing things too hard and we are ending by being very mean to the fellows who want to protest.
Talking about the trade union section or the political section of the Labour movement, we grew so that people should be able to protest effectively. There is no more effective way of stopping people from protesting than taking away their jobs. In 1926, my father was put out of work by the employers. When he was nominated for a job on the Evening Standard he was put out by the appropriate printing trade union. Are your Lordships telling me that one is a wicked man, and the other is a good man? If a trade unionist loses his job for saying and doing what he thinks is right, the punishment is the same either way. Speaking for myself, I believe that one should stand up against the one as against the other. If fellows or girls wish to leave a union, for reasons that they deem to be right and proper, the one punishment that should not follow is the loss of their job.
I come now to the merits of the proposals. I listened to my noble friend the Leader of the House, who appears to have gone to debate at the Cambridge Union—
The LORD CHANCELLOR: If the noble Lord, Lord George-Brown, will allow me to intervene, lest he may think that the noble Lord the Leader of the
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House is guilty of discourtesy to the Committee, or even to the noble Lord, Lord George-Brown, may I say that the noble Lord the Leader of the House has gone to attend to the matter of the industrial dispute which is directly affecting the House.
Lord GEORGE-BROWN: It is a pity that the noble Lord the Leader of the House went out before he heard my advice, because I could have helped him. I now come to the respective arguments. I listened to the noble Lord the Leader of the House telling us how it would work if we accepted the proposition of the TUC and a group of men went through the union machinery—and, quite often, it will be a group; I have known as many as 1,700 men leave one union, which I will not name, to come and join mine. The noble Lord the Leader of the House said that they should go through all the machinery which their unions provide, which, as my noble friend Lord Greene knows, can take a very long time—the branch can mess it about, the district committee can mess it about (we all know how much they can mess it about), and only after that appealing to the very people they are opposing. In that situation, justice takes a very long time, and is jolly unconvincing when you get it. Says the noble Lord the Leader of the House, "They can go all through that". When they have gone through all that, all the way up through the pyramid, they can go to the TUC committee, which will be some years later, by which time the whole intensity and urgency of the argument will be dimmed.
Then we will get this independent man with legal qualifications, and in the last nine months or so I have had some experience of independent men with legal qualifications. I have been trying to organise it so that people can buy their houses reasonably cheaply, and so on. May I tell your Lordships that I am not very impressed with the independence of some of these men with legal qualifications, especially as their fees are being paid by the TUC. There will be two other independent fellows—I do not know what they are independent of but, again, they will be paid by the TUC. At the end, they will adjudicate whether a man can get back to his job. The noble Lord the Leader of the House persuaded me

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that he believed his brief, and he asked, "Would you not rather the man had his job back?". What!—after he has been out of work for two years, after everyone he has tried has turned him down? It is unrealistic, and would not work that way. All that will be achieved by that is that there will be many a dispute on the way up. The fellows could not have been working all that time and, theoretically, the employer would have been paying their wages all that time. But since the two noble Lords who preceded me said that the employers would not want to be out of countenance with the TUC, they would not have been paying the wages and the fellows would have been on social security, or would have found some other job.
That simply seems to me to be a non est as a solution. It is cosmetics; it looks all right. I do not think there is a trade unionist in this Chamber, or anyone else who has been with me in the trade union movement, who believes it is anything else but cosmetics. The legal solution gives a fellow, or a group of fellows, a right to go to some legal body. But let us keep our minds on the group of fellows; not just on the exception for whom the noble Lord, Lord Greene, had such feelings. They all get there fairly early on. It is true that if you bring in the law the trade unionists can say, "We are not going to listen to it. We are not going to obey it. We will go on strike, or whatever."
I now come to my last point, which I think is tremendously important. The trade union movement grew, prospered, developed and finally came to its present position of being one of the estates of the realm by claiming the right of the rule of law, by resting itself on the law and by getting the law changed so that we could use it. The trade union movement grew, because we detested those who used the law against us. The early leaders of our movement were determined that we should have the same right, the same access to the law, as had the barons of industry and of the land before us. It is not really for us to reject it, when we grew up under it and grew because of it.
The basis of my present difference with colleagues and friends with whom I have worked is that we must not reject the rule of law at the end of the day, if we can win the rights of those in our group, by which
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I mean the trade union movement, who are dissidents in a land where the right to be a dissident is still respected, still admired and still upheld. The difference between us, and Mr. Shelepin when he gets here, is that by upholding the right of dissidents we uphold what our movement has stood for. If I had to choose between the two propositions today, I would say that each has disadvantages, each can be wrecked in the end by the trade unions not obeying the law. But for myself, for the reasons I have tried to set out, I would take the legal provisions and not what I would regard as the cosmetic and highly illusory provisions which were put to us by the noble Lord the Leader of the House.
5.49 p.m.
Lord DOUGLASS of CLEVELAND: I would not have risen to speak had not my noble friend Lord George-Brown spoken in the way he has. I regret it and, as briefly as possible, I will tell your Lordships why. The assumption is that if we accept legal procedures and keep this section in the Act a man will get his job back if a lawyer so desires. That is the whole basis and tenor of the argument put forward by my noble friend. I have had some experience of the 1971 Act. Where a tribunal was completely independent and chaired by a lawyer, and had made a decision that an employer was wrong in discharging a man, one then had to make another decision, which was whether you could compel that employer to take him back; and it was only a small employer in some cases. If he did go back, would his life be so intolerable that it would not be worth while sending him back?
In many cases under the present Act those tribunals did not send a man back to his job because it was impracticable to do so. If the argument is that taking legal steps will enable us to overcome the problems that have been spoken about this afternoon, then the whole basis of that has been proved wrong since the inception of the 1971 Act, and it has had four years of operation. To deal with this clause in the manner suggested will not entitle a man, or enable a man to go back to his job.
In the trade union movement we talk a different language from the lawyers but we mean the same thing. The lawyer says

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"We have case law after the Act to decide how the Act should be interpreted". In the trade union movement we have precedents; we continually discuss precedents and they govern what is to happen in the future in 999 cases out of a thousand. What we on this side of the House are asking the Committee to do is to apply a legal procedure which is understood in the trade union movement, and not a legal procedure that will be imposed by Act of Parliament which has been proved to be impractical, so far as the problem we are discussing is concerned, since 1971. To retain the Act as it is will not entitle a man to go back to his job, and that has been proved by four years' experience.
The only other point I want to make is that in all the arguments which have been put forward here today it is only the Government who have put forward any examples and have given any cases to show what has happened. Not one case has been put forward by the Opposition to show that an injustice has been done by the procedure that we want to operate. I could expand on that and I want to expand on it, but time is getting short, and with that I will sit down.
5.53 p.m.
Lord HAILSHAM of SAINT MARYLEBONE: The time is now coming when we ought to try to bring this discussion to a conclusion, if the Committee will agree. I am afraid I must take a little time, but I hope, therefore, that I shall not be unduly dull. The first point I want to make is that I think there is a slight danger that the Committee may be losing sight of what this Amendment is about. This is a Bill to repeal certain sections of the principal Act of 1974, and this Amendment is confined to the proposal to repeal Section 5 of the Act of 1974.
Section 5 of the Act of 1974 does two things and two things only. First, it provides that a worker shall have a legal right, and the legal right which a worker shall have is not to be excluded from membership of or to be expelled from membership of a trade union. The first question is whether we want to legalise the abolition of that right. That is the first question but the second is this, and it is quite a distinct question. Section 5 of
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the Act of 1974 provides a remedy. The remedy is a swift and efficient recourse to an industrial tribunal. The industrial tribunal is a tribunal, admittedly independent, which has been operating, I believe, without criticism of any serious kind since 1964. The second question, therefore, and the only other question, is whether we want to legalise the abolition of the Act of 1974 so far as regards the remedy provided.
I believe, as I said on Second Reading, that this Act is irremediably bad. I believe it is a retreat from rationality. I believe it is a retreat from individual liberty and I believe it is a retreat from the rule of law. But the reason this Amendment was put down—and it will be true of another Amendment, not the next, but the next Amendment standing in the name of my noble friends—is that we wanted the Government to justify the legal consequences which they are invoking by the repeal of these sections, and we are now confined to the abolition of Section 5, the provisions of which I have correctly stated.
I was hoping to entice the noble and learned Lord the Lord Chancellor into the debate, but he has observed an understandably discreet silence. The only member of the Government who has spoken, the Lord Privy Seal, gave us— and I am sure the Committee is grateful to him—an account of what the Trades Union Congress was proposing to do. But what he did not do was to justify the abolition of the legal right, or suggest that the remedy which he proposed, or the Trades Union Congress proposed, which is not in the Bill, would be either as efficient or as expeditious—and the noble Lord, Lord George-Brown, thought it would be neither—as the one which the Government are taking away.
I want to examine, if I may, the various reasons which the Back Benches—at any rate, from the other side—suggested for rejecting the Amendment. The noble Lord, Lord Lee of Newton says that it is not necessary at all to have any legal right or any legal remedy. But, of course, cases of wrongful expulsion and wrongful exclusion have taken place. They have taken place in relation to unions. I have had them in my own professional experience, and won them. They have taken place in relation to clubs and the books are full of them. They do have

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them. May I say to the noble Lord, Lord Gordon-Walker, that he himself invoked the Electrical Trade Union, one of the bigger scandals of our time. It was not the Trades Union Congress who put that right; it was the courts who put that right, and it could not have been put right without the courts.
The noble Lord, Lord Gordon-Walker, now says "Do not bring the law into trades unions". But the Secretary of State throughout the passage through another place emphasised, if it be the case, that he was not proposing—and the noble and learned Lord the Lord Chancellor emphasised at one stage in the last Session of Parliament that he was not proposing—to take away the access to the courts in a case where there has been a breach of natural justice or a breach of the rules of the trade unions. So what is the good of saying that you must not bring the law into trade unions in these circumstances? It is true that in his powerful speech the noble and learned Lord, Lord Salmon, said that as a matter of law the noble and learned Lord and the Secretary of State were wrong. I do not want to intervene in that dispute. The point is that the Government view is that there should be access to the court but not in this matter, not because of unjust exclusion or unjust expulsion.
May I say this, too, to the noble Lord, Lord Gordon-Walker. He says that you cannot bring the law into trade union affairs, but he is wrong about that. It has been brought in again and again in these disputes between unions and their members. In over a hundred years, and certainly not in my own professional experience, I do not know of a single case where a union has disobeyed the High Court under an injunction or a claim for damages. Perhaps the noble and learned Lord the Lord Chancellor will know of one, but I do not. It is true that the unions disregarded the NIRC, but that is a very different matter. I hope that that disposes of the argument of the noble Lord, Lord Gordon-Walker.
Lord GORDON-WALKER: Apart from the High Court, why is it that the National Industrial Relations Court is not relevant to what we are talking about?
Lord HAILSHAM of SAINT MARYLEBONE: Because the remedy
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we axe discussing today is that which universally the unions have obeyed, and not the remedy which they disobeyed. The truth is that they have obeyed the High Court where the High Court has said, "This is against natural justice" or, "This is against the rules of the union". That is what they have obeyed. To say that they will not obey it is, I should have thought, to do a real disservice to the great mass of the trade union movement which is law-abiding.
Then it is said on Section 5, despite the fact that it cannot be faulted on its merits, that it is part of the Social Contract to abolish it; that the Government are bound to do it as a political necessity. The noble Lord, Lord Houghton of Sowerby, made a powerful speech in the last Parliament, and again in this, in which he supported the essence of Section 5, but he now says that it has become a political necessity because it is in the Manifesto. You can take one view about the mandate a Government receives when it is elected with a majority under our present electoral procedure—of which the Liberal Party disapproves—or you can take another. But I believe that the doctrine of the rubber-stamp mandate is not the doctrine of Parliament, but the doctrine of the Reichstag or of the Soviet Union. When a Party gets into power on a Manifesto, which is a prospectus, it is bound to justify what it says by reason and argument before it can enact it into law. What I seek to say to the Committee is that they have not done so on this matter. But then it is said that this is the hoary remains of the Act of 1971 and every trace of that horrid enactment must be removed from the Statute Book. I cannot remember what noble Lord said that, but it is just not true.
I ask your Lordships to look at Schedule 1 to the Act of 1974, which it is not proposed to remove. Without alteration that contains 30 clauses of the wicked old Act of 1971 without amendment. If we were to remove the proposal to repeal Section 5, we should only be reinstating the Act of 1974. We should not be reinstating the Act of 1971, although no doubt, like the proposals for unfair dismissal which occur in Schedule 1, its proposals happen to have had their origin in the disputed Act of 1971. What we should be doing is to reinstate the Act:

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of 1974 which, in its turn, gave effect to, I believe, the unanimous part of the Donovan Commission's Report, and to the view of both Houses of Parliament less than a year ago. So, with respect, that is nonsensical.
Although I believe that in each of its successive clauses that matter this Bill a retreat from the rule of law, from individual liberty and, above all, from rationality (because most of these arguments are not really reasonable and have not been justified) I am anxious not to wreck the Government's Bill. Further, as was pointed out by the noble Lord then in the Chair at the beginning of our discussion on this Amendment, the fact is that if the Amendment were carried the next Amendment, which is that of the Liberal Party, could not be discussed. I am anxious that it should be discussed, and, therefore, I am not anxious at this stage of the Bill to press this Amendment to a Division in case the Liberal Party were destroyed—
Several Noble Lords: Oh!
Lord HAILSHAM of SAINT MARY-LEBONE: I beg your Lordships' pardon for a Freudian slip. I should have said "deprived" of its day in court: and in case it might also be alleged that I was using a probable majority in this House in an unreasonable way. I do not know what my noble friend may decide. May I say that I am glad to have him beside me on the Front Bench and that I congratulate him on what I think was his debut in that position. I shall not ask him to press this Amendment to a Division, at any rate at the Committee stage. But I must say that the Government have done nothing whatever to justify the principle which they have enshrined in the proposed repeal of Section 5. They have done nothing to justify the legislation of unjust exclusion, or unjust expulsion, which has to be read in the context of a possible closed shop.
I must point out to the Government that in doing this they are doing that which is plainly contrary to at least three of the Articles of the Universal Declaration of Human Rights, and at least one of the Articles of the European Convention which is legally enforceable. I would not in the least hesitate to ask
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the House of Commons to think again about this matter; that is what a revising Chamber is for. But for the reasons which I have given, and without in the least being convinced by the arguments we have heard, I would suggest that we proceed to the next Amendments when my noble friend has taken the course which no doubt he will adopt.
The LORD CHANCELLOR: I intervene briefly, if only to dispel any illusion which the noble and learned Lord may nourish in his bosom that I do not support the Government in opposing this Amendment.
Lord HAILSHAM of SAINT MARY-LEBONE: May I disclaim any such illusion?
The LORD CHANCELLOR: I am delighted to hear that. The noble and learned Lord has at least succeeded in getting me on my feet on this matter, which is a serious one. It is at least comforting to us on this side of the Committee to note the commendation that has been given by the noble and learned Lord to the law abiding quality of the trade union movement. I wish he would portray a little confidence in it, for what is proposed by the trade union movement at this time is an entirely new departure in their own arrangements against arbitrary and unreasonable dismissal. During the previous existence of the closed shop before the Industrial Relations Act, there was no such machinery. I am not aware of any action taken at that time to remedy that situation, but now the Committee has been informed by my noble friend the Leader of the House of the nature of the independent machinery that is proposed, the undertaking that it will take effect when the Act comes into force, and the transitional provisions to ensure what is wanted.
As I understand it, the real issue in this debate is the admittedly difficult choice between whether a statutory protection—as provided for in Section 5 of the principal Act—is to be preferred to what is now proposed by the TUC. We have heard about some difference, if I may so describe it, between my noble friends who have had great experience in the trade union movement, but in this debate my noble friend Lord George-Brown is the odd man out. Of course,

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I use the word "odd" in no disrespectful sense. The others, with their prolonged experience, have affirmed that this is an experiment that ought to be tried and I respect very greatly indeed the combined judgment of the three or four who have spoken to that effect.
Let me say this. The Government have indicated, and I now indicate on their behalf, that if the machinery that is now proposed does not work we shall look at the problem again, and see that protection is given to the individual in employment against unreasonable and unjust exclusion. That undertaking I certainly give, but surely it would be a great mistake to reject the opportunity which is being given by the trades union movement itself which will, at the end of the day—as my noble friend Lord Greene said in a notable speech— have the problem of what to do when the courts have dealt with the matter, for the buck will then be passed straight to the shop floor, to the employer and the unions, as to what is to happen to the individual concerned.
My advice to the Committee, for what it may be worth in a matter where I take a political, Governmental view, is that it is surely right to give this machinery a chance. Let us see how it works. There is no evidence, as was indicated by my noble friend the Leader of the House, of harassment and excessive injustice being perpetrated by the present machinery. Certainly, experience since the principal Act has been in force has not pointed to that. Therefore, I beg the Committee to give the proposed machinery a try.
As regards the exclusion of the courts, the effect will be to exclude the power of direct reference to the tribunal at present contained in Section 5 of the principal Act. The difficulty about giving the right of direct reference is that it could result in by-passing the ordinary machinery of the trade unions—and almost all of them now have this—for internal regulation of problems of this kind. It would mean a by-passing of the ordinary trade union machinery by direct reference to the tribunal, which the Industrial Court itself, during the existence of the Industrial Relations Act, found so objectionable. The position of the courts in regard to rules of unions which are themselves unlawful remains.
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The action that an individual can bring in the courts against a union if the rules have not been complied with remains. The action that an individual can bring in the courts if the principles of natural justice have not been observed by a union remains. Indeed, the courts have shown what a powerful instrument they are in maintaining the rights of the individual in that situation. All those rights remain and are not affected by what is proposed by the Government in opposing this Amendment.
The noble and learned Lord, Lord Hailsham, made a most eloquent speech on Second Reading about what he alleged to be the infringements of the Universal Declaration of Human Rights that are, or would be, contained in the Act particularly if what is now proposed by the Government is maintained. While, of course, we all greatly respect that Declaration as a statement of aspirations towards the setting up of a common standard of achievement towards which all peoples and nations will strive, and while we appreciate its spirit, the Declaration is not a legal instrument, as the noble and learned Lord perfectly well knows. None of the propositions which he so eloquently and robustly directed at me personally has ever been put to the test. It will be interesting to know what will be the outcome in law when that does come about but, when the Universal Declaration—
Lord ROBBINS: I am sorry to interrupt the noble and learned Lord the Lord Chancellor, but he is going rather fast and something that he said raised a very important question in my mind. That was before his utterance on the general declaration of principle. He said that nothing had impaired the right of a person to appeal to the courts if the principles of natural justice were in question. The question that I wish to put to the noble and learned Lord—and I put it fully conscious of my status as an amateur— is: Do the principles of natural justice cover unfair dismissal, or do they not?
6.15 p.m.
The LORD CHANCELLOR: The principles of natural justice, as I indicated in what I said, apply to an examination by the court of the rules of a union, to see whether they are themselves unlawful. They apply to the question which the court can ask itself as to whether the

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rules have been adhered to, and they apply to the general question of whether, in the circumstances of the case, the principles of natural justice have or have not been observed. I do not know that they apply to the limited field of unfair dismissal, which is what the noble Lord was asking about. However, the generality will remain and, as I have said, if what is now proposed by the TUC comes into effect, that machinery will come into being and will provide a tribunal in which trades unionists will, I apprehend, have at least as much confidence as in the proceedings of the High Courts of this country.
I am sorry to be going fast, but the hour is advancing and we want to come to a decision on this matter. I just want to touch on the point that was so eloquently raised by the noble and learned Lord, Lord Hailsham, who almost pictured me as some sort of new-found international criminal in this field. My point is this. Trade union membership is dealt with separately in the Universal Declaration of Human Rights, in Article 23(4). That article gives the right to joint and form trade unions, but it says nothing about failure to join. Indeed, it was the view of delegates like those of New Zealand and other countries that Article 20(2) of the Universal Declaration, which declares that no one may be compelled to belong to an association, had no relevance to the trade union aspect of the matter which was dealt with separately in another section.
However, this is an interesting matter which might form the subject of prolonged discussion in some moot, and it may well be that the noble and learned Lord and I will have an opportunity of discussing it at some other time. What I say now is that the trade union movement is offering an alternative procedure which is less likely to cause industrial disruption, and is more likely to reinstate the affected person in his job. I implore the Committee to give the new machinery a fair trial.
The Earl of MANSFIELD: I am strongly minded to accept the advice of the noble and learned Lord, and in a moment I shall do so. This has been a long debate but it has not been unprofitable in the sense that many of the issues
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which occur later in the list of Amendments have already been ventilated and to an extent battle lines have now been drawn for the rest of this Bill. I appreciate that the Committee wishes to pass on to other business and in these circumstances I beg to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.21 p.m.
Baroness SEEAR Baroness SEEAR moved Amendment No. 2.
Page 1, line 8, at beginning insert (" in ").
The noble Baroness said: With your permission, my Lords, I shall speak also to Amendments Nos. 3 and 5, which are clearly complementary. I do not intend at this hour to speak at length because many of the points which we on these Benches wish to make in support of these Amendments have already been made in the debate on Amendment No. 1.
I wish, however, to return to an issue which has already been mentioned but which is a major one in connection with this Amendment; namely, that it is quite untrue to argue that the law has no place at all in relation to industrial relations. There has been law in relation to industrial relations since at least 1871 and, of course, the 1974 Act, whether amended or unamended, is in itself law in relation to industrial relations. The argument, then, is not whether there should be law on this subject but what law there should be and in what connection. It might help if we were to get that clear.
The three Amendments in this group and the one which preceded it concern a very important but, in fact, very limited area of industrial relations. The previous debate naturally ranged widely over a large number of matters which are obliquely connected—but I submit only obliquely—with the matters we are now discussing and on which, before long, I hope your Lordships will vote. What is being discussed here is no more and no less than the rights of an individual person or a small group of people excluded or expelled from a union. The vital and central point to remember is that a closed shop expulsion from a union or refusal of admission is to deprive a man from his chosen livelihood. This is what it is all about. It is not about a large number of the other, though

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interesting, issues which have been raised tonight.
What kind of protection is most appropriate to a person whose chosen method of livelihood is threatened? Let us be under no misapprehension about this. In certain trades and industries where a closed shop operates expulsion from a union, and the loss of livelihood that follows, leads to a drastic and permanent fall in the standard of living of the person concerned. Do not let us forget the best-known case of all, the case of Bonza v. The Musicians Union, in which Bonza, having been a musician, died scraping rust off Brighton pier. That represented a drastic change in a man's livelihood, his standing in society and his whole personal life. For these few cases this is a matter of the greatest possible importance, and it is much more a question of the importance of the protection of a small number of individuals than of the many wider questions of industrial relations which have engaged your Lordships tonight. It is a question of what kind of protection and security should be afforded to the small number—and I agree it is a small number—of individuals affected by these cases.
In this matter there is not a great deal of difference between the two sides of the House. I am sure that all noble Lords want justice to be done to these individuals. I am sure they are aware that in a small number of cases great hardship can be inflicted and they want it to be seen that society is falling over backwards to be fair to the individuals so threatened. I would not for a moment believe that noble Lords opposite, the Government or the trade unions wanted otherwise than to be fair to individuals in these cases and under such a threat. What we are talking about is how that justice should be carried out. The difference between us, as I understand it, is primarily whether there should at the end of the day be statutory enforcement, accepting all the difficulties of statutory enforcement but recognising that it is a great strength to a man to know that there is recourse to the law behind him at the end of the day.
My second important point—this is the main one on which this group of Amendments differs from the one we discussed earlier—is that we suggest that the tribunal to which such a person should appeal should be set up not by the TUC
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in consultation with the Secretary of State but by the Secretary of State in consultation with the TUC. Noble Lords will see how close we are getting. We say that, subsequently, if a trade union fails to carry out the requirements of that tribunal set up by the Secretary of State in consultation with the TUC, then there shall be resort to a court of law; this is the narrow difference between us. I shall not go through the many arguments which were rehearsed in connection with Amendment. No. 1, but I am anxious to emphasise a point which has not so far been made but which I believe will appeal to noble Lords opposite.
It was said earlier that we are only going back to an earlier situation, but that is not quite true, and I believe that noble Lords opposite know that the position is not the same as it was before 1971. It is widely recognised that the balance of power has shifted considerably to the trade unions in this country. This may or may not be a bad thing. It may be a good thing, but few people would deny that there has been a major shift in the balance of power. I believe it is also a fact with which noble Lords opposite will agree that there is a tendency at present to exaggerate the danger of that shift in the balance of power. There are sections of society which are exploiting the threat, for their own purposes, of the danger that comes from a greatly enhanced trade union movement. I suggest that if the Government accept this Amendment, agree that the tribunal should be set up by the Secretary of State and that there should be the ultimate recourse to a court of law, this would be evidence that the trade union movement was falling over backwards not to abuse its now-found power.
This of itself would do a great deal for public opinion in relation to the trade unions. There is much eivdence that they are not in all quarters the most popular organisations in society. It would be a demonstration that the trade unions were so confident of their position and integrity that they welcomed the Secretary of State setting up a tribunal and welcomed that, at the end of the day, they should submit their case to a court and be prepared to show openly in this way that they are subject to the rule of law like all other sections of society. This would be beneficial not only for the individual whose

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case needs to be heard but also, and perhaps even more important, for the relationship of the trade unions with the country as a whole and the relationship of the Labour Government with the country as a whole. I beg to move.
6.30 p.m.
Lord SHEPHERD: On the previous Amendment the noble and learned Lord made a most impassioned speech which, if I may say so with gentleness which comes very much from my nature, was largely irrelevant to the Amendment before us. But I do not intend to make a long speech in reply to the noble Baroness. The area she was covering is one we spoke about on the previous Amendment. At the moment when the noble and learned Lord sat down, I thought that there existed a mood that we ought to take a decision. But the noble Baroness has suggested that Section 5 should be amended, and in such a way that, whatever gloss we may put upon it, it would be in a statutory form. I could, but I will not, explain again to the noble Baroness the attitude of the Government. It is not that we do not accept that there is a difficulty; that we accept, and we also accept that there is a need for safeguards against arbitrary dismissal or exclusion. The difference between us is solely as to the best method of overcoming this. We on this side, after all the experiences of the Industrial Relations Act in the past few years—and let us not forget that aspect—take the view that the best method available to us today is the one that I put before the Committee; namely, that the TUC should set up its own appeals procedure under a chairman appointed by the TUC, after consultation with the Secretary of State and CAS.
We think that this is the right way of approach and that we shall get the best results from the entire trade union movement if we adopt it. I accept that this proposal may prove disappointing. Certainly the law has proved disappointing. As my right honourable friend the Secretary of State has said in another place, if the proposals, which we have had before and which we are urging upon the Committee prove wrong, we should not hesitate to legislate to provide the safeguards that we all wish to see It may be that there is in the minds of some noble Lords—and I think this was hinted
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at on the previous Amendment—the thought that if what the TUC may propose, if the Bill has been passed as we should like it to be passed, proves to be not satisfactory, then Parliament would not be able to do anything about it. My noble and learned friend the Lord Chancellor dealt with this, and I should like to emphasise that if that is the feeling of the Committee and if it would help meet some of the doubts of the Committee, then I would be quite ready to leave this section in the Act, with a proviso in the form of an Amendment that when the TUC machinery has been set up there should be a commencement order to come into force when the new TUC procedures come into operation. There would be no statutory body; but Section 5, which we are discussing, would disappear from our legislation.
That would certainly give your Lordships' House and another place an opportunity to consider the proposals that the TUC is putting forward. It would still be open to Parliament to give assent to the recommendations of the Secretary of State. In putting forward this suggestion, care would need to be taken over the Amendment; but if it meets a genuine feeling that the Government's proposals have substance, and since we are not sure what may yet emerge from the TUC proposals, I should seek to meet that doubt in the Committee's mind. It would be on that understanding. I think the noble and learned Lord wishes to intervene—
Lord HAILSHAM of SAINT MARYLEBONE: I think that this is a very important point and I want to get absolutely plain what it is the noble Lord is suggesting, because I am not sure whether or not I have understood it aright and I do not want any misunderstanding to arise. Is the noble Lord suggesting that he is prepared to leave Section 5 of the 1974 Act in existence until a commencement order which would begin to take effect when the trade union machinery was put into operation? If that is what is being suggested, then it is a suggestion which I have not heard previously, and which I should obviously have to discuss with my noble friends before I could come to a decision on the Amendment of the noble Baroness. But I should like to know what the suggestion is before I think about it.
Lord SHEPHERD: I have here a piece of paper which does not make a great deal of sense, and therefore the noble and learned Lord will not, I hope, hold me too severely to task if I am not entirely accurate in what I suggest. What I am seeking to suggest—and I do not have the Amendment in my mind at present —is that there is doubt in the minds of some Members as to what proposals the TUC make. That I accept. What I should like to do is to devise a way by which Parliament will have knowledge of these proposals. My understanding is—and I may be wrong, but I will look at this between now and the next stage, and will put it forward at Report, to ensure that the present provisions carry on until such times—
Lord HAILSHAM of SAINT MARYLEBONE: That is Section 5 again?
The LORD CHANCELLOR: If I may intervene, the intention is to avoid a gap between the coming into force of the new machinery and the ending of the existence of Section 5.
Lord HAILSHAM of SAINT MARYLEBONE: May I get it absolutely clear that what is proposed is that Section 5 remains part of the law of the land until a commencement order, and that commencement order will be made when the new machinery comes out? May I seek the indulgence of the Government, and ask in plain terms whether the commencement order would be subject to the approval, negative or positive, of Parliament?
Lord SHEPHERD: I have this in mind, but I should not wish to commit the Government to a positive procedure. While it is quite easy for your Lordships' House to deal with such Motions there are difficulties in another place. These are matters which are discussed through the usual channels, but I have tried to put to the Committee some thoughts to meet some of the doubts that I have heard expressed. If it is the wish of the Committee I will examine the matter as to the Amendment to be put down on Report—
Lord DRUMALBYN: May I ask the noble Lord a question before he sits down? It is one thing to talk about
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machinery to be set up—and I am sure we should all like to examine that very fully—but what are the provisions, what is the code, that that machinery is going to administer? If the code is going to be something along the lines of subsections (1) and (2) of Section 5—obviously one would not wish to say it should be exactly the same—then this would be a great advance. But if the trade union machinery is merely to be a machinery to appeal on general grounds, that would be a different matter.
Lord SHEPHERD: The purpose of this Committee was set out in a very comprehensive statement by the Trades Union Congress. I have not got that statement with me. But it seems to me that the issue we have been debating this afternoon relates to a statutory procedure and a voluntary procedure—the TUC procedure which we on this side have supported. Listening to the debate I have suspected that there has been an element of doubt as to whether the TUC proposition—its personalities and the like—may raise a question mark as to effectiveness. But the plea we have made throughout this Committee stage is for trust in the Trades Union Congress to set up the machinery and to administer it. I believe that often the personalities count more than the little words on a piece of paper. I do not ask that anyone should be committed to it, but if the Committee is interested in the proposal I have put forward then, if the noble Baroness will withdraw her Amendment, I am willing immediately to seek the drafting of an Amendment and to discuss this with the noble and learned Lord and the noble Baroness, leaving them full options at the next stage.
Baroness SEEAR: I am afraid that the crux of the matter is that we need to have something which is both independent and statutory. I regret this; but I am afraid that this is where we stand.
Lord HAILSHAM of SAINT MARY-LEBONE: May I try to play my customary part of—
A Noble Lord: Honest broker!
Lord HAILSHAM of SAINT MARY-LEBONE: I will not say that. I will say "honest"; but "broker" is perhaps going too far May I consider whether

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this could not be to some extent negotiable. Probably it is not negotiable in its present inchoate form; but the noble Lord said that we have our options open for the next stage. There are one or two differences between the Liberal Amendment —which I should have voted for—and what the noble Lord has so far discussed; and some of the differences may be negotiable and some may not. One of them is that they have turned round the machinery to say that the new tribunals will be set up by the Secretary of State and not by the Trades Union Congress, instead of the reverse which is what is at present proposed. I understood the noble Baroness to be saying that this was, very largely, to them, a breaking point. I wonder how far it ought to be a breaking point if other options are negotiable.
I share her desire that this should be truly independent. I also share her belief that if the Trades Union Congress actually appointed the personnel, it would not so appear ; but that does not mean that the Trades Union Congress could not create the machinery. That is a different option. If the Trades Union Congress were prepared to consider handing over the appointment of the personnel—or one of them, the Chairman perhaps—to the Lord Chancellor or to the Secretary of State, that would be independent, I think, within the terms of what the Liberals regard as essential. That is the first point.
The second point is that at an earlier stage this afternoon the noble Baroness, Lady Burton of Coventry, made an interesting suggestion in an intervention to the noble Lord, Lord Houghton. It was whether the Trades Union Congress or the Government would be prepared to consider discussing the machinery before they finally evaluated it to the Council on Tribunals—which is a public body not a court, and responsible in a vague kind of way to the Lord Chancellor—of which the noble Baroness was at one time a most distinguished chairman. If the noble Lord will say that these points can be discussed, with nobody committed to anything, it might be that one can bridge this gap. I am anxious not to make or break at this moment. If I had to vote I would vote for the Amendment, but I am anxious to give the noble Lord the Lord Privy Seal great credit for having thought
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of an interesting new suggestion. I am anxious that it should not break down at this stage when we have a Report stage in front of us.
Lord SHEPHERD: I am not a lawyer; I am just an honest politician. I am interested in practicalities and the facts and not the theories. I have always believed that at the end of the day it is the quality of the membership of a tribunal which justifies its existence and the confidence in it. I remember discussing the other evening with the noble Lord, Lord Goodman, the problems of the Press. He said: " There was a time when we in the Press were gravely suspicious of the Press Council. Today, because of the quality of its membership, we have confidence in it." I feel that the division between us is a division between those who want to have a legalistic framework, thinking that something good will arise out of it, and myself and my noble friends on this side who feel that this informal procedure under the TUC is the best way of getting people back to work and into membership of the union. That fundamental issue still divides us.
I put forward the suggestion in the hope and genuine belief that if the names of the committee (or council, whatever name it may be given) were announced and if it were made up of representatives of the TUC of great eminence and trust— particularly so in the case of the chairman and his independence—the members of this Committee may say, "All right, if men of that stature are willing to serve in this particular capacity then, like the Government, we are prepared to give this new procedure an opportunity to prove itself". I put this proposal. I have to say straight away that the Liberal proposals—in my view, and certainly at this moment of time I cannot foresee any other—are not open to negotiation but that consultations can take place.
I should be misleading the Committee to say that the proposal I put forward was one to give opportunities for negotiating the general differences that are between us. I put it forward in the hope that by the nomination, the presentation, of men and women of distinction within the trades union movement to serve on the committee, this Committee would feel that it is a committee to whom it will be justified to give their confidence. That

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was the purpose of my suggestion. I should be misleading to suggest that any of the wider aspects that the noble and learned Lord spoke about were negotiable.
6.48 p.m.
Lord WIGODER: We have done our best on these Benches to minimise the differences between this Amendment and the attitude taken up by the Government; but there remain two quite clear fundamental principles on which we are at issue. The first is an important one. It is described by the noble Lord the Leader of the House as a "legalistic framework". The use of the word "legalistic" has a certain emotive quality. The issue is this. Given that every noble Lord here agrees that in a closed shop situation it is important that a worker should have the right not to be unreasonably excluded or expelled from membership, is this one of the freedoms which is of sufficient importance to warrant being included in some form of legislation? We on these Benches believe that it is. We believe that after the unhappy experience of the last four years it would be a gesture of considerable magnanimity by the trade union movement if they were prepared to accept that in a matter that fundamentally affects the lives of ordinary people—it could be only a few such people a year—there might be something written into a Statute which the unions would accept.
The other difference is as to the way in which this tribunal which is to determine all these matters is to be set up. It may be that in the result precisely the same three people might be nominated under the proposals in the Liberal Amendment as under the proposals the Government are putting forward. But there would be the vast difference that the world at large would know and the aggrieved worker would know, that the tribunal by whom he was being judged was one appointed independently and not one with a majority of members appointed by a trades union council. It might be possible, for example, to determine the frontiers of the State of Israel by means of an independent committee of three, consisting of an independent chairman appointed by the United Nations and two other independent members appointed by the Palestine Liberation Organisation. It may well be
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that they would reach precisely the right answer, but it would be idle to pretend that in such a situation people would have confidence in the result. It seems to us that there are two principles here which the proposals made by the noble Lord the Leader of the House do not meet: the principle that there should be some statutory protection for the right of the individual, and the principle of an independent tribunal to ascertain whether that right has been infringed.
Lord LEE of NEWTON: There is of course a fundamental difference here. The noble and learned Lord and the noble Baroness, when speaking to their Amendment, told us about the awful things that could happen to the individual; and one accepts that this is so. But they did not define what kind of thing would be held to justify men in refusing to work with another person. Let me put it this way: there is in existence the closed shop, and the noble Baroness referred to this in moving the Amendment. I do not happen to be very keen on the closed shop. I have never had one in the whole of my life; I have never asked for one and I have got on very wall without one. It was not really philanthropy on my part: I did not fancy informing the employers of my inability to organise a factory or that I needed their help in that way. Therefore I never asked for one and I think the agreements I got were quite as good as they would have been had there been a closed shop.
On the other hand, there comes a point where no trade union official can guarantee that he can carry out his side of a bargain unless he has the men in the factory behind him. If the trade union official has discussions and makes an agreement, the employer is entitled to expect that that agreement will be honoured, just as the trade union official is entitled to expect the same thing from the employer's side; and if you reach the point where individuals can opt out, certainly no trade union official can say, "I can honour my side of the agreement". Therefore I think the Liberals have to say—if I may say so with respect—what it is that they would deem to be adequate machinery to cope with the situation where men refuse to work with people who have in some way incurred their wrath. I believe it is not enough simply to say that it is a very bad

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thing when a man loses his job. Of course everyone will agree with that fact, but I do not think you can allow that liberty to become licence or to reach a point where a person can practically sabotage the efforts of both the trade union official and the employer to get a mutually agreed basis for their negotiation, so that you then say that, irrespective of what that group of people do, it would be wrong for individuals to say, "We cannot work with these people".
When it is suggested that we should have the power of legislation behind such a measure, we have to define what we mean. The noble and learned Lord, Lord Hailsham, will remember, I think, as a colleague of mine in the 1945 Parliament, that we brought along the fair wages clause without any legislative backing at all. It may not spring readily to his mind, but it was about 1946 or 1947 and it was done simply by a declaration. My old friend George Isaacs was then the Minister of Labour. Without any legis-
lative backing, that fair wages clause has stood the test of time. It seems to me there may be a lesson in that, whereas I do not believe it possible, for the reasons I have given, that words can be put into legislation which would cover the point made. But if the Government would agree—and I do not know whether or not they would—to make a declaration on rather the same lines as the fair wages clause, then we could probably reach the point where a declaration by the Government in both Houses would carry substantial backing by both trade unions and employers.
Baroness SEEAR: Nothing that has been said leads us to see fit to withdraw the Amendment, and we shall divide the Committee.
6.56 p.m.
On Question, Whether the said Amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 87; Not-Contents, 73.

CONTENTS

Aberdare, L.

Eccles, V.

Monson, L.

Alexander of Tunis, E.

Effingham, E.

Mowbray and Stourton, L.

Amory, V.

Elton, L.

Newall, L.

Amulree, L.

Emmet of Amberley, B.

Northchurch, B.

Arran, E.

Ferrers, E.

Nugent of Guildford, L.

Astor of Hever, L.

Gainford, L.

Orr-Ewing, L.

Auckland, L.

George-Brown, L.

Penrhyn, L.

Balfour of Inchrye, L.

Glasgow, E.

Redesdale, L.

Banks, L.

Goschen, V.

Robbins, L.

Barnby, L.

Gray, L.

Robson of Kiddington, B.

Beaumont of Whitley, L.

Greenway, L.

Rochester, L.

Belstead, L.

Grenfell, L.

Ruthven of Freeland, Ly.

Berkeley, B.

Gridley, L.

St. Davids, V.

Brooke of Cumnor, L.

Hailsham of Saint Marylebone, L.

St. Helens, L.

Brougham and Vaux, L.

St. Just, L.

Campbell of Croy, L.

Kankey, L.

Sandys, L. [Teller.]

Cathcart, E.

Hanworth, V.

Savile, L.

Chelwood, L.

Hill of Luton, L.

Seear, B. [Teller.]

Cork and Orrery, E.

Hood, V.

Selkirk, E.

Cottesloe, L.

Hornsby-Smith, B.

Strathcona and Mount Royal, L.

Courtown, E.

Killearn, L.

Cowley, E.

Kinnoull, E.

Templemore, L.

Cullen of Ashbourne, L.

Lauderdale, E.

Terrington, L.

Daventry, V.

Long, V.

Trevelyan, L.

Davidson, V.

Lyell, L.

Vickers, B.

de Clifford, L.

Macleod of Borve, B.

Vivian, L.

Denham, L.

Mansfield, E.

Ward of North Tyneside, B.

Derwent, L.

Merrivale, L.

Wigoder, L.

Digby, L.

Mersey, V.

Young, B.

Drumalbyn, L.

Monck, V.

NOT-CONTENTS

Ardwick, L.

Blyton, L.

Champion, L.

Arwyn, L.

Bolton, L.

Collison, L.

Bacon, B.

Brockway, L.

Cooper of Stockton Heath, L

Balogh, L.

Bruce of Donington, L.

Crowther-Hunt, L.

Beswick, L.

Burton of Coventry, B.

Cudlipp, L.

Birk, B.

Castle, L.

Darling of Hillsborough, L.

Darwen, L.

Houghton of Sowerby, L.

Ritchie-Calder, L.

Davies of Leek, L.

Hughes, L.

Rusholme, L.

Diamond, L.

Jacques, L.

Sainsbury, L.

Douglass of Cleveland, L.

Janner, L.

Serota, B.

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

Leatherland, L.

Shepherd, L. (L. Privy Seal.)

Evans of Hungershall, L.

Lee of Newton, L.

Shinwell, L.

Fisher of Camden, L.

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

Slater, L.

Fisher of Rednal, B.

Snow, L.

Gaitskell, B.

Lovell-Davis, L.

Stedman, B.

Gardiner, L.

Lyons of Brighton, L.

Stewart of Alvechurch, B.

Geddes of Epsom, L.

Maelor, L.

Stow Hill, L.

Gordon-Walker, L.

Maybray-King, L.

Strabolgi, L. [Teller.]

Goronwy-Roberts, L.

Melchett, L.

Taylor of Mansfield, L.

Greene of Harrow Weald, L.

Milner of Leeds, L.

Wallace of Coslany, L.

Greenwood of Rossendale, L.

Paget of Northampton, L.

Wells-Pestell, L.

Hale, L.

Pannell, L.

Wilson of Radcliffe, L.

Hall, V.

Phillips, B.

Winterbottom, L.

Harris of Greenwich, L.

Platt, L.

Wynne-Jones, L.

Henderson, L.

Popplewell, L.

On Question, Amendment agreed to.

7.3 p.m.
Resolved in the affirmative, and Amendment agreed to accordingly.
Lord SHEPHERD: I am very much in the hands of the Committee. I do not know whether the Committee would like to continue; if so I am happy to do so. But if the Committee feels it would like a break for about half an hour, which is customary, then I shall be pleased to move that the Committee be adjourned.
Lord HAILSHAM of SAINT MARYLEBONE: I assume that the noble Lord recognises that the next two Amendments are consequential. Presumably he will be prepared at this stage, at any rate, to take them formally. I would think we could break as a Committee immediately after we have dealt with the next two Amendments.
Lord WIGODER: I beg to move Amendment No. 3.
Amendment moved—
Page 1, line 9, after ("union") insert ("sub-sections (3), (4) and (5)").—(Lord Wigoder.)
[The Sitting was suspended at 7.5 p.m. and resumed at 7.38 p.m.]
Lord HAILSHAM of SAINT MARYLEBONE Lord HAILSHAM of SAINT MARYLEBONE moved Amendment No. 4:
Page 1, line 10, leave out paragraph (b).
The noble and learned Lord said: I move Amendment No. 4 on behalf of my noble friend the Earl of Gowrie. I am sorry not to see the noble and learned Lord the Lord Chancellor here, because the point I am going to make is a point
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to which, without any disrespect to the noble Lord the Leader of the House, the noble and learned Lord the Lord Chancellor is almost uniquely qualified to reply. Despite his many qualifications, the noble Lord the Leader of the House is perhaps not at his strongest on a point of constitutional law. I was anxious, as I said when I was supporting my noble friend Lord Mansfield—
Lord SHEPHERD: May I suggest to the noble and learned Lord that he might speak to the generality of his case and then come to the legal point. If he does not trust my knowledge of constitutional law, I hope that I may then be able to deal with this matter.
Lord HAILSHAM of SAINT MARYLEBONE: I will seek to follow the excellent advice of the noble Lord. I was proposing to "tread water" for a minute or two, in the hope that something might transpire, and I was also proposing to be relatively short, which again is in the interests of the Committee. Obviously, these two requirements are mutually incompatible, but a reconciliation between the two is something which I will now seek. I cannot please everybody, but I will do my best to please as many as possible.
As I said when I was supporting the first Amendment in the name of my noble friends, we put these Amendments down in order to entice the Goverment to justify, if they can, the principles underlying this Bill on their merits. By "on their merits" I do not mean any more of this stuff about the Act of 1971, any more of this stuff about "Trust the TUC"— which I do not distrust anyway—or this stuff about my having put it into the Bill

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of 1974 or about its being in the Manifesto. I am making a straightforward appeal to reason. The Bill proposes to repeal Sections 5 and 6. We have dealt with Section 5 in one way or another and we are now on Section 6. As I explained in dealing with Section 5, I think it is a mistake for us on this Bench to seek to take out of this part of the Bill what, rightly or wrongly, the Labour Party regard as the heart of it. That is why I have said in rather plain language what I think of it, but have not pressed my Amendment nor that of my noble friend to the point of Division.
In my observations on Section 5 I described the Bill as a retreat from reason, a retreat from the rule of law and a retreat from liberty, and I explained why I did so. Section 5 dealt with the rights of workers as to arbitrary exclusion or expulsion from the trade union. Section 6 of the principal Act refers to provisions as to rules of trade unions and employers' associations. It provides that:
"The rules of every trade union and employers' association shall contain provisions in respect of the matters mentioned in the following subsections of this section."
It does not state what the provisions shall be, but states what they shall contain. It is proposed to eliminate that from the law of the land. One of the provisions which it contains is that the rules of the trade union shall conform to natural justice. I take that as the extreme example. It is, however, the case that there are other examples, perhaps more esoteric but equally good. No one, so far as I know, has quarrelled with the provisions of Section 6 as a statement of what the rules of any reasonable trade union ought to contain. No one has suggested that any decent trade union does not already contain them, or that if it omits them it omits them otherwise than from inadvertence and not from vice. I am inviting the Government to justify the removal of Section 6 on these grounds.
With great respect, it is no good saying that this is an insult to the trade unions; that you ought to trust the trade unions; the trade unions always do what is right, and so forth. We are discussing this in the context of a proposed closed shop which is rendered legal by the Act of 1974. Like most Members of this House, I am a member of numerous clubs and
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numerous voluntary associations of one kind and another. If my club breaks the law or acts contrary to natural justice, it can be brought before the courts. I do not for that reason say that people do not trust the members of the Carlton Club to do what is right and that it is an insult to the Carlton Club, because the law says that they must conform to natural justice.
I am also a shareholder in numerous companies. But the Companies Act contains numerous provisions as to what the memorandum and articles of association of a limited company should contain. I do not say, being a shareholder of those companies, that the law is an insult to the company of which I am a shareholder or to the whole conception of limited companies, because it says that the memorandum and articles of association should contain some minimal provisions. On the contrary, I am rather grateful to the Companies Act for making sure that the company in which I own shares, or of which I am a member, is told by the law the minimal provisions which the memorandum and articles must contain—not always providing exactly what it should contain, but dealing with the subjects which it must include; and incidentally providing what is called "Table A" which gives a model set of rules which, if the company is lazy, it can copy without any disadvantage to itself. I regard that as an advantage, not a disadvantage. I am also a parent. The law says that I must not beat my children or hurt them severely. I do not know why—I sometimes wonder why myself—but I do not treat it as an insult to my parenthood.
I am delighted to see the noble and learned Lord and I will very soon come to the point. May I explain to the noble and learned Lord that I was expatiating on the subject in general, in order that he might enjoy the last vestiges of his supper. This I did at the invitation of his noble friend the Leader of the House, and I hope that the noble and learned Lord is duly grateful. As I was saying when the noble and learned Lord came in, being a parent with children, I do not regard the fact that the law says that you must not beat your children or do them serious injury, as an insult to me because I am likely to beat them. I simply say that I am delighted that the law imposes these provisions on

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other parents who are less conscientious than I am.
I cannot understand why the trade union movement, alone of all the institutions in this country—different from the Church, from the Free Churches, from voluntary clubs, from friendly societies, from provident societies, from limited liability companies—should say, if somebody states, "Your rules shall contain certain minimal provisions; for instance, that you should conform with the provisions of natural justice", "That is a great insult to us, because we always conform with the law and the provisions of natural justice. We are fairminded, responsible people. We do not want any laws affecting us, because we tend to have less than the ordinary ration of original sin with which other unfortunate mortals are condemned to live". I do not under-stand this argument. I do not know whether the Leader of the House or the noble and learned Lord the Lord Chancellor can explain it to me. I had always thought that the rule of law was designed to protect the conduct of honest people by setting a standard with which less honest people might have to conform.
However, apparently, the rule of law as understood by the Labour Party and the trade union movement is different. The rule of law consists in passing those Acts of Parliament which are in the Manifesto, if possible without discussion and without amendment. This is not a doctrine which is consistent with Parliamentary Government. Now that the noble and learned Lord the Lord Chancellor has settled himself down, I want to put a specific point which I was holding in abeyance until he was more comfortable and present in our midst.
I think the noble and learned Lord was present when the noble and learned Lord, Lord Salmon, made quite a considerable speech—at least I thought it was quite a considerable speech—from the Cross-Benches in connection with an earlier Amendment. There were things I agreed with in that speech and there were things I did not altogether agree with, but I thought the noble and learned Lord was treated with rather less than courtesy, both from the Government Front Bench and from some of the Back-Benches behind them. The noble and learned
94
Lord, Lord Salmon, is a very considerable lawyer, an extremely liberal-minded man, one who has maintained both the rule of law and the rights of the individual with complete impartiality throughout a very long and distinguished professional life, and who is a great ornament to the Appellate Committee in your Lordships' House. I who have sat with him know how very distinguished, how very impartial and how very liberal-minded he is; and, lest it should be suspected that I have any politicial axe to grind in this matter, may I say that so far as I know the noble and learned Lord has never, in any phase or incarnation of his existence, been an active member of my Party or, so far as I know, a member of the Party at all. I simply admire him very much and, if it were not for the conventions of this House, I should be proud to call him my noble and learned friend —but perhaps that would be the kiss of death!
Lord SHEPHERD: Not quite.
Lord HAILSHAM of SAINT MARYLEBONE: The noble Lord the Leader of the House said earlier today that he would prefer a bite in the leg from me than an accolade, so I must be careful upon whom I bestow my encomiums. At any rate, the point that I wanted to put to the noble and learned Lord the Lord Chancellor arises out of the speech of the noble and learned Lord, Lord Salmon, and may I put the point which the noble and learned Lord, Lord Salmon, was seeking to make because I think it arises on this Amendment more appropriately than on the Amendment to which he was speaking.
What the noble and learned Lord was saying was virtually this: the Secretary of State in another place and the noble Lord the Leader of the House this afternoon, strongly—and on this point extremely ably—supported by the noble and learned Lord the Lord Chancellor, explained that in their view at any rate, and in their intentions certainly, there remained available to the citizen who finds himself wrongfully excluded from the trade union or wrongfully expelled in closed shop conditions, the ultimate right of appeal to the Common Law courts, either on the ground of a breach

95
of the rules or on the ground of a breach of natural justice. This is their view, and I take it for granted that it is their intention because I have known all of them long enough to realise that they would never say a thing which they did not mean.
What the noble and learned Lord, Lord Salmon, was saying—and I am not saying necessarily that I endorse it—was that Section 6, which it is now proposed to repeal from the Act of 1974, expressly provides that the rules of a union should be in accordance with the rules of natural justice. It is now proposed, as a specific item in the Government's programme, blessed by two Manifestos and the Reich-stag doctrine of mandate, to legalise the removal of that provision from the law, and to say that the rules of a union shall be all right even if they do not conform with the rules of natural justice. That is the specific legal effect of this provision: it is to remove the requirement that the laws of a trade union should conform with the rules of natural justice— totidem verbis, if I may break for a moment into a learned language.
The noble and learned Lord, Lord Salmon, was asking, what becomes of the right of the individual who has been treated contrary to the rules of natural justice, but in accordance with the new rules which are not in accordance with natural justice? How can he go to the courts and ask for a remedy? The noble and learned Lord, Lord Salmon, said— and this is vividly within my memory: " It is my considered opinion that he could not do so because the court would be bound to say, ' But the union has treated you in accordance with its own rules, so you cannot complain of the breach of the rules, and Parliament has expressly authorised the union to have rules which are not in accordance with natural jusice. Therefore you can have no remedy'."
When a noble and learned Lord, a member of the Appellate Committee of this House, expresses that as his considered opinion, we are at least entitled to hear the defence of the noble and learned Lord the Lord Chancellor against this indictment. In my judgment it is a very serious indictment indeed, because it means that although he has done so wholly unwittingly—as I fully accept
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because I am not making any charge of bad faith in this matter at all— the Secretary of State in another place, together with the two noble Lords who have led this House on this Bill, have misled your Lordships as to the effect of what they are doing. I fully accept that it is not what they intend, because they have said so, but I cannot necessarily accept so willingly that it is not the result of what in fact they are going to do.
Lord SLATER: May I—?
Lord HAILSHAM of SAINT MARYLEBONE: In a moment, yes, certainly. Your Lordships simply cannot afford to hastily part with a clause in the Bill when a member of the Appellate Committee of this House, with a life-time of professional experience behind him and one of the most distinguished lawyers in the land, says that the effect is different from that which the noble and learned Lord the Lord Chancellor says it has. In addition to the rather general observations I was making, all I am asking is how the noble and learned Lord the Lord Chancellor defends his Bill from the indictment brought against him by the noble and learned Lord, Lord Salmon. I will give way now to the noble Lord, Lord Slater.
Lord SLATER: I am grateful to the noble and learned Lord, Lord Hailsham, for giving way. I should like to try to clear my mind. Suppose a factory is set up with a workforce of about 300 or 400 people, none of whom is a member of a trade union, and the time comes when it is considered desirable to start a trade union; they come together and they choose their officials and then draft a set of rules and regulalations covering that particular trade union. I may be wrong, but I assume that they must first have the consent and the approval of the Registrar General under the 1971 Act before that trade union can become operative. Am I correct in my assumption?
Lord HAILSHAM of SAINT MARYLEBONE: Yes, the provision of Clause 6 is that the Registrar General must approve the rules; but he can only disapprove them, in effect, under the Act of 1974 if they fail to conform with certain minimal requirements. That is what I was saying at the beginning of my speech. While his is the sanction, he cannot disapprove of the rules

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because he does not like them or does not think they are well expressed; he can only disapprove of them if they do not conform with the law, one clause of which—and I have chosen to take this as a test case—is that they should conform with natural justice. That is one ground on which he can refuse to recognise the rules of the trade union.
Baroness GAITSKELL: If I may interrupt the noble and learned Lord to ask a question, and also apologise for my profound ignorance: Is it possible to interpret the laws of natural justice in more ways than one?
Lord HAILSHAM of SAINT MARYLEBONE: I do not think it is, but it is very easy to apply them in more ways than one. The rules of natural justice are probably well known because of the large number of decided cases; their application to an individual case is sometimes a matter of extreme difficulty, as most of us have found in our professional careers. But of course under the existing law a registrar is subject to the supervision of the courts and ultimately of this House. On that the only point I am putting to the noble and learned Lord the Lord Chancellor is that he will have heard this afternoon the noble and learned Lord, Lord Salmon, take a view as to the result of what the Government are doing which he cannot but concede is wholly different from his own, and I should like to hear him answer what the noble and learned Lord, Lord Salmon, said this afternoon because I think its application relates to Section 6 rather than to Section 5, of which the noble and learned Lord was speaking. I am not seeking to lay down the law myself. It is an arcane subject. I had assumed, from what the noble Lord said and from what the right honourable gentleman the Secretary of State said in another place, that there was only one view possible about this. Another has now been expressed. I would respectfully ask the noble and learned Lord the Lord Chancellor to clear up the doubt.
Lord JACQUES: In the earlier part of his speech, the noble and learned Lord, Lord Hailsham, made many comparisons between a trade union and a company. As I understand it, the noble and learned
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Lord said that Section 6 lays down that the rules must comply with natural justice. We think that should remain. My question to the noble and learned Lord is this: does the Companies Act require the articles of association of a company to comply with natural justice?
Lord HAILSHAM of SAINT MARYLEBONE: No, it is a good deal more stringent than that, because it spells out the requirements in greater detail. One would think that the rules relating to limited companies over the last 100 years are a great deal more stringent than anything contained in Section 6. One would think that no one could be badly incommoded by a requirement that he should conform with the rules of natural justice. Some of the directors of limited companies find the provisions of the Companies Act extremely incommodious.
If I may say another word to the noble Lord, Lord Jacques, that leads me to revert to an argument I have put before in this House on this very subject. On the whole, anybody who has had experience—either professionally, as a shareholder, or as a director—with company law recognises that it is a great protection for the individual shareholder, and for the officer of the company who knows where he can go for guidance. Indeed, he can go to the courts to interpret it, and to members of the public who may wish to deal with limited companies. My theory has always been—and I have consistently said so—that if in about 1860, when company law first took its present form, Parliament, in its infinite wisdom, had laid down a parallel law for trade unions—not an exact analogy, of course, because they are not quite the same kind of animal—we should not be in the miserable situation in which we now are. People would have learned by this time that the law is a great protector and defender of liberty, and a great source of certainty where uncertainty at present exists.
My answer to the noble Lord, Lord Jacques, is that the law regarding companies is a great deal more severe in this respect. It spells it out in greater detail and is considered a good deal more restrictive than anything now proposed. I had concluded my speech, and I hope that the noble Lord, Lord Jacques, feels that I have dealt with his question as seriously as it deserves. With that, I beg to move.
8.4 p.m.
The LORD CHANCELLOR: The noble and learned Lord, Lord Hailsham of Saint Marylebone, has raised an interesting and no doubt important question. The issue as to whether to state that rules should comply with natural justice really assists a person potentially injured by an infringement of the principles of natural justice is not one that is either self-evident or necessarily right. In my view, to eliminate Section 6, provided that the rules of the unions themselves comply with the principles of natural justice, would not damage the position of the individual trade unionist. It would fall to the courts in a given case to construe the rules if it were alleged that any particular rule was in breach of the principles of natural justice. This they would do, and whether or not a general rule saying that the rules should comply was present, it would make no difference to the task of the court in applying the principles of natural justice to the construction of the rules of the case. I remember appearing myself for the Football Association—
Several Noble Lords: Hear, hear!
The LORD CHANCELLOR: A very splendid body—in an action brought by the Enderby Football Club which, following certain matters which I will try to be impartial about now in this neutral capacity, was subjected to fines by the Football Association for non-compliance with the rules. In the disciplinary proceedings taken by the Football Association, they were refused representation by counsel, and, indeed, I think the rules of the Football Association so stated. There was an examination which took place, I am happy to say, for quite a considerable time, because the matter was then thoroughly canvassed in the Court of Appeal, where the Court of Appeal decided in the end that a rule which denied the right of legal representation was not a rule in infringement of the principles of natural justice. There was a classic case of the examination of the doctrine in relation to the rules of a union, for this purpose the Football Association. If the rule had said there should be no right for the allegedly offending club to be heard, I have little doubt that the Court of Appeal, with the Master of the Rolls blowing many trumpets, would
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have taken a very different view. It means that with the law as it stands, the rules adumbrated and produced by the relevant unions will be subjected to searching tests by the courts and, indeed, the TUC has so advised the divers trade unions.
That, I think, is the answer to what the noble and learned Lord has called a constitution point. I am not sure whether it is constitutional or a legal point of a good deal of importance. But the fact is that in regard to trade union rules, the trade union movement has moved a great deal forward since the days when the Donovan Report drew attention to the need for producing a corpus of rules which really protected the position of individual members of the unions. Examination of the rules in recent years shows, I think, that an honourable attempt has been made to comply with the guidance of the TUC. Perhaps an interesting test as to whether they have effectively and, of course, in good faith done that—and I detect that the noble and learned Lord does not impune their good faith—may be indicated by the last Annual Report of the Chief Registrar of the Trade Unions and Employers' Associations, that there was little evidence of major shortcomings in union rule books, and no evidence of pressure from individual union members to have the rule books revised.
Therefore, it would seem, if that is right, that the apprehensions which apparently—I have no doubt also in good faith—trouble noble Lords on the other side of the Committee, are not justified by the event. In the view of the Government, the inclusion in the rules of a statement that these rules must comply with the principles of natural justice would not take the individual member of the union anywhere, would be otíose because they must comply with the rules of natural justice anyway, and therefore, in my most respectful submission to the noble and learned Lord, Lord Hailsham of Saint Marylebone, there is nothing in his point.
Lord HAILSHAM of SAINT MARYLEBONE: As I said, if the matter had rested with me, I would not have raised it. The point is that I would have been content to have accepted what was said by the noble and learned Lord the Lord Chancellor on Second Reading, or whenever it was he said it, which I cannot

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now recollect. But the point I was making was that now we have the considered opinion, and I am using his ipsissima verba, of the noble and learned Lord on the Cross-Benches, whose whole professional life has been engaged on purely legal matters and who will be, in fact, on the panel of salaried Law Lords who might have to decide this very point. The noble and learned Lord came to that conclusion, after a lifetime of experience which was wholly incompatible—and the noble and learned Lord the Lord Chancellor really must accept the fact that he said in the hearing of the entire Committee this afternoon words which were wholly incompatible with the words which the noble and learned Lord has just spoken. When he says, therefore, that there is nothing in my point, I would say, in the first place, that it is not my point; it is that of the noble and learned Lord, Lord Salmon; and, in the second place, I think he is treating it in a rather cavalier fashion.
I shall not press this Amendment at the present stage, but I hope that the noble and learned Lord will consider the matter afresh when he has read in Hansard the report of the speech of the noble and learned Lord, Lord Salmon. Speaking for myself, I am not at all happy that the new provision, which expressly expunges from the law the provision that the rules should conform with natural justice, has the effect which he so confidently says it has, because I have heard somebody of equal authority to himself dispute the fact. It may be that before the Report stage, in order to clear the matter up, I will wish to put down a clarifying Amendment. But having heard the noble and learned Lord, who has responded most generously to my invitation to reply on this matter, although I was not content with the tone of his comments upon the speech of the noble and learned Lord, Lord Salmon, I would beg leave to withdraw this Amendment.
The LORD CHANCELLOR: May I say that I will, of course, respond to the suggestion made that I should look at the point again. It was sprung upon me in the middle of a modest piece of refreshment in another part of the building. I cannot believe, and do not believe, that the repeal of the section would authorise trade union rules contrary to natural
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justice. But I will look at the point most willingly.
Lord HAILSHAM of SAINT MARYLEBONE: I am most grateful to the noble and learned Lord. But the point was not exactly sprung upon him, because the noble and learned Lord, Lord Salmon, made his speech in the earlier part of the afternoon and, loath as I am to interfere with the refreshment of the noble and learned Lord, I am bound to say that if at about four o'clock somebody had said this about a Bill which I was sponsoring I would not have said that it was sprung upon me at ten minutes past eight.
Lord SHEPHERD: But, equally, would not the noble and learned Lord agree that if this was a matter of such burning importance one would have thought that the noble and learned Lord, Lord Salmon, would have remained when this important aspect was to be considered?
Lord HAILSHAM of SAINT MARYLEBONE: I think this is really unfair. I, of course, hold no brief for the occupants of the Cross-Benches, but this is not the first time the noble Lord the Leader of the House has said it, and I think I ought to spring to the defence of the noble and learned Lord on this matter. Obviously, when one has committed oneself very long in advance to attend a meeting which is waiting for one's attendance, and failure to attend which would cause a great deal of inconvenience to a number of young people, there is very good reason for one's action. I know that the noble and learned Lord intended no discourtesy to this House. I think the noble Lord the Leader of the House has been a little unjust to him in his absence, for having kept an engagement of this kind. We are all of us from time to time faced with this kind of situation. He apologised to the Committee, and I think his apology should have been accepted in a more generous way than it has been.
Lord SHEPHERD: I raised the question only on the strength of the point. My noble and learned friend has agreed to look at it. If it was a point of such constitutional importance there were opportunities, and I, as Minister responsible for this Bill, could well have been

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approached. What was said this afternoon was quite new; I believe it was new to my noble and learned friend. If it was of such importance, I should have thought there were ways and means by which the Government's attention could have been drawn to it prior to Committee stage.
Lord HANKEY: I must rise to the defence of the noble and learned Lord. He explained very clearly and courteously —I think the Leader of the House may have been out of the House—
Lord SHEPHERD: No, I was not!
Lord HANKEY: He could not help what he had to do; some of us do occasionally have engagements which it is almost impossible to avoid. May I say that we have heard a very interesting legal discussion on this subject. As the noble and learned Lord has most courteously said that he will consider the points that have been raised, may I ask him to consider one or two practical points as well. The position which we now have is that a good many trade unions have very strong Communist participation. One thinks of the National Union of Mineworkers; Mr. Gormley is surrounded by all sorts of militants, and I have greatly admired the way he has dealt with them. One would like to think that there will be no attempt by union executives, when they get into that position, to change the rules for their own advantage.
If there are no provisions by which the unions are to be guided in framing their rules, what security can the noble and learned Lord give us that we shall not be faced with certain large unions really going Communist? We have had this in the ETU. Before we finally end discussion on this Bill I personally want to know whether, with the removal of Section 6, of the principal Act the decision of the High Court in the case of the ETU would have come down in the direction in which it did, which led to the election of my friend Sir Leslie Cannon. There are also other considerations which I do think it is fair to mention. There are all sorts of political aspects here. Some of the big unions wield millions of votes in the Trades Union Congress. If their rules were to be altered wantonly or
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arbitrarily because there were no principles laid down with which those rules should comply, might not this have a very serious effect on the tribunal which we are talking about the TUC setting up to deal with questions about unfair exclusion from a union? These things can be far-reaching. If I had not served in Communist countries and lived through two Communist revolutions, I would not raise these matters, but I can assure your Lordships that they are important.
Lord SLATER: Is the noble Lord aware that it is such statements as he is now making, as an exdiplomat, that are the cause of all the trouble so far as these Communist elements that we are constantly hearing about are concerned? I certainly take exception to the remarks made in regard to the National Union of Mineworkers, and the noble Lord ought to withdraw them.
Lord HANKEY: This is a matter of fact. I am not making insinuations. You can read it in the newspapers every day. I should be very grateful if the noble and learned Lord would be so good as to say he will consider these practical questions along with the legal ones. I am not making accusations or insinuations, but I believe this to be important.
The LORD CHANCELLOR: I merely rise in a temporary capacity as Leader of the House, to remind your Lordships that the Amendment has already, by leave, been withdrawn.
Lord HAILSHAM of SAINT MARYLEBONE: I have sought leave, but I have not yet been given it.
Lord HOUGHTON of SOWERBY: With great respect, leave was not given for the withdrawal of this Amendment a moment ago. I was on my feet. I do not understand the procedure. If the Amendment is to be withdrawn by leave, then the Committee should clearly understand that is what is afoot.
The LORD CHANCELLOR: I apologise to my noble friend; I had not seen that he was on his feet. If I had, I should of course have encouraged the continuance of the debate.
Lord HAILSHAM of SAINT MARYLEBONE: There were in fact two noble Lords on their feet; one was

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the noble Lord who has just spoken and the other was the noble Viscount, Lord Hanworth. I therefore postpone my formal request.
Viscount HANWORTH: Whereas I support a good deal of what the noble Lord, Lord Hankey, said, I would not quite put it in this way. What one should realise is that good rules for all unions are important, and I think this is probably a matter for the unions themselves in the present circumstances—and I am a pragmatist above everything else —to consider. The message I should like to leave is that the TUC and others should look carefully at this problem to see that every union has good rules. Though many noble Lords may laugh, when we were considering the Industrial Relations Bill those on the other side said, "What we want is strong unions" Many people did not believe them but I believe it to be true. What one wants today, even more than ever before, are strong unions who can control their members but do it responsibly. I am sure that few noble Lords in this House would disagree. I should like to put the gloss on what the noble Lord, Lord Hankey, has said. I believe that it is a point of vast importance although he made it possibly in a way not quite acceptable to some noble Lords on this side of the Committee. I hope that nevertheless they will accept its importance.
Lord HOUGHTON of SOWERBY: I will not keep the Committee for more than two minutes, but I think it is important to put on record that although the words "natural justice", used so freely in the discussion so far, were contained in the Amendment tabled by the noble and learned Lord, Lord Hailsham of Saint Marylebone, on 22nd July 1974, in moving an Amendment which is now Clause 6 of the principal Act, they were never once mentioned by him. The whole debate occupied two and a half pages of the Official Report, and now we have "natural justice", elevated to the highest form of principle, a term which the noble and learned Lord did not use when moving the Amendment in 1974. I wish to put this on the record: the noble and learned Lord has twice taunted me about the reference I made to certain things being in the Labour Party Manifesto and having been agreed in negotiations with
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the TUC. These, he said, should be subject to argument and debate in the democratic Parliamentary way and not rubber-stamped. Let me remind the noble and learned Lord that in 1971 the Conservatives put in their Manifesto that they were going to introduce an Industrial Relations Bill. They did so. They refused to hold discussions on that Bill with the Trades Union Congress. They pushed it through the House of Commons on a guillotine; they never accepted a single Amendment in the House of Commons from beginning to end, and that is what the noble and learned Lord, Lord Hailsham of Saint Marylebone, is apparently offering us as an example of Conservative Party democracy and the truest form of Parliamentary procedure.
Baroness GAITSKELL: May I add one word to this discussion? I think the bogey that has been raised about Communism has done much more harm to the trade union movement and to our country than anything else for a long time. Are we not proud of our freedom? Do we not take risks for our freedom? Let us look round the world and see the countries where the Communist Party is banned and judge whether we should like to emulate their Governments. After all, in any society we shall always have people whom I call "destroyers" or "spoilers" of any kind, call them whatever you like. Call them Communists or Fascists, but in a free democracy one will always have a certain number of people who will try to spoil the democracy. Call them whatever you like. To raise this bogey about Communism, which some of us have heard all our lives, does absolutely no good at all. We should be proud that we can contain these elements. That is what we should be proud of, and not frighten ourselves to death with the idea that we have a Communist Party which does not have one Member of Parliament.
Lord HAILSHAM of SAINT MARYLEBONE: As this is Committee stage, I believe I am entitled to say this without seeking formal leave. I do not think we should continue the debate of last Wednesday about Communism and subversion in the context of this Amendment. Secondly, it may be true (and I take it from the noble Lord, Lord Houghton of Sowerby, that it was true) that in 1974 when I inserted what is now

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Section 7 of the Trade Union Act of 1974 I did not mention "natural justice" specifically. I am delighted to know that the whole debate took only two and a half pages—I could only wish that this debate was to be equally concise. If I did not refer to natural justice it is because I did not imagine that anybody would seriously try to legalise rules which did not conform with it. I refer to the other remark of the noble Lord, Lord Houghton of Sowerby. I forget whether he was with us; I do not think he was; nor was the noble Lord, Lord Melchett, who also made vociferous noises from a recumbent position. I spent night after night in this House arguing the merits of every single Amendment, both on Report and on Committee, and whatever else can be said about this Bill I do not think that anybody accused me at the end of the business of not being prepared to defend the merits of what was being done or not accepting Amendments. There were dozens of them. So let us not hear any nonsense of that kind, and with that pious hope let me again beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Lord WIGODER: I beg to move Amendment No. 5.
Amendment moved—
After Clause 1, insert the following new clause:
(" . After section 5 of the principal Act, there shall be inserted the following section: —
"Rights of workers aggrieved by exclusion or expulsion from trade union to applay to tribunal.
5A—(1) A worker aggrieved by his exclusion or expulsion from any trade union, branch or section may apply to tribunal appointed for the adjudication of such grievances for a declaration that he is entitled to be a member of that trade union, branch or section.
(2) The tribunal shall be appointed by the Secretary of State in consultation with the General Council of the Trades Union Congress and the Chairman of the Conciliation and Arbitration Service and shall have an independent person with legal qualifications as chairman and two other members.
(3) The procedure at such a tribunal shall be in accordance with rules made by the Trades Union Congress and approved by the Council on Tribunals.
(4) If at any time there is not existent such a Tribunal and such
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rules, such an application may be made instead to an industrial tribunal in accordance with industrial tribunal regulations.
(5) Where any such declaration has been made either by the tribunal or by an industrial tribunal as the case may be and has not been implemented by the union, branch or section concerned with in any period specified in the declaration or if no such period is specified within a reasonable period, the worker may apply to the High Court or in Scotland, the Court of Session for an injunction, interdict or such relief (including compensation) as the court may think just and expedient in all the circumstances of the case.
(6) Nothing in this section or section 2(5) above shall prejudice or in any way reduce the common law rights of a person who has applied to join, but not been given membership of, or who claims to be and to remain a member of, or who has been expelled from, a trade Union." ")—(Lord Wigoder.)
The DEPUTY CHAIRMAN of COMMITTEES: Amendment No. 6—Lord Goodman.
Lord HAILSHAM of SAINT MARYLEBONE: If I may intervene, the noble Baroness—I was going to say the Master of the Queen's Horse—the Chief Whip, said this afternoon that this Amendment would be moved at a later stage in the Bill, and that goes also for Amendment No. 7. They are not in my name, but it might be for the convenience of the Committee if I reminded your Lordships of this fact.
Baroness SEEAR: I confirm that this was in fact the arrangement made earlier through the usual channels.
Lord BYERS: If I may say so, this Amendment will be put down tonight for tomorrow's debate.
Clause 2 [Amendments of the principal Act] :
8.28 p.m.
Lord JACQUES Lord JACQUES moved Amendment No. 8:
Page 2, leave out lines 43 to 47 and insert—
("" (5A) For the purposes of this Act, employees are to be treated, in relation to a union membership agreement, as belonging to the same class if they have been identified as such by the parties to the agreement, and employees may be so identified by reference to

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any characteristics or circumstances whatsoever." ")
The noble Lord said: May I express the hope that on this and subsequent Amendments we might stick to the point? This is an Amendment to Clause 2(4). This subsection seeks to clarify what is meant by class of employees in relation to a union membership agreement and in the provisions relating to dismissal in Schedule 1, paragraph 6(5) of the 1974 Act. It makes clear that a class of workers may be identified by reference to any shared characteristics or circumstances and not just by matters related to their employment. In practice employees are excluded from union membership agreements because of age, present trade union membership, conscientious objection and so on. Therefore the subsection brings the definition of union membership agreement more in accord with industrial reality.
In the other place the Opposition introduced an amendment designed to make clear that the shared characteristics used to identify a class of workers are those which the parties have agreed and are not just any characteristics which people may happen to have in common. The Government accepted the Opposition amendment in principle but unfortunately the drafting was not quite prefect. The Government undertook to introduce an Amendment in this House—and this is it.
The amended subsection makes three points clear: first that the class referred to is the class covered by the union membership agreement; secondly, that the parties to a union membership agreement are the people who identify the employees within the class; and, thirdly, that the parties may refer to any characteristics or circumstances whatsoever in identifying a class of worker. The subsection, thus amended, will satisfy all the parties. I beg to move.
8.30 p.m.
The Earl of MANSFIELD: I promise to stick to the point, but there are one or two questions which I should like to ask the noble Lord. This is a complicated and technical matter which I find rather difficult to follow, probably because this is an Amendment to a Bill which amends an Act. As I understand it, there are certain classes of worker who would not wish to be identified by common charac-
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teristics, irrespective of whether or not there happens to be a union membership agreement. There are two types of people who are particularly anxious about this point, and I should like to confirm with the noble Lord that their interests are covered by the present Amendment.
First, there are persons such as professional engineers—for instance, borough engineers—in local government. In their capacity they act as what one might call quasi-employers and it would clearly be quite unsuitable that they should be forced to join what amounts to a closed shop, and thereafter give instructions to fellow brother trade unionists. I am afraid that I have not put that very elegantly.
Secondly, there are certain other types of professional persons such as water engineers, who have a rigid code of professional conduct which, could involve them in a head-on clash if they were forced to belong to a trade union which advocated action in direct opposition to their code of professional ethics. I mention water engineers, because they have a duty not to do anything which might affect the safety or health of the people whose interests they serve. My understanding—and I hope that this is the case —is that the Amendment provides not an escape clause, because that might be a contentious phrase, but an easy way out for the classes of people whom I have mentioned. However, I should like to be sure of that.
Lord JACQUES: I think I can confirm that. The position is that since the 1974 Act became law some lawyers have expressed the opinion that the identification had to be by reference to the employment of the people concerned. What the new subsection does is to make it clear that there can be identification of a class without reference to employment. For example, if there were a union membership agreement concerning local government officers, and that union membership agreement was being made between a local authority and Union A, it could under the new subsection say that it would exclude all members of Union B. I think that that satisfies the point which the noble Earl has raised.
Viscount HANWORTH: This is an Amendment of some importance to the professional institutes, and I am a member of at least three such institutes. I

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know that the Government have recognised the problem here, but the question really arises as to whether their Amendment meets that problem. It is at least the thought of the associations themselves that the right which is intended, I think for a small minority, could be exercised only on the willingness of the larger union and the employees to allow them to be represented. If that is the case, this is not a satisfactory answer. The professions have their ethics and they are very high ethics, and they should be able to exercise them. I suspect that, along the line, there may be some objection to this from trade unions for various reasons which I can think of. But I cannot believe that anybody would not feel, bearing in mind the ethics of the institutes and institutions, that this was not a very important provision which should be made utterly watertight.
Baroness VICKERS: I should just like to ask one question. As your Lordships will know, quite a number of men are trained in Her Majesty's Forces and are given a qualification or a trade, though they do not go through a normal apprenticeship. I should like to know whether these men will be excluded, because many people join the Services— particularly the Navy and certain sections of the Army—and learn a trade so that they can earn their living when they come out. I should like to know whether this provision would exclude them in the future.
Lord JACQUES: This clause, as amended, would not stop anybody. The clause attempts to give much greater flexibility to the 1974 Act. Instead of groups of workers, who are included in or excluded from an agreement, being identified in relation to their employment, we are now saying that they can be identified in any way the parties think fit. Therefore, this gives much greater flexibility for the purposes of including or excluding people from a union membership agreement.
I would say that if any Amendment is required on the lines suggested by the noble Earl, it would certainly not be to the present clause. This clause deals merely with the identification of classes for inclusion in or exclusion from an agreement, and it goes the whole hog and
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says that one can use any identification whatever for that purpose. Therefore, it is extremely liberal in its intentions.
Viscount HANWORTH: May I ask the Minister whether he will consider the point that I have made, and see whether any further Amendment should be put down by the Government at a later stage of the Bill to meet what I am saying; that is, that in certain cases there ought to be a right for members of profesional institutions to be able to call themselves a class quite independently of what the employees or the union concerned may consider? Will the Minister see whether something on those lines can be done later to meet this very important point?
Lord JACQUES: I suggest that the noble Viscount is here tomorrow to hear my reply to Amendment No. 13.
Baroness WARD of NORTH TYNE-SIDE: May I ask, on this point of identification, whether a group such as the professional engineers, who are a small minority and very easily identified, and who have asked me to raise this point because I have had some connection with them in the North of England, will be protected and able to operate through their own professional union?
Lord JACQUES: There are two answers to the noble Baroness's question. The first is that, so far as this Amendment is concerned, they could as a result of it quite easily be excluded from a union membership agreement, so that the subsection is favourable to them. Secondly, regarding protection, I advise the noble Baroness to be present for the debate on Amendment No. 13 and, in particular, to hear the reply of the Government.
8.40 p.m.
Lord ROCHESTER Lord ROCHESTER moved Amendment No. 9:
Page 3, line 4, at end insert (" and for the words " religious belief "there shall be substituted the word " conscience " ").
The noble Lord said: In moving this Amendment—
Lord HAILSHAM of SAINT MARYLEBONE: Before the noble Lord continues, may I suggest that it would be convenient to the Committee to discuss with this Amendment, Amendment No. 10, though it may be that we shall wish

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to vote on them separately, if we vote at all. They raise the same point.
Lord ROCHESTER: The intention of Amendment No. 9, which concerns Schedule 1, paragraph 6(5) to the principal Act, which deals with cases where dismissal is to be regarded as fair, is to substitute the word "conscience" for the words "religious belief". I venture to move this Amendment only because I have some practical experience of the operation of the element of conscience in a 100 per cent. union membership situation. May I first agree with those who claim that the great majority of people who fail to pay or who cease to pay contributions in a closed shop situation do so for no better reason than that they prefer not to pay for benefits received. They are what are called "free riders", and I have every sympathy with those who object to such people boarding the bus and then failing to pay the fare.
I recall from my experience a few cases of people known as Plymouth Brethren who had conscientious objections to being union members, to associating with others in a union on grounds of religious belief. They were people who had Scriptural authority for claiming that they should not be grouped together with unbelievers. I do not recall any other cases, and it could therefore be said, for what my experience is worth in this matter, that conscience has hitherto coincided for this purpose with religious belief.
In winding up the debate on Second Reading the noble Lord, Lord Jacques, said he had been advised that industrial tribunals in the context of a closed shop had been able to identify the conscientious objector only when he was a religious objector. In support of that contention he quoted two cases; Hynds v. Spiller-French Baking Limited and Woolam v. National Union of Insurance Workers. Through the noble Lord's good offices, I have been able to obtain from the Department of Employment copies of the industrial tribunal's decisions in those cases. I have to tell your Lordships that what the noble Lord said on Second Reading about this matter is the truth, and that in the context of arbitration in this matter it appears that, until now anyway, it is only when conscience has been shown to be
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based on religious belief that it has afforded ground for exceptional treatment.
It was indeed with this and other points in mind that my noble friend and I framed Amendment No. 9, seeking to substitute for the words "religious belief" the word "conscience". We did so, first, because we saw no good reason for departing, as the Government did in the principal Act, from the exclusive test of conscience when it has been used since time immemorial, so far as I know, and found to work in practice in closed shop cases in industry, including tthe industrial tribunal cases to which I have just referred; when it is supported by the findings of the Donovan Commission—I refer your Lordships to paragraphs 603 to 617 of that Commission's Report—when it has proved effective in the matter of military service; and even, I understand, in those somewhat delicate questions that sometimes arise within the Labour Party when, under the Party constitution, the matter is dealt with by reference to this same test of conscience. Secondly, we felt, as conscience clearly includes religious belief, that if the word "conscience" were inserted into this Bill there would also be no need for the words "religious belief" to be in the Bill.
Lord LEE of NEWTON: Is it not possible for an atheist to have a conscience?
Lord ROCHESTER: I see no reason why not. All I said was that conscience included religious belief. I did not say that conscience could not include other things besides religious belief. Thirdly—and we regard this point as of considerable importance—in contrast to Schedule 1, paragraph 6(5) to the principal Act, if Amendment No. 9 were accepted and on some occasion an industrial tribunal found it possible to distinguish, in the context of the closed shop, between conscientious objection and religious objection, it would be possible for the tribunal to find accordingly. For these reasons it seemed to my noble friends and I that there was no need for any reference to religious belief in this Bill and that the well-tried test of conscience was perfectly adequate. If this Amendment is accepted industrial tribunals can continue, in the context of the closed shop, reasonably to apply the test of conscience rather than only religious belief.

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It may be claimed by the Government that if this Amendment were accepted it would not give the conscientious objector the right in a closed shop situation to obtain employment, nor once in a job to remain in it. All it would do is to give a person in this category the right to obtain compensation if he were dismissed unfairly. I agree that that is all that this Amendment would do, and I can only say that on this matter we would much rather have the hole left. But, if I may say so without disrespect to noble Lords opposite, we have to make do with such crumbs of bread and scrape as we can find under the Government Front Bench. I beg to move.
Lord HAILSHAM of SAINT MARY-LEBONE: May I speak to Amendment No. 10, because I take the view, rightly or wrongly, that it is better than Amendment No. 9. Both Amendments raise the same point. On the point of principle, I am wholly with the noble Lord who has just spoken, but may I give my reasons for saying that Amendment No. 10 is better than Amendment No. 9? I think it is manifest that "religious belief" is too narrow. What we are talking about—and it is as well to see the context of what we are talking about— is someone dismissed without compensation. It is not about whether or not there should be a closed shop—that is accepted. There can be, because the Act of 1974 legalises it. It is not about whether or not a man should be dismissed, because he can be dismissed under the 1974 Act and this Bill does not reduce that probability. The question is whether or not he is paid compensation; that is the only question we are considering.
As the law stood in 1974, he gets compensation if he has reasonable grounds for not belonging to a particular union, as he does where he has religious grounds. The noble Lord says, and rightly, that there are people with consciences who have no religious belief at all, or who can have conscientious objections based on grounds other than religious beliefs. I cannot believe that the Government ought not to respect them. On Second Reading, the Government said—the noble and learned Lord the Lord Chancellor said it, and so did the noble Lord, Lord Jacques—that hitherto industrial
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tribunals assessing these cases have used only the section in relation to religious belief. That, I think, is a pure coincidence and I am not prepared to accept it as a matter of law. I do not myself see how the Government can refuse to recognise conscientious belief. What I and my noble friends have done in Amendment No. 10 is to say that religious belief, which is not always reasonable—at any rate, which the courts cannot decide is reasonable—should be a separate ground.
I do not happen to think that the Ply-mouth Brethren are reasonable. I had a long argument with them on this very point when I was Lord President of the Council, because they did not want to join the Pharmaceutical Society. We discussed the Greek text of Corinthians II until I was throughly exhausted with it. But I ended with the view, as I began, first, that their religious belief is perfectly genuine ; and, secondly, that it is not reasonable. However, whether they be right or wrong, I cannot think of a less suitable tribunal to decide whether a religious belief is reasonable or unreasonable than an industrial tribunal consisting of a lawyer and two trade unionists. We think that "religious belief" should stay in, and it has nothing to do with "reasonable" when dealing with religious belief because everyone knows that one's own religious beliefs are entirely reasonable, and everybody else's are entirely unreasonable. This is one of the facts of life which I think we can all accept, religious or irreligious.
I have put in "conscience" because I think it necessary, but I have deliberately limited it to "reasonable grounds of conscience" because although a tribunal cannot by its nature decide whether religious beliefs are reasonable or unreasonable, it can decide, and has often decided, whether conscientious beliefs are reasonable. If a man is an atheist, or is operating on the same wavelength as an atheist, because his religious beliefs have nothing to do with objection which he claims to be conscientious, he ought to be able to persuade an impartial body that he is reasonable as well as being conscientious. So I see nothing wrong in that, and I think it is vastly superior to what is proposed in Amendment No. 9.
I do not find it possible to see how the Government can object to it. The

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fact of the matter is, first, that "conscience" is in the Labour Party's own rules of conduct, and I do not think it finds much difficulty in interpreting it, though it is not for me to say whether that Party interprets it sensibly or otherwise —that is no part of my case—or too restrictively, or too liberally, perhaps. But the conscientious objectors in the war were not limited to religious beliefs. The Donovan Commission pointed that out; there was no difficulty in identifying grounds of conscience as genuine or not genuine, reasonable or unreasonable, and in the most important field of military service during wartime there operated a perfectly rational means of deciding con-science.
There is a third example, which will appeal to the noble and learned Lord, who twitted me during discussion of an earlier Amendment with the Universal Declaration of Human Rights which he, quite rightly, said is not enforceable at law, although we put our word to it. So he said, "We need not bother too much about that. We keep it in the spirit, but in trade union matters we take a broad-minded, latitudinarian view." It rather reminded me of a famous advocate called Martin O'Connor who, when he mentioned the sum of money paid into court, said, "Your honour, this is only a gross breach of professional etiquette and not a breach of legal procedure, so you can do nothing whatever about it"—
The LORD CHANCELLOR: If the noble and learned Lord will allow me, I was not resting my case on the fact that the Universal Declaration of Human Rights is not a legally enforceable document, but in so far as it has effect the noble and learned Lord quoted the wrong paragraph of it.
Lord HAILSHAM of SAINT MARYLEBONE: I think I did not, but I do not want to enter into that discussion again. I quoted sub-paragraph (2) of paragraph 20 which said that nobody should be compelled to join an association. But that is irrelevant to the point which the noble and learned Lord twitted me with, which was that the Universal Declaration of Human Rights is unenforceable. I was not thinking that the noble and learned Lord was at his conspicuous best when he raised that point. I mentioned it only because I
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am now going to refer to something which is binding on the noble and learned Lord and which is a legal document, and which he will have to interpret legally, because he can be made to to so, and made to do so by a body outside this country; that is, the European Convention which says in Article 9 that everyone has a right to freedom of thought, conscience and religion. So you can infer two things from that—one is that conscience is one thing and religion is another; and the other is that it can be given a legal meaning. Thirdly, if my Amendment is not accepted, the noble and learned Lord can find himself up before the Convention on Human Rights—and the sooner the better.
I think we are justified in telling the other place that they really ought to think again about conscience. This House has a very wide range of experience and, on the whole, we have many kinds of consciences in this House. I think we all want them to be respected and, even if we do not, the European Convention tells the Government that they have to respect them. I cannot believe that the Government will not accept my Amendment.
Lord HOUGHTON of SOWERBY: I think that this is a difficult matter. I agree that "religious objection" is too narrow. On the other hand, I doubt whether "conscience" is any more satisfactory. As for "reasonable grounds of conscience", I do not know what they are. I should say that most grounds of conscience are unreasonable, which means that they are not open to reason. We had this difficulty in the Parliamentary Labour Party. We had a conscience clause. We were not quite sure when people were justified in using it, and in the end we abolished it, and we abolished "religion" as well. We substituted "deeply held personal conviction" and that covers everything. I suggest this to my noble friends on the Front Bench as an acceptable alternative. At least they can, perhaps, persuade the Secretary of State that what is good for the Parliamentary Labour Party is good for trade unionists. But, seriously, the danger here is that "conscience" clauses, "deeply held personal conviction" clauses, have to be tested. "Religion" is more easily identifiable, because many

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people are aware of the religious convictions of their comrades and friends.
This relates to a sect called the Plymouth Brethren who are freely acknowledged to be covered by a religious or even a conscience clause. I do not think that we can equate membership of a trade union with operating compulsory military service. I think they are two very different things. One is a call to arms, to shoot, to kill; the other is a call to join in a peaceful activity, collective action and co-operation. I doubt whether the latter calls for a very wide field of conscientious objection. I believe that this matter was discussed quite fully in another place and religious conviction was believed to be the best of a very poor selection of definitions because of its easier identification; but if there are to be a number of people who claim conscientious objection and exemption from membership on those grounds it could lead to serious disputation and difficulty with regard to individuals.
Nevertheless, I think the principle of conscientious objection was clearly recommended in the Donovan Report. It used the word "conscience", but we might find an alternative for that. The late Lord Attlee said that conscience is a still small voice. The question is: where does the still small voice come from? Those who have a religion believe that these words come from a higher authority; others without religious beliefs probably say that this is the result of careful thought, self-analysis and conviction.
My father was a passive resister against the abominable Conservative Education Act of 1903, but nobody accepted his conscientious objection to paying education rates to support Anglican schools; so he went to prison. In my boyhood he went to prison for 14 days every year that I can remember until the First World War. There was not much consideration for concience there. But we are more enlightened these days. We give people greater freedom to hold views of their own and, if they are deeply enough genuinely enough held, we allow them to call them in aid to exempt them from something that they do not like doing. So I suggest that the Government might consider this again and see whether any suggestion that I have made is a
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more suitable alternative. But we must guard against doing something which will widen the area of disputation between individuals and their unions. In any case, I offer this sage advice to your Lordships for what it is worth.
Lord PANNELL: I think it was the late Arthur Henderson who introduced a conscience clause into the Labour Party Constitution. I remember him, in 1931, I think, saying:
"I do not object to a man's conscience ; what I object to is organised conscience."
He said that the plural of conscience is usually conspiracy. I think there is a great deal of truth in that. When we consider this as something individual, we must consider how catching it would be in the workshop. One chap gets away with it for the completely ignoble reason that he does not want to pay dues for services he receives. Having got away with it, he puts it all on somebody else. I hope it will never be advaned that refusing to join a trade union is a principle in itself or that it is a good reason to invoke any conscience clause.
Lord JACQUES: Amendment No. 10 is very similar in content to one which was moved by the Opposition on Report in the other place, but that Amendment was rejected. Amendment No. 10 is, however, much less acceptable than the earlier Amendment which referred only to conscience rather than to reasonable grounds of conscience. Amendment No. 10 is vaguer, more difficult to interpret and more likely to give encouragement to free riders and those who would like to undermine the closed shop.
So far as Amendment No. 9 is concerned, conscience would almost certainly be interpreted more narrowly, probably only as religious belief. Nevertheless, it is still open to the same objections in principle and practice as Amendment No. 10. The inclusion of any statutory exception for conscientious objectors other than those who object on religious grounds poses problems in practice and is unacceptable in principle. The principle involved is that the law should not interfere with the free negotiation of agreements between management and unions on matters which are internal to the company. The closed shop agreement should be lawful if the management and the union agree that they will

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benefit industrial relations. Experience has shown that their de facto existence cannot be prevented by Statute; but it is not right that the law should, while allowing the closed shop arrangements to exist lawfully, at the same time take away from employers the right to uphold lawful agreement without having to pay compensation for doing so. The question of whether compensation is payable is the one issue at stake. The Amendment does not prevent a conscientious objector from being dismissed; the Amendment does not give him the right not to belong; it does not enable him to get a job if there is a pre-entry closed shop. The one issue at stake is whether or not he should get compensation.
Special provision has been made for religious objectors. Religious belief itself is a subjective matter; but it can be objectively recognised by those who are not believers. Furthermore, it does not attack their own beliefs by saying the unions are bad. It does not impinge upon the equally strongly-held convictions of other people. For this reason and because they are a small, readily identifiable group, religious objectors can be made the subject of a statutory exception. But other conscientious grounds for objecting to union membership cannot be clearly established and are very difficult to distinguish from self-interest. The Opposition have made clear in another place that they have no wish to encourage "free riders"; quite the opposite. But how are reasonable grounds of conscience to be distinguished from parasitical selfishness? What are reasonable grounds? That is a completely open phrase which gives tribunals no indication of what Parliament had in mind.
A man who says that he objects to unions in principle is taking a stand on an everyday practical matter affecting other people; a matter on which other people, including his fellow employees, have equally strong and legitimate beliefs in principle. Where there is a direct clash of freedoms of conscience of this kind, which view prevails must be worked out by those concerned. It is not possible to make statutory provision for the minority without interfering with someone else's rights. My noble friend Lady Gaitskell summed it up when we were debating the main Act last summer. She
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said that freedom for individuals could spell anarchy for the unions in undermining their hardwon rights to represent a bargain on behalf of employees.
The difficulties of establishing a realistic and objective meaning of "conscience", let alone "reasonable grounds of conscience", in relation to union membership is borne out by the experience of operating the Industrial Relations Act. In the context of union membership, tribunals have only been able to identify the conscientious objector when he is in fact a religious objector. Here I quote the case which has been mentioned already in this debate, of Hynds v. Spiller-French Baking Limited:
"In our opinion, ' grounds of conscience ' necessarily points to and involves a belief or conviction based upon religion in the broader sense as contrasted with personal feeling, however strongly held, or intellectual creed."
That, I think, is quite clear, whether or not the noble Lord agrees with it.
The identification of a conscientious objector in wartime is not a good analogy with the industrial relations situation. A pacifist does not have to take a stand directly contrary to the beliefs of those with whom he works. He does not join the Army and then say that war is a bad thing. His position is more comparable with that of an employee who does not like unions and therefore avoids working in a closed shop. He may suffer some drawbacks as a result, but that is the outcome of his exercising his freedom of conscience.
One thing we ought to have learned in the last two and a half years is that if you give individuals the right of appeal to a tribunal with compensation at the end of the road, then, regardless of the merit of their case, many individuals will come forward because of the compensation involved. Furthermore, you will get people who, because they want an opportunity of snubbing the people with whom they work and with whom they have fallen out, will, if that is in addition to compensation, be all the more eager to go forward with their objection. We therefore believe that this will encourage vexatious complaints, and in our opinion it is not practicable and not justified.
Lord HAILSHAM of SAINT MARYLEBONE: I do not think we want to spend a great deal of time on this: I do not know what my noble colleague

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across the gangway feels about it. The noble Lord has read out his brief with, I am sure, complete conviction; but he has failed to carry any conviction at all with me. I have never heard so much nonsense in my life. In the first place, this does not encourage "free riders". The question is whether or not in addition to people with religious objections to joining not any union but a particular union, a man should be entitled to advance conscientious objections which are both reasonable and otherwise than religious. The noble Lord has Donovan against him, because I followed Donovan exactly, as one noble Lord pointed out—I believe it was the noble Lord, Lord Houghton. He has also got the European Commission on Human Rights against him; and he has the former Labour Party Standing Rules against him. But still he goes on in an obstinate way, saying that people should be dismissed without compensation even if they object on conscientious grounds. I really do not think this is good enough. I think the Government are being pigheaded and unreasonable and are trying to abolish conscience not only in the Labour Party, as the noble Lord, Lord Houghton, pointed out, but also in Parliament. I myself shall vote on my Amendment and invite my noble friends to do so.
Lord ROCHESTER: Like the noble and learned Lord, Lord Hailsham, I can-
not pretend to be satisfied with what the noble Lord, Lord Jacques, has had to say to us. We continue to feel that people with conscientious as opposed to simply religious objection should have a statutory right to compensation for unfair dismissal. I am in a little more difficulty than the noble and learned Lord, Lord Hailsham. I continue to feel that our Amendment is —I shall not say vastly superior to his. as I am too modest for that, but marginally so. I am also, however, an accommodating fellow and, since it is not likely that he will fall in with our Amendment, and since my noble friends and I feel it is of great importance that some Amendment concerning this word "conscience" should go forward from this House, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Lord HAILSHAM of SAINT MARYLEBONE: I beg to move Amendment No. 10.
Amendment moved—
Page 3, line 4, at end insert (" and after the word " belief " there shall be inserted the words "or reasonable grounds of conscience"").— (Lord Hailsham of Saint Marylebone.)
9.15 p.m.
On Question, Whether the said Amendment (No. 10) shall be agreed to?
Their Lordships divided: Contents, 62; Not-Contents, 55.

CONTENTS

Aberdare, L.

Elton, L.

Orr-Ewing, L.

Alexander of Tunis, E.

Emmet of Amberley, B.

Reigate, L.

Allan of Kilmahew, L.

Exeter, M.

Robbins, L.

Auckland, L.

Ferrers, E.

Rochester, L. [Teller.]

Beaumont of Whitley, L.

Glasgow, E.

Ruthven of Freeland, Ly.

Belstead, L.

Glenkinglas, L.

St. Davids, V.

Berkeley, B.

Gridley, L.

St. Helens, L.

Brooke of Cumnor, L.

Hailsham of Saint Marylebone,

St. Just, L.

Brougham and Vaux, L.

L.

Sandys, L.

Byers, L.

Hankey, L.

Seear, B.

Campbell of Croy, L.

Hood, V.

Selkirk, E.

Cathcart, E.

Hornsby-Smith, B.

Strathclyde, L.

Chelwood, L.

Killearn, L.

Strathcona and Mount Royal,

Cork and Orrery, E.

Long, V.

L.

Courtown, E.

Lucas of Chilworth, L.

Templemore, L.

Cowley, E.

Lyell, L.

Terrington, L.

Cullen of Ashbourne, L.

Mansfield, E.

Tranmire, L.

Davidson, V.

Monck, V.

Vickers, B.

Denham, L. [Teller.]

Mowbray and Stourton, L.

Vivian, L.

Digby, L.

Newall, L.

Ward of North Tyneside, B.

Drumalbyn, L.

Northchurch, B.

Young, B.

Eccles, V.

NOT-CONTENTS

Allen of Fallowfield, L.

Fisher of Camden, L.

Maelor, L.

Ardwick, L.

Gaitskell, B.

Melchett, L.

Arwyn, L.

Gardiner, L.

Milner of Leeds, L.

Bacon, B.

Gordon-Walker, L.

Morris of Kenwood, L.

Balogh, L.

Goronwy-Roberts, L.

Paget of Northampton, L.

Beswick, L.

Greene of Harrow Weald, L.

Pannell, L.

Birk, B.

Greenwood of Rossendale, L.

Ritchie-Calder, L.

Blyton, L.

Hale, L.

Rusholme, L.

Brockway, L.

Harris of Greenwich, L.

Serota, B.

Bruce of Donington, L.

Henderson, L.

Shepherd, L. (L. Privy Seal)

Castle, L.

Houghton of Sowerby, L.

Snow, L.

Champion, L.

Hughes, L.

Stewart of Alvechurch, B.

Cooper of Stockton Heath, L.

Jacques, L.

Strabolgi, L. [Teller.]

Crowther-Hunt, L.

Kissin, L.

Taylor of Mansfield, L.

Darwen, L.

Lee of Newton, L.

Wallace of Coslany, L.

Davies of Leek, L.

Llewelyn-Davies of Hastoe, B.

Wells-Pestell, L.

Douglass of Cleveland, L.

[Teller.]

Wilson of Radcliffe, L.

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

Lovell-Davis, L.

Wynne-Jones, L.

Evans of Hungershall, L.

Lyons of Brighton, L.

Moved accordingly, and, on Question, Motion agreed to.

Resolved in the affirmative and Amendment agreed to accordingly.
Lord STRABOLGI: It may be for the convenience of the Committee if we now adjourn the Committee stage. Therefore I beg to move that this House do now resume.
Lord HAILSHAM of SAINT MARYLEBONE: I concur. In the last Division I voted on my conscience, not on my religious beliefs!
House resumed.

BARONY OF ARCHIBALD
The Lord Chancellor acquainted the House, That he had received from George Christopher Archibald an Instrument of Disclaimer of the Barony of Archibald, delivered in accordance with Section 1 of the Peerage Act 1963.
  BRITISH RESIDENTS ABROAD AND VOTING RIGHTS
  BRITISH RESIDENTS ABROAD AND VOTING RIGHTS
  H.M. PRISONS: SEGREGATION UNITS
  H.M. PRISONS: SEGREGATION UNITS
  PREVENTION OF POLLUTION AT SEA CONVENTIONS
  PREVENTION OF POLLUTION AT SEA CONVENTIONS
  GERMAN DEMOCRATIC REPUBLIC
  GERMAN DEMOCRATIC REPUBLIC
  SPAIN
  SPAIN
  UNION OF SOVIET SOCIALIST REPUBLICS
  UNION OF SOVIET SOCIALIST REPUBLICS