Sitting of 3 November 1976

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

    Local Authorities (Staffing)
    Mr. Speaker: Mr. Graham Page.
    Mr. Graham Page: Is the Minister aware that in the Conservative-controlled—
    Mr. Speaker: Order. Does the right hon. Gentleman intend to wait for the answer before asking his supplementary question?
    Mr. Graham Page, to ask Question No. 1.
    Mr. Graham Pageasked the Secretary of State for the Environment what recent advice he has given to local authorities on staffing.
    The Secretary of State for the Environment (Mr. Peter Shore): I congratulate the right hon. Gentleman on opening Question Time on such an agreeable note.
    Following my Department's Circular 84/76 issued in August about local authority expenditure in 1976–78, I met the local authority associations at the consultative council on 20th October. I made it clear to them that, while it was essential to reappraise manpower needs to conform with the provision for local authority expenditure in the financial years 1976–77 and 1977–78, it should be possible to achieve the savings required very largely by natural wastage rather than redundancies.
    Mr. Page: Since I was fairly sure what the answer would be, Mr. Speaker, may I now ask the Secretary of State whether he is aware that the Conservative-controlled
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    Sefton Metropolitan Borough Council, in whose area my constituency lies, has managed, since reorganisation, to employ less staff than were employed before reorganisation by the former boroughs which comprise the new borough?
    Has not the Secretary of State been rather slow to use the persuasive and many other powers which he has to stop local authorities using reorganisation as an excuse for swollen local bureaucracy and to ask them to emulate the very good example of my own borough?
    Mr. Shore: I can well understand the right hon. Gentleman's sensitivity about charges that reorganisation might have led to growth in the number of local authority employees. After all, he played a very prominent part in setting up the present structure of local government. I do not think that anyone other than the authors of reorganisation would absolve the reorganised local authorities from the charge that, whatever else their virtues may be, there has been a very great increase in staff employed. Sefton is probably an exception to the rule, if what the right hon. Gentleman said is true, as I am sure it is. It is not the general experience.
    In approaching local authorities, we have urged upon them the need to look very carefully at their manpower needs and, above all, to conform to the figures for total local government expenditure laid down in the February White Paper.
    Mr. Madden: Is not the reluctance of the Opposition to listen to advice on this matter a clear indication that the reorganisation of local government led to an inevitable increase in staff? Will my right hon. Friend give some indication of the growth since reorganisation in the number of those who administer the services as opposed to those who deliver them?
    Will my right hon. Friend confirm that standards will not be allowed to deteriorate because of synthetic attacks by the Opposition on staffing levels, and that it is most important to maintain public expenditure—[Interruption]—in order to maintain services which are of importance?
    Mr. Speaker: There is no sense in the length of some of the supplementary questions. I appeal to hon. Members who

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    are now shouting to be brief with their own supplementary questions—if they are lucky enough to be called.
    Mr. Shore: It is undoubtedly true that there has been a considerable growth—of the order of 4 per cent. per annum—in local government manpower since reorganisation. In the last year, however, it has been slowed down. Indeed, the last figures we have for local government employment show that the growth was under 1 per cent. in the year up to June 1976. I would expect that there will be a standstill situation by the end of this year.
    It is, of course, important to maintain standards—I think we are all deeply aware of that—but I believe that much can be done by a better deployment of existing resources than has at present been achieved.
    Mr. Raison: The Secretary of State accepts, I think, that Government policy will entail some redundancies in local government next year. Is he able to give us any idea how many redundancies there are likely to be as a result of Government action? Will he also give us an assurance that where local authorities are forced to implement redundancies they will have his backing?
    Mr. Shore: It would, of course, be wrong for me to say that no redundancies will arise. I do not think that any Secretary of State could have given such an assurance at any time in relation to local authorities. I do say, however, that redundancies should be exceptional and local, as the savings required overall—that is, nationally—should be capable of being contained within the margins of natural wastage of staff.

    Council Housing Standards
    Mr. Penhaligonasked the Secretary of State for the Environment if he is satisfied with the building standards applied in local authority house building.
    The Minister for Housing and Construction (Mr. Reginald Freeson): Yes, Sir.
    Mr. Penhaligon: I thank the Minister for that detailed answer. Will he comment on the assertion made by some people that about £50 million a year could be saved if the standards used for
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    building council houses were those of the NHBC instead of Parker Morris, or the alternative assertion that we could build 25,000 more houses a year for the same money?
    Mr. Freeson: I do not know where those assertions are made, and I should be interested to receive more detailed submissions. I would study them with great interest. I know that schemes have been introduced by local authorities for building for sale, with our support, at different standards than Parker Morris which have resulted in savings. But they have been savings well below what has been broadly claimed for these schemes where they have been changed from Parker Morris to somewhat different standards operated in the private sector.
    As for the possibility of building more homes from the same resources, although I should be interested to hear further details of the figures quoted by the hon. Gentleman, I prefer at present to press for greater efficiency on building sites. The loss of material in building site work is such that 13,000 dwellings-worth of material is being lost each year.
    Mr. Skinner: Does my right hon. Friend agree that, quite apart from the principle of not lowering standards on public sector building, it would produce a strange anomaly in that we could have a situation where prospective Liberal candidates were running around these second-class housing estates playing at community politics in order to get on local councils?
    Mr. Freeson: I cannot speak for the Liberal Party. On a suitable occasion I have no doubt that Liberal Party Members will speak for themselves. There is no intention on our part to reduce standards. However, there is scope for looking at greater flexibility in the use of basic standards in the public sector. That we are prepared to do and are doing.

    Housing (Co-ordination)
    Mr. Beithasked the Secretary of State for the Environment if he is satisfied with the degree of co-ordination between his Department and local authorities on housing matters.
    Mr. Shore: We continue to have close contact with local housing authorities. But, as I have indicated before, I am

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    seeking a new relationship with housing authorities which, within firm capital budgets, would allow them greater freedom to tailor their housing investment programmes to local needs.
    Mr. Beith: Do the present closer contacts make the Secretary of State realise that many rural local authorities do not think that they will be able to meet the obligation to be placed upon them under the tied cottage legislation without some relaxation of the restrictions on the treatment of stress areas? Why is his Department being so obstructive with those local authorities, like Alnwick district, for example, which want to buy just a few privately-built unoccupied houses to meet urgent housing needs?
    Mr. Shore: I cannot answer the hon. Gentleman's question about Alnwick District Council off the cuff. However, on the broader question of the tied cottage legislation, this matter was thoroughly debated in the House, and if there is an opportunity it can be debated further. Our general view—it was not simply a Department of the Environment view but arose out of consultation with local authorities—was that the new obligation could be met by local authorities out of their existing programmes.
    Mr. Ronald Atkins: Is my right hon. Friend satisfied that there is sufficient co-ordination between the different parts of his Department when dealing with the same authority—for instance, when one part of his Department tells a local authority that it can demolish a housing area and when another part of it refuses to give permission to rebuild?
    Mr. Shore: If my hon. Friend will give me details of his illustration, as he sees it, of contrary policies emanating from the same Department, I shall be pleased to look into them and see whether I can reconcile them.

    Labour-only Sub-contractors
    Mr. Ridleyasked the Secretary of State for the Environment if he will issue a circular to local authorities requesting them not to issue tender documents for contracts which seek to exclude the employment of labour-only sub-contractors by the main contractor.
    Mr. Freeson: No, Sir.
    Mr. Ridley: Why not? When will this Government realise that the efficiency of the building industry should come before encouragement giving the Trotskyites and Communists the power to cheat decent working people of their livings?
    Mr. Freeson: I am not sure whether I should rise to that bait or even answer the hon. Gentleman's supplementary question. But it is far from the truth to suggest that the great growth in "lump" labour which occurred a few years ago contributed to greater efficiency in the building industry.
    Mr. Ridley: But it did.
    Mr. Spriggs: Is my right hon. Friend aware that the worst examples of jerry-building to be found in the country are in the private building sector?
    Mr. Skinner: John Poulson did a few.
    Mr. Freeson: Certainly over decades past we have had experience of jerry-building which we should seek to do our best to avoid. It is not for me to say that it is operating on the same scale as was the case in past decades. I do not think that it is. But there is a need to tighten up efficiency and the quality of work in the building industry. To advocate a return to massive "lump" labour employment in the industry, as the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) does, would act against such a policy.

    Windscale (Nuclear Reprocessing)
    Mr. Formanasked the Secretary of State for the Environment whether he will call in the planning application submitted by British Nuclear Fuels Ltd. for the expansion of its nuclear reprocessing facilities at Windscale.
    Mr. Shore: I understand that the planning committee of the Cumbria County Council decided yesterday that it was minded to approve, subject to agreement of appropriate conditions, the planning application, but that the application should first be referred to me as a departure from the development plan. I will decide what action to take when I have studied its representations.
    Mr. Forman: Whatever action the Secretary of State decides to take, will he undertake now to make a detailed

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    statement to the House about this matter within the next 21 days and give special consideration to the idea of calling in that part of the application relating to oxide fuel reprocessing, which is the most sensitive aspect of the expansion plans of BNFL and which has caused most concern not only in the Royal Commission reports on environmental pollution but also among local residents?
    Mr. Shore: I think that I should wait until I receive the observations in the letter from the Cumbria County Council which, I understand, is on its way to me now, and, of course, I shall consider reporting to the House on any decision that I make.
    Mr. David Steel: Will the right hon. Gentleman explain why he did not call in this application in the first place since the implications of the decision go far beyond the interests of Cumbria alone? Will he give a more firm undertaking to report to the House on the matter and not merely consider reporting?
    Mr. Shore: I am quite willing to give that assurance. I will report to the House. I had to consider this, and I did. I considered it under two separate responsibilities—that is to say, as the Minister concerned with planning and planning applications, and also in my other role as guardian of the Nuclear Installations Act 1965, in which I have a quite separate responsibility to satisfy myself about the safety of the disposal of nuclear wastes. I can assure the House that I shall exercise that responsibility to the full.
    Mr. Robin F. Cook: Has my right hon. Friend seen the statement by the Chairman of Cumbria County Council yesterday that a local planning authority is not competent to judge the safety standards of pollution or the security of fissile material? In view of this, and since the matters raise concern well beyond Cumbria, will he accept the view of the Town and Country Planning Association that the planning of these matters should be undertaken at a national rather than at a local level?
    Mr. Shore: The safety considerations are those which most concern people who have urged me and the county council either to refuse or to call in the
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    application. But I must point out that not only have I myself the responsibilities which I mentioned under the Nuclear Installations Act 1965 but that there is a further separate responsibility for nuclear installations of all kinds which falls upon my right hon. Friend the Secretary of State for Energy. These responsibilities are exercised with very great care over every stage of the construction of nuclear power stations and nuclear-associated facilities.
    Mr. Thompson: When he is taking his decision, will the right hon. Gentleman bear in mind the rising tide of public opinion in the Solway area against the concentration in the area of so many of the country's dangerous nuclear industries?
    Mr. Shore: Obviously a number of people have written to me, and there was a public meeting in Cumbria itself during which these matters were thrashed out and discussed by all the local interests involved. But it is only fair and proper to say that the overwhelming opinion at the public meeting, which was well advertised before being held, was in favour of going ahead with the project and expressed considerable confidence in the safety procedures.

    Rate Support Grant
    Mr. MacGregorasked the Secretary of State for the Environment whether he has completed his negotiations for the rate support grant settlement for next year; and if he will make a statement.
    Mr. Shore: No. I will make a statement as soon as the negotiations are completed.
    Mr. MacGregor: Can the Secretary of State bring the House up to date on the figures for local authority overspending this year? What does he intend to do about this in the grant next year? Does he realise that any reduction in the rate support grant next year in real terms will mean redundancies in local authority staffs? Will he, in fairness to the staffs, ensure that there is no further switch, as has been the practice over the last two years, from the fast-growing country areas to the depopulated inner urban areas?
    Mr. Shore: I cannot give any assurance one way or the other on the particular formula which I will adopt for

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    distribution of the grant. I have made it my business to listen very carefully to spokesmen from different local authority associations about their different interests.
    The overspending situation has improved. A few months ago when we talked about overspending we were talking about £400 million; now we are talking in terms of £150 million to £200 million. While it is right that this over-spend should not continue into 1977–78—and I intend to see that it does not—I do not accept that the necessary economies which need to be made will involve the redundancies to which the hon. Member has referred.
    Mr. Hardy: Does my right hon. Friend agree that when he makes the statement it will not be as outrageously and disgracefully inaccurate as the last rate support grant statement made by the Conservatives on 22nd January 1974? Will he remind the House of the outrageous inaccuracies stated on that occasion?
    Mr. Shore: I am grateful to my hon. Friend. I have not delved into the history of the ill-doings of my predecessors but, now that my hon. Friend has invited me to do so, I will.
    Mr. Graham Page: I completely deny what the hon. Member for Rother Valley (Mr. Hardy) has said. Has the Secretary of State considered new procedures in settling the rate support grant so that in future it can be settled long before the last week in November? Great inconvenience has been caused to local authorities through this procedure which has been adopted by Governments over many years. So that local authorities will know what they can get much earlier in the year, will he consider a change?
    Mr. Shore: I think that for a number of years November has been accepted as the month in which the settlement should be made. However, I am willing to hear representations on matters of this kind to see whether things can be made easier for local authorities, which have to budget ahead and obviously would welcome as much time as possible.
    Mr. Speed: As the Secretary of State has had meetings with the TUC on this matter, will he also meet Members of this House, members of the CBI and representatives of ratepayers' action groups?
    Mr. Shore: I have never cut myself off from hon. Members who wish to see me. As we approach the rate support grant determination, however, the physical ability of Ministers to see the very many different groups who have a legitimate interest is limited.

    Horse Guards Parade (Parking Permits)
    Sir J. Langford-Holtasked the Secretary of State for the Environment by what percentage the number of passes issued for parking on the Horse Guards Parade has increased or decreased since October 1974.
    The Minister of State, Department of the Environment (Mr. Denis Howell): The number of passes issued has increased by approximately 6 per cent.
    Sir J. Langford-Holt: Does the Minister feel that he is fulfilling his duties in protecting the environment by allowing such an annual increase in the number of these passes issued to privileged people parking in what is, after all, a public place? What categories of people are entitled to park free of charge on Horse Guards Parade?
    Mr. Howell: The 6 per cent. to which I referred was in the year for which the hon. Gentleman asked; it is not an annual increase. Some of the passes have gone to departmental staff who are increasingly required to work outside the hours when public transport is available. Also, some of the increase is due to the fact that we have had to accommodate the temporary closure of the old Admiralty car park while an emergency power station is being erected in the Vicinity. That will be completed in August 1978, and a substantial number of the passes for Horse Guards Parade will then cease.
    Mr. Lipton: Is my right hon. Friend suggesting that these people with parking passes are working such anti-social hours that it is impossible for them to use public transport? Is it still Government policy to dissuade people from bringing private cars into central London?
    Mr. Howell: The answer to the first part of my hon. Friend's question is "Yes". These are the people who work for Ministers of the Government, and it is because they are required to work

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    the anti-social hours which we in this House inflict on them and ourselves that this situation has arisen.

    Housing Finance Review
    Sir George Youngasked the Secretary of State for the Environment when he expects to publish his Department's housing finance review.
    Mr. Shore: I hope that the review will be completed by the end of the year.
    Sir G. Young: Pending the much-delayed publication of the review, will the Secretary of State tell the House that the call at the Labour Party Conference for a total freeze on council house rents is totally unrealistic, given the economic crisis and the need to reduce indiscriminate subsidies?
    Mr. Shore: No doubt the hon. Gentleman follows my party conference as closely as I do. But I was there, and I do not recall any resolution calling for a total freeze on council house rents in the coming year. If there had been such a call, I would have said that it was not one which this Government could accept.
    Mr. Richard Wainwright: Will the Secretary of State undertake to seek comments from local authorities which have had successful experience in building houses for sale to people who might otherwise have sought council tenancies, with considerable financial benefits to capital and revenue accounts resulting from this policy?
    Mr. Shore: I have no objection at all to councils building houses for sale, but we have found that there are not very many councils which have so far operated this policy.

    Listed Buildings
    Mr. Adleyasked the Secretary of State for the Environment if it is his intention to vary the General Development Order in such a manner as to remove from local authorities the need for them to notify his Department of any planned changes to the existing state of listed buildings, other than grade I or grade II.
    The Under-Secretary of State for the Environment (Mr. Guy Barnett): Yes, Sir. I intend to make an amendment to the General Development Order when a suitable opportunity arises.
    Mr. Adley: Is the Minister aware that that will be bad news to many people who regard these listed buildings as a vital part of the historic fabric of our towns, cities and countryside? Will he consider, in the light of what he has said, making notifiable to amenity societies any proposed planning changes which are not to be notified to his Department? That would avoid the unacceptable planning by-products that will result from what he has just announced, such as the unacceptable disfigurements from supermarket developments which we have had over the years.
    Mr. Barnett: This change does not in any way diminish the degree of listed building control. The change has already occurred in one place, in a direction which has only recently required planning authorities to notify the Secretary of State of all grade II buildings. The reason for the change was that there was a considerable waste of staff time in the Department of the Environment, as was evidenced by the fact that 11,000 of these applications came before the Department in two years but only seven were called in. I would welcome the need for amenity societies to be made aware by the local planning authority. The best chance we have of preserving these buildings is to encourage active public participation.
    Mr. Newens: Does my hon. Friend accept that not all local authorities are equally concerned about the preservation of historic and architectural merit? Therefore, it is vital that the Government, at central level, should continue to take a firm stand in defence of listed buildings.
    Mr. Barnett: This must be a locally determined matter. It is impossible for the Government to have a close interest in every listed building in the country. When it is obvious that the planning committee of a particular local authority does not take enough interest in listed buildings, the local amenity societies do, and they maintain a check on this.
    Mr. Marten: When a grade II building is burned to the ground, does the local authority have the power to say that it need not be rebuilt, particularly in present economic circumstances?
    Mr. Barnett: I cannot answer that without notice.

    Council House Building
    Mr. Ovendenasked the Secretary of State for the Environment what is his latest estimate of the number of public sector housing starts for 1976; and what is his policy towards the level in future years.
    Mr. Shore: Starts and completions in the public sector are likely to be higher this year than last, when they were 174,000 and 162,000 respectively. In 1977, starts will be lower but completions are again expected to exceed the 1975 figure.
    Mr. Ovenden: Will my right hon. Friend confirm that the likely level of future starts by English local authorities will be around 100,000 a year in future years? Is he aware that that figure is only three-quarters of the level achieved by the Labour Government of 1966 to 1970? Is he aware that in many quarters of the Labour Party there is concern that the Government are abandoning their commitment to maintaining a house-building programme which was an essential feature of their first two years of office?
    Mr. Shore: I accept that the starts will be lower next year than they have been in 1975–76. There is no point in disguising that, and I would not dream of doing so. But there is a contrast between the Labour Governments of 1964 to 1970 and this one. Under the earlier Governments there was a massive emphasis on new building. The emphasis now is on rehabilitation and improvement as well as on new building.
    Mr. Michael Latham: In view of the broad hints given by the Chancellor of the Exchequer to the Labour Party economic committee yesterday, may I ask whether the Secretary of State expects to get beyond Christmas without having to announce further cuts in the public housing programme?
    Mr. Shore: The hon. Gentleman has the advantage of me. I found myself rather heavily engaged on other matters this morning and, therefore, I have not read what my right hon. Friend the Chancellor said.
    Mr. Heffer: Is my right hon. Friend aware that in Liverpool the local Labour-controlled authority is faced with the Liberals and Conservatives combining to stop the development of local authority housing because of an argument about the sale in the past of council housing? Will he look into this and ensure that the local authority is given support?
    Mr. Shore: I included Liverpool in the stress areas. By definition, therefore, it is an area in which we judge new house building to be clearly required. I do not know of the obstacles that my hon. Friend has mentioned in terms of the disagreements within the council, but if it is appropriate for me to intervene in a helpful way I shall consider doing so.
    Mr. Raison: Will the right hon. Gentleman tell the hon. Member for Gravesend (Mr. Ovenden) that the figure of 100,000, which he quoted for starts in England next year, is too high? Will he confirm that the Government's own figure is about 85,000?
    Mr. Shore: I think that the hon. Gentleman is nearly right on starts. We have said that on average we expect to achieve 100,000 per year over the two years. This year the figure looks as thought it will exceed 100,000—it could run to 110,000. This would mean, therefore, that there would be proportionately fewer starts next year. The figure could be 90,000, but it would depend upon the balance between the two years.
    Mr. Stephen Ross: Will the Secretary of State take on board the earlier questions about co-operation between local authorities and private house builders? Is he aware that this is one way of surmounting the inevitable shortfall which lies ahead? Is it not important for local authorities and private builders to get together to build houses in the lower price range, and should not greater encouragement be given to housing societies which can renovate older types of properties more cheaply?
    Mr. Shore: If it would help to sustain the house-building programme within the inevitable constraint on public expenditure, we should be anxious to look at any suggestions, including those of the hon. Gentleman.

    Rent Officers
    Mr. Russell Johnstonasked the Secretary of State for the Environment what will be the future rôle of rent officers.
    Mr. Freeson: The method of fixing fair rents, for which rent officers are responsible, is one of the matters to be examined in the review of the Rent Acts now being undertaken.
    Mr. Johnston: In view of the valuable work that rent officers have done and the expertise they have accumulated, will the right hon. Gentleman consider extending their activities to advising local authorities, since there are considerable fluctuations in rent levels for the same accommodation between different authorities?
    Mr. Freeson: There is no reason why local authorities should not consult whomever they wish on a normal type of informal basis to help them come to a view about the deployment of rents in their areas. I shall consider whether there is a need to examine this matter in the context of the Rent Acts review, but I should not have thought that there was.
    Mr. Evelyn King: Are not unfurnished houses valued on a net rateable value basis by the district valuation officer? What is the point of having two separate officials valuing the same house? What additional function do rent officers perform, if rents are to be controlled, which could not be better carried out on the basis of the NRV?
    Mr. Freeson: I recall extensive arguments on that and related points when the 1965 Rent Act was passing through the House. Arguments were presented and conclusions reached against that approach. At this stage I can say only that all such views and representations will be considered as part of the Rent Acts review. If the hon. Gentleman wishes to make a submission, we will consider it appropriately.
    Mr. George Cunningham: Is not the difference between a valuation officer and a rent officer that, among other things, a rent officer goes to the place and sees the premises whereas a valuation officer goes nowhere near them?
    Mr. Freeson: I am not sure that I should risk being drawn too far down that
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    road. In general, however, I believe that my hon. Friend is right. It would be physically impossible for the valuation officer to visit every house, but that is inevitably a part of the rent officer's duties when he is dealing with individual applications for changes in rent.
    Mr. Rossi: Has the Minister given further thought to the anomaly that exists which depends on whether the landlord is resident? In one case the tenant goes to the rent officer and in the other he goes to a rent tribunal. Similarly, in one case he gets awarded a fair rent and in the other he gets a reasonable rent. This is an unsatisfactory arrangement. Does it imply the eventual phasing out of rent officers or rent tribunals?
    Mr. Freeson: I do not know what the word "this" refers to. We have undertaken a review of the Rent Acts. The point that the hon. Gentleman raises was raised during the deliberations of the Francis Committee when the merging of the two services was considered. It is not impossible to consider this matter as part of the review, but it is not for me to say today what conclusions might be reached in the review.

    Council Housing Programme (Social Effects)
    Mr. Hoosonasked the Secretary of State for the Environment if he is satisfied with the social consequences of the current council house-building programme.
    Mr. Freeson: During 1974–76 a total of 416,000 dwellings were or will have been started by local authorities, new towns and housing associations, so that by the end of 1977 approximately 430,000 dwellings will have been completed. Thus about 1·3 million people have been or will be housed in good-quality publicly-owned dwellings in the period 1975 to 1977.
    Mr. Hooson: Does not the Minister consider it socially desirable to bring up the younger generations to be owner-occupiers? Is not one of the ways of doing that for councils to be encouraged to build new dwellings for sale and to maintain most of their existing stock for letting?
    Mr. Freeson: I find this concerted campaign of questions from the Liberals on

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    this matter most interesting. However, they come about 18 months—or perhaps even more—too late. I refer them not only to the various speeches and statements by myself and my hon. Friends in the Department but to the policy circular "Housing Needs and Action" which we issued and which covered precisely the sort of points which are being made by the Liberals today.
    Mr. Ovenden: Is my right hon. Friend aware of the serious social consequences which could develop from the future decline in the council house-building programme? What answer does he intend to give to Shelter, which has criticised the singling out of so-called stress areas on the ground that there is an acute shortage of rented accommodation in all areas of the country?
    Mr. Freeson: I do not wish to get involved in a detailed discussion of the Shelter statement except to say that I accept parts of it but that it would be wrong for me to accept it in full or generally. My hon. Friend is quite right. If there is a reduction in house building in areas of shortage or where there are large numbers of properties to be cleared rather than rehabilitated, it means that people will be continuing to live in conditions in which they should not be expected to live.
    However, the Government have to act within the prevailing economic circumstances, and housing could not escape unscathed from the recent review of public expenditure. I repeat what my right hon. Friend said earlier. We shall do our best to protect housing programmes—whether new building, rehabilitation or housing association programmes—in the areas most hard hit, the priority stress areas. We shall be developing and refining this policy in the housing policy review which we are now carrying out.
    Mr. Arthur Jones: Does the right hon. Gentleman see in his proposals for extending the work of direct labour departments a significant contribution to the effective use of labour resources in the industry? What criteria has he for the operation of direct labour departments?
    Mr. Freeson: The answer to the first part of the hon. Gentleman's question is "Yes". I wish to see an expansion of efficient direct labour organisations. The
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    answer to the second part of the question will be put before the House when we introduce legislation on this matter not too long from now.

    New Towns
    Mr. Newensasked the Secretary of State for the Environment if he will make a statement on the future development of new towns, in the light of current housing needs.
    Mr. Shore: No, Sir. I shall report to the House as soon as the review of future policy on dispersal is completed.
    Mr. Newens: Is my right hon. Friend aware that many of us who were born in inner city areas welcome the Government's intention to pay more attention to those areas in future? However, will he also reassure some of us who are concerned with new towns that there will be no diversion of resources from them as this would lead to a lengthening of housing waiting lists for second-generation and other applicants which many of us would feel bound to oppose very strongly?
    Mr. Shore: I welcome what my hon. Friend, as one who was born in an inner city area, has said about the new stress we are putting on helping those areas. As to the future role of new towns, we are proceeding with the review and I hope that we shall be able to complete it and make an announcement at an early date.
    Mrs. Kellett-Bowman: Is the right hon. Gentleman aware that there is a growing feeling in my part of Lancashire that the Central Lancashire New Town is no longer required and that, if it is proceeded with, it will have a very adverse effect on other, older parts of the county on which any available money could be very much better spent?
    Mr. Shore: I note what the hon. Lady says. She will probably know that the outline plan decision on the CLNT is before me. I hope to come to a conclusion on it as soon as possible.

    Water Resources (North-West England)
    Mr. Peter Morrisonasked the Secretary of State for the Environment what plans he has for the further integration

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    of water resources in North-West England.
    Mr. Denis Howell: The North-West Water Authority has executive responsibility for the management of all water resources in its area and I have no plans at present to make any change in these arrangements.
    Mr. Morrison: Is the right hon. Gentleman aware that any attempt to nationalise the Chester Waterworks Company would not be welcomed by my constituents? In the event of his doing so, by how much does he estimate that the cost of water would increase?
    Mr. Howell: When I make a statement shortly on the future of water supplies, the second part of the hon. Gentleman's question might be relevant. Most of the operations of the company to which he refers are not in the North-West Water Authority's area but in the area of the Welsh National Water Development Authority. Many of us have noted in this dry summer that the exclusion of private companies from the water industry as a whole has been regrettable.
    Mr. Wigley: The right hon. Gentleman has referred to resources in Wales which serve North-West England. Is he aware that water from Wales for industry in the North-West is sold at about half the price at which it is available in Wales and that water taken from Wales by the North-West authorities is sold back to Wales at a much higher price? Does he not agree that it would be equitable for Wales to have more benefit from its resources?
    Mr. Howell: I am well aware of the fact that in this dry summer the Welsh people have had cause to be grateful for the large-scale investment by Lancashire, Liverpool and the Midlands in establishing water industries in Wales. If we had not had those resources available to us, we might have been in an extremely difficult situation.
    The undertakings which were built by municipal authorities—what might be termed municipal Socialism—have brought tremendous benefits in rateable value and employment to the areas concerned.
    Mr. Heffer: Is my right hon. Friend aware that, although I realise that there is an advantage to Merseyside under the present arrangements, hon. Members from Wales have a point? Will he look at the matters which our Welsh colleagues have raised?
    Mr. Howell: I am not quite sure what point my hon. Friend thinks that our Welsh colleagues have. There is a discrepancy about charges, but the Government's proposals for a degree of equalisation will considerably assist in that direction and will be forthcoming in the not too distant future.
    Mr. Speed: How can the right hon. Gentleman justify the extraordinary slur on water companies contained in his reply to my hon. Friend the Member for City of Chester (Mr. Morrison)? Has he one scrap of evidence to show that they have failed in their duties? Is he aware that I consider that the 28 water companies have done as well as, if not better than, the regional water authorities?
    Mr. Howell: I made no slur on the companies. I observed that at a time of national water shortage the policy of excluding private companies from the totality of available water resources has turned out to be nonsense.

    Housing Expenditure
    Mr. Douglas-Mannasked the Secretary of State for the Environment whether he is satisfied that the present distribution of public expenditure on housing as between subsidies and investment or improvement is the most effective in order to relieve housing needs and sustain employment in the construction industry.
    Mr. Shore: No, Sir.
    Mr. Douglas-Mann: I welcome that brief reply, but will my right hon. Friend bear in mind that in the last seven or eight years we have been spending two and a half or three times as much on investment in new building and improvements as we have on subsidising mortgages and council rents? Even accepting the current restraints on public expenditure, does he not consider that we could achieve better results? Does he agree that we are effectively subsidising those who have satisfactory housing at the expense of those who desperately

    1401
    need it and those who work in the industry which could supply it?
    Mr. Shore: We have to accept that we are operating on a very tight budget for housing expenditure, and we must therefore try to get the best results within that budget. I would not say that I think that the right distribution has been achieved between subsidies and investment, new building, modernisation and other work. However, there is an additional problem. It is not just a matter of the best possible housing policy. Housing and rent policy must play a part in the broader counter-inflation policy.
    Mr. Rossi: In simple language, does that answer mean that council rents must inevitably rise if the right hon. Gentleman envisages transferring money from housing subsidies to further investment and improvements?
    Mr. Shore: Council house rents have risen this year and will inevitably rise next year. The question to which we must address ourselves is whether, in the context of the counter-inflation policy, the rise is to be one which can be borne by council tenants or one which will be unacceptably high. We have to make a judgment on that matter.
    Mr. Skinner: Why should council house rents rise and why should it be planned that housing subsidies be cut, relatively speaking, at a time when the Government found it possible to have £70 million transferred for the use of the Slater Walker debacle that took place in November 1975?
    Mr. Shore: I assure my hon. Friend that, other things being equal, if I could lay my hands on that £70 million I should like to deploy it in my housing programme. We have to face the fact that the present situation partly reflects the much higher levels of interest rates that have persisted in recent years and the fact that rent income for housing revenue accounts accounts for historically a low part of the total.
    Mr. Dykes: Is the right hon. Gentleman aware that the Minister for Housing and Construction has three times obstinately refused to receive a deputation from Harrow with an ingenious and imaginative idea for a home-purchase scheme that would provide additional topping-up
    1402
    on a mortgage or loan over and above the normal one, which would enable people to buy council houses on a total subsidy element far smaller than the existing subsidy on new buildings?
    Mr. Shore: I am sure that my right hon. Friend will be most receptive to any proposals for topping up loans or anything else which is relevant and helpful to the housing situation. I advise the hon. Gentleman to write to my right hon. Friend on the matter.

    Water Supplies
    Mr. Wyn Robertsasked the Secretary of State for the Environment if he is satisfied with the operation of the Drought Act.
    Mr. Michael Robertsasked the Secretary of State for the Environment if he is satisfied with the advance warning system for anticipation of a water shortage.
    Mr. Denis Howell: Yes, Sir, the Drought Act was of considerable importance in enabling the water industry to meet the unprecedented drought situation. I am satisfied that in conjunction with the water industry we can build on this year's experience to ensure the earliest possible warning of any recurrent water supply problems next year. I shall be making a statement on all these matters very shortly.
    Mr. Wyn Roberts: Is the right hon. Gentleman aware that the procedure involved in making an application for powers under the Drought Act was so long that the Welsh National Water Development Authority was suffering from flooding as opposed to the drought for which it wanted powers to act?
    Mr. Howell: No. I think that that supplementary question shows considerable confusion. Fortunately, some of the many hundreds of orders made under the Drought Act could be made within a matter of days. If they were of a more substantial and permanent character, obviously we could not use the Draconian powers in the Act without giving the owners of property and land a proper opportunity to make representations and the Secretary of State a reasonable time in which to determine the applications. However, I can assure the House that in

    1403
    all cases the process was considerably shorter than is normally the case for such applications.
    Mr. Heffer: Does my right hon. Friend realise that he is regarded by Labour Members, and probably throughout the country, as the most successful Minister we have ever had?
    Mr. Jopling: Does the right hon. Gentleman agree that the emergency arrangements that are now in force to extract extra water from the Lake District have been agreed readily by interests in the Lake District? Is he further aware that once the reservoirs in the Lake District are full, as they are now becoming, there would be the greatest resentment if he were to use his powers to violate the solemn undertakings given by his predecessors to ensure that water is extracted from the area in a way which does not violate the amenities and beauties of the area? It is important that the Minister ensures that the area is not ruined by short-term steps.
    Mr. Howell: I am extremely appreciative of the co-operation we have had from interests within the Lake District in this national emergency, and I pay tribute to it. Now that the temporary situation is over, I entirely agree with the hon. Gentleman that we must take all proper steps to safeguard that magnificent environment, and I certainly intend to do so.
    Mr. Michael Morris: Is the right hon. Gentleman saying that there will definitely be a debate on the Green Paper and the drought report this year? If not, what are the Government being so tardy about?
    Mr. Howell: I am sure that if the Opposition wish to use one of their Supply Days for a debate we shall have a debate. I have promised to make a statement to the House as soon as possible in this Session, and I hope to do so next week. We shall see what the Opposition make of the statement.

    Water Service
    Mr. Durantasked the Secretary of State for the Environment when he proposes to introduce legislation implementing the proposals outlined in his Green Paper on the water service.
    Mr. Shore: The very substantial response to the Green Paper is still being analysed. I look forward to future legislation, but no final decisions on timing have yet been taken.
    Mr. Durant: In future legislation, will the right hon. Gentleman take account of the recent legislation passed by the House on charges to those who are not connected to the sewerage system? Is he aware that that legislation has resulted in a great loss of financial revenue to the water authorities and placed an extra strain on the remaining households?
    Mr. Shore: The recent legislation may have imposed costs directly on the water authorities, but I do not think anyone would doubt that it conferred great benefits on water consumers throughout the country. As for the scope of the legislation which we hope eventually to bring before the House, it is too early for me to comment on the particular proposals being put forward, but we hope that the legislation will strengthen the organisation of the water industry nationally.
    Mr. Hardy: Although it may be unreasonable to demand that general water legislation should be introduced next Session, will my right hon. Friend at least ensure that a small and uncontentious Bill is brought before the House to deal with the severe problem, of which I know his right hon. Friend is aware, concerning those not connected to the main sewers?
    Mr. Shore: I shall consider what my hon. Friend has said, but I think he will realise that the question of the size of the legislative programme is a very difficult one and is more for my right hon. Friend the Leader of the House.
    Mr. Madel: Mention has been made of the Drought Act. Is the right hon. Gentleman aware of the time scale in implementing that Act? Is he aware that the Thames Water Authority applied for restrictions on 18th August but that they were not signed until 13th September? The Anglia Water Authority had equal difficulty. Surely the Minister must look afresh at existing legislation if we are to avoid great difficulties if we have another drought next summer.
    Mr. Shore: I should like notice of the instance that the hon. Gentleman mentioned. General experience has been

    1405
    that the operation of bringing drought orders into effect under entirely new legislation, and at short notice, has been very successful.
    Mr. Urwin: In his dealings with the water service, will my right hon. Friend seek to use his considerable influence to ensure that water authorities are given instructions to purchase British cars for their employees? I had visual evidence this morning of a Japanese Toyota car carrying the insignia of the Thames Water Authority. Bearing in mind the plight of the British motor industry, is it not disgraceful that this situation should be allowed?
    Mr. Shore: I hope that what my hon. Friend has said about the desirability of buying British cars wherever possible will be noted not only by the water authorities but by all those who can exercise decisions in this matter. My hon. Friend gives excellent advice.

    Scotland (Expenditure)
    Mr. Rifkindasked the Secretary of State for the Environment what is the level of expenditure of his Department over the last 12 months in respect of the fulfilment of its responsibilities in Scotland.
    Mr. Denis Howell: Approximately £75 million. Most of this related to the provision of accommodation for Government Departments in Scotland.
    Mr. Rifkind: Does the right hon. Gentleman accept that with the creation of the Department of Transport his Department has virtually no responsibilities left in Scotland? Would it not be more convenient for administrative and other purposes for the Government to consider transferring the remaining functions to the Scottish Office?
    Mr. Howell: That is not a matter for me, but I am sure that when the devolution proposals are considered it will be a matter of great interest and concern to the House as well as to the Government.

    Local Authority Housing (Sale)
    Mr. Cyril Smithasked the Secretary of State for the Environment which authorities have undertaken building-for-sale housing programmes during the last five years; what was the cost to public
    1406
    funds of each programme after sales were completed; what would be the cost of providing rented accommodation on similar scales; what proportion of sales in each case was achieved by way of local authority mortgages; and what proportion of buyers had been local authority tenants immediately prior to purchase.
    Mr. Freeson: Table 13 of "Local Housing Statistics" No. 37 and earlier issues, copies of which are available in the Library, give a breakdown of sales of dwellings owned by each local authority in England and Wales and identify those which were built for sale. I regret that the further information requested by the hon. Gentleman is not readily available.
    Mr. Smith: Is the right hon. Gentleman aware of the happy experience of the Liverpool City Council in building houses for sale? Will he undertake to examine that experience? If he is satisfied that it is a happy one—my right hon. and hon. Friends are so satisfied—will he undertake to advocate it to other local authorities for their consideration?
    Mr. Freeson: One of the troubles with orchestrating the kind of programme of questions that we have had today from the Liberal Bench is that one turns out to be a little precipitate in some of the observations. As I understand it, the houses in question in Liverpool have not yet been built, so one can hardly be happy about it. [Interruption.] Secondly, I would consider it far more important—[Interruption.] I would consider it far more important for the Liberal Member who is interrupting me to speak to his colleagues in Liverpool and explain to us in the Department and to other people why so few houses were built by his Liberal friends in Liverpool last year.
    Mr. Heffer: Does my right hon. Friend accept that the statement made by the hon. Member for Rochdale (Mr. Smith) is utter nonsense? There are 25,000 people on the housing register in Liverpool who need houses to rent. They cannot afford to buy houses. They require those houses because they are living in very serious circumstances. Does my right hon. Friend agree that in Liverpool we need houses to rent rather than houses for sale, and that Liverpool

    1407
    City Council—[HON. MEMBERS: "Speech."]—prior to the accession of the Labour majority, failed to build the houses that were needed by the people?
    Mr. Freeson: My own view, as indicated in policy circulars that we have issued, is that public enterprise must get involved in providing a much greater variety of different kinds of tenure down market than has been the case in the past, whether they be for rent, for co-operative housing or for low-cost housing for sale. What concerns me with regard to Liverpool is my hon. Friend's reference to recent history prior to the last elections. A great deal of paper has been pouring out from the Liverpool City authority in recent years, but very few dwellings indeed, either for rent or for sale.
    Mr. Michael Morris: Is the Minister aware that his reply to the hon. Member for Rochdale (Mr. Smith) was inaccurate? I visited Liverpool during the recess. What the hon. Member for Rochdale says is fact, and as a Minister of the Crown the right hon. Gentleman ought to get his facts straight before he denies the contents of a question.
    Mr. Freeson: I am pleased to hear that the hon. Gentleman has been to Merseyside and Liverpool and has discovered all the happy people who are so satisfied with the building record of the friends of the hon. Member for Rochdale (Mr. Smith). I have met many people who are far from satisfied with the results of that period of office.

MAIL SERVICES (GRUNWICK PROCESSING LABORATORIES LTD.)
Mr. Gorst: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration; namely,
"the actions of the Post Office workers in failing to deliver mail to Grunwick Processing Laboratories Ltd., contrary to the provisions of the Post Office Act 1953."
The matter is important because the General Secretary of the Union of Post Office Workers has today thrown down the gauntlet in a printed statement in today's newspapers, which says,
1408
"The Post Office Act was written many years ago and it has never been tested in relation to sympathetic industrial action. Until it is, as far as our union is concerned, we are going to support these workers."
This is the first time that any illegal action of this sort has occurred, and it should be urgently considered by this House not just because 300 people may lose their jobs the day after tomorrow but because if this action succeeds this time and a small company is put out of business within seven days of the interruption of its mail deliveries, such illegal action will have been shown to work, and it may, therefore, be extended into other fields with far-reaching and serious consequences.
Mr. Speaker: The hon. Member asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration; namely,
"the actions of the Post Office workers in failing to deliver mail to Grunwick Processing Laboratories Ltd., contrary to the provisions of the Post Office Act 1953."
The hon. Member gave me notice that he would be raising this matter. When the hon. Member for Chingford (Mr. Tebbit) made his application yesterday, he did so without warning. I take no exception to that, because his application arose out of exchanges across the Floor of the House.
This is a new application, to which I have given considerable consideration. I am satisfied that the matter raised by the hon. Member is proper to be discussed under Standing Order No. 9. Does the hon. Member have the leave of the House?
The leave of the House having been given—
Mr. Speaker: The motion for the Adjournment of the House will now stand over until the commencement of public business tomorrow, when a debate on the matter will take place for three hours.
Mr. Ridley: On a point of order, Mr. Speaker. May I draw your attention to the fact that in most of today's newspapers there is a story that the business proposed for next Monday is not to take place but that there are to be three short debates on guillotine motions relating to

1409
Lords amendments? Can you advise me how to protect the interests of hon. Members, such that statements about the business of this House are made in the House by the Leader of the House and not made to the Press, so that hon. Members may question the Leader of the House upon his intentions?
Mr. Skinner Mr. Skinner rose—
Mr. Speaker: On the same point of order, Mr. Skinner.
Mr. Skinner: I wonder, Mr. Speaker, whether you would look into the situation when your predecessor dealt with the matter of the last postal strike—[Interruption.]
Mr. Speaker: Order. If the hon. Gentleman is seeking in any way to challenge my ruling—
Mr. Skinner: No, I am asking a question.
Mr. Speaker: Order. I am not prepared to allow the hon. Gentleman to give me advice when I reach decisions of this sort.
Mr. Skinner Mr. Skinner rose—
Mr. Speaker: The hon. Gentleman had better understand that he is not going to advise me on this matter. If he has a point of order unrelated to it, I shall listen. Otherwise, I shall ask the hon. Gentleman to resume his seat.
Mr. Skinner: What I want to do, Mr. Speaker, is to draw to the attention of the House—
Hon. Members: Sit down.
Mr. Speaker: The hon. Gentleman cannot use this opportunity to draw matters to the attention of the House. If he has a point of order for me, he will address it to me now.
Mr. Skinner: Yes, Mr. Speaker, it is a point of order. I wonder whether you would consider the situation regarding the last postal strike, the national strike in 1971—
Mr. Speaker: I must ask the hon. Gentleman to resume his seat.
1410
With regard to the point of order raised by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), the hon. Member knows that that is not a matter for me.

BUSINESS OF THE HOUSE
Mr. Spriggs: On a point of order, Mr. Speaker. From what you have ruled today, it appears that there will be a change of business somewhat tomorrow. As there is to be a debate on transport tomorrow, will you advise the House about the change of business?
Mr. Speaker: All I have done is to say that the first three hours tomorrow will be available for a debate on the matter to which I have referred. No doubt it will be made clear to the House what the business for tomorrow will be—but not by me.
Mr. Lawson: On a point of order, Mr. Speaker. While I fully appreciate that the business of the House is not a point of order for you, may I ask whether, now that the Leader of the House is happily restored to health and is, happily, in the Chamber, it would be in order for him to tell the House whether there has been a change of business for next Monday? May I ask you whether it would be in order for the Leader of the House, if he felt it right, to do that now, as this matter has already appeared in the Press?
Mr. Speaker: That is not a point of order. It is really making a request through me.
Mr. Tebbit Mr. Tebbit rose—
Mr. Speaker: Mr. Tebbit—a genuine point of order?
Mr. Tebbit: Now that you have yourself announced that there will be a change of business tomorrow, Mr. Speaker, perhaps it would be possible for you to allow the Leader of the House to say what is to be the remainder of the business tomorrow?
Mr. Speaker: I have had no such request.

PENSIONS (INCREASE) ACT 1971 (AMENDMENT)
3.40 p.m.
Mr. John Pardoe: I beg to move,
That leave be given to bring in a Bill to amend the Pensions (Increase) Act 1971; and for connected purposes.
As the House is probably by now well aware, the Bill is about public sector pensions. It seeks to amend the Pensions (Increase) Act 1971 by deleting Section 2 and so to restore the situation regarding the upgrading of public service pensions to what it was before that Act was passed.
My Bill does not seek to impose on any Government any one way of dealing with public service pensions, although I shall briefly suggest the choices before the Government. My Bill does not attack public servants. I do not believe that they are idle layabouts. There are 1 million of them—teachers, National Health Service employees, policemen and firemen and many more—all or most of them doing a very good job of work, even though we may question the value of some of the work done by the bureaucrats. Not all of them are well paid. Some employees of the Department of Health and Social Security are paying out to many of their applicants in weekly benefits more than they are taking home in their pay packets.
The Bill is certainly not an attack on public service pensioners. My object in bringing it forward is to bring a little reason and a sense of fair play to bear upon public service pensions.
It is not my intention to blame any one Government or party for the 1971 Act. It was Parliament that made a mistake in 1971, if mistake there was, and I accept my share of responsibility for that. No one foresaw in 1971 that a time would come when prices would rise faster than incomes. It is that fact that has caused the problem and resulted in the need for my Bill.
Before the 1971 Act the situation was that the Government reviewed public service pensions as and when they saw fit. An Act of Parliament was required each time and that meant that Parliament could debate, discuss and decide the issue.
1412
The 1971 Act provided for a two-yearly review of official pensions—
"against any rise there may have been in the cost of living during the review period".
That provision was amended almost immediately afterwards by Section 25 of the Superannuation Act 1972, which provided for an annual review of official pensions.
The result of those two Acts is that official pensions are increased each year on 1st December by an amount equal to the rise in the Index of Retail Prices during the previous 12 months. That is sometimes called indexation because it links pensions to that index. I support the principle of indexation, but it cannot be done for one part of the economy or one section of the community alone, because that leads to distortions in the economy and injustice between one group and another.
This is neither the time nor the place to argue the principle of indexation. I and my Liberal colleagues have for some time been committed to full-scale monetary correction as advocated by the Nobel economics laureate Professor Milton Friedman. Before his time it was advocated by Lord Keynes. To link one section of pensions only, or even pensions and wages, with the index—as was done with the threshold agreement—without linking all other financial contracts with the index is economic lunacy. It is a question of all or nothing with indexation; we cannot go half way.
In the Pensions (Increase) Act 1971, the Government indexed only public service pensions. They hoped—a perfectly reasonable hope at the time—that they would thereby set an example to the private sector. At first, some of the best firms in the private sector took up that challenge and followed the Government's example. But where is the money to come from?
All pension schemes in the private sector are funded from a fund built up from past contributions. Those funds are inevitably eroded by inflation. The fund managers try to keep up by skilful investment, but that has proved impossible for most of them. Some firms top up the funds, but the topping up has to be done out of profits, and the profits are not there to enable that practice to continue, and it cannot be guaranteed.

1413
In a "pay as you go" scheme, in which current pensions are paid for out of current contributions, it may be possible to cope with inflation, but it places an immense burden on the shoulders of the current generation of workers which they may not be prepared to continue to shoulder. In the public sector, the burden of indexation falls on the taxpayer. His shoulders are presumed to be infinitely broad and capable of carrying any darn fool burden anyone likes to lay on them.
What are the results of the 1971 Act? First, public service pensioners have done very much better than have private sector pensioners. That, inevitably, will encourage people to go into the public sector as opposed to the wealth-creating private sector. Over a period that will have disastrous results on the balance between public and private sectors in a mixed economy.
The second result is that many public service pensioners who retired in 1973 now have higher pensions than do people doing the same job in the public sector who retire now. Because of compound percentages, the increase in public service pensions since 1973 is 82·6 per cent. There is almost no one in the private or public sector whose pay has kept up with that.
Thirdly, public sector pensioners have beaten the pay policy. They have gone well ahead of the pay policy and I do not think that the Government will argue that that is a good thing.
So indexation is unfair between the public and private sector pensioners, unfair between public sector pensioners and the whole working population, and unfair between public sector pensioners and public sector employees.
1414
What should the Government do? They might accept the advice of the TUC and Professor Michael Fogarty and index-link all pensions, private and public, but that can be done only by a topping up from the taxpayer. There is no other source for the funds. The taxpayer will, therefore, be chary of that advice.
Secondly, we could go back to a regular review by Parliament.
The third course—the one I advocate—is for the Government to apply the pay policy to pensioners in both public and private sectors. No one who has ceased to work should be allowed to get an increase in his income which is larger than he would have received had he stayed at work. What the unions asked for in 1971 was said by the Government to be too expensive. The unions asked that pensions and pay should be tied together. My Bill leaves the Government free to do that or to apply the pay policy to pensions. I commend the Bill to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. John Pardoe, Mr. J. Grimond, Mr. Cyril Smith, Mr. Emlyn Hooson, Mr. Stephen Ross, Mr. David Penhaligon, Mr. Richard Wainwright and Mr. Geraint Howells.

PENSIONS (INCREASE) ACT 1971 (AMENDMENT)
  PENSIONS (INCREASE) ACT 1971 (AMENDMENT)
  Mr. John Pardoe accordingly presented a Bill to amend the Pensions (Increase) Act 1971; and for connected purposes: and the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 242.]
ORDERS OF THE DAY

  RETIREMENT OF TEACHERS (SCOTLAND) BILL [Lords]
  Order for Committee read.
  3.50 p.m.
  Mr. Alick Buchanan-Smith: On a point of order, Mr. Speaker. I am sorry to raise this point of order so early in the debate, but perhaps you might like to take a little time to consider it.
  There are to be before the House three Scottish Bills, but I am particularly concerned about the last of them, the Licensing (Scotland) Bill, which received its Third Reading in another place only last night. Since the Government amendments are starred, I wish to ask you, Mr. Speaker, whether all those starred amendments will be selected by you for debate today.
  Because the Bill came from the other place only last night, it must be emphasised that, although no doubt the Government have had the opportunity of departmental advice to help them, Back Benchers on the other hand are put in great difficulties in examining amendments made in the other place. Many hon. Members, including myself, have been in Committee all morning, and I wonder whether you will be prepared to accept manuscript amendments from Back Benchers if you decide that the business can go ahead.
  Finally, I wish to emphasise that the Licensing (Scotland) Bill is an important matter, not a party political dispute, and causes deep feelings among many hon. Members across the party boundaries in this House. The measure has evoked great interest in Scotland and is being followed closely there. The organisations affected by its provisions in Scotland have experienced difficulties in making representations to Members of Parliament because the deliberations in the other place were completed only last night. Therefore, those concerned have not had the opportunity to see what Government amendments have been tabled and have been unable to make the appropriate representations.
  Ideally, Mr. Speaker, I believe that because of the importance of the Bill and
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  because the Government have brought the measure back to this House at such short notice, the measure should be put back for consideration at a later date.
  Mr. Hector Monro: Further to that point of order, Mr. Speaker. It is intolerable that on the Licensing (Scotland) Bill we should have before us 53 Lords amendments—
  Mr. Speaker: Order. If the hon. Gentleman wants to submit a point of order to me, I hope that he will not argue the case which no doubt he will have an opportunity to deploy later.
  Mr. Monro: I would not dream of arguing the case, Mr. Speaker. I know that you always seek to protect the interests of Back Benchers. My point of order relates to the fact that 53 Lords amendments are now before us and that many of them are starred. This makes life intolerable for hon. Members who wish to carry out their legislative work efficiently—and this especially applies to Back Benchers. The Government should give some explanation of their handling of these matters and say how they expect the House to deal with starred amendments which became available in the Vote Office only this morning. Surely they should have given hon. Members an opportunity to discuss those provisions with interested parties.
  Mr. Teddy Taylor: Further to that point of order, Mr. Speaker—
  Mr. Speaker: Order. I hope that we shall not debate the matter now. Is the hon. Gentleman raising a completely new point which I have not heard?
  Mr. Taylor: Yes, Mr. Speaker.
  Mr. Speaker: I should be surprised if that were the case.
  Mr. Taylor: Have you ever known me to be wrong, Mr. Speaker?
  I wish to mention a separate point and it relates to certain Government amendments to Lords Amendment No. 46 in relation to the Licensing (Scotland) Bill. I understand that you were prepared to consider only amendments to Lords amendments which did not make a substantial change. So far as I can see, the Government, by virtue of their

  1417
  Amendments Nos. 4 to 9, are virtually rewriting the clauses dealing with Sunday opening. Is that not an unusual use of Lords amendments, particularly on a controversial Bill of this nature? Is it fair that we should have before us a virtually new provision on Sunday opening so soon after the measure has left the other place? How is it possible for hon. Members to study seriously the implications of the provision?
  Mr. Speaker: The hon. Member for Glasgow, Cathcart (Mr. Taylor) was quite right. He did have a completely new point of order. I apologise to him for my suspicions. It was as a result of experience—not with him, but with others.
  This is not a new situation, unpleasant though it may be. I am advised that it has happened many times before that a Bill which has been discussed in the Lords the night before has then returned to this place with starred amendments. I shall accept the starred amendments. I shall be prepared to examine any manuscript amendments submitted to me.
  The Secretary of State for Scotland (Mr. Bruce Millan): I did not intervene earlier, Mr. Speaker, on the point of order because these matters are for you, and not for me, but the question of taking the Bill today was discussed through the usual channels. No amendments were made to the Bill yesterday on Third Reading in the other place. I appreciate that this is not the most convenient way of proceeding, and I hope that when we come to the controversial amendments—and there are not many—I shall be able to give an explanation that will help the House to understand what they mean.
  Bill considered in Committee.
  [Mr. BRYANT GODMAN IRVINE in the Chair]

  Clause 1

    AGE OF RETIREMENT OF TEACHERS
    Mr. Teddy Taylor: I beg to move Amendment No. 1, in page 1, line 8, leave out
    'or by the managers of a grant-aided school'.
    This might appear a somewhat unnecessary amendment, but we hope that it will elicit information from the Government and certainly some explanation of the
    1418
    speeches made by the Secretary of State and his colleagues on Second Reading. We wish to establish from the Government how many teachers are involved in grant-aided schools. The numbers were the basis of considerable controversy on Second Reading, and the Secretary of State will appreciate that he has a great deal of explaining to do.
    If we examine the Official Report for 25th October we shall see that the Secretary of State used as his justification for the Bill the fact that unemployed teachers would be given jobs. We then asked him to give some idea of the numbers involved and he said:
    "… I believe that on 1st January about 400 teachers in Scottish schools will be affected by the Bill in one way or another. That is the extent by which, by making room in schools, we could be making jobs available for newly qualified teachers who at present find it difficult to obtain jobs."—[Official Report, 25th October 1976; Vol. 918, c. 52.]
    That was a clear statement, and we asked for details. We were told that because the September 1976 survey was not available details of numbers in grant-aided schools and other schools could not be given. Therefore, I was astonished to hear from Mr. Docherty, the respected General Secretary of the Scottish Secondary Schoolmasters' Association, that the day after that debate he received a letter from the Scottish Education Department, and with it a table headed
    "Number of teachers over age 65 in service as at September 1976."
    The reference on that statement gave the impression that this was the up-to-date figure for September 1976. Figures included in that table caused great concern and astonishment to hon. Members who thought that the Bill was aimed at justifying the saving of teacher jobs because we discovered that those teachers in full-time employment, according to the table, totalled only 183.
    4.0 p.m.
    I notice, as I did on Second Reading, that when the Opposition mention something that is particularly embarrassing, the Secretary of State engages in a loud personal conversation. That is a good guide that we have hit on something which the Government have bungled.
    The figure is significant because the other teachers concerned—temporary, part-time or occasional—are on such short-term contracts that their services

    1419
    can be dispensed with irrespective of the Bill. Of the total number of teachers, 117 are in primary schools, about 45 in secondary schools and probably, although we do not know, a considerable proportion of the 45 will be teachers of subjects such as maths where there is a shortage. The Bill will not have the effect of creating more jobs.
    In the debate on 25th October the Secretary of State said that he could not give any details but in a letter to the Scottish Secondary Schoolmasters Association he gave a full and detailed statement. Has there been a mistake in the make-up of the figures? Did the Scottish Office make that mistake by referring to September 1976 when it meant September 1975? Even that would not answer the situation because in a statement in another place Lord Kirkhill said that the figure for September 1975 was about 300.
    Mr. Millan: This has nothing to do with the amendment. If the hon. Gentleman raises the matter on the Question That the clause stand part of the Bill, I shall be happy to deal with it. The amendment is a narrow one.
    Mr. Taylor: We are dealing with the numbers of teachers in grant-aided schools. Unless the Secretary of State can give us an explanation on the amendment it will be difficult for us to proceed. It is outrageous for the Government to have misled the House and to ask us to approve the inclusion of grant-aided schools without any indication of the numbers involved. It is not for the Secretary of State to give the House instructions on order. He has a bit of a cheek if he says that there will be an explanation forthcoming later when the House has already been misled. Either Mr. Docherty was misled or we were misled.
    I thought it might have been a mistake involving the year and Mr. Docherty, in a frantic telephone conversation this morning, was told that there had been a mistake. He was told that the statement did not mean what it said and that the figures came from the year before. If that is the case, why did Lord Kirkhill say that the 1975 figure was about 300? The Secretary of State has a lot of explaining to do.
    1420
    Our concern is for the numbers involved. Surely the Secretary of State can give us some indication of the numbers. The information given to Mr. Docherty showed that the reason for the new legislation is to deal with one permanent primary school teacher, no secondary school teachers and 1·5 special teachers in grant-aided schools. A total of seven part-timers are employed in grant-aided schools but they can be dismissed under existing legislation.
    In which school does the one primary schoolteacher work? Is it a school where it might be difficult to recruit someone else and is the teacher male or female? The Government are taking up the valuable time of the House to deal with a situation which, according to the statement given to Mr. Docherty but not to us, concerns one full-time permanent teacher and 1·5 special teachers in grant-aided schools. How is it possible to have 1·5 permanent teachers? Where are they and will the Bill be of real help to them? As I said on Second Reading, I have a feeling that the Bill, instead of saving teachers' jobs, is just a cosmetic to cover other Government embarrassments over teacher unemployment and industrial policy.
    I declare an interest because my 4½-year-old son has just started at a grant-aided school in Glasgow. Is it right for a Government which intends to phase out grants to grant-aided schools to write into permanent legislation a restriction on the freedom of action of schools which will shortly receive no grants at all?
    The issue is important though small and beyond it there is the whole credibility of the Secretary of State who specifically told the House that the September 1976 figures were not available. He told us that 400 teaching jobs would be made available. He should explain precisely how, if one dismisses 50 part-time teachers, 50 new jobs are created. The Secretary of State was misleading the House.
    The hon. Member for Glasgow, Spring-burn (Mr. Buchanan) recently asked how many teachers over 65 years of age are in temporary, part-time or occasional posts and therefore not directly affected by the Bill and how many are employed

    1421
    in one-teacher or two-teacher schools. He was told:
    "The estimate of 400 to which my right hon. Friend referred on 25th October—cannot be broken down into the categories requested." —[Official Report, 2nd November 1976, Vol. 918, c. 504.]
    If that is so, how was it possible for the categories to be broken down to Mr. Docherty the day after the debate? There is something strange going on. I feel that it is an attempt by the Government to give the impression that the Bill will achieve more than it will.
    I can see no point in writing in a specific provision about grant-aided schools when, as far as I can see, no secondary teachers are involved and only one primary teacher is involved, and when the grants for the grant-aided schools are being phased out because of the Government's scandalous vendetta against those schools.
    Mrs. Margaret Bain: The Scottish National Party's attitude to the grant-aided schools is already clear, but the principle behind the debate is very important. Scottish teachers feel an increasing lack of confidence in the Scottish Office as it seems to be unable to produce statistics when asked for them in the House. On Second Reading several of us, from different parties, asked for the numbers affected by the Bill. It is extremely disappointing that only research by organisations outwith the House has provided the figures on which we have come to depend.
    It appears that there are 416 teachers over the age of 65, but 145 are part-time according to the Scottish Education Department statistics kindly provided by the SSTA. Incidentally, I point out to the hon. Member for Glasgow, Cathcart (Mr. Taylor) that that is the Scottish Secondary Teachers' Association and not the Schoolmasters' Association. There is quite a difference. Part-time teachers in Scotland have already suffered the indignity of being asked to leave during the present crisis, many of them having already given years of inestimable service to the local community. We all know that 145 part-time jobs do not make 145 full-time jobs. How many jobs does the Secretary of State estimate would become available if the 145 part-time teachers were replaced by the new
    1422
    teacher who could not find employment?
    Is the figure of 184 full-time permanent teachers the one with which the Bill deals, or is it 400? What exactly is the figure the Scottish Office has in mind? Most hon. Members have rather confused attitudes towards the Bill because they are unsure about the number of jobs available. Only a categorical assurance that the Secretary of State knows the numbers involved will ensure that the Bill is given its Third Reading.
    Mr. James Dempsey: Over the weekend I was interviewed by a representative of Mr. Docherty's association, the SSTA, who told me that one of the main reasons for the Bill was to find employment for newly qualified teachers. We have heard that 400 teachers could be found employment if we passed the Bill. I have heard many figures bandied about—400, 300 and now 180. I was told at the weekend that if we took account of those who could have their services terminated by the ordinary statutory rights of local education authorities and those over age but teaching subjects for which there is a shortage of teachers—for example, engineering, science and maths—we should find that not more than 60 teachers would be affected by the Bill. A wide variety of figures are being trotted around. It would be in the interests of us all to have something more definite.
    4.15 p.m.
    I have a great respect for many of the teachers with whom we are dealing. Whatever we decide today, we should all express our gratitude to those men and women who have devoted their time to helping us, especially during periods of serious teacher shortage. The officer in charge of Lanarkshire was out night after night knocking on doors to encourage teachers to help us out during the days of grave shortage. We should record our appreciation to them for their loyal service during those difficult times.
    The hon. Member for Glasgow, Cathcart (Mr. Taylor) said that the Secretary of State had stated that he could not break down the figure of 400. I wonder why not. I could have understood it before the reorganisation of local government, when we had about 30 local education authorities. It would then

    1423
    have been quite a problem preparing reports showing the number of teachers over 65, the subjects they taught and those who would automatically be asked to retire when the Bill became law. But today we have only 12 education authorities and it should not be so difficult. Has any effort been made by my right hon. Friend's Department to find out from the 12 regional authorities the numbers of teachers over 65 and the subjects they are teaching? Since my meeting with the SSTA representative, I am convinced that steps should be taken to place before the House clear details of the number of teachers affected.
    Mr. Monro: I am glad to join the hon. Member for Coatbridge and Airdrie (Mr. Dempsey) in his tribute to the older teachers who helped out in Scottish education for such a long time when we were short of teachers. Their help was nowhere more important than in the hon. Gentleman's area, then Lanarkshire but now Strathclyde.
    I want to add my strong criticism of the handling of this legislation by the Scottish Office. The Under-Secretary talks about raising standards. He hopes for better standards, but, as the draft of the letter on the subject is so woefully inadequate in terms of literacy and numeracy, he has a long way to go.
    Our first demand must be for a clear statement on what went wrong with the computer in the Scottish Office which resulted in the House and no doubt Ministers themselves being completely misled. I cannot imagine that they would have introduced the Bill if they had known what they were talking about. When we have a great economic crisis and many other problems to deal with, it is difficult to justify taking up the time of the House with a Bill that apparently will retire compulsorily only about 180 teachers. Some of those teachers are specialists in mathematics and science whose departure can be ill afforded, bearing in mind that so many of the teachers without posts are not qualified in mathematics and science. I shall, of course, be relating this situation particularly to the grant-aided schools, where the situation is even more incredible.
    The hon. Member for Dumbartonshire, East (Mrs. Bain) said that we all know
    1424
    the policy of the SNP in relation to the grant aided schools. But she did not go on, for the benefit of the House and the world at large, to say that the SNP had set out hell-bent to abolish them, as have the present Socialist Government. We on the Conservative Benches realise the value and importance of the grant-aided schools and the grant-aided system in Scotland, as well as the right of managers to appoint or retire their teachers as they and the teaching association feel correct.
    The SSTA, so ably led by Mr. Docherty, has brought to the notice of the House the apparently incompatible terms of the letter sent by the Scottish Education Department to Mr. Docherty. It grieves me to know that that splendid Department has fallen so rapidly on to the rocks under the guidance of the Minister. [Interruption.] The hon. Member for West Stirlingshire (Mr. Canavan) chortles away but he does not know that at one time the SED was operating extremely effectively. What is of concern is that here we have a letter written by the Department and compounded by Lord Kirkhill in another place. The present disorganisation in the Department is incomprehensible. The Minister has a great deal to explain away, such as the figures and the drafting of the letter in relation to the numbers of teachers available in schools, particularly those available to teach in grant-aided schools who would be compulsorily retired under the Bill.
    It seems surprising that the Minister should include a clause apparently affecting one primary school teacher in Scotland. Does he really think that it is good value for money or a proper use of the Government's time? Surely they could be doing better things than legislating to retire one teacher. Mr. Malloch must be spinning like a top at the thought. The Minister has a great deal of explaining to do before the House can accept that what he is proposing is more than a charade of practical legislation about Scottish education.
    We on the Conservative Benches are particularly anxious about the numbers encouraged into colleges of education by the Minister in September last year when he had all the facts before him. We are still awaiting answers to our questions about why he did it. The hon. Gentleman still does not know and is not

    1425
    prepared to answer those questions. The House is eagerly awaiting answers. Will the hon. Gentleman try to reconcile the inconsistencies in the statistical information over the past two months about teacher supply and teacher retirement, because the House is so far confounded by his efforts?
    Mr. Malcolm Rifkind: The House has heard from several speakers how hopelessly irrelevant the Bill is to the educational needs of Scotland. I do not wish to go over the general argument. The amendment specifically relates to grant-aided schools and I would draw attention to something of significant importance. We have heard a number of references about the hopelessness of the information made available to the House, particularly during the Second Reading debate.
    I want to make a specific reference to a positive mis-statement made by the Minister in respect of education in Scotland during the Second Reading debate. It was a positive misleading of the House and unless the hon. Gentleman corrects it, or withdraws it, it could do considerable harm to one particular individual in Scotland.
    During Second Reading I raised the case of Dundee High School which is a grant-aided and co-educational school. I referred to the problem which that school had raised with the Scottish Education Department, namely, that its present rector is due to become 65 this month. The school raised this matter some months ago before the Bill had even been contemplated. The school has invited the rector to remain after his 65th birthday—until June of next year—in order that he can supervise the internal reorganisation of the school. As a result of this Bill the rector would be obliged to retire on 1st January next year with a maximum extension of three months—a period which is less than that required by his school in the interests of the school and the pupils.
    I raised this matter with the Minister and pleaded with him to reconsider it because of the harmful effect that the Government's policy would have with regard to this particular school. The answer that I got from the Minister was not only disappointing but turned out to be totally inaccurate and misleading. In the Official Report of Monday 25th
    1426
    October, during Second Reading the Minister referred to my comments and said:
    "The hon. Member for Edinburgh Pentlands (Mr. Rifkind) referred to the decision about the rector of Dundee High School."
    The Minister then went on to say:
    "That situation has nothing to do with the Bill. The situation of a rector, which is a promoted post was decided in 1969 when the teaching profession, unions and local authorities were unanimous in the view that a promoted teacher had to retire at 65."—[Official Report, 25th October, 1976; Vol. 918, c. 96.]
    What the Minister was saying, quite unambiguously and unequivocally was that the position of the rector of Dundee High School was in no way affected by the Bill or prejudiced by it because the situation had already been resolved seven years ago.
    I must inform the Minister that he clearly had not read his own legislation when he made that statement. There is a substantial difference in the present situation, as proposed in the Bill, compared with the situation under the 1969 Education (Scotland) Act. If the Minister will refer—perhaps for the first time—to the 1969 Act he will see that Section 16(1) states quite specifically:
    "Except where his employer otherwise determines, every teacher … shall retire"—
    at a certain age, and in the case of promoted posts at the age of 65.
    In other words, not that he must retire at 65 irrespective of whether his employers determined otherwise. It was on that basis, under the provisions of the 1969 Act, that Dundee High School made its invitation to the rector to continue and he agreed to do so until June of next year in order to supervise the reorganisation of that grant-aided school.
    In case there is any doubt about this matter, or that the school might have been confused, I asked the school after the Minister made his reply last Monday and the letter I have received states:
    "The employer in this case is the Board of Governors or Managers of the School and they determined, prior to the Retirement of Teachers (Scotland) Bill that the Rector should continue in his post until the end of the present session, i.e. the end of June 1977. Before coming to this decision reference was made to the Scottish Education Department"
    —the Minister's own Department—
    "in Edinburgh, who referred us to Section 16 of the 1969 Act and confirmed that what we intended was perfectly in order."
    Mr. Monro: That is monstrous.
    4.30 p.m.
    Mr. Rifkind: I look forward to the Minister's reply. Last Monday he said categorically that this Bill made not the slightest difference to the position of the rector of Dundee High School. It is clear from the Bill, but we have also a statement from the SED to the high school, that prior to the publication of the Bill the rector would have been able to continue as the school hoped. As a result of the Bill, that will no longer be possible.
    The Minister did not answer that question last Monday. He misled the House, albeit innocently. I hope therefore that he will not only make clear the legal position but also concede that the position of the rector will be severely prejudiced by the Bill in its present form. I hope that he will be man enough to accept now that some flexibility is required, that the present position is undesirable and that the legislation should be amended in terms of this amendment and by means of other amendments which will extend the period for people in promoted posts until after the age of 65.
    It is unusual and unfortunate when the House is misled in this way. I hope that the Minister will now have the grace to agree that he unwittingly misled the House and to concede this point in the interests of justice.
    Mr. William Small: I wonder who is misleading whom. I respect the intellectual fidelity of hon. Members, but the hon. Member for Edinburgh, Pentlands (Mr. Rifkind) said that this matter concerned the future of the grant-aided schools. I thing that he had better read the record. I am a Bedouin who believes in Greek tragedy, and I see that as a classic case of misleading the House.
    Then there is the numbers game, the throwing of the legal dice to decide whether an area will get a grant-aided school and therefore—so Opposition Members claim—children the opportunity of a better education. I hope that the Minister will resist the amendment. This tendency to play the numbers game is not consonant with the principle of the amendment.
    The Under-Secretary of State for Scotland (Mr. Frank McElhone): The amendment is a very narrow one and has nothing to do with much of the debate that we have heard so far. I hope that hon. Members will take the advice of the Secretary of State, who told the hon. Member for Glasgow, Cathcart (Mr. Taylor) when he went into the numbers game that if a debate on the Question That the clause stand part of the Bill were allowed, my right hon. Friend would clear up the matter of one group of figures against another.
    Mr. Teddy Taylor: We were not questioning figures. We asked a simple question. The Minister said on 25th that figures were not available. But Mr. Docherty got a table headed "September 1976". Therefore, either Mr. Docherty was misled or the House was misled. It must be one or the other. The Minister could at least answer that point of principle, quite apart from the detailed explanation. That is a straight question requiring a straight answer—"Yes" or "No".
    Mr. McElhone: Could I prevail on the hon. Member to take the advice of my right hon. Friend? My right hon. Friend will certainly convey to the House in his answer enough information to clear up the doubts in the hon. Member's mind and in the minds of any other hon. Members. I ask him to consider that proposition.
    I stand by what I said at the beginning, that this is a very narrow amendment. I am bound to deal with the amendment. I hope that I shall not be taken to be impudent about the conduct of the Chair if I also say that the comments by the hon. Member for Edinburgh Pentlands (Mr. Rifkind) had nothing to do with the amendment. However, with your permission, Mr. Deputy Speaker, I shall try to answer his questions and his accusation that I misled the House.
    The purpose of the amendment is to remove from the application of the proposed new Section 16 any teacher employed by managers of a grant-aided school which is a grant-aided secondary school or a grant-aided residential special school. I regret to say that the amendment is not acceptable to the Government. The present Section 16 of the

    1429
    Education (Scotland) Act 1969 applies both to teachers employed by the managers of a grant-aided school and to those employed by an education authority and requires them to retire from a promoted post at the age of 65 and from any other post at the age of 70, unless the employers otherwise determine.
    This section will be replaced from the date of commencement of the Bill by the proposed new Section 16. If the new section does not apply to teachers employed by the managers of grant-aided schools, there will be no statutory provisions governing the retiring age of teachers employed by such managers. As long as the managers of such schools receive public money in the form of grant aid, the conditions of service of teachers in them should not differ substantially from those which apply to teachers in education authority schools.
    The amendment is also defective, because it does not remove the reference to managers of grant-aided schools in line 19 on page 1. I would ask the Committee to resist the amendment.
    Perhaps I might now try to answer the questions raised by the hon. Member for Pentlands. The substance of our debates was the whole question of promoted and non-promoted teachers. It was a unanimous decision, which had the acceptance of the teaching unions, that promoted teachers should retire at 65 in order to open up the promotional stream. That was accepted by everyone, with no furore. The hon. Member for Pentlands wrote to me about the rector of Dundee High School and I replied to him in the letter to which he referred.
    When I referred to the debate, it was in the context of the general provision, which we had agreed in 1969, that teachers in promoted posts should retire at 65 anyway. The Bill would allow three months' discretion. We believe that the correct way of tackling this problem—
    Mr. Rifkind: The Minister refers to the letter that he wrote to me. I never mentioned it, because it contained nothing of substance. I was referring to the Minister's statement in the House last Monday. I raised the matter with him, as he remembers. I must repeat the words that he used:
    1430
    "The hon. Member for Edinburgh, Pentlands (Mr. Rifkind) referred to the decision about the rector of Dundee High School. That situation has nothing to do with the Bill."—[Official Report, 25th October 1976: Vol. 918, c. 96.]
    That is what the Minister said, but any examination of the Bill reveals that it has an enormous amount to do with the Bill. But for the Bill, the rector could continue in office as the school, the parents and everyone else wish until June next year. As a result of the Bill he will be able to remain there only for three months after 1st January. That is the consequence of this Bill and of nothing else. Would the Minister concede that?
    Mr. McElhone: We do not want to split hairs or spend an inordinate time on this amendment, because in this context it is in a sense out of order. On Second Reading, we discussed the contents of the letter in which I replied to the hon. Member, referring to the rector. I was saying at that time that the situation in Dundee was such that surely a replacement could be found from among all the teachers in the Tayside region who could fill this position. I was saying that surely this man was not irreplaceable. The hon. Gentleman will remember that I made that point and said that the whole point of retiring from promoted posts at 65 was to open the possibility of promotion to those posts. That was how I described it in the context of the debate. If I misled the hon. Gentleman, I apologise, but he knows that was not my intention.
    Mr. Rifkind Mr. Rifkind indicated assent.
    Mr. McElhone: I am pleased that the hon. Gentleman, who is gracious at times, accepts that. The argument is still the same.
    No person is so irreplaceable that a teacher on Tayside could not be found to do the same job as the rector of Dundee. I have great faith in the quality of teachers in Scotland. To settle the argument, if I gave a different impression, I apologise to the hon. Gentleman.
    In the context of the debate we were talking about promoted posts at 65 and the need to open promotion opportunities for teachers in non-promoted posts. I was arguing on the principle that no one is irreplaceable—certainly not headmasters of schools, be they grant-aided or ordinary comprehensive secondary

    1431
    schools. I hope that will be accepted by the hon. Member for Pentlands. We must resist the amendment.
    Mr. Rifkind: I accept that the Minister did not deliberately intend to mislead the House, but the fact remains that he did. I am happy that he has at last conceded that point, albeit reluctantly.
    The Minister may be right to say that it is generally accepted that persons in promoted posts should retire at the age of 65 with various extensions for limited periods if the school wishes. But that is not the issue. In the instance to which I drew his attention the question was whether there should be certain flexibility to allow the rector to continue not indefinitely, but for another eight or nine weeks because he was supervising the overall internal reorganisation of the school. In the view of the governors, that will take several months to complete. If the rector who initiated that reorganisation has to leave before it is completed, I suggest that a completely new teacher, who may be a very good rector, cannot reasonably be expected to take over such a complex and substantial reorganisation.
    Mr. McElhone: Deputy?
    Mr. Rifkind: The Minister mutters "Deputy". We do not know whether the deputy will become the rector. The top person in the school is the rector.
    Mr. Robert Hughes: Would it not be possible for the school in question to allow the present rector to complete his job while holding the post as a non-promoted teacher?
    Mr. Rifkind: The hon. Gentleman clearly demonstrates the nonsense involved by suggesting that, instead of the Government writing inflexibility into the Bill so that common sense can coincide with its terms, we should have a rigid Bill, but re-employ the rector as an ordinary teacher for a couple of months to complete the reorganisation.
    Mr. Robert Hughes: The hon. Gentleman is obviously having a bit of fun. There is flexibility in the Bill to allow the rector to stay on if he is engaged in reorganising the school. But he could do that without being rector. On the other hand, it shows a damaging view of the way in which the affairs of
    1432
    that school are run that one man should be totally responsible for everything that happens and, if he goes, there is utter chaos and collapse.
    Mr. Rifkind: Clearly the hon. Gentleman has never been responsible for or been involved in running any large organisation, be it a school, industry, a trade union or anything else. Perhaps it is just as well. Clearly if the school is going through intensive reorganisation, success or otherwise will depend on the leadership provided by the person in charge of the reorganisation. To withdraw the rector, not by accident but by design, just before the reorganisation is complete is bound to increase the problems.
    The Bill in its present form is foolishly rigid. It is not meant to re-enact common sense. It is simply concerned with choosing an unnecessary formula which will not have any substantial effect on education prospects in Scotland. I hope that the Minister realises that he is asking the Committee to approve a rigid statute that does not relate to standards of common sense. That is not what legislation is for.
    The Bill has already resulted in considerable resentment. This type of approach is certain to increase the resentment already felt by many in the teaching profession. In at least one instance it will lead to serious problems in the reorganisation of an important school.
    4.45 p.m.
    Mr. Buchanan-Smith: The Minister has given a most disgraceful reply from the Dispatch Box. It was totally inadequate in meeting the arguments which have been put forward by the Opposition. If the Minister's arguments are to be so lacking in reason and fact on other amendments, we are in for a long, hard night's work. I hope that he will continue better than he started, because he has not given us any confidence so far.
    The hon. Member for Dunbartonshire, East (Mrs. Bain) put forward an unequivocal argument when she referred to grant-aided schools. It is interesting to have the views of the Scottish National Party repeated.
    One point really annoyed me in the Minister's reply. Having had to sit opposite the Minister on another Bill earlier

    1433
    in this Session, I know that, whenever he is lacking in argument, he tries to put up a smoke screen of other reasons which have no relation to the amendment under discussion. That is what the hon. Gentleman did this afternoon in lecturing the Committee on procedure in the presence of the Chairman. We shall listen to the Chairman regarding procedure, but not the hon. Gentleman.
    My hon. Friend the Member for Glasgow, Cathcart (Mr. Taylor) made it clear that we cannot proceed to further debates on this clause without knowing the basis of fact on which it is formed. It is all very well for the Secretary of State to intervene and to say that he will give us the figures on the Question, That the clause stand part of the Bill. But, by the time we reach that stage, we shall have finished with this amendment. We want to know what is involved now.
    My hon. Friend the Member for Cathcart was entirely right to refer to the figures which have been given in earlier debates and to the Scottish Secondary Teachers' Association and to ask which were right. What confidence can we have in any figures put forward by the Government when so many different figures have been bandied about? The Secretary of State could have helped the Committee if he had been prepared to give this information at an earlier stage. It is difficult to form a proper opinion when the Government are not prepared to give the necessary information to enable us to continue.
    The Minister has not dealt with the one basic question put to him by my hon. Friend. We have been put in a difficulty, because of the Secretary of State's intransigence, in coming to a proper decision on the amendment. I put that to one side. The Minister has completely failed to answer the question: how many teachers are involved? The Minister should have been prepared to answer that question. My hon. Friend put forward the figures which he thought were involved: one full-time teacher in primary schools, none in secondary schools, and 1·5, whatever that may mean, in special schools. We want to know whether the Minister will give us an answer on that point and tell us how many are involved in relation to the amendment.
    1434
    The Minister appeared to be so worked up about procedure that he was not prepared to give us the information. This makes me very nervous as to what may happen when we come to the motion That the Clause stand part of the Bill. If the Minister cannot give us the information on this one small point, what confidence can we have that the Government will be any more forthcoming or accurate later? For that reason, if for no other, I am particularly disappointed with the Minister's argument.
    With regard to the argument put forward by my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind), this again focuses the inadequacy of the Minister's reply. The Minister makes little of the one person concerned in relation to Dundee High School. He seems to think that because there is only one person concerned, it is a special case and ought not to cause any difficulty. But that argument is equally applicable to what was said by my hon. Friend the Member for Cathcart. If only one primary schoolteacher and 1·5 special schoolteachers are involved, that is not very important either. Therefore, if the Minister tries to belittle the argument of my hon. Friend the Member for Pentlands, he is in effect giving strength to the argument of my hon. Friend the Member for Cathcart. If this is of so little importance, why does the Minister not accept our amendment? The Minister has shown himself to be thoroughly stubborn. He has shown that the Bill is really of little importance, because so few people are involved.
    Concerning the main burden of the argument put forward by my hon. Friend the Member for Pentlands as to the rector of Dundee High School, the Minister is saying that because the Government have a Bill with blanket provision for a particular purpose covering all teachers, he is completely unprepared to consider a special situation in a particular school, which our amendment would help cover. That is what makes us on the Conservative side very critical of the whole approach of the Government to education in Scotland at the present time.
    The Government are simply not prepared to deal with the special needs of particular groups in particular schools. If I were involved in teaching in Scotland I should be horrified at the insensitivity

    1435
    of the Minister to the particular problem of Dundee High School. The view put forward by the managers is a thoroughly reasonable one. There is a major reorganisation taking place and they have asked for special conditions in regard to the rector. This is not for another year or two but just for a matter of weeks, so that they can continue to the end of the 1976–77 school session and carry through to its conclusion the reorganisation that is taking place.
    By trying to apply his blanket solution to a particular case, the Minister has not shown himself to be worthy of his responsibilities of looking after education in Scotland at the present time. He is quite insensitive to the needs of education in Scotland.
    In listening to the debate I could not help reflecting on the reluctance of the Minister and of the Secretary of State to give to the House the statistics which would help it to come to a better conclusion, knowing that there is confusion and conflict about the figures. One wonders—this point was referred to by my hon. Friend the Member for Dumfries
    (Mr. Monro)—what has happened to the numeracy of the Scottish Education Department. The Prime Minister has been urging a return to better educational standards. The Scottish Education Department, and the Minister responsible for that Department, would do well to try to improve their standards and to set an example themselves. In failing to put right the record in regard to numbers they are failing the House. They are not enabling the House to deal properly with these amendments.
    I appreciate that the amendment does not affect many people but, given the inadequacy of the Government's reply, their total unwillingness and failure to provide the information which would help the House, and the insensitivity of the Minister towards these special cases, I have no hesitation in advising my right hon. and hon. Friends to support the amendment and to vote against the Government.
    Question put, That the amendment be made:—
    The Committee divided: Ayes 138, Noes 163.

    Division No. 369.]

    AYES

    [4.55 p.m.

    Arnold, Tom

    Fry, Peter

    Maudling, Rt Hon Reginald

    Atkins, Rt Hon H. (Spelthorne)

    Gilmour, Rt Hon Ian (Chesham)

    Mawby, Ray

    Awdry, Daniel

    Gilmour, Sir John (East Fife)

    Maxwell-Hyslop, Robin

    Baker, Kenneth

    Goodhew, Victor

    Meyer, Sir Anthony

    Banks, Robert

    Gow, Ian (Eastbourne)

    Miller, Hal (Bromsgrove)

    Bell, Ronald

    Gower, Sir Raymond (Barry)

    Mills, Peter

    Bennett, Dr Reginald (Fareham)

    Grant, Anthony (Harrow C)

    Mitchell, David (Basingstoke)

    Benyon, W.

    Gray, Hamish

    Moate, Roger

    Berry, Hon Anthony

    Grieve, Percy

    Monro, Hector

    Biggs-Davison, John

    Grist, Ian

    Montgomery, Fergus

    Boscawen, Hon Robert

    Hall, Sir John

    Morris, Michael (Northampton S)

    Boyson, Dr Rhodes (Brent)

    Hannam, John

    Morrison, Charles (Devizes)

    Braine, Sir Bernard

    Harvie Anderson, Rt Hon Miss

    Morrison, Hon Peter (Chester)

    Brittan, Leon

    Havers, Sir Michael

    Nelson, Anthony

    Brocklebank-Fowler, C.

    Hawkins, Paul

    Neubert, Michael

    Brotherton, Michael

    Hayhoe, Barney

    Newton, Tony

    Bryan, Sir Paul

    Heseltine, Michael

    Noll, John

    Buchanan-Smith, Alick

    Hicks, Robert

    Onslow, Cranley

    Buck, Antony

    Higgins, Terence L.

    Page, John (Harrow West)

    Butler, Adam (Bosworth)

    Howell, Ralph (North Norfolk)

    Page, Rt Hon R. Graham (Crosby)

    Carlisle, Mark

    Hunt, David (Wirral)

    Parkinson, Cecil

    Chalker, Mrs Lynda

    Hunt, John (Bromley)

    Percival, Ian

    Clark, Alan (Plymouth, Sutton)

    Hutchison, Michael Clark

    Prior, Rt Hon James

    Clarke, Kenneth (Rushcliffe)

    Jones, Arthur (Daventry)

    Pym, Rt Hon Francis

    Clegg, Walter

    Jopling, Michael

    Raison, Timothy

    Cooke, Robert (Bristol W)

    Joseph, Rt Hon Sir Keith

    Rathbone, Tim

    Cope, John

    Kellett-Bowman, Mrs Elaine

    Rees-Davies, W. R.

    Cordle, John H.

    King, Evelyn (South Dorset)

    Renton, Tim (Mid-Sussex)

    Corrie, John

    King, Tom (Bridgwater)

    Rhys Williams, Sir Brandon

    Dean, Paul (N Somerset)

    Kitson, Sir Timothy

    Ridley, Hon Nicholas

    Dodsworth, Geoffrey

    Knight, Mrs Jill

    Ridsdale, Julian

    Douglas-Hamilton, Lord James

    Knox, David

    Rifkind, Malcolm

    Drayson, Burnaby

    Latham, Michael (Melton)

    Rost, Peter (SE Derbyshire)

    Durant, Tony

    Lester, Jim (Beeston)

    Sainsbury, Tim

    Dykes, Hugh

    Luce, Richard

    Shaw, Giles (Pudsey)

    Farr, John

    Macfarlane, Nell

    Shepherd, Colin

    Fisher, Sir Nigel

    MacGregor, John

    Shersby, Michael

    Fookes, Miss Janet

    Madel, David

    Silvester, Fred

    Forman, Nigel

    Marten, Neil

    Sims, Roger

    Fowler, Norman (Sutton C'f'd)

    Mates, Michael

    Sinclair, Sir George

    Fox, Marcus

    Mather, Carol

    Spicer, Jim (W Dorset)

    Sproat, Iain

    Walder, David (Clitheroe)

    Wood, Rt Hon Richard

    Stradling Thomas, J.

    Walker, Rt Hon P. (Worcester)

    Young, Sir G. (Ealing, Acton)

    Taylor, R. (Croydon NW)

    Wall, Patrick

    Taylor, Teddy (Cathcart)

    Walters, Dennis

    TELLERS FOR THE AYES:

    Tebbit, Norman

    Wiggin, Jerry

    Mr. Spencer Le Marehant and

    Townsend, Cyril D.

    Winterton, Nicholas

    Mr. Michael Roberts.

    Viggers, Peter

    NOES

    Abse, Leo

    Hart, Rt Hon Judith

    Prescott, John

    Anderson, Donald

    Hatton, Frank

    Price, C. (Lewisham W)

    Archer, Peter

    Henderson, Douglas

    Reid, George

    Armstrong, Ernest

    Hooson, Emlyn

    Roberts, Gwilym (Cannock)

    Atkins, Ronald (Preston N)

    Hoyle, Doug (Nelson)

    Roper, John

    Atkinson, Norman

    Hughes, Mark (Durham)

    Rose, Paul B.

    Bagier, Gordon A. T.

    Hughes, Robert (Aberdeen N)

    Ross, Stephen (Isle of Wight)

    Bain, Mrs Margaret

    Hunter, Adam

    Ross, Rt Hon W. (Kilmarnock)

    Barnett, Guy (Greenwich)

    Irvine, Rt Hon Sir A. (Edge Hill)

    Rowlands, Ted

    Barnett, Rt Hon Joel (Heywood)

    Irving, Rt Hon S. (Dartford)

    Sandelson, Neville

    Bates, Alf

    Janner, Greville

    Sedgemore, Brian

    Beith. A. J.

    Jay, Rt Hon Douglas

    Selby, Harry

    Bishop, E. S.

    Jenkins, Hugh (Putney)

    Sheldon, Robert (Ashton-u-Lyne)

    Blenkinsop, Arthur

    John, Brynmor

    Silkin, Rt Hon S. C. (Dulwich)

    Bottomley, Rt Hon Arthur

    Johnson, James (Hull West)

    Silverman, Julius

    Brown, Hugh D. (Provan)

    Johnson, Walter (Derby S)

    Skinner, Dennis

    Brown, Ronald (Hackney S)

    Johnston, Russell (Inverness)

    Small, William

    Buchan, Norman

    Jones, Dan (Burnley)

    Smith, Cyril (Rochdale)

    Campbell, Ian

    Judd, Frank

    Smith, John (N Lanarkshire)

    Canavan, Dennis

    Kaufman, Gerald

    Spriggs, Leslie

    Cant, R. B.

    Kelley, Richard

    Stallard, A. W.

    Carmichael, Nell

    Kerr, Russell

    Steel, David (Roxburgh)

    Cartwright, John

    Lambie, David

    Stewart, Donald (Western Isles)

    Cocks, Rt Han Michael

    Lamond, James

    Stewart, Rt Hon M. (Fulham)

    Coleman, Donald

    Leadbitter, Ted

    Sloddart, David

    Cook, Robin F. (Edin C)

    Lewis, Arthur (Newham N)

    Strang, Gavin

    Cox, Thomas (Tooting)

    Lipton, Marcus

    Strauss, Rt Hon G. R.

    Craigen, J. M. (Maryhill)

    Lomas, Kenneth

    Taylor, Mrs Ann (Bolton W)

    Crawford, Douglas

    McCartney, Hugh

    Thompson, George

    Davies, Ifor (Gower)

    MacCormick, Iain

    Thorpe, Rt Hon Jeremy (N Devon)

    Deakins, Eric

    McDonald, Dr Oonagh

    Tierney, Sydney

    de Freitas, Rt Hon Sir Geoffrey

    McElhone, Frank

    Tomney, Frank

    Dempsey, James

    McGuire, Michael (Ince)

    Urwin, T. W.

    Doig, Peter

    Mackintosh, John P.

    Walker, Harold (Doncaster)

    Dormand, J. D.

    McMillan, Tom (Glasgow C)

    Walker, Terry (Kingswood)

    Douglas-Mann, Bruce

    McNamara, Kevin

    Ward, Michael

    Eadie, Alex

    Madden, Max

    Walkins, David

    Edwards, Robert (Wolv SE)

    Marshall, Dr Edmund (Goole)

    Watt, Hamish

    Ellis, John (Brigg & Scun)

    Marshall, Jim (Leicester S)

    Welsh, Andrew

    English, Michael

    Mellish, Rt Hon Robert

    White, James (Pollock)

    Evans, John (Newton)

    Mendelson, John

    Whitehead, Phillip

    Faulds, Andrew

    Millan, Rt Hon Bruce

    Wigley, Dafydd

    Fletcher, L. R. (Ilkeston)

    Miller, Dr M. S. (E Kilbride)

    Willey, Rt Hon Frederick

    Fletcher, Ted (Darlington)

    Molloy, William

    Wilson, Alexander (Hamilton)

    Ford, Ben

    Moonman, Eric

    Wilson, Gordon (Dundee E)

    Forrester, John

    Murray. Rt Hon Ronald King

    Wilson, William (Coventry SE)

    Fowler, Gerald (The Wrekin)

    Newens, Stanley

    Wise, Mrs Audrey

    Garrett, W. E. (Wallsend)

    Orbach, Maurice

    Woodall, Alec

    Gilbert, Dr John

    Orme, Rt Hon Stanley

    Woof, Robert

    Ginsburg, David

    Ovenden, John

    Wriggles worth, Ian

    Golding, John

    Palmer, Arthur

    Gourlay, Harry

    Pardoe, John

    TELLERS FOR THE NOES:

    Grimond, Rt Hon J.

    Park, George

    Mr. James Hamilton and

    Hardy, Peter

    Parker, John

    Mr. Ted. Graham.

    Harper, Joseph

    Penhaligon, David

    Harrison, Walter (Wakefield)

    Phipps, Dr Colin

    Question accordingly negatived.
    5 p.m.
    Mr. Teddy Taylor: I beg to move Amendment No. 5, in page 1, line 11, leave out paragraph (a) and (b) and insert—

    '(a) on the date on which he attains the awe of 65, or

    (b) in the case of a teacher who has attained the age of 65 before the commencement of this Act, on the date of such commencement.'

    The Second Deputy Chairman (Mr. Bryant Godman Irvine): With this
    1438
    amendment we may take the following amendments:
    No. 2, in line 12, leave out '1st January 1977' and insert '1st March 1977'.
    No. 3, in line 15, leave out '1st January 1977' and insert '31st December 1976'.
    No. 4, in line 15, leave out '1st January 1977' and insert '1st March 1977'.
    No. 9, in Clause 2, page 2, line 14, leave out '1st January 1977' and insert '1st March 1977'.
    No. 10, in page 2, line 14, leave out subsection (2) and insert—
    'This Act shall come into force on such date as the Secretary of State may appoint by an order made by statutory instrument.'
    Mr. Taylor: I am sorry that it falls to me to move this amendment. Unfortunately, the hon. Member for Glasgow, Springburn (Mr. Buchanan) is indisposed.
    It is depressing to move an amendment with a good case bearing in mind that in the last Division the Government were again supported by the votes of Scottish National Party Members. It is disappointing that, despite our good argument, once again the Scottish National Party saved the Government from defeat.
    This is a very good series of amendments and I can best explain it by saying that we propose three alternatives to the commencing date of 1st January 1977, The first alternative, which we think the best one is contained in Amendments Nos. 5 and 10. What, in our view, is the second best alternative is contained in Amendment No. 2, 1st March 1977. The third best of our alternatives is 31st December 1976, that proposed in Amendment No. 3.
    We are trying to change the commencement date of this Bill because it is generally agreed in the teaching profession that if the Government had wanted to select any one date which was the worst possible from the point of view of the interests of the teachers, 1st January 1977 was that date.
    We propose a change, namely, that the date should be fixed by order at a later stage after consultation with the teachers. It is important that there should be an opportunity and time for consultation on this issue before the Bill is implemented. The Secretary of State must accept that his assurance that consultation was undertaken on this Bill was a strange one. If any other group of work people or professionals had been treated in this scandalous way there would have been a walk out. The teachers' associations received a copy of the outline of this Bill on 6th July and were asked to make submissions on its merits by 12th July. The Bill was presented, and introduced into the House of Lords on 13th July. It is unlikely that the Bill was not printed before the official date of submissions,
    1440
    and it is clear that insufficient time was given for consideration of the teachers' submissions.
    The Bill should begin on a date later than 1st January in order to put the situation right. If 1st January is retained it could have a serious and adverse effect on pensions of teachers who lose their jobs. The Pensions (Increase) Act provides for pension increases to be paid to public service pensioners in accordance with increases in the cost of living. There was a 10-minute rule Bill on that issue today. The increases are at different rates, depending whether the pension starts in the six-month period from 2nd January to 1st July or 2nd July to 1st January, both dates inclusive. The formula is complicated, but basically the pensions in the latter period obtain an increase based on the cost of living for one year, while those in the former period obtain an increase based on the cost of living for only the second half of the same year. Both are paid with effect from the same date so the pension which begins on 1st January attracts a bigger increase than the one which begins on 2nd January, because the former begins in the first half of the review year, and the latter in the second half.
    The Bill stipulates that those at present over 65 shall retire no later than 1st January 1977. The majority of teachers' associations and local authorities which have looked at this Bill would say that this means that the last day of service for those who do not resign but allow the Bill to operate will be 1st January 1977. Their pensions therefore will begin on 2nd January 1977 and they will lose the effect of a six-month cost of living increase because of one day's difference in the date of retirement. By having the date 1st January 1977 teachers could lose pension increase equivalent to six months rise in the cost of living. Therefore, the Government's date is most inappropriate.
    The House will be aware that some time ago we passed the Employment Protection Bill which said that people were entitled to periods of notice, and it improved these rights considerably. A Person was entitled to one week's notice for each year of employment up to a maximum of 12. If we retain 1st January, this being November, it will be quite impossible to give people the proper

    1441
    period of notice. We cannot give a teacher 12 weeks' notice if his or her employment is to terminate on 1st January. Therefore this date could mean that we are depriving teachers of their statutory rights to notice, which might be as much as 12 weeks. This is outrageous and quite wrong.
    5.15 p.m.
    Another reason for changing the date is that under the contract of service drawn up between the employing authorities and the teachers' associations, the teacher is entitled to his salary up to and including the last day of the Christmas holiday. That would mean, but for this Bill, that a teacher who terminated his employment at the end of the present term would be entitled to pay up to 7th, 8th or 9th January. That is more than a week's wages. If we keep 1st January as the date, teachers will lose that.
    There is the question of precedent. What we are proposing in Amendment No. 5 is the same procedure as that in the Education (Scotland) Act 1969 which this Bill replaces. Therefore, there is a good case for saying that 1st January is the wrong date. Not only is it wrong, it is the very worst possible date. It means that teachers could lose up to six months' pension increases, it deprives them of statutory rights under the Employment Protection Act, and it deprives them of payment for about a week's holiday. In these circumstances we should change the date.
    The best way to change it is not to name another date but to say that the Act should come into force on a date to be specified in a statutory instrument after consultations. An alternative suggestion is to insert the date 1st March 1977. This would enable the employing organisations to give the teachers the proper period of notice under the Employment Protection Act, and it would remove the serious injustice in relation to pensions. A third suggestion is that the date should be changed to 31st December 1976 which might go some way to dealing with the pension point. I hope the Government will accept one of these suggestions.
    If we leave 1st January in the Bill we shall do a very real injustice to the teachers who may be affected by the Bill's provisions. The number affected may well be relatively small, and nothing like
    1442
    the 400 mentioned by the Secretary of State in the last debate. But even if it affects only a handful, those teachers have the right to justice. If the date is not changed, there will be no justice.
    Mrs. Bain: It was very obvious in the debate last Monday on Second Reading that many hon. Members on all sides of the House were very concerned about the date chosen for implementation of this Bill. The arguments against the date are quite obvious because they affect the pension rights of the teachers concerned. Whatever reservations we may have about this legislation, we must ensure that those directly affected by it will receive the protection to which they are entitled as members of a worthwhile profession.
    The fact that 1st January 1977 was chosen at all indicates the lack of consultation with the teachers' organisations concerned. I hope that the Government intend to begin consultations as soon as possible with all teachers' organisations, although one particular organisation has been most vociferous in its condemnation of the date chosen.
    This reflects the nature of this Bill which has been rushed through its various stages by the Government, and exemplified by the Secretary of State in his opening remarks last week. During our discussion on the Bill he said that the commencement date of 1st January 1977 was chosen as the earliest date on which the new provisions could come into force. It would therefore appear that it was chosen for the Government's administrative convenience, rather than out of genuine concern for Scottish education. I shall certainly be listening with great interest to the Secretary of State's reply.
    Mr. J. M. Craigen: I hope that the Government will not stick rigidly to the date of 1st January 1977. I believe it would herald New Year bitterness, albeit for only a few people. There has been a great deal of talk about the vast differences involved for some people in the choice of date. I want the Secretary of State to give way on this point and to show some flexibility. I imagine that the best possible date would be 1st March 1977, but if that cannot be acceded to by my right hon. Friend, I hope that at least he will agree to 31st December 1976.
    Mr. Monro: I wish to support my hon. Friend the Member for Glasgow, Cathcart (Mr. Taylor) who put the argument forward so eloquently and emphatically that there is no need to go into it in any detail except to indicate my strong support. I believe that the hon. Member for Dunbartonshire, East (Mrs. Bain) was generous in suggesting that the date was chosen for administrative convenience. I believe that the Government just took any date out of a hat and included it in the Bill. The date they have chosen appears to have no relevance to the situation.
    I hope that the Secretary of State will explain why he chose 1st January. He did not make it the least bit clear on Second Reading. Presumably he read the Bill in draft in the legislation committee and must have decided whether 1st January was the right date. Did he consult the teachers' associations? The SSTA has made firm representations. Personally, I have not had memoranda or representations from the EIS or the SSTA, and so I should like to know whether the Secretary of State consulted them. Did he consult the Convention of Scottish Local Authorities? Did they all agree to the date that the Government have proposed? It seems incredible that the Government should have chosen the one date that would penalise teachers, and we are therefore entitled to know why they chose it.
    I believe that 1st March would be the earliest convenient date on which to implement a Bill which, as it progresses, appears to affect fewer and fewer teachers. I lend my support to the date of 1st March.
    Mr. Robert Hughes: It seems that the Government cannot win in their choice of dates. The debate has centred almost exclusively on the question of teachers' pensions. Representations have been made to me which have been deeply concerned with the position of teachers who will lose pension rights under the Bill.
    The idea behind the Bill, which seems to have been totally forgotten, is to require teachers at the top end of the age scale to move out of teaching in order to make room for newly-trained teachers. Therefore it seems self-evident that a balance must be struck somewhere. If the Bill is to have any effect in the current scholastic year, clearly an attempt must be made
    1444
    to implement it on the earliest possible date in order to make jobs available for teachers as quickly as possible while at the same time making sure that justice is done to teachers.
    The Government have gone a fair way in the Bill to give some flexibility to local authorities, either on grounds of hardship to individual teachers or on grounds of educational need in individual schools, to allow teachers to remain on where they are capable of doing the job. Whichever date had been chosen—whether 31st December 1976 or 1st February 1977—the Government would have been criticised both in the House and in the teaching profession.
    The Bill is not particularly welcome. It is seen as a response to a very difficult position in which teachers have been trained but have no jobs. In such a circumstance there are bound to be rough edges. No matter how one seeks to deal with that circumstance, some teachers are bound to fall on the wrong side of the line for pensions or wage increases. If the Government were persuaded that the date should be 31st March 1977, I am sure that there would be those who complained that that was a bad date because the teaching profession might be due another increase on 1st April which would affect pensions.
    Opposition Members who pretend that they are searching for absolute justice should recognise that it is not so easy to achieve as it might seem. Nevertheless, I lend my support to those who seek to postpone the date until 31st March. If the Government accepted that change they would do more justice and would show that they had flexibility and an open mind.
    Mr. Russell Johnston: It is with pleasure that I often follow the speeches of the hon. Member for Aberdeen, North (Mr. Hughes), but seldom have I heard him put up such a hesitant and uncertain defence of Government policy. This time he concluded, after not very powerful rhetoric, that he disagreed with them anyway.
    There seems to be general agreement in the debate so far that the Government should consider giving way on this matter. I was not present on 25th October—
    Mr. Teddy Taylor: Where were you?
    Mr. Johnston: I was in Europe. It would be a pity if the Government were not prepared to make exceptions but were quite happy to create anomalies. The original contribution from the hon. Member for Glasgow, Cathcart (Mr. Taylor) demonstrated most effectively that if the Bill goes through in its present form it could result in injustice to a considerable number of people. Clearly that is something that we should seek to avoid. I therefore lend my support to the amendment.
    5.30 p.m.
    Mr. Millan: Far too much attention has been devoted to the operative date of the Bill. The date was chosen as the first practicable date in all the circumstances for bringing the Bill into operation. However, any teacher likely to be affected by it can retire voluntarily at any time, and any teacher who does not want to retire on 1st January 1977 because of his pension can retire today, tomorrow or on 31st December 1976.
    Mr. Monro: That is a daft argument.
    Mr. Millan: It is not such a daft argument, as the hon. Member will learn if he listens. I should explain why I do not think 1st December 1976 provides any improvement in the Bill, particularly on the question of pensions.
    Anyone who, because of pension considerations, was worrying about retiring on 1st January could retire voluntarily at any time between now and 31st December. This is understood by teachers, who are remarkably well informed about the pension implications of particular retirement dates. There is no question of anyone being forced to stay on until 1st January and thereby losing a pension increase. That cannot happen with the Bill as drafted. Those affected by the Bill will not all have to leave on 1st January. It is a matter largely for the discretion of education authorities. Many teachers will carry on, some for a considerable time after that date. It is simply an operative date—the earliest date on which someone can be compelled to go—and not the date on which all 65-year-old teachers will be removed from our schools. I hope that I have made clear that this date is not as significant as some hon. Members seem to think.
    Two arguments have been raised in the debate—pensions and the period of
    1446
    notice. They are contrary arguments. One set of amendments has an operative date before 1st January and the other a date two months later. If the argument is that 1st January will create an injustice for those who retire before the end of this year—an argument which I do not accept—the date 1st March would make their situation even worse.
    Mr. Teddy Taylor: Will the right hon. Gentleman give way?
    Mr. Millan: I hope the hon. Gentleman will let me complete what I have to say. He might even be a little more cheerful then and not his usual disgruntled and disagreeable self.
    There is no merit in putting 31st December rather than 1st January in the Bill. Those who have advocated this date have done so under a misunderstanding.
    However, there is the other argument about period of notice and an operative date of 1st March. The provisions of the Bill relate to retirement and not to dismissal, redundancy or other forms of termination of employment, and I am advised that the normal notice given by authorities under the Contracts of Employment Act would not be necessary. We are dealing with retirements which are statutorily laid down.
    If we adopted 1st January as the operative date, there would be no legal difficulty about giving notice to teachers. However, I have always taken the view that we should be reasonable in these matters and, even if there were no legal requirement, it could be argued that, since the Bill is going through in November, there is only a short time until 1st January and that therefore it would be reasonable to have a later commencement date so that education authorities who wished to ask teachers to leave on the operative date would be able to give them reasonable notice.
    I had intended, in any case, in the circular which I shall send when the Bill receives Royal Assent, to tell local authorities that I hoped that in exercising their powers they would give reasonable notice to teachers. I have had a letter from the General Secretary of the EIS making the same point.
    On balance, I think that the best thing that the House could do would be to accept the amendments providing for a

    1447
    commencement date of 1st March. No one could then be accused of giving too short a period of notice.
    When I send out the circular, I shall say that although the date has been put forward by two months, I hope that authorities which wish to retire teachers on the operative date—now 1st March—will still take the decision as soon as possible and, if possible, give the teachers notice immediately so that reasonable notice is given to all individuals.
    Mr. Teddy Taylor: I am grateful to the Government for accepting our arguments, agreeing to change the date and accepting that injustice would have been done otherwise.
    I was a little unhappy when the Minister referred to me as being normally disgruntled, especially since we have not had such a grumpy Secretary of State for a long time.
    I am glad that he accepted our arguments and am grateful for the assurance that we might get not just a sensible decision as a result of a Conservative initiative but also a smile on the face of the Secretary of State. I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Amendments made: No. 2, in page 1, line 12, leave out '1st January 1977' and insert '1st March 1977'.
    No. 4, in page 1, line 15, leave out '1st January 1977' and insert '1st March 1977'.—[Mr. Teddy Taylor.]
    Mr. Teddy Taylor: I beg to move Amendment No. 6, in page 1, line 16, at end insert—
    '(2) For avoidance of doubt it is hereby declared that the date of the teacher's attaining age 65 and 31st December 1976 shall be the last dates of teaching service of the teachers specified in heads (a) and (b) respectively in subsection (1) above.
    (3) In the case of teachers specified in head (b) of subsection (1) above, an education authority or managers of a grant-aided school shall make to a teacher payment in lieu of salary and of notice of termination of employment to which he would otherwise have been entitled but for the application of the provisions of this Act.'.
    Clearly we cannot proceed with this amendment in detail and have a vote on it because it refers to the situation which existed before the House made the two
    1448
    amendments a few moments ago. However, the Secretary of State said in his reply to those amendments that because we were substituting a new retirement date, teachers would not be entitled to a period of notice. Does he think that this is fair or reasonable? We are not just substituting a new retirement date; we are removing teachers' right to work.
    If the Under-Secretary, instead of doing important work here, were a 66-year-old teacher in a Glasgow school, he would, before this Bill was introduced, have had the right to work in an unpromoted post for a considerable period. This right is now being removed and is changing teachers' expectations of employment and income.
    Have the Government considered the full implications of saying that teachers whose employment prospects are being destroyed by the Bill—albeit from a better date—should not be entitled to any notice? Has the Secretary of State cleared this with the Secretary of State for Employment? Quite apart from the legal aspect, is it fair to make a change in a person's prospects and expectations of employment and to give him no period of notice?
    Mr. Millan: I had great difficulty understanding the first part of the amendment when it was tabled and I still find difficulty understanding it. It is in the name of the hon. Member for Glasgow, Cathcart (Mr. Taylor) and my hon. Friend the Member for Glasgow, Springburn (Mr. Buchanan). I think that it was related to what my hon. Friend was suggesting in Amendment No. 5, but it was almost certainly misconceived and would have had almost the opposite effect to that which he sought to achieve. I think that the hon. Member for Cathcart has made clear that he does not expect the amendment to be accepted.
    Paragraph (3) is more easily understood and I note what the hon. Member for Cathcart said about it. By putting forward the date, we are probably dealing with an immediate situation as far as notice is concerned. Whatever the legal requirements and the fact that we are dealing with retirement rather than normal termination of employment, authorities should behave in a reasonable way and give people reasonable notice.

    1449
    This is not a matter that concerns only teachers. It concerns many other people in the public service who are able to be employed at the discretion of their respective authority but who could be required to retire at a particular time because they have passed the normal retiring age. There is no particular problem for teachers. They are not in a position that is different from that of any other public servants.
    I do not know what the amendment means by
    "payment in lieu of salary".
    If that is a suggestion that some compensation should be paid, I cannot accept it. I do not know any basis on which we could calculate compensation for a teacher who is asked to retire at the age of 65 and who goes to the authority and says "But you do not appreciate that if you had not asked me to retire now I had intended to continue until I was 70. Will you compensate me for those five years?" There is no way in which we could make that calculation. I do not think that compensation is relevant.
    The amendment is fairly obscure about what
    "payment in lieu of salary"
    would mean. I hope that with the new date and a reasonable degree of notice that we need not worry about payment in lieu of salary. I believe we can assume that authorities will behave reasonably. If we were to write something into the Bill, apart from creating a precedent for many other public servants, which could be extremely expensive, there would be no basis on which to make the payments.
    Mr. Teddy Taylor: I hope that this is a matter that the Government will bear in mind. I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Mr. Teddy Taylor: I beg to move Amendment No. 7, in page 2, line 11, at end add—
    '(3B) In exercising their discretionary powers under subsection (2) above, education authorities shall give consideration to the date of entry or re-entry into the teaching profession of the teacher concerned and, in particular, to whether the teacher was recruited under the special recruitment scheme, in so far as these factors affect pension entitlement'.
    The Second Deputy Chairman: With this we may take Amendment No. 8, in page 2, line 11, at end add—
    '(3C) In exercising their discretionary powers under subsection (2) above, the education authority shall take into account representations from teachers' professional organisations'.
    Mr. Taylor: The House will recall that on Second Reading it was pointed out by the Government that the local authorities, in operating their discretionary powers under the Bill, would be reasonable. I am making two suggestions with which I hope the Government will at least agree even if they cannot accept the amendment.
    We want to draw attention to the position of those who entered the profession under the special recruitment scheme, people who entered teaching rather late in life and did so with the expectation that they would have the right to work until 70, thereby increasing their salary and their pension. Some of these people have had limited service and, because of the Bill, will be deprived of the right to work for a further few years to add to their salary and pension. We are talking about a lot of money because five years, as a result of Houghton, can result in a substantial increase in salary. As pension is based on an individual's salary at the end of his employment, it can mean a great deal of money.
    5.45 p.m.
    If an authority were faced with the prospect of putting out of employment three teachers out of five, I hope that it might at least have regard to the fact that one of the teachers, for example, entered through the special recruitment scheme and would have only a small pension on retirement. I hope that it would appreciate that the Bill would remove the prospects that they were offered on recruitment.
    We have to bear in mind that not so long ago, in the golden age of the Conservative Government, we were appealing to people of advanced years to go into teaching to help solve the problem of a teacher shortage. Happily we were able to remove that problem, largely due to the splendid work of my hon. Friend the Member for Dumfries (Mr. Monro) when he was in the Scottish Office. We now have a glut. However, many people came

    1451
    into the teaching profession in the hope and expectation, along with almost a sense of public duty, of helping out in meeting a real problem.
    I am proposing that in exercising its discretion an education authority, should take into account representations from teachers' professional organisation. There have been disturbing indications during the debate and over the past few weeks that there has been a worsening of relations between the administration of the Scottish Office and the teachers' professional organisations. That is something that worries and concerns us all. There have always been extremely good relations in the past, but there are now disturbing indications that information has not been available and that other information has perhaps been misleading. Further, the teachers' associations, and one in particular, have been complaining about a lack of consultation.
    I hope that the Government will at least agree that in principle the education authorities should take into account representations from the professional organisations in exercising their discretionary powers.
    Mr. Michael Clark Hutchison: I can remember, along with most lion. Members now present, the days when we were trying to recruit people into the teaching profession. Many schemes were put up to get them into the net, so to speak. We are now involved in retiring them. There were clearly rather bad forecasts and rather bad machinery. I want to know what the Scottish Office is doing to improve the machinery and the forecasting. I have asked this question before and received no answer. I wonder whether I shall have an answer today.
    Mr. McElhone: The purpose of the amendment is to specify certain factors that an education authority should be required to take into account in deciding whether it is appropriate to re-employ a retired teacher. There is much to be said—much has been said—in favour of each of the factors that are set out in the amendment. Although I am asking the Committee to reject the amendments, that is not because I consider that an education authority should not take any of these factors into account should it consider it appropriate to do so.
    1452
    The main reason that I am asking the Committee to reject the amendments is that I consider that an education authority should be given the widest possible discretion to determine in all the circumstances which factors are relevant to a particular case when considering whether to re-employ a retired teacher. If we specifically require an education authority to take into account certain factors, that might be construed as indicating that they are the only factors that it should take into account. Further, it could mean that an authority would give undue importance to those factors at the expense of others that it might be argued are of equal importance, or even of greater importance. For example, a factor to be borne in mind may well be the existence of a large number of unemployed teachers in the authority's area.
    I think it is appropriate for Parliament to trust local authorities to exercise their discretion properly after taking into account all the relevant factors in a particular case. I see no reason to doubt that an education authority would exercise its powers to employ a retired teacher in anything but a sympathetic manner.
    The hon. Member for Glasgow, Cathcart (Mr. Taylor) referred to consultation with the teachers' organisations and their relations with the Scottish Office. In my period of office, extending just over a year, the association of myself and my right hon. Friend with the teachers' unions has never been better. I see their representatives very often, both formally and informally. I can assure the Committee that in the many discussions that I have had with them they have always understood our position. It is their duty to represent their members in the best possible way, and I expect them to do so. However, taking into account that duty, they understand to a large degree the problems facing the Government.
    It is the desire of my right hon. Friend and myself that education authorities, in considering whether they should reemploy teachers or whether they should employ teachers at all, should show some concern for the late entrant and those who came in under the special recruitment scheme. I believe that local authorities, especially the regional authorities, will take that into account. Indeed, COSLA has given an assurance to my right hon. Friend and myself that it will

    1453
    treat such cases in a most sympathetic manner.
    Although I am sympathetic to the amendments, I think that they would limit the discretion of local authorities. To some extent I share the view expressed by the hon. Member for Cathcart, but I think he will agree that his experience of Glasgow Corporation as an education authority allowed him to come to the conclusion that it always treats teachers in a most reasonable way. That pattern has continued with Strathclyde and other regional authorities. I am confident that the authorities will take into account the views expressed by the hon. Gentleman. I am sure that they will have some concern for the late entrants or those in special circumstances. There could be a number of categories where an education authority has to have regard to the domestic or financial circumstances of a teacher they might employ. I hope that the House will accept that position.
    Mr. Michael Clark Hutchison: I wonder whether I may now have an answer to the question that I have put twice. If there is no answer, I shall call a Division because of the sheer incompetence and rudeness of the Government Front Bench.
    Mr. McElhone: I hope that I have not been discourteous to a very reasonable Opposition Member. I was not aware that he had been asking questions in another Committee. However, I am still not clear about the question he is pursuing. Of course, I shall try to help him.
    Mr. Michael Clark Hutchison: I am very surprised that the Minister has not read the Second Reading proceedings. I will repeat my question. All of us remember the days when we were agitating and thinking up schemes to get teachers into the profession. We were short of teachers. Now we are doing our best to encourage them to retire early. Clearly, the forecasts were faulty. I am not blaming anyone for that. I do not know why the forecasts were faulty. However, what is the Scottish Office doing now to improve the forecasts? Does it have any machinery for doing so? What is it doing about this matter for the future, so that we shall not be faced with this sort of problem in the years to come?
    Mr. McElhone: The hon. Gentleman has always been reasonable in debate. I assure him that my right hon. Friend is sending out a document for consultation on the projected figures for people entering the training colleges. The hon. Member may remember that we debated this important point recently, on the Education Bill. I am sure that the House would not want me now to go into the arguments as to who was responsible for the large number of teachers leaving the colleges this year. Suffice it to say that another Government were in power during that time.
    However, without drawing out the argument any further, I assure the hon. Gentleman that my right hon. Friend has taken steps to ensure that the forecasting is improved, and a document will be going to various bodies concerned with the matter within the next few weeks.
    Mr. Monro: The Minister is like a football team that started the season badly and then fell away. His answers are getting worse and worse. He does not even know his facts. He knows very well that the secondary school teachers who came out of the colleges of education during the past summer went there under his jurisdiction just over a year ago. Why is it that over the last two years the Minister has allowed the intake to colleges of education for graduate secondary teachers to increase when the situation was staring him in the face?
    Would the Minister mind reading the White Paper of December 1972—obviously he has never done so—which made a very accurate forecast of the situation, provided that the intakes were reduced each year? The Minister did not do that, and that is the reason for the present trouble.
    Before the Minister gets excited and takes off, let me say that I accept responsibility for those who went to the colleges in September 1973, but not those who went in 1974 or 1975. What is more important is that had we not been in the present miserable economic situation, we would have employed the teachers concerned.
    There is a host of questions to be answered. May we have the answers now?
    Mr. Teddy Taylor: I share my hon. Friend's annoyance at the Minister's

    1455
    inadequate reply. The Government cannot give a good reply. The facts are staring them in the face. The reason why we are in this desperate situation is that there was too much recruitment in 1974 and 1975, years in which the Under-Secretary had responsibility for this matter, although not just in his present capacity. I am afraid that this is a rather sad tale of miscalculation. As my hon. Friend the Member for Edinburgh, South (Mr. Hutchison), in his very courteous way, has always said, all we can do is to forget the past and to say "Let us make sure that we do much better in the future."
    Mrs. Bain: I take it from the comments of Opposition Members that is is now official Opposition policy to adopt minimum standards in Scottish schools.
    Mr. Taylor: I am afraid that minimum standards in Scottish schools can mean a lot of things. What the Conservative Party stands for is ever-increasing standards of attainment and success. The only sure way of achieving this will be if the SNP starts supporting the Conservatives in bringing down the present Government. In the only Division we have had on this matter the SNP supported the Government solidly. However, we are in danger of straying. We hope for the best for the future. In the light of the Minister's assurance, I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Amendment proposed: No. 8, in page 2, line 11, at end add—
    '(3C) In exercising their discretionary powers under subsection (2) above, the education authority shall take into account representations from teachers' professional organisations'.—[Mr. Teddy Taylor.]
    Question, That the amendment be made, put and negatived.
    Question proposed, That the clause, as amended, stand part of the Bill.
    Mr. Millan: I was asked earlier about teacher numbers and I promised that I would make a statement. This seems to be the most sensible point at which to make the statement.
    Clearly, there has been some confusion about the number of teachers who will
    1456
    be affected by the Bill. I am glad of this opportunity of trying to clear up some of the confusion.
    There have been a number of references to numbers, including that made by my noble Friend, Lord Kirkhill, in the other place on 27th July, reported at c. 1274 of Hansard. I also dealt with the question of numbers on Second Reading in this House. Also, my hon. Friend the Under-Secretary gave Answers to my hon. Friend the Member for Glasgow, Springburn (Mr. Buchanan) on 20th October and 1st November. Those Answers are relevant. There have also been letters written by my Department to Mr. Docherty, the General Secretary of the SSTA, which dealt with the question of numbers. I should like to pick up points arising from all these references.
    To explain the position it is necessary to distinguish between three groups of teachers who are at present employed over the age of 65. Some of the confusion has arisen—not all of it, unfortunately—because of confusion about the kinds of teachers about whom we are talking. First, there are promoted teachers, who have, at the employing authority's discretion, been kept in post beyond the age of 65—I am talking about the present position—although they had no entitlement to that since their age of retiral was 65.
    Secondly, there are employed in the schools at present unpromoted teachers who have the discretion to stay on beyond the age of 65 as they have a retiral age of 70 and have exercised that discretion.
    Thirdly, there are teachers who have actually retired but have later come back to the schools and are employed by the authorities under arrangements which they have made between themselves and the authorities. This group will comprise teachers who were promoted and teachers who were unpromoted at the date of their retirement.
    The first category, promoted teachers kept on beyond the age of 65, are affected by the Bill because the Bill restricts employment in a promoted post after that age to only three months.
    The second group, the unpromoted teachers, are those most affected by the

    1457
    Bill since the discretion about employment after the age of 65 is removed from the individual teacher and given to the employing authority.
    The third group of teachers, mainly those who have retired and come back, are affected by the Bill to the extent that it will now be possible for authorities to offer contracts with a maximum of only one year. I do not have detailed information about those teachers of this category employed in the schools at present, but a large number of them will certainly be employed on a temporary basis or subject to short periods of notice. In practice the Bill will not affect those so employed, although it may affect others.
    6 p.m.
    I come to the figures that have been given. Generally speaking, the figures were given in response to questions which were put in a particular way. The figures given by Lord Kirkhill referred to full-time posts, both promoted and unpromoted. As he said, the total number at the beginning of the 1975–76 Session was about 300.
    The Answer given to my hon. Friend the Member for Springburn on 20th October referred to unpromoted teachers only but, in giving the figure of 500 for education authority schools, the Answer took account of the full-time equivalent of teachers employed only part-time. The detailed figures for education authority schools were as follows: full-time permanent 243, full-time temporary 96, part-time with full-time equivalent 157 and occasional, four. That gives a total of 500 to which we can add 13 similarly calculated for grant-aided schools.
    The statistics that we collect do not show the kind of contract which part-time teachers had with their respective authorities, so that it is impossible from those statistics—which were gathered for another purpose—to give the exact numbers affected by the Bill. In any case, the statistics were at September 1975.
    Mr. Docherty wrote two letters to the Department on 15th September, one to the Statistics Branch and one to the Superannuation Branch. The letters did not ask specifically for the numbers of teachers affected by the Bill but were in more general terms. The letter to the Statistics Branch asked how many non-promoted teachers over 65 were at
    1458
    present in service. I have to apologise to the House and Mr. Docherty, and I do so publicly, for I am sorry to say that the reply to Mr. Docherty was inaccurate, as the figures given were stated to be at September 1976 when they were the 1975 figures. That clears up the question asked by the hon. Member for Glasgow, Cathcart (Mr. Taylor) at the beginning of our debates about my having said that the 1976 figures were not available although apparently they were given to Mr. Docherty. There was a mistake. The heading on the letter should have been "September 1975" instead of "September 1976".
    Unfortunately, the Statistics Department interpreted the wording of Mr. Docherty's letter as referring to those of the age of 66 and over, and the figures were given on that basis.
    I regret these errors—one perhaps a misunderstanding and the other a simple error by my Department—especially as the figures given formed the basis of a letter which Mr. Docherty subsequently wrote to hon. Members. He was perfectly entitled to write that letter and to draw some, but not all, of the conclusions he drew from the figures he received from the Department.
    Mr. Docherty's letter to the superannuation branch asked for the number of non-promoted teachers over 65 in reckonable service—that is, reckonable for superannuation purposes. Superannuation records are kept up to date on a day-to-day basis and the reply showed that at the latest date—September 1976—there were about 460 teachers aged 65 or over in service. About 50 of these had indicated their intention to retire by December 1976. It is impossible to know how many of these retirals would have happened in any case and how many were in anticipation of the Bill.
    Moreover, these figures, as the letter to Mr. Docherty explained, included promoted as well as unpromoted teachers, and also a small number of teachers who would be employed outside the school sector and some who are no doubt employed in further education where the retiral provisions are exactly similar to those in the schools. The Bill will, therefore, affect further education teachers in the same way as it affects teachers in schools.

    1459
    It is fair to assume that most of those in reckonable service are employed full time or, if not, on a fairly long-term basis, but the superannuation records, which are kept for other reasons, do not make that distinction. They are concerned with teachers in relation to pensions, not with teachers moving from one kind of service to another.
    When I said in the Second Reading debate on 25th October that I believed that by 1st January about 400 teachers in Scottish schools would be affected by the Bill in one way or another, I did not distinguish between promoted and unpromoted teachers. That was a fair statement but I made clear at the time that the position was uncertain.
    Looking back at the various statements that have been made and the various answers to different questions, I regret that I did not explain the figures in more detail during my Second Reading speech. Had I done so at least some of the confusion that has since arisen might have been prevented. In fairness, I cannot give a better figure than I gave in my Second Reading speech. The figure may be less than 400; it is unlikely to be more. I hope that the Committee will accept that the figure I gave was given in good faith. If it turns out in the event to be an overestimate, I very much regret it, but even when the Bill is implemented it will be difficult to find out exactly how many teachers are affected by it.
    I apologise for giving wrong figures to Mr. Docherty and the confusion which has caused a large number of hon. Members a great deal of inconvenience. I also apologise if, in dealing with the matter on Second Reading in rather less detail than I have done today, I inadvertently misled several hon. Members when what I said was taken with other answers that have been given. I hope that what I have said today will be recognised to be as good a statement as I can make about the figures and as a fair statement of the position.
    We are not simply dealing with the number of people who will be immediately affected by the Bill. Whatever the numbers are, the main purpose of the Bill remains. The Bill has a significance beyond the next few months, as it is meant to provide permanently for the
    1460
    overall change in teacher supply from a period of acute shortage to the present period of overall surplus and the prospect over the next few years of getting teacher supply and demand properly into balance. If in the event it turns out that all our figures are wrong—I hope that will not be so—a significant number of teachers will still be involved. The changes made by the Bill are necessary to enable us to move into the new situation of teacher surplus. I hope that that statement will be helpful to the Committee.
    Mr. Teddy Taylor: The Minister has made an almost unprecedented apology to the Committee for the figures he gave to the SSTA being apparently for the wrong date, incorrect and covering the wrong period. He also made a generous apology for his speech in the Second Reading debate. We should be less than gracious if we did not accept his handsome apology for the serious lack of information on a Bill which is being rushed through at the end of the Session. We are entitled to ask the Minister what steps are being taken to give us the information we want, which is not the detailed information to which he referred.
    The hon. Member for Glasgow, Spring-burn (Mr. Buchanan) asked the Secretary of State for Scotland on 1st November:
    "… how many of the estimated 400 school teachers over 65 years of age at present in service in Scotland in unpromoted posts are in temporary, part-time or occasional posts …".
    The Answer was given by the Under-Secretary of State as follows:
    "The estimate of 400 cannot be broken down into the categories requested." —[Official Report, 1st November 1976; Vol. 918, c. 504.]
    If the figure for September 1975 is available, why is it not now possible to break up the figures into the categories requested?
    Another query relates to the Secretary of State's Second Reading speech on 25th October. The right hon. Gentleman then said that he believed that the numbers affected would amount to 400 teachers, but added:
    "That is the extent to which, by making room in the schools, we could be making jobs available for newly qualified teachers who at present find it difficult to obtain jobs."—[Official Report, 25th October 1976; Vol. 918, c. 52.]

    1461
    He did not then say that there would be 400 affected, but that there would be 400 spare jobs. We now hear that that is probably not the case—in other words, that even if the figure of 400 teachers is correct, there will not be 400 jobs available. We understand that they cover all categories affected, including unpromoted positions, and that the figure of 400 includes temporary, part-time and occasional teachers.
    On thing that stands out a mile is that if one has 20 part-time teachers at age of 65 and decides to make them redundant or to retire them, one does not replace them with 20 young teachers from the colleges. Perhaps we may be told by the Minister the number of full-time equivalent teachers who might be put out of post to create that number of jobs.
    I am worried that the situation, according to the break-up figures for September and October 1975, will mean that instead of these provisions covering 416 teachers above the age of 66, the actual figure will be only 180 permanent teachers and only 46 secondary school teachers. Is there any information available about the number of those teachers who are teaching subjects in which there is a shortage? We are trying to arrive at a rough estimate as to how many jobs could be made available depending on the discretion of the local authorities. What would be ideal for that purpose would be for the House to have a statement showing how many teachers are serving in the schools who are 65 years or over and who possibly will be affected by the Bill. That should not be too difficult a task since there are only a small number of education authorities. We are told by the Secretary of State that the September 1976 survey is not yet available. When will it be available?
    If the Government bring forward a Bill at this end of the Session, the least one expects is that they will make some kind of estimate of the number of jobs likely to be made available if local authorities were to apply the Bill rigidly—and obviously they will not do so. We are unhappy about a situation when the Government admit that they do not know how many teachers may be affected or how many new jobs will be created. This underlines our view that the Bill is basically a cosmetic operation.
    1462
    6.15 p.m.
    I wish to ask four straight questions of detail. In the statement handed to Mr. Docherty, which we now understand was incorrect, there was a note stating that the source was "TF/1/2, October 1976". Was that also an error? One can understand a typist or secretary putting in the wrong date, but it is strange that the source also should be wrong. May we be told why?
    Secondly, if it was possible to give separate details about different categories of teachers in respect of September 1975, why is it not possible to give some split in respect of September 1976, as would appear to be the case, judging by the Written Answer given by the Under-Secretary of State for Scotland on Monday, at c. 504 of Hansard.
    Thirdly, as the Minister has admitted that the figure of 400 teachers may be wrong, does he also withdraw the statement made on Second Reading to the effect that by making room in the schools he could make jobs available for newly qualified teachers? That is a significant point.
    Lastly, when shall we be given the September 1976 figures, and, indeed, why can we not have them now? It is disturbing that this Bill is being rushed through in order to give the general public the impression that many jobs are being created for young teachers, when the fact is that the numbers involved are very small indeed, and when the Government do not even appear to know those numbers.
    Mr. Millan: I do not want to repeat the exact words that I used on Second Reading. The hon. Member for Glasgow, Cathcart (Mr. Taylor) drew attention to my statement that by making room in the schools we could make jobs available for newly qualified teachers who were finding difficulty in obtaining jobs. I did not definitely say that we would be doing so. I said in a later passage that the number of teachers involved would depend on how local authorities exercised their discretion. I was at pains to explain that on Second Reading, and I also wish to do so today.
    I have never said that all teachers over the age of 65 would come out of schools on 1st January. Indeed, the Opposition's view was that it would be grossly unfair

    1463
    for all teachers over 65 to be removed from school forthwith. Therefore, the immediate impact will depend on how authorities deal with individual cases. If hon. Members will examine the words I used on Second Reading, they will see that I made the matter quite clear. I am sure that it is within the understanding of all who have taken an interest in the Bill that that was the situation.
    I turn to the parliamentary Answer that was given to my hon. Friend the Member for Glasgow, Springburn (Mr. Buchanan) on Monday. The figure of 400 used last week was largely related to the superannuation figures which were the most up-to-date figures we had, but they are gathered for other purposes and do not make the distinction which I was asked to make between the categories of part-time and full-time teachers. They are individual teachers, not equivalent full-time posts. I cannot split the superannuation records, and shall never be able to do so, unless those records are kept in a different way. If hon. Members will examine in tomorrow's Hansard what I said a little earlier, they will see that I made a strong case for basing the estimates on the superannuation figures, particularly since the other figures are a year out of date. We can make reasonable assumptions because most of the figures relate to reckonable service and full-time permanent posts.
    The hon. Gentleman may not have quite understood that when I spoke of part-time teachers my figures concerned full-time equivalents, so many more teachers are involved. If one removed part-time teachers from the schools, one would make available an equivalent number of full-time jobs. I also made clear in my statement that most of those part-time teachers would not be affected by the Bill because they have arrangements with the authorities which probably provide for a short period of notice on either side.
    If, having read my statement, hon. Members still feel that I have not clarified the situation sufficiently, I shall try to explain further by correspondence. No doubt Mr. Docherty will look carefully at what I have said and if he should challenge my figures, I shall be pleased to examine what he says.
    1464
    The hon. Member for Cathcart mentioned the wording of the statement given to Mr. Docherty. There is no significance in the date. It was the date on which the letter was typed. The reference TF/1/2 refers to two of the large branches in the Scottish Education Department and so far as I know they have no special significance.
    I am sorry that the information from the September 1976 statistical survey is not available. The information is still coming in and will not be available for some time. The Scottish Education Department collects a large number of statistics and we are always reluctant to add ad hoc inquiries to its duties, even for a good reason. We are trying not to impose additional burdens on local authorities. With hindsight, perhaps it might have been better to conduct a general, straight ad hoc survey a month or two ago to get the figures. Perhaps that would have been sensible, but we did not do it. The principle behind the Bill remains the same, whatever the numbers involved.
    Mr. Teddy Taylor: The Secretary of State has failed to answer some of my questions. Were the figures that he read out in his original statement substitutes for those in the statement given to Mr. Docherty, or are they more up to date? Were the figures of 243 permanent teachers and 96 full-time teachers those which Mr. Docherty should have got for last year, or are they more up to date?
    Surely we can expect to be told how many teachers over the age of 65 are teaching in Scottish schools. That information should be readily available. One would also expect the number of full-time teachers to be readily available. Those are basic figures which should be available to hon. Members when considering a Bill of this kind.
    The Government have postponed the State opening of Parliament because there is too much business. One therefore assumes that the Government will be careful about what legislation they introduce. If the Government argue the case for a Bill to be introduced at the end of the Session, one expects them to have some idea of the figures involved.
    The Minister has explained the problems and the mistakes that he has made. When will the September 1976 figures be

    1465
    available? Is the delay caused because the local authorities have not sent in their returns yet, or because the Scottish Education Department has not had time to process them? May we have a statement on the September 1976 figures similar to that given to Mr. Docherty?
    Mr. Millan: The hon. Member asked whether the figures that I gave were a substitute for those given to Mr. Docherty. The answer is "Yes". If the hon. Member examines my statement he will see that the breakdown adds up to the 500 education authority unpromoted teachers concerned at September 1975.
    In view of what has happened, I shall see whether I can get the figures from the September survey brought forward more rapidly than would otherwise be possible, because the normal processes take some considerable time. On Second Reading I said that I would make available to the House the information on September 1976 as soon as I got it. I shall do that even if it is information which does or does not justify what I have said. I shall try to obtain the information as a kind of special exercise.
    I wanted to make a statement to the House this afternoon rather than write private letters to my hon. Friend the Member for Springburn or to Mr. Docherty, because I thought that all hon. Members should know the position.
    Question put and agreed to.
    Clause 1, as amended, ordered to stand part of the Bill.

  Clause 2

    CITATION, COMMENCEMENT AND EXTENT
    Amendment made: No. 9, in page 2, line 14, leave out '1st January 1977' and insert '1st March 1977'.—[Mr. McElhone.]
    Mr. Teddy Taylor: I beg to move Amendment No. 11, in page 2, line 16 at end insert—
    '(3A) This Act shall expire on 1st March 1980, but may be further extended to 1st March 1982 by an order approved by both Houses of Parliament'.
    While many hon. Members accept the need for a Bill of this sort to try to help
    1466
    to deal with teacher unemployment, many in the profession and outside the House are unhappy about the way in which teachers' retirement age is shoved up and down according to teacher shortages.
    The Bill should not be a permanent measure but should last only until 1980 with the possibility of an extension of a further two years by order. That is what the amendment proposes. Between now and then it would be possible for a proper survey to be conducted into the appropriate age for teacher retirement.
    It is wrong for the ages to be put up and down depending on the employment situation. I hope that by imposing a date for the expiry of the Bill it will be possible to introduce more objective criteria for teacher retirement. If the economy improves and a Conservative Government are returned, there may be extra demands for teachers because we shall improve standards in our schools. We could be restricted by the Bill, which puts curbs on local authorities.
    I hope that the Government will accept this sensible amendment, which will provide for more flexibility and time to consider the appropriate retirement age for teachers.
    Mr. Russell Johnston: I, too, am not very keen on this kind of Bill. I do not favour compulsory retiral dates. In the best ordered society people should be allowed to work for as long as they want and are able, and not be compelled to give up at a predetermined date. But I was more than puzzled by the contribution of the hon. Member for Glasgow, Cathcart (Mr. Taylor), not for the first time. He suggested that we should have a survey to establish objective criteria for when it would or would not be appropriate for teachers to retire. I do not believe that any such survey is possible, because I do not think that objective criteria exist. I do not want any more surveys than we already have.
    6.30 p.m.
    Mr. McElhone: The one certain fact among the many matters disputed this afternoon is that we shall not have a Conservative Government for as long as anyone can foresee. That is evident from the Opposition's conduct, especially this afternoon.

    1467
    The amendment provides that the Bill should cease to have effect on 1st March 1980, though it might be continued to 1st March 1982 by an order approved by both Houses of Parliament. It is not acceptable because it would mean that after 1st March 1982, at the latest, there would be no statutory provisions governing the retirement of teachers employed by education authorities or by the managers of grant-aided schools.
    Since the Second Word War there has been only a very short period—from 1st February 1969 to 1st August 1970—when there have been no statutory provisions about the retirement of teachers in Scotland. Provisions about such retirements were reintroduced in Section 16 of the Education (Scotland) Act 1969 following requests from the Educational Institute of Scotland and the Scottish Secondary Teachers' Association.
    The amendment has probably been prompted by fears that the provisions of the Bill would no longer be appropriate if the present teacher unemployment should change back to a position of teacher shortage. Such fears are groundless. Although the Bill has been prompted by the recent change from a teacher shortage to a teacher surplus, the reduction of the retiring age of unpromoted teachers from 70 to 65 is in no way a temporary measure. The upper age of retirement for teachers in England and Wales is 65, and very few employees in the public sector in Scotland have any higher retiring ages.
    Moreover, the drafting of the amendment is defective, because it makes no provision as to who should make the order which may be approved by Parliament. Therefore, I ask the House to reject the amendment.
    Mr. Teddy Taylor: The Under Secretary has nut a convincing argument against the amendment, and therefore I beg to ask leave to withdraw the amendment.
    Amendment, by leave withdrawn.
    Mr. McElhone: I beg to move Amendment No. 12, in page 2, line 17, leave out subsection (4).
    I am glad that we had such a reasonable approach from the hon. Member for Glasgow, Cathcart (Mr. Taylor) on
    1468
    the last amendment. I hope that his colleague, the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith), will adopt a similar approach later. We should then soon get on with our business.
    This amendment leaves out the conventional subsection added in another place to avoid questions of privilege. It is purely formal, and involves no issue of substance.
    Amendment agreed to.
    Clause 2, as amended, ordered to stand part of the Bill.
    Bill reported, with amendments; as amended, considered.
    Motion made, and Question proposed, That the Bill be now read the Third time.
    6.35 p.m.
    Mr. Teddy Taylor: We are glad that the Government accepted a major amendment removing what we had regarded as a real injustice in the Bill. We are glad that they accepted our arguments and extended the date for the coming into effect of the Bill from 1st January to 1st March.
    I hope that the public, particularly unemployed teachers, will not expect too much of the Bill. Although it had been indicated that several hundred jobs might be involved, it is clear that many of those who are over 65 will not be retiring immediately, that some will not retire at all, and that some are not eligible for retirement. It is also clear that the removal of some, as they are part-timers, would not provide a full-time equivalent job. In those circumstances it is important that we should not wrongly raise the expectations of the unemployed teachers, and we are grateful for the Secretary of State's apology on the question of the figures.
    It would have been helpful to have from the Under-Secretary an indication of how he saw the teacher employment position in the future. My hon. Friend the Member for Edinburgh, South (Mr. Hutchison) said that he was very worried because estimates could always go wrong, and he asked whether forecasting could be improved. If the Government do not have a rough idea of what the effect of the Bill will be, it must be difficult for them to forecast.

    1469
    It was discouraging that the Under-Secretary said that the teacher surplus was likely to continue for a considerable time. Can he give us any indication of precisely what he meant by that? Can he give an assurance that the measures which we understand the Chancellor of the Exchequer is shortly to introduce will not result in additional teacher unemployment in Scotland?
    6.38 p.m.
    Mr. McElhone: I cannot speak for my right hon. Friend the Chancellor of the Exchequer.
    Although this is a small Bill, it is important. Many points have been made about how many teachers we can employ next session, but the important point is that the Bill is not just for one year. We hope that over the years it will help significantly in reducing teacher unemployment.
    The Bill has been debated very fully. Whatever reservations the Opposition may have, we believe that it will help to bring unemployed young teachers into jobs. We have a great deal of sympathy for anyone who is unemployed. We are taking steps to help young teachers and those who came under the special recruitment scheme.
    I thank all those who took part in the debate. My right hon. Friend the Secretary of State displayed his usual flexibility. I hope that the Opposition will accept his generous concession, made in response to the many requests from both sides of the House, as an indication of his attitude in trying to help the House in all matters concerning legislation. I hope that we can proceed as swiftly with the legislation with which we are to deal later today.
    Question put and agreed to.
    Bill accordingly read the Third time and passed, with amendments.

  VALUATION AND RATING (EX EMPTED CLASSES) (SCOTLAND) BILL [Lords]
  Considered in Committee.
  [Sir MYER GALPERN in the Chair]

  Clause 1

    EXCLUSION FROM VALUATION ROLL OF SUBJECTS BELOW Low WATER MARK
    6.40 p.m.
    Mr. Teddy Taylor: I beg to move Amendment No. 3, in page 1, line 7, after "lie", insert "float or are suspended".
    This is a genuine probing and a rather small amendment. What I have proposed is that instead of giving the Secretary of State power to free from the rates burden—
    "lands and heritages which lie wholly or partly on, over or under the bed of the sea."
    we should add the words—
    "float or are suspended".
    I suggest this because I am not sure whether the word "over" covers the point that I am making. If something is over the sea bed, would that cover things which are suspended or are floating? I am thinking particularly of fish farming. One item that I would hope a future Secretary of State would consider exempting from rates would be fish farming cages.
    I would have thought that fish farming cages did not lie on, over or under the bed of the sea. They are usually suspended. Do the words that I am proposing cover all eventualities?
    Mr. John Corrie: I intervene to put a specific point to the Secretary of State. I am slightly worried that an oil rig might be rated twice. On Second Reading we talked about what would happen to oil rig building platform sites, because one could have a coffer-dam site built below the low water mark with a rig in it. I think that the Secretary off State said that as long as it was attached to the mainland, it could still be rated.
    The Secretary of State for Scotland (Mr. Bruce Millan): When I looked at the Second Reading debate I thought my

    1471
    reply was ambiguous. It might have suggested that not only was the permanent installation rateable but the rig as it was built was rateable until it was floated out. I did not actually mean that and I hope that I have not misled the hon. Gentleman on that point. It is, of course, a moveable structure and no more rateable when being constructed than a machine would be rated when it is being constructed for shipment elsewhere.
    Mr. Corrie: I thank the Secretary of State for that explanation. That was the point that I was worried about and his intervention has cleared it up.
    The Under-Secretary of State for Scotland (Mr. Frank McElhone): The hon. Member for Glasgow, Cathcart (Mr. Taylor) has put forward an interesting argument about whether subjects can float or be suspended. The purpose and effect of the amendment is to extend the scope of the order-making power to lands and heritages which float or are suspended over the sea bed. I am sorry to say that its effect would add nothing to the clause as drafted.
    It is difficult to imagine what might float or be suspended wholly or partly on, over or under the bed of the sea without lying wholly or partly on, over or under it. If that seems confusing, I am prepared to re-state it. The amendment would therefore have no effect on the meaning of the subsection. It is unnecessary and I have to resist it.
    Mr. Teddy Taylor: I am perfectly happy to accept the Minister's assurance, so long as when we come to fish farming he will not say that the amendment cannot be accepted because it would not be contained within the provisions of Clause 1. I hope that the hon. Gentleman will remember that when we discuss fish farming. I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    6.45 p.m.
    Mr. J. Grimond: I beg to move Amendment No. 4, in page 1, line 7, leave out 'or partly'.
    The First Deputy Chairman: With this we may take the following amendments:
    No. 14, in Clause 2, page 3, line 1, leave out 'or partly'.
    No. 1, in Title, line 3, leave out 'or partly'.
    Mr. Grimond: As I said on Second Reading, I have some fundamental objections to the Bill, but a most important detail is that it applies not only to heritages
    "which lie wholly … over or under the bed of the sea."
    but to those which lie
    "partly on, over or under the bed of the sea".
    My first objection is that the word "partly" seems to be extraordinarily vague. I take it, however, that a heritage or structure any part of which was built below the low water mark would come within the scope of the Bill and, therefore, a jetty or a pier—as it would extend from above the high water mark to below the low water mark—would come within the scope of the Bill. Although that would make it possible to remove it from the rateable value which the local authorities could draw their income from, it is contrary to the general desire to give local authorities more sources of income.
    It could also be extremely serious in my constituency. The estimate made by the Shetland Island Council of the valuation figures for piers and jetties alone, leaving out all other structures and pipelines, is £2 million. It will have serious effects in Orkney and Shetland if the Secretary of State should use his powers under the Bill. It would be most objectionable to rely upon the Secretary of State not to use his powers, because it has been a general principle that rating should not be in the hands of the Scottish Office but left to the independent valuers. Now we are giving the Secretary of State authority to intervene. However, if he does intervene, it would seem that it must create unfairness between one rateable subject and another.
    I cannot see how that can be avoided. If the Secretary of State exempts any structure which is partly above the low water mark, that would be unfair on the other structures which are still subject to rating. If it is argued, as it was on Second Reading that this is a provision to prevent the oil companies from being too heavily taxed, I would adopt

    1473
    the argument that it is not by the local authorities that the oil companies are heavily taxed. That taxation was taken by the Government for the Exchequer before this Bill was ever thought of.
    If the Secretary of State is to use his discretion and bring in orders which will exempt oil companies but will not necessarily exempt other forms of enterprise, that would be most unfair. Perhaps the right hon. Gentleman would make good to the local authorities any lack of revenue which they suffer from the exemption of oil companies. In any case, it cannot be right for Parliament to pass a Bill which gives a power to the Secretary of State which is quite unknown to the general law of rating. It would allow him to rate not only structures in the sea but structures part of which are out of the sea and to discriminate between one type of structure and the others.
    The other two amendments that we are discussing deal with the same point.
    Mr. Gordon Wilson: This is a point which I raised on Second Reading and the answer which the Minister then gave was that the word "partly" was included to cover bridges. He said that it was difficult to bring within the scope of the Bill toll bridges which span waters as well as perhaps being partly involved in them. The answer suggested at the time by the hon. Member for Dundee, West (Mr. Doig)—with whom I associate myself on this occasion—was that bridges should be dealt with separately so that there is no doubt about their position. I understand that later we shall have an opportunity of considering two forms of amendment which would seek to do just that.
    The word "partly" could cause a difficulty. I shall not repeat what I said about the legal interpretations to which that could give rise, but it could cause assessors considerable difficulty. As a consequence, difficulty will be caused to Ministers when considering what sort of exclusions are to be made to cover any changes in a valuation.
    If we removed the need for this word "partly" to cover bridges, because bridges were dealt with separately, we should then have to consider the justification for the word at all. The definition clause says:
    1474
    "the sea means any area seaward of the lowest point to which the tide ebbs at ordinary spring tides and includes any estuary, arm of the sea and the waters of any channel, creek, bay or river seaward of that lowest point".
    If that is the definition which has been employed, it seeks to give a point of delimitation where the land ends and the sea begins and consequently to separate that area where the right to value heritages exists from that where no such right exists.
    If a definition in the Bill creates a fixed point and is capable of interpretation by assessors, lands valuation committees, the Lands Valuation Appeal Court and the Scottish Office, why is the word "partly" used? That fixed point of the subject is either below the mark—that is, in the sea—and therefore cannot be valued, or it is on land and can.
    One example given on Second Reading was that of the submarine pipeline. In that case, the part of the subject which came above the sea from the definition point contained in the Bill could be valued, as indeed could other oil-related subjects on land, whereas that portion of the pipeline which was below the sea would get the benefit of the Bill.
    In the case of jetties and piers, the Minister assured us that they could not be exempted by virtue of the Bill. However, the problem in legislation is that firm and proper intentions expressed by a Secretary of State can be reversed by his successor for policy and political reasons. If that is the case, we should make the Bill as self-explanatory as possible. That seems to rule out the use of the word "partly". I therefore ask the Minister to consider accepting the amendment.
    Mr. Teddy Taylor: Because of the inclusion of the word "partly", a Secretary of State might be able to remove from rating subjects on which rates are now paid. Subjects which extend below low water mark, like coal mines, piers and estuarial bridges, have been held by the courts to be rateable. Considerable sums are involved, particularly with piers. Would it be possible for the Secretary of State to remove such subjects from rating?
    Mr. Millan: First, all that the Secretary of State can do under the Bill is to lay an order before Parliament under the affirmative resolution procedure. The

    1475
    House actually makes the decision. Therefore, for hon. Members to talk about the Secretary of State being able to take subjects out of valuation or include them in valuation at his own discretion is to misunderstand and misrepresent the Bill.
    That, incidentally, disposes of the argument that I should be interfering with the independence of the assessors. An assessor has a certain amount of independence, but he does not decide what is rateable and what is not. Parliament decides that through the various valuation Acts and Parliament will continue to decide it by the view that it expresses on any order under the Bill brought forward by any Secretary of State.
    I explained on Second Reading why the Bill was drafted in this way. The intention is to give the Secretary of State the maximum flexibility. If I could forecast now my view in future of what should be rateable and what should not and could express that in satisfactory legislative terms, I should be willing to do so. But it is difficult in this unusual field to ensure that the legislative provisions are absolutely right. That is why it is done in this way—so that the matter can be dealt with by order, subject to confirmation by Parliament.
    Having looked at the alternative procedure, of including special provisions for the bridges, I do not believe that that would have been so satisfactory. If we found that we did not have it right, other small pieces of valuation legislation might be needed to define this area accurately. This method of proceeding will be much more beneficial and will enable the House to express a view on the development of the Bill as an order is laid. If we tried to get everything right in the first place, we might find that it was not right but it would then be the law and we should have to put up with it.
    The reason for the words "or partly" is that without them some of the land and heritages with which we intend to deal under the Bill would not be covered. Both hon. Members who have spoken accepted that that was so for the Forth and Tay road bridges, but without these words, they would be removed from the Bill. That is because, in layman's language, they are partly over the sea and partly on land. No one wants to
    1476
    remove them from the provisions of the Bill.
    On the other hand, nor do I accept that every bridge going over every little bit of water should not be subject to rates. That applies to the Forth and Tay bridges, but there may be others which are suitable for rating. We certainly need these words in this discretionary way to cover those two bridges.
    The same applies to pipelines. The hon. Member for Dundee, East (Mr. Wilson) suggested that it was not true for pipelines because if we took these words out and substituted another definition of the word "sea", it would be possible not to rate a bit of pipeline until it got to the boundary point and then to rate the bit on shore. That is not so, because it would be a single subject and it is not possible in valuation terms to divide it.
    7 p.m.
    Mr. Gordon Wilson: Does the right hon. Gentleman accept that in valuation law a single subject straddling a boundary is divided in quantity and value for entry into different valuation rolls—for example, the valuation roll for the former city of Glasgow and that for Renfrewshire? That is common throughout the country. Therefore, I cannot see why it should not be adopted here.
    Mr. Millan: That may be so, but we have a situation where a single subject is divided so that part is rateable and part is not. It is a question not of dividing the valuation between one rating authority and another, but whether it should be rateable. I am afraid that the hon. Gentleman's formulation does not achieve the objective which he has in mind, because it is a single subject, as he recognised. A pipeline would be a single subject which did not lie wholly on, over or under the bed of the sea; if it did, it would stop before it got to the shore, and it would be a peculiar and unsatisfactory pipeline.
    To take these words out of the Bill would not achieve the hon. Gentleman's objective. We need words of this nature to deal with bridges and pipelines. That does not mean that when the Bill is passed the Secretary of State—either myself or any successor—would immediately wish to exempt anything which

    1477
    could possibly come under Clause 1. That is not what is intended.
    I have given certain assurances about a number of subjects which we shall not remove from rating. It must not be assumed that we shall do that. If we attempted to do that, it would be subject to agreement by the House of Commons. But we need the words expressed in the terms in subsection (1) if we are to have the flexibility to work the exemption procedure. Therefore, I cannot advise the Committee to accept the amendment.
    Mr. Grimond: I am totally unconvinced by the Secretary of State's speech. First, he has advanced no arguments as to why, if he wishes to exempt the Forth and Tay Bridges, they cannot be explicitly exempted. Secondly, although rating legislation is passed by the House of Commons, it has up to now been in a form which has not given discretion to the House or Ministers to make distinctions between one rateable subject and another.
    Mr. Millan: For the right hon. Gentleman to talk about giving discretion to the House of Commons when it has legislative supremacy to decide what the law should be seems extraordinary.
    Mr. Grimond: The right hon. Gentleman said that one of the reasons for
    drafting the legislation in this form was that he did not quite know what he wanted to do. That was the alarming part of his speech. The House of Commons should not pass legislation which is designed to give some general umbrella to cover what the Government may wish to do in future.
    I take the point that this is subject to an affirmative resolution of the House of Commons. We all know what that means. If the Government of the day have a majority—they normally do, despite the present situation, which is rather eccentric—the order will go through. Whatever the Secretary of State may say, there will be discrimination between one rateable subject and another. I consider that highly undesirable.
    If the Government wish to exempt certain oil installations in the sea, they should come to the House of Commons and say in precise terms that the valuers shall not have power to rate beyond two or three miles. They should not introduce legislation which will cause injustice between one subject and another. In my constituency it could have extremely serious results. I maintain that this amendment ought to be made.
    Question put, That the amendment be made:—
    The Committee divided: Ayes 18, Noes 104.

    Division No. 370.]

    AYES

    [7.4 p.m.

    Bain, Mrs Margaret

    Reid, George

    Welsh, Andrew

    Crawford, Douglas

    Ross, Stephen (Isle of Wight)

    Wigley, Dafydd

    Freud, Clement

    Steel, David (Roxburgh)

    Wilson, Gordon (Dundee E)

    Henderson, Douglas

    Stewart, Donald (Western Isles)

    Howells, Geraint (Cardigan)

    Thompson, George

    TELLERS FOR THE AYES:

    MacCormick, Iain

    Thorpe, Rt Hon Jeremy (N Devon)

    Mr. A. J. Beith and

    Pardoe, John

    Watt, Hamish

    Mr. Russell Johnston

    Penhaligon, David

    NOES

    Anderson, Donald

    Douglas-Mann, Bruce

    Jones, Dan (Burnley)

    Armstrong, Ernest

    Eadie, Alex

    Judd, Frank

    Ashton, Joe

    Edwards, Robert (Wolv SE)

    Kaufman, Gerald

    Atkins, Ronald (Preston N)

    Ellis, John (Brigg & Scun)

    Kerr, Russell

    Atkinson, Norman

    English, Michael

    Lambie, David

    Bates, Alf

    Evans, John (Newton)

    Lamond, James

    Bishop, E. S.

    Fletcher, L. R. (Ilkeston)

    Leadbitter, Ted

    Brown, Hugh D. (Provan)

    Fletcher, Ted (Darlington)

    Lipton, Marcus

    Brown, Ronald (Hackney S)

    Forrester, John

    Lomas, Kenneth

    Campbell, Ian

    Fowler, Gerald (The Wrekin)

    McCartney, Hugh

    Canavan, Dennis

    Golding, John

    McElhone, Frank

    Cant, R. B.

    Gourlay, Harry

    McGuire, Michael (Ince)

    Carmichael, Neil

    Hardy, Peter

    Mackintosh, John P.

    Cocks, Rt Hon Michael

    Harrison, Walter (Wakefield)

    McMillan, Tom (Glasgow C)

    Cohen, Stanley

    Hart, Rt Hon Judith

    McNamara, Kevin

    Cook, Robin F. (Edin C)

    Hatton, Frank

    Madden, Max

    Craigen, J. M. (Maryhill)

    Hunter, Adam

    Marshall, Dr Edmund (Goole)

    Deakins, Eric

    Hutchison, Michael Clark

    Marshall, Jim (Leicester S)

    de Freitas, Rt Hon Sir Geoffrey

    Irvine, Rt Hon Sir A. (Edge Hill)

    Mellish, Rt Hon Robert

    Dempsey, James

    Irving, Rt Hon S. (Dartford)

    Millan, Rt Hon Bruce

    Doig, Peter

    John, Brynmor

    Miller, Dr M. S. (E Kilbride)

    Dormand, J. D.

    Johnson, James (Hull West)

    Molloy, William

    Murray, Rt Hon Ronald King

    Selby, Harry

    Walker, Harold (Doncaster)

    Oakes, Gordon

    Sheldon, Robert (Ashton-u-Lyne)

    Walker, Terry (Kingswood)

    Ovenden, John

    Silkin, Rt Hon S. C. (Dulwich)

    White, James (Pollock)

    Palmer, Arthur

    Sillars, James

    Whitehead, Phillip

    Park, George

    Silverman, Julius

    Wilson, Alexander (Hamilton)

    Parker, John

    Skinner, Dennis

    Wilson, William (Coventry SE)

    Phipps, Dr Colin

    Small, William

    Wise, Mrs Audrey

    Prescott, John

    Smith, John (N Lanarkshire)

    Woodall, Alec

    Roberts, Gwilym (Cannock)

    Spriggs, Leslie

    Woof, Robert

    Roper, John

    Stallard, A. W.

    Wrigglesworth, Ian

    Rose, Paul B.

    Stewart, Rt Hon M. (Fulham)

    Ross, Rt Hon W. (Kilmarnock)

    Stoddart, David

    TELLERS FOR THE NOES:

    Rowlands, Ted

    Strang, Gavin

    Mr. Ted Graham and

    Sedgemore, Brian

    Tierney, Sydney

    Mr. Thomas Cox

    Question accordingly negatived.
    7.15 p.m.
    Mr. Grimond: I beg to move Amendment No. 5, in page 1, line 8, after 'sea', insert:
    'within three miles of the lowest point to which the tide ebbs at ordinary spring tides'.
    The First Deputy Chairman: With this we may take the following amendments:
    No. 19, in Clause 3, page 3, line 27, leave out from 'tides' to end of line 30.
    No. 20, in Clause 3, page 3, line 33, at end insert—
    '(2) This Act shall not apply to rivers, bays, creeks and portions of the sea largely enclosed by land'.
    Mr. Grimond: These are largely probing amendments suggested because I am not very clear as to the definitions in the Bill. I am advised that there is at any rate a view that subjects outside the three-mile limit cannot be rated anyway. Is in the Government's view that, were it not for this Bill, subjects outside the three-mile limit would be rated? The amendment is designed to find out whether this is so.
    I do not think that the Bill should be drafted in this way, but, if the Government wish to draft it in this way, are they assuming that without the Bill subjects can be rated even beyond the three-mile limit?
    I have some doubt as to the meaning of Clause 3(1), which says:
    "'the sea' means any area seaward of the lowest point to which the tide ebbs at ordinary spring tides and includes any estuary, arm of the sea and the waters of any channel, creek, bay or river seaward of that lowest point".
    I am not at all certain what that means. The Thames, which flows past this building, is tidal, and at low water mark there is a channel which is much narrower than that at high water mark. If the Bill applied to England, would the whole of the Thames estuary come within it in regard to a channel at low water mark?
    1480
    To take another example that is familiar to me, in East Fife the Guard-bridge Paper Works is on a part of the Eden estuary, which is tidal. It may well have a water intake below low water mark, and may well have an outlet for its effluent below low water mark.
    Sir John Gilmour: I do not think that paper is made with salt water.
    Mr. Grimond: The company may purify salt water for all I know. It could be held, under the interpretation in the Bill, that those paper works were partly below low water mark. I cannot believe that that is the Secretary of State's intention, but I do not understand where, under the definition, the sea begins. What is the "lowest point"? Is it the lowest point in the sea or the lowest point in the estuary, creek, bay or river?
    I should have thought it was unnecessary to have rivers and creeks within the Bill and that it would be easier to remove them altogether. If the Secretary of State has good reason for not doing that, I hope that he will give us an explanation of the definition of the sea in Clause 3.
    Mr. Teddy Taylor: The right hon. Member for Orkney and Shetland (Mr. Grimond) has put some interesting points. I have another in relation to the three-mile limit proposed.
    On Second Reading I asked which part of the sea belonged to which local authority. I asked whether the boundaries would be extended in what one might call a straight line, or whether they could cover the contours of the local authority boundary. If there were some item—rig, land or heritage—in the sea which had to be rated, obviously difficulties could arise if it were not clear which part of the sea belonged to which local authority.
    The Under-Secretary was kind enough to write to me on 2nd September answering this point, but what he said was rather

    1481
    alarming. Apparently, difficulties arose over determining common boundaries, but the seaward limits appeared for most purposes to be totally undefined. The reason appears to be that, when we drew up the Local Government (Scotland) Act 1973, the new regions and island areas were defined merely by reference to the boundaries of the abolished authorities, mostly deriving from those of ancient parishes. Apparently, in England and Wales there are pretty clear boundaries. In England and Wales the limit of a local authority area is the low-water mark and provision exists for accretions from the sea to be added to the appropriate local authority area. But it seems that in Scotland there is no such provision.
    Obviously, if we are to have any item rated which is in the sea, it is important to know which part of the sea belongs to the rating area of which local authority. From what the Minister said in his letter, it seems that in drawing up the Local Government (Scotland) Act we made an error in not making provision for which part of the sea belonged to which local authority.
    This is a responsibility which all those who took part in the drafting of that legislation must bear. But now that it is clear that there are no seaward limits defined as belonging to particular authorities, it may be appropriate to put it right. In view of the Minister's helpful but rather disturbing letter, we hope that he will say whether he has any plan in the future to take action to ensure that the situation in Scotland is made similar to that in England and Wales.
    Mr. Millan: Dealing first with the point raised by the hon. Member for Glasgow, Cathcart (Mr. Taylor), I am afraid that no one knows exactly what the position is. It has never been necessary in the past to worry too much about things floating out in the sea. There have not been many of them, and they have tended to be boats, which no one has considered should be subject to rateable value. So I would not be too hard on those who drew up the Local Government (Scotland) Act 1973 for defining the regions and islands areas by the boundaries of the old authorities, which were equally vague about this matter.
    1482
    For some subjects which are partly in, say, estuarial waters, it is not difficult to decide that, if they are rated, they are in one specific authority. Obviously, the shaft of a coal mine which starts on land and goes out to sea is attached to somewhere on land. That land is part of a specific authority, and there is no difficulty about it. But, if we brought into the area of rating oil production platforms which are not attached to any particular piece of land, there would be considerable difficulty, apart from whether they are rated at all, in attributing an installation to one local authority area rather than to another. There are considerable difficulties of definition here.
    If we had not been faced with the problem that a number of assessors have attempted to enter on the valuation roll and have rated certain oil production platforms and, therefore, made it necessary to do something rather quickly about it, we might have treated this in a more leisurely manner. It would have involved tremendous consultation if we had wanted to define every seaward boundary of every local authority area. The Western Isles and the West Coast of Scotland would have given us a great many problems in that regard.
    I dare say at the end of the day it would have been possible to get a satisfactory solution. However, there is an element of urgency in this matter. We have to deal with issues which have already arisen. We have to deal with the position of the Forth and Tay road bridges, and we have used the definition in the Bill and the particular formulation in the drafting of the Bill to enable us to do the things which we think need to be done urgently without allowing the whole legal question to be argued out at considerable length through the courts. That would be the alternative to producing this Bill and getting it into operation fairly quickly. I agree that it is not a wholly satisfactory situation, but it is one that we have to deal with at the present time.
    Earlier, the right hon. Member for Orkney and Shetland (Mr. Grimond) accused the Government of not knowing what they were doing. I can assure him that we know what we are doing. However, I find it difficult to understand what he is doing with his amendments.

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    Amendment No. 5 would confine the exemption orders under Clause 1(1) to lands and heritages within three miles offshore. In other words, Sullom Voe and all the piers and jetties about which the right hon. Gentleman is worried would be the only kinds of lands and heritages which I would be able to prescribe by order as being exempt from rating, and oil production platforms and the rest would carry merrily on and not be covered by his definition. That is the reverse of what presumably he would like it to do. Certainly it is the absolute reverse of what Shetland County Council would like to do, and I am sure that it would not be very happy to think that its Member of Parliament was seeking to put provisions in the Bill which would have the effect of bringing into exemption from rating very considerable installations to which it attaches great importance from the rating point of view, but, apparently, allowing other things well out to sea to be subject to the possibility of rating. I am afraid that Amendment No. 5, whatever its objective, would have that very unfortunate effect, and I cannot believe that the right hon. Gentleman will want to press it.
    As for Amendments Nos. 19 and 20, I have already dealt with the general question of our approach to the Bill, and we have put in a definition which in the circumstances of the Bill we think is the right one. The right hon. Gentleman asked what was meant by
    "the lowest point to which the tide ebbs at ordinary spring tides."
    It means what it says. These are matters of fact. I see no difficulty in using that formulation. But to take out the words
    "estuary, arm of the sea and the waters of any channel, creek, bay or river",
    as Amendment No. 19 would do—and it is reinforced by Amendment No. 20—would mean again excluding the two bridges, because they bridge estuarial waters. Therefore, these amendments, for whatever reason they are tabled, would have the effect of preventing the exemption for the Forth and Tay road bridges which I am sure the House as a whole wants them to have.
    For those reasons I cannot recommend the Committee to accept any of these amendments.
    Amendment negatived.
    Sir John Gilmour: I beg to move Amendment No. 6, in page 1, line 9, at end add
    'and all bridges over estuarial tidal waters shall be automatically exempt without the need for an order by the Secretary of State'.
    The First Deputy Chairman: With this we may discuss Amendment No. 7, in page 1, line 9, at end insert—
    'In this subsection "lands and heritages" include the Tay and Forth road bridges'.
    Sir J. Gilmour: To some extent, the Secretary of State has alluded already to the spirit of this amendment. However, I would take him up on one matter. He said that Parliament's view was sacrosanct in terms of what was and what was not rated. But, it will be within the discretion of the Secretary of State to make an order. We in Parliament will have no power to force him to make an order. It means that the power lies with the Secretary of State and not with Parliament.
    I seek to ensure that these two bridges in particular are taken out of being rated without the need for the Secretary of State to make an order. It may be that I have tabled my amendment in the wrong way to achieve this. If I have, I do not know whether on Report it will be possible to move a manuscript amendment to do it in another way. For example, would it be possible to say that, notwithstanding the provisions of the Local Government (Scotland) Act 1973, the provision to take these two bridges out of rating in the Acts under which they were built shall still stand?
    All I seek to do is to ensure that the two bridges are not eligible for valuation at the whim of the Secretary of State. This should be laid down in an Act of Parliament which we pass so that there can be no doubt about the fact that they have been exempted.
    7.30 p.m.
    Mr. Gordon Wilson: This matter has been discussed before, and I have tabled an amendment dealing specifically with this issue of the Tay and Forth road bridges. I have my doubts still about the definition of that word "partly". I believe that on balance the courts will interpret it, but there is still some doubt about it.

    1485
    The Secretary of State has said quite specifically that the Tay and Forth road bridges will be excluded from rating, and he has had the support of the House in that. If it is his intention to exclude these two bridges and if, under the terms of the Bill, he is required to promote an order to that effect, would it not save time and effort if the bridges were included in this Bill, either by the suggestion of the hon. Member for East Fife (Sir J. Gilmour) or by specific mention of them. If this were the case, that would be the end of the matter.
    In the previous local government legislation these two bridges were excluded from valuation, and it was only by an oversight on the part of the previous Administration that they became eligible for inclusion. I hope that the Minister will be sympathetic to this point.
    Mr. McElhone: I must say straight away that I recommend that the Committee resist these amendments.
    Amendment No. 6 would confer exemption on all bridges over estuarial tidal waters. The amendment of the hon. Member for Dundee, East (Mr. Wilson) would extend the definition to "land or heritages" just to include the Tay and Forth road bridges. It is difficult to imagine a road bridge which is not land or heritage. I do not wish to start a debate on the word "partly". No doubt the hon. Member, being a lawyer, could speak for many hours on the definition, and at the end of the day we would still disagree.
    The Government have said that the power to exempt by order will be used to extend exemption of rating to the Tay and Forth road bridges. This was unintentionally left out of legislation by the Conservatives in the process of the reorganisation of local government, and it shows that the previous Administration was certainly not infallible.
    We are glad that this exemption by order process exists, because if we did not exempt these bridges they would probably double their tolls, and nobody wants that. I hope that hon. Members will accept that it is a very useful purpose to ensure that we contain any increase in toll charges.
    Mr. Gordon Wilson: In referring to my amendment the Minister said that
    1486
    lands and heritages included road bridges. I take that point. However, I doubt very much whether a whole series of Tay and Forth road bridges will be built as a result of my amendment. The amendment simply makes it clear that these two bridges will be included for the purposes of the Bill.
    Mr. McElhone: I am glad that the hon. Member understands the position. There is a strong measure of agreement between us. The concern expressed by the hon. Member has been met, even if it is not in the way in which he wants it. But one of the main purposes of the Bill is to ensure that no rates are charged on the Tay and Forth road bridges, and I can certainly give that assurance.
    Sir J. Gilmour: I hope that the Minister will give an assurance that he will lay the orders as soon as the Bill gets Royal Assent. If there were to be a change of Government we might have a Secretary of State who did not wish to lay the orders. Can we be certain that as soon as Royal Assent has been given the Secretary of State will lay the order forthwith?
    Mr. Teddy Taylor: I can assure my hon. Friend that any Conservative Government would respond to all his arguments with even greater sympathy than the present Government.
    My hon. Friend has put forward an amendment to exempt the bridges which would in effect exempt all bridges over estuarial tidal waters without the need for orders, to save administration time, and the time of the House. Is he aware of any estuarial tidal water bridges which are rated?
    The Minister wrote to me and said that subjects which extended beyond low water mark, such as coal mines, and estuarial bridges, had been held by the courts to be rateable. Therefore, it seems that some estuarial bridges are rateable.
    Would the Minister give me some idea which estuarial bridges are rated in Scotland because that would help us to decide what to do with this amendment?
    Mr. McElhone: I do not have that information at the moment. Personally, I am not aware of any bridges, apart from those that we are discussing. I assure the hon. Member for Dundee, East (Mr. Wilson) that there is no danger that we

    1487
    shall see a change in Government in the near future. I give an assurance that my hon. Friend will try to lay the order as soon as practicable, although there are still some consultations to be undertaken.
    Sir J. Gilmour: I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Mr. Teddy Taylor: I beg to move Amendment No. 8, in page 1, line 19, at end insert—
    'In making any such order the Secretary of State shall have regard to the nature and extent of the services provided by local authorities to the owners, occupiers or users of the lands and heritages concerned.'.
    Because of the amounts of taxation on the oil companies it would be wrong to charge them with rates. However, we must bear in mind that certain local authorities have considerable extra expenditure because of the existence of oilfields, rigs and platforms off their shores. Often they have to provide extra services, such as police, and a number of regions and districts have complained that they are thereby involved in extra expenditure.
    Have the Government considered making some compensation available to these local authorities for the extra expenditure for which they get no return in rates? Once this Bill is law, the Secretary of State can exempt all these offshore structures entirely from rates. This amounts to extra expenditure for local authorities with no possibility of rating return.
    I feel that it is rather unfair on the local authority especially at this time when money is short.
    Mr. Millan: I can assure the hon. Member that the problem is recognised and that there is special provision in the rate support grant for oil-related expenditure beyond that which an authority would normally have been given to cover services. This is taken into account by a special grant which is part of the rate support grant. We therefore recognise that certain authorities have borne expenditure burdens because of oil developments, and they have been compensated accordingly. The authorities include Shetland, the Grampian Region and a number of others.
    However, we must be careful on this matter. I stress that it was the present
    1488
    Government, not the previous one, who introduced this provision. If we were to do too much for these authorities it would be unfair to authorities elsewhere in Scotland. Although oil activity brings burdens it also brings rewards, including additional rateable values for the area concerned.
    There is also the question how the rate support grant is calculated in terms of the needs element and the resources element. I take the view that, combined with the special arrangements that I have mentioned, we take adequate account of the problems of local authorities involved with oil development. For that reason I hope that the hon. Member will be willing to withdraw his amendment.
    Mr. Teddy Taylor: I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Mr. Grimond: I beg to move Amendment No. 10, in page 2, line 19, at end add—
    'The Secretary of State shall in any case consult with the local authorities affected if they so desire'.
    I tabled the amendment because of the curious wording of subsection (6). Under that subsection the Secretary of State is compelled to consult the associations of local authorities or persons who appear to him to be concerned. But consultation with any single local authority is left to his discretion, and he need consult only if he thinks it desirable.
    I cannot understand that. I should have thought that it was essential for him to consult the particular local authority concerned, and I should like it written into the Bill, as the amendment suggests, that he would have to do that if the local authority so requested. As I understand it, the drafting of the Bill compels him to consult associations of local authorities or persons who appear to him concerned. But then there is the class of authority which he may think it desirable to consult, and it is in that class that the particular local authorities fall.
    Mr. McElhone: I think that I can give the right hon. Member for Orkney and Shetland (Mr. Grimond) the assurance that he seeks. I can see the point that he is attempting to make. This subsection is well precedented.

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    The right hon. Gentleman referred to the position of a single local authority. In practice we now deal with large authorities such as the regional authorities, and we have regular consultation with them on such matters as social work and education. Consultations with an individual local authority can relate to existing assessments of the authority on, for example, the Forth and Tay bridges and the Auk, Argyll and Forties oilfields. In such a case we would consult the separate authority.
    There may be instances which involve a joint local authority interest. The right hon. Gentleman is concerned to ensure that local authorities, whether individually or collectively, can have that consultation with the Secretary of State on matters concerning the Bill and their jurisdiction. I think that I can give that assurance.
    Mr. Grimond: In view of the assurance that the Secretary of State would always consult separately with local authorities, I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    7.45 p.m.
    Mr. Teddy Taylor: I beg to move Amendment No. 11, in page 2, line 23, leave out subsection (8).
    I hope that the Secretary of State will explain this unusual subsection. It appears to say that even if one of the orders was hybrid or private, it should be regarded as a Public Bill, irrespective of the circumstances. The House has had much discussion on the subject of hybrid legislation this year. The procedures for hybrid or Private Bills are different from those for Public Bills. If one individual company or group is singled out for special parliamentary attention, it has the right to go before a Private Bill Committee where its case is presented and argued and witnesses are called.
    It was clear from the Secretary of State's introduction of the Bill that it is more than possible that some of the orders made under the Bill will be private or hybrid in the sense that individual oilfields or oil rigs or areas will be selected while others may not be. Does subsection (8) mean that even if an order is private or hybrid it should be regarded as public and treated as a Private Bill?
    1490
    Are there precedents for this arrangement? The subsection appears horrifying, but it may have been used a hundred times before and therefore may not be a matter of concern. Does the working of the subsection mean that such orders cannot go to Private Bill Committees? The Bill says
    "On the expiry of 28 days from the laying of the draft … the order shall proceed in that House, whether or not it has been referred to a Committee under Standing Orders … relating to Private Bills, as if its provisions would require to be enacted by Public Bill."
    Does that mean that these orders may in no circumstances go to a Private Bill Committee, or is it that they may go for 28 days and then move forward in a different category? The clause appears most unusual and seems to apply the same provision that was applied to the Aircraft and Shipbuilding Industries Bill. There may be a perfectly good explanation for the provision, and that may remove my fears.
    Mr. Millan: This rather obscure wording has no implication for the House of Commons. It deals with the procedures in the House of Lords. The wording is precedented and it invokes a particular procedure in the other place. It is of fairly recent origin and is provided for, for example, in Section 1(7) of the Offshore Petroleum Development (Scotland) Act 1975. It is strictly a House of Lords procedure which does not affect the House of Commons. I understand that when the other place discussed this matter it was perfectly agreeable to the procedure applying there. I hope that that will set the hon. Gentleman's mind at rest.
    In the House of Lords the instrument can be a hybrid instrument even under a Public Bill of this sort. I understand that there is no such thing as a hybrid instrument in that sense in the House of Commons. It is a purely House of Lords concept which involves the characteristic that a private interest is affected by an order in a manner different from the private interests of other persons or bodies of the same category or class. When that happens in another place there are procedures similar to those for Private Bills. They include provision for petitions and the rest.
    There is also an accelerated procedure in another place and this subsection

    1491
    brings in that procedure and provides a reasonable period of 28 days for hearing private interests. Thereafter, the order proceeds as though it were not hybrid.
    It is a new procedure which has not been much used, but this is a standard formula which will have to be used in legislation which attracts that procedure. There is nothing in the least bit sinister about it and nothing which affects the interests of this House. It is a rather obscure matter to us and it is rather obscurely drawn in the legislation.
    Mr. Teddy Taylor: I am grateful to the right hon. Gentleman. I am sure that we have all learned a great deal. The problem could have been resolved if reference had been made to the House of Lords instead of to a House of Parliament. That gave the impression that it could be either.
    The Minister's explanation was interesting and reasonable and I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Mr. Teddy Taylor: I beg to move Amendment No. 12, in page 2, line 36, at end add:
    '(11) Notwithstanding the provisions of the above subsections the Secretary of State shall, within six months of the passing of this Act, make an order to delete from valuation rolls all lands and heritages which fall under the criteria of section 1() above and which relate to fish farming'.
    The First Deputy Chairman: With this we may take New Clause 1—Rating of marine fish farming.
    Mr. Taylor: The amendment relates to fish farming and I hope that even if the Government cannot accept the amendment or the new clause, they will be able to make concessions and give an indication of future policy.
    There is considerable grievance among fish farmers who feel that the industry is not treated with the same consideration as is given to agriculture generally. We would be mistaken if we did not appreciate the potential of this industry and the work being done.
    There is quite a substantial industry, particularly in Scotland, in rainbow trout and brown trout. At the expensive lunches of which my hon. Friends have
    1492
    experience, though I have not, they have probably eaten rainbow trout bred under these unusual conditions. It is becoming a major industry. About 900 tons of rainbow trout were fish farmed in Scotland last year.
    There have been experiments, including some in Norway, in the fish farming of salmon. Several large firms have taken an interest with Unilever starting the process in Lochailort. It is expected that production of fish farmed salmon might increase to 200 tons a year. However, all these are marginal activities from which little profit is made because of the considerable rates burden on the industry. I understand that progress is also being made with oysters and mussels.
    Bearing in mind the special problems facing our fishing industry and the possibility that we might not get an agreement on our inshore limits, our housewives and fishermen will find themselves in a difficult situation. If there is the prospect of ever-rising prices, sea fish farming will become an industry with potential. However, if we wish to build up such an industry, we must realise that the rates involved are substantial and that it is wrong to draw a distinction between farming at sea and other agriculture.
    Some people may think that there is not much involved here. I assumed that until I started to look into the subject. I assumed that a wall could be put across a fjord to keep the fish in, but I have been told by experts that this could not be done because of salinity problems and water exchange difficulties. That is why most fish farming involves floating cages and static, fenced-off enclosures, both of which attract considerable rate burdens which are preventing the further development of the industry. There is no doubt of the great scope in sea fish farming. I am told that the only sea fish currently farmed in this way are Dover sole and turbot, because they are expensive fish.
    However, if we have continued problems with the shortage of fish and overfishing—we already have indications that we might not be successful in getting the kind of agreement on limits which all my hon. Friends would want—fish farming and sea fish farming could become growth industries and safeguard some of

    1493
    our potential food supplies. There is every reason for treating fish farming in the same way as agriculture.
    I understand that we give concessions on agricultural buildings and land but not on the heritages of fish farming. As a general matter of policy, will the Government give an indication that they accept the potential of the industry and that it will be treated in the same way as agriculture generally? Will the Government provide this assistance to help an important industry to expand in the interests of housewives and everyone else?
    Sir John Gilmour: The new clause deals mainly with marine fish farming because I felt that it was the only type which could be included within the title of the Bill. However, what my hon. Friend the Member for Glasgow, Cathcart (Mr. Taylor) said applies to marine farming and fish farming. Surely we can make a start in this area? Fish farmers are as much farmers as those who farm the land.
    In the past 20 or 30 years there have been enormous changes in the techniques involved in livestock farming, particularly with poultry and pigs. Experiments with intensive beef production have also shown what can be done. We need to remove any rating burdens on the same type of activity which can produce food from the sea. Breeding and hatching techniques and disease control are on similar lines to those practised on land.
    We have all the facilities. Our coastline, particularly around Scotland, is particularly suited to the development of fish farming. It is remarkable that a country such as Japan produces almost 1 million tons of farmed fish a year and has a five-year plan for a big expansion. The European output is 750,000 tons a year, mostly from Spain and France, with some from Italy and Germany. We are net importers of fish and fish products. Last year we imported £80 million worth of fish products, salmon and trout, even though we are big salmon producers and have built up salmon fisheries in the West Coast of Scotland, we still imported £42 million worth of the fish last year.
    Bearing in mind the value of the pound, our balance of payments troubles and our need to become as self-sufficient as possible in food, we should miss no
    1494
    opportunity to take a step forward by increasing fish farming.
    As an island we have been able to keep ourselves free from endemic diseases such as foot and mouth in cattle. We would be able to do the same with fish farming. The increased number of job opportunities in certain areas is another good reason, in the present unemployment situation, to expand fish farming.
    I am told that fish is a more efficient converter than animals. We do not need to keep fish warm. Unlike pigs and cattle they can exist happily in extremely cold conditions and are therefore more efficient producers of food than some other animals we farm. These arguments and many more were rehearsed in a debate on another subject, and at that time the Minister of State for Agriculture, Fisheries and Food admitted that our law on the rating of fish farming was vague and indeterminate. I hope that we shall receive an assurance from the Under-Secretary of State that he will look with favour on this proposition.
    8.0 p.m.
    Mr. McElhone: I must say at the outset that the hon. Member for Fife, East (Sir J. Gilmour) has put forward a strong argument for the derating of fish farms, as did the hon. Member for Glasgow, Cathcart (Mr. Taylor). They will be aware that the argument has continued for a number of years.
    I can remember the argument being raised when we were discussing the 1971 rating legislation. On that occasion amendments were moved in both Houses in the hope of derating buildings used by fish farmers. They were rejected as was a similar amendment when we discussed the Agriculture (Miscellaneous Provisions) Bill. That was because the analogy with agriculture was not accepted.
    Perhaps hon. Members will know that the matter was decided in the Lands Valuation Appeal Court. It was decided in Wallace v. Assessor for the joint county of Perth and Kinross that fish are not livestock within the meaning of the Act. In the past the argument has been based on the assertion that fish farming is analogous with agriculture, but that was not accepted in the courts.
    I must also be consistent and say that it is not the intention of the Government

    1495
    to afford exemption from rates to marine fish farmers or any other fish farmers. We do not think it would be proper to alter valuation and rating law when the whole area of local government finance is under review following the Layfield Committee's report. To derate fish farms alone would create an anomaly within the industry.
    I hope that I have not been unkind to the hon. Member for Cathcart, who today has been a model of calmness in putting forward a reasonable case on behalf of the Opposition. However, I should draw to his attention the debate on Second Reading and to column 105 of Hansard, where he expressed, as he has done so often in the past, his concern for ratepayers not only in the Glasgow seat that he represents but in Scotland generally. He has been consistent in his defence of ratepayers and it is rather surprising that he should put his name to an amendment which would relieve marine fish farmers and other fish farmers from rates. He must realise that the cost of relieving anyone from the rate burden must fall on the rest of the community in the form of added rates or taxes. If he is consistent in his views—I am sure that he always wants to be—I am sure that he will support the Government when we say that we cannot accept the two amendments to derate marine or other fish farms.
    Sir John Gilmour: We have heard a disappointing and short-sighted reply. The point that the Minister has entirely failed to grasp is that if we expand the production of fish we shall build up ancillary industries, which will pay rates. The contribution that would be made to the Exchequer by the distribution of the fish and the money that would be saved in not paying unemployment benefit to those in rural areas would far outweigh the loss of money from the ratepayer.
    If the hon. Gentleman were to follow his argument through he would be advocating the rerating of agriculture. I trust that he will not be doing that. He has made a most unsatisfactory answer that is unacceptable.
    Mr. Teddy Taylor: Like my hon. Friend the Member for Fife, East (Sir J. Gilmour), I am disappointed by the
    1496
    Minister's reply, which showed that he has no real appreciation of the importance of agriculture and fishing. He also showed a singular lack of sympathy with those who try to battle against all the problems of running a fish farm as well as having to cope with the extra problem of rates. This is a major issue and the debate will have to continue. I am sure that my hon. Friend and I will take part in it.
    The Minister made some rather nasty comments about my views on rates and the effect of the amendment on ratepayers in Cathcart and Queen's Park. The hon. Gentleman may like to know that, apart from wanting to relieve some people of the rates burden, my party is committed to the abolition of domestic rates. It is committed to replacing them with a much fairer form of taxation.
    The hon. Gentleman will be aware that if he were to pursue general Conservative policies, which are fair to all, this and many other problems would not arise. This is a debate that must continue for that reason. As the Chamber is rather empty, perhaps it would be right not to vote on the issue at this stage. I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Clause 1 ordered to stand part of the Bill.

  Clause 2

    PROVISIONS SUPPLEMENTARY TO SECTION 1
    Mr. Teddy Taylor: I beg to move Amendment No. 15, in page 3, line 13, after 'possible', insert:
    'and not later than six months'.
    In Clause 2 it is stated that the Secretary of State may give a direction to an assessor not to put something in the valuation rôle. Subsection (3) states:
    The Secretary of State shall, as soon as possible after giving a direction … inform the assessor or, as the case may be, the Assessor of Public Undertakings (Scotland) whether or not he intends to make an order under section 1 of this Act; and if he does not so intend, he shall revoke the direction.
    It seems that subsection (1) is an early warning system. It would be unfair to the assessor if there were to be a long delay between the warning by the Secretary of State, saying "Do not put something into the valuation roll" and a

    1497
    decision being arrived at by the Secretary of State. Surely a minimum time of six months is reasonable. I hope that the right hon. Gentleman will accept this suggestion.
    Mr. Millan: I accept the sense of the amendment, that we shall lay these orders as soon as possible, but I prefer not to be tied to a particular period. A process of consultation is involved under Clause 1. I have to go through that process with the local authorities concerned. If the hon. Gentleman looks at Clause 1(2) he will see a reference to orders that have to be made within nine months of the passing of the Act. I understand that the period was extended in another place to nine months to allow the necessary consultations to take place before anything is done immediately following the passing of the Bill.
    After I get through the consultations—I hope that they need not take a great deal of time—I shall produce the orders as soon as possible. In the cases that come within Clause 2 we are dealing with events that may happen in future. I am not sure what the circumstances would then be, and I should certainly have to go through the process of consultation. I might find six months to be an inconvenience or hardship to the local authorities rather than to me if I were tied in that way.
    I should prefer to leave matters as they are formulated—namely, "as soon as possible". I hope that in practice I shall be able to proceed within a period a good deal shorter than six months, but I should like to have that flexibility.
    Mr. Teddy Taylor: I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Mr. Teddy Taylor: I beg to move Amendment No. 17, in page 3, line 18, at end add—
    '(4) The Secretary of State shall, at least once each year, send to each assessor a statement setting out the directions he has given under subsection (1) above and of the orders which he has made under section 1 above'.
    The basis of the amendment is that if the Secretary of State is making orders or issuing advice to individual assessors over a period it would be unfortunate if time were to be wasted because one
    1498
    assessor did not know about the advice or orders being given by the Secretary of State to another. The idea is to try to ensure that all decisions of the Secretary of State in this regard will be circulated to all assessors.
    It may be that there is already some procedure for doing this of which I am not aware. If the Secretary of State can give us an assurance that his advice under Clause 2(1) will be made available to all assessors so that they will have general guidance on Scottish Office policy, and the Secretary of State's policy, that will be adequate for the purpose of the amendment.
    Mr. McElhone: The purpose and effect of the amendment would be to cause the Secretary of State to send to assessors annually a statement of orders and directions made under the Bill. Assessors keep informed as to the state of the law and it is the long-standing practice of the Scottish Office to call attention to legislative changes. It is intended that there should be an order covering petroleum installations and public toll bridges as soon as possible after powers are enacted. Thereafter the question of a direction under Clause 2 or an order under Clause 1 will arise in unforeseeable circumstances. It would be pointless and administratively extravagant to set up procedures calling for annual repetition of unchanged information. If directions are given or orders made the persons concerned will be made aware of the fact clearly and promptly.
    Although the hon. Member put down the amendment with good intentions, I can tell him that the Assessors' Association is of the opinion that the suggested provision is unnecessary. I know that the hon. Member will take the advice from that rather august body.
    Mr. Teddy Taylor: I certainly shall. I beg to ask leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Question proposed, That the clause stand part of the Bill.
    Mr. Gordon Wilson: I had given forewarning to the Minister of my intention to participate in the debate on the Question, "That the clause stand part of the Bill", by putting down an amendment. I have some worries about the terms of the clause.

    1499
    It seems that the procedure which the clause envisages could strike at the independent status of an assessor, whose job so far has been to interpret the law as laid down in Acts of Parliament, to put entries into valuation rolls and then subsequently to go through the process of appeal, if an appeal is marked, leading finally to the Lands Valuation Appeal Court deciding whether a particular subject should enter a valuation roll and, if it should enter, at what particular value.
    The clause seeks to give to the Secretary of State certain holding powers. In other words, he is enabled to make a direction to assessors indicating that a certain subject which the assessor feels should be valued should not be placed on the roll. It concerns a subject which the Secretary of State had previously not considered worth excluding because it had not been brought within his ken. If he had considered that it was worth including it would presumably have been contained in an order which would have been made under Clause 1.
    If, as the Secretary of State said earlier, this is a case in which the orders are made and approved by Parliament, there would, perhaps, be less objection to it. In this instance we have a situation in which—I am not talking personally about the right hon. Gentleman—a Secretary of State is given power to issue an administrative edict to a local authority official not to carry out a duty which otherwise he might have felt obliged to undertake, in other words, to enter into a roll a subject which, in his opinion as a qualified assessor and independent individual, should have been so entered.
    The Secretary of State has to follow through the procedure subsequently by bringing an order before Parliament under the affirmative procedure, but it means that for a time, for administrative convenience, the law can be set aside. If a direction is subsequently not approved by Parliament after it has considered the order a local authority could be deprived of rateable value and of valuable income in these days of cut-backs in public expenditure and, as a consequence, the authority will lose.
    If Parliament were consulted right at the outset and if the local authority were to lose income because of the directive of
    1500
    Parliament, that would be part of the democratic system, and although there may be criticism by a local authority about losing income, certainly it could have no fundamental objection. However, for six or nine months, or whatever it is, a local authority may be deprived of income by direction of the Secretary of State through an instruction to an assessor.
    Therefore, the clause tends to give certain very powerful strengths to the Secretary of State to take independent action. I am not so sure whether Parliament should give those powers to any Minister. Are there any precedents which have been employed in the past to give such powers of an administrative nature before Parliament has had a chance to implement any statutory powers that it may have?
    8.15 p.m.
    My second question is a follow-through on what type of subject might be excluded under the provisions of Clause 1 which may occasion the Minister to take emergency action under the holding powers of Clause 2. There was a discussion earlier about submarine pipelines. These subjects can be partly under the sea and partly on land and would not be treated as rateable. Presumably, following that through, the pipeline concerned would be non-rateable as a single subject from the point at which it emerges from the water until presumably it reaches some other fixture which is rateable.
    Are processing plants, gas separation plants and pumping stations considered to be separate from the pipeline? Might it mean, therefore, that these will be rateable, so that under the Bill we are concerned only with exemption of pipelines and not the other items of plant to which I have referred?
    It seems that these holding powers are not really necessary if in future we have a Scottish Assembly with adequate time for legislation and which would be able to receive at a very early date—under an affirmative procedure which still has to be laid down, presumably—an order under Clause 1 enabling a full parliamentary approval to be given to a decision whether a particular subject should be exempted from the provisions of valuation for rating.
    Mr. Peter Doig: Surely it is right that the Secretary of State should have this reserve power as if some assessor decides to rate the Tay road bridge, for example, he goes to a great deal of expense and trouble in order to ensure that the assessment is reasonable. When one is doing something new in this way, it involves a great deal of expenditure. Further than that, however, as soon as one assessor decides to do this, every other assessor who has a similar construction anywhere in his area will also proceed to spend a great deal of public money in finding out what value should be placed upon it.
    This is a sheer waste of time and money if the ultimate intention of the Government is not to allow assessors to rate such subjects. It would be a shocking waste of ratepayers' money for the Secretary of State not to have the power to stop that money from being wasted. It is right that he should have this power and should use it.
    In the past many subjects have been rated that should never have been rated. That is now fairly common knowledge. In my own constituency an assessor in Dundee decided to rate a public street because it happened to be used as a bus centre. The assessor, who was probably within his rights, wanted to contest the case and engaged counsel at the ratepayers' expense. The Town Clerk said that if the assessor engaged counsel, he required counsel to put the other side. Two departments of the same authority each spent a considerable sum on an inquiry, paying the expenses of both sides. At the end of the day the money went from one corporation department to another. If the Secretary of State can prevent that sort of occurrence, he should have the power to do so, and should use it.
    Sir John Gilmour: I am slightly worried about the provision in Clause 2, line 11, which reads:
    "unless and until the Secretary of State revokes the direction given".
    I raised earlier with the Secretary of State the question of the Forth and Tay Bridges being put by error into the risk of rating. We must make certain that they are taken out from that risk permanently. According to the wording of Clause 2, a future Secretary of State
    1502
    could revoke the order and again bring the two bridges into rating. As we are to go straight on Report and do not have time to consider and put down other amendments, will the Minister say whether wording can be incorporated in the Bill to make it impossible for the order relating to the two bridges to be revoked?
    Mr. Millan: The question raised by the hon. Member for Fife, East (Sir J. Gilmour) arises not under Clause 2 but under the powers to vary or revoke an order by a subsequent order under Clause 1(9). I am glad to say that we have passed that clause, so I cannot answer that question.
    I agree with the hon. Member for Dundee, East (Mr. Wilson) that Clause 2 contains a novel power and for that reason we considered carefully whether to include it in the Bill. We did so for reasons so graphically explained by my hon. Friend the Member for Dundee, West (Mr. Doig).
    If the intention is to provide for an exemption order, it is useful to have power to prevent unnecessary and expensive work from being undertaken before the order comes into operation. Clause 2 provides a holding power for the Secretary of State. Admittedly, it means that the Secretary of State, by administrative edict, can temporarily set aside the duty of an assessor.
    There may be circumstances in which the assessor would find that irksome, but there may also be circumstances in which the assessor is under pressure to put something into the valuation roll because a ratepayer asks him why he has not fulfilled his statutory duty to rate a certain installation. It may be convenient for the assessor, when he knows that the Secretary of State is considering an exemption order, to have a direction from the Secretary of State which prevents him from having to carry out work which he knows will almost certainly be unnecessary.
    The provision can work both ways, but however it works it is concerned with avoiding unnecessary public expenditure when an exemption order is on the way. It is a balanced argument. It could be argued that the power should not be given out of respect for the purity of the

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    valuation system but, looking at it hi practical terms and remembering that we shall often be dealing with extremely complicated valuation points on which a great deal of money and effort might be expended, we think on balance that it is better to have the clause in the Bill.
    Question put and agreed to.
    Clause 2 ordered to stand part of the Bill.
    Clauses 3 and 4 ordered to stand part of the Bill.
    Bill reported, without amendment.
    Motion made and Question proposed, That the Bill be now read the Third time.
    8.25 p.m.
    Mr. Teddy Taylor: I know that many hon. Members and others who are watching the proceedings are anxious to get on to the subject of the extension of drinking facilities in Scotland. Although I should like to hold up that measure, it would be wrong of me to do so by means of delaying the Third Reading of this Bill.
    I think we would all agree with the principle of the Bill, because we accept that the oil industry has had about as much as it can take from the Government with the substantial petroleum levy, corporation tax and the threat of participation. The burdens on North Sea oil have held back development which could have been a means of providing jobs in Scotland. If, in addition to all those burdens, there were to be a rating burden, it would make life impossible for the industry.
    During the Second Reading debate I asked the Under-Secretary of State a question which he was unable to answer. He said that he thought that the Bill was a good Bill because it would enable North Sea oil platforms and so on to be exempt from rates. I asked whether he was quite sure that a Scottish Assembly, if established, would not be able to frustrate his intention. The Government did not clarify that issue at the time and I should like the Minister to make a statement on it during this debate.
    Paragraph 69 of the White Paper "Our Changing Democracy", which deals with devolution, reads as follows:
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    "Where a United Kingdom Act in a devolved field lays down, in order to control expenditure, that delegated legislation shall be made jointly by two or more Ministers … the power will pass simply to the Scottish Executive. Where a United Kingdom Act confers a power exercisable by Order in Council, that power will be exercisable by Order of the Scottish Executive."
    Paragraph 67 is in the following terms:
    "The Scottish Executive will be able to make delegated legislation under enabling powers contained either in Assembly Acts or in United Kingdom Acts still in force in the devolved fields."
    What are the devolved fields? According to the White Paper the devolved fields exclude the creation of new United Kingdom taxes but include the application of the rating system. Perhaps there is a danger that if a Scottish Assembly, when established, were to refuse to make such orders, or were to revoke them once made, a situation could arise in which the oilfields would not be derated or be freed from rates as the Government intend.
    Because the House lacked information on these matters, I tabled a Question to the Secretary of State for Scotland on 1st November. The answer I received, which was somewhat unusual, was as follows:
    "The broad purpose of the Valuation and Rating (Exempted Classes) (Scotland) Bill is to ensure that certain installations should be subject only to national taxation and not also to local rating. Under the Government's devolution proposals, national taxation is to continue to be a matter for the United Kingdom Government and, consistent with this, the powers in the Bill to allow the Secretary of State to exempt certain categories from local rating will continue to be exercised by the Secretary of State."—[Official Report, 1st November 1976; Vol. 918, c. 505.]
    I wish to ask the Minister two brief questions arising out of that answer.
    When he said that the purpose of the Bill was to ensure that certain installations should be subject only to national taxation and that certain categories would be exempted from local rating, did he mean that the devolution Bill will specifically provide that that category of order will not be considered by a Scottish Assembly, or is he seeking to interpret the White Paper? If he is seeking to make such an interpretation, it would be a judicial matter that would have to go before the Privy Council. It is important that we should be clear precisely what is intended.

    1505
    It is strange that, after the Government have been rushing round the country extolling the virtues of their plans and the powers contained in the White Paper, their enthusiasm appears to have collapsed at the first hurdle. It seems to me that the Assembly will not even have the power to make valuation orders. Did the Written Answer to which I referred earlier cover the full rating system, and will any decision about industrial de-rating also be covered by its terms? It is important to be clear whether the Bill will be applied as the House of Commons intends.
    Furthermore, was that answer an indication that the devolution Bill will prevent valuation orders from being discussed in a Scottish Assembly, if established, or will such powers be held in reserve? A clear statement must be made on this important matter. It is clearly stated in the White Paper that the Assembly will take over the order-making powers in decisions affecting the oilfields. Is there to be a change in policy? If the Government are reserving the right to do something that is inconsistent with national policy, it appears that the Assembly will not be allowed to discuss the matter or to make a decision upon it. This makes nonsense of their proposals. I hope that the Government will be able to clear up this matter.
    Having said that, I must emphasise that we welcome the Bill because the oil industry has suffered from too many bad policies and burdens imposed by the present Government. A further burden might make things even more difficult for the industry.
    8.33 p.m.
    Mr. Grimond: I hope that the Government will pay heed to the important points raised by the hon. Member for Glasgow, Cathcart (Mr. Taylor), although I suspect that the Government will reply that this is not the moment to go into arguments about the power of the Assembly. Nevertheless, the hon. Gentleman's remarks were important and should be borne in mind in view of the provisions of the Bill under which the Assembly will be set up.
    I wish to protest about the late moment in the Session at which this Bill dealing with the important subject of rating has been introduced. If the Government regard
    1506
    it as an important Bill, this is just one more example of bad management on the part of the Government which has meant overcrowded timetables in both Houses of Parliament.
    I do not differ from those who say that the oil industry has had enough taxation levied upon it. However, we should be chary of depriving local authorities of a legitimate source of revenue, particularly when considering local authorities in the North of Scotland who have been short of valuable subjects.
    I believe that these aims could have been achieved much more simply by excluding subjects outside certain limits—say, one, two or three miles below low water mark—rather than by undertaking this procedure which will involve the Secretary of Stale in making orders and Parliament having to consider them, with all the drawbacks that are entailed.
    I urge the Secretary of State to bear in mind the expenditure which some local authorities have had to undertake on behalf of oil-related industries and to some extent oil industries. Though I am well aware that they have also got a great deal out of the companies, they have had heavy expenditure.
    If the Bill is to be put into effect, it should be done with some expedition. I hope that the right hon. Gentleman will set about the necessary consultations with the local authorities to allay their fears that large amounts of their rateable value may be taken from them. I attach great importance to the arrangements for consultations. If the Secretary of State is to take action, I hope that he will consult the relevant local authorities as quickly and as fully as possible.
    8.35 p.m.
    Mr. Ian Sproat: I rise to reinforce a point which I made on Second Reading and which my hon. Friend the Member for Glasgow, Cathcart (Mr. Taylor) has rightly drawn to the attention of the House again tonight. I would go even further than my hon. Friend, who said that it was ridiculous that by the Bill we should take away one of the most obvious powers which a Scottish Assembly should have, if it was ever set up. Rating is exactly the sort of area of government which it would be most natural for a Scottish Assembly to have within its powers, yet

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    by the Bill we are taking it away. I read the Answer given to my hon. Friend, that the Government do not intend that the Assembly should have any such rights. But that will not be the end of the matter, whatever the Secretary of State may say in a few minutes.
    I am astonished that the hon. Member for Western Isles (Mr. Stewart), the Leader of the Scottish National Party, is not here, considering that he was present for Second Reading. When T said then that it might be the intention of a future Scottish Assembly to take away this right from the House of Commons, he nodded agreement. That would indeed be the first thing a Scottish Assembly would seek to do, in order to gain money for its own purposes. It would then come into direct conflict with the House of Commons.
    Although we welcome the Bill in general, this is the path down which we are being led into a morass of confusion about what will be within the right of the Commons, de jure but also de facto. It is no use saying that the Bill states that we here shall have the right if the Assembly says "We don't care. We shall kick up such a fuss that you will have to give it to us." This is another indication in support of what my hon. Friend and I have been saying for so long, that any Scottish Assembly will be a guaranteed recipe for confusion and conflict. This Bill proves the case, even before we have begun to discuss the devolution Bill.
    8.38 p.m.
    Mr. Millan: The only person in a morass of confusion is the hon. Gentleman. An explicit answer was given on Monday in reply to a Question by the hon. Member for Glasgow, Cathcart (Mr. Taylor).
    Mr. Sproat: I saw that.
    Mr. Millan: The hon. Gentleman obviously did not understand it. It might help if he would listen to me instead of deciding that he knows the answer before I have even spoken.
    The question of what appears in the devolution Bill will have to await the
    1508
    appearance of that Bill. It is true that rating as a whole will be one of the devolved subjects, but we have also made it clear that we are making a demarcation between rating and national taxation. We believe that the offshore oil installations should not be subject to local taxation, but that the profits from their operations should be subject only to national taxation. The devolution Bill will be drafted in a way which will achieve that particular result. It will of course be a matter that we shall be able to debate when we have the Bill itself but it does not affect the wording of this Bill.
    Mr. Teddy Taylor: The Secretary of State said that rating will be devolved but not in this particular case because it does not suit the Government. Does the right hon. Gentleman mean that agricultural derating would also be a devolved power? Will the powers relating to fish farming or industrial derating be devolved? Will a Scottish Assembly be able to decide to derate industry but not offshore oil? It seems strange that the Government are saying "We will allow you to exercise this power but not where this does not suit us".
    Mr. Millan: I am talking only about rating so far as offshore oil installations are concerned and the division between national and local taxation. The devolution Bill will be drafted so that the responsibility with regard to taxation of offshore oil installation will remain with central Government and will not be devolved to the Assembly.
    The purposes of the Bill have had a general welcome even if the particular structures adopted in the drafting gave rise to a certain amount of complaint. I think that that structure is the only one which was possible, particularly within the time scale under which we are operating. I would assure the right hon. Member for Orkney and Shetland (Mr. Grimond) that I will proceed as rapidly as possible—given Royal Assent to the Bill—with the necessary consultation and with the introduction of the first orders.
    Question put and agreed to.
    Bill accordingly read the Third time and passed, without amendment.

  LICENSING (SCOTLAND) BILL
  Lords amendments considered.
  LICENSING (SCOTLAND) BILL
    Clause 2

      DISQUALIFICATION OF INTERESTED PERSONS
      Lords amendment: No. 1, in page 3, line 11, at end insert:
      "() A member of a licensing board who holds a disqualifying interest in a company shall not take part in any proceedings before the board in which that company is an applicant or an objector, and in this subsection "disqualifying interest" means a beneficial interest in shares or stock of a close company within the meaning of section 282 of the Income and Corporation Taxes Act 1970 which have a total nominal value exceeding £50 or which amount to more than one hundredth part of the nominal value of the issued share capital, or stock, as the case may be, of the company or any class of such capital or stock."
      8.41 p.m.
      The Secretary of State for Scotland (Mr. Bruce Millan): I beg to move, That this House doth agree with the Lords in the said amendment.
      Lords Amendment No. 1 disqualifies any member of a licensing board who is a shareholder with more than a specified minimum holding in a close company who is an applicant or objector in proceedings before that licensing board from taking part in those proceedings.
      I shall not deal with the matter in detail because, obviously a potential conflict of interest is involved and the purpose of the amendment is to avoid that.
      Mr. Teddy Taylor: In general I think that the Lords have acted with a great deal of irresponsibility in some of the amendments which they have passed. I find it difficult to understand this amendment and I hope that the Secretary of State can give me some guidance.
      So far as I can see, it indicates that the "disqualifying interest" means a beneficial interest in the stock of a close company which has a nominal value exceeding £50. I understand that the Secretary of State is an accountant. He will know more about these things than I do. Does "nominal value" not mean the number of shares? I understand that
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      we could have a £1 share which stands at 3p. yet the nominal value would be £1. We could have a £1 share worth £100 and yet the nominal value would still be £1. Many of these companies have £100 as the nominal share capital although the real value of the company concerned might be considerably more. Is it fair and reasonable to talk about £50 nominal value of shares in a company when they might be worth £1 or £10,000? We know that many private businesses are drawn up under the terms of £100, £300 or £1,000 companies. To put in a nominal share value of £50 could be quite meaningless.
      Would it not be better to relate this provision to the real value of the business and not the nominal share value of the company? This is important because the Bill will radically alter the economic prospects of some licensed premises. Some people say that extra hours of Sunday opening will reduce the profits of the pubs. Others, like myself, think that it will mean more dringing and therefore greater profitability. We are talking about big money and big business. Does the right hon. Gentleman feel that a nominal share value is a valid basis for disqualification when the nominal value can mean anything at all?
      Mr. Millan: The matter which worries the hon. Gentleman is taken care of by the second definition. Whatever the total nominal value of the shares of the company, the second definition would bring in shareholders whose holding is more than one-hundredth of the nominal value. Therefore, whatever the real value of the company, someone with more than 1 per cent, of it would be covered. We are dealing with close companies, which are controlled by comparatively small numbers of people.
      Question put and agreed to.

    Clause 5

      ARRANGEMENTS FOR DISCHARGE OF FUNCTIONS OF LICENSING BOARDS
      Lords amendment: No. 2, in page 4, line 15, leave out "to" and insert "of".
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Deputy Speaker: With this amendment we are to discuss Lords Amendment No. 47.
      Mr. Millan: These are both drafting amendments.
      Question put and agreed to.
      Lords amendment: No. 3, in page 4, line 35, leave out paragraphs (h) and (i).
      Mr. Millan: I beg to move, That this House doth disagree with the Lords in the said amendment.
      Mr. Deputy Speaker: With this amendment we are to discuss Lords Amendments Nos. 29 and 46.
      Mr. Millan: These amendments deal with the safeguards on Sunday opening. The Bill did not originally provide for Sunday opening, because in the Government's view it was unwise against the background of concern in Scotland about misuse of alcohol to take this step as well as making the other changes to liberalise hours of opening.
      The Government were defeated on that matter in Committee and were subsequently defeated on it on Report. However, on Report I moved certain amendments to provide safeguards in the procedure for applying for Sunday opening and the considerations which would be taken into account by the licensing board when considering those applications.
      The question of Sunday opening has been settled so far as the House is concerned. We all have our own views about that matter. I still take the view that the House made a mistake, but that is not the issue involved here. We are dealing only with safeguards. I hope that we shall not argue the case for and against Sunday opening again, because that matter has been decided. Many of us have strong views about it. I should love to deliver a speech similar to that which I delivered on Report, but I do not think that would take us much further forward tonight.
      Lords Amendment No. 3 removes certain paragraphs from Clause 5(2) relating to Sunday safeguards. The amendment by itself is comparatively minor, but the whole thing hangs together. The further Lords Amendments Nos. 29 and 46 have the effect of removing a reference to Schedule 4 from Clause 53 on permitted
      1512
      hours and of removing the schedule. The effect of agreeing to those amendments, against my advice, would be that there would be automatic Sunday opening of all 4,000 public houses in Scotland as soon as an order was made to bring the relevant provisions of Clause 53 into operation.
      Mr. Dennis Canavan: Will my right hon. Friend make it clear that this would not mean the automatic opening of all public houses? It is, after all, an option for public houses to open on Sunday.
      Mr. Millan: Strictly speaking, it is an option to open from Monday to Saturday as well. There is nothing special about Sunday from that point of view. If my hon. Friend the Member for West Stirlingshire (Mr. Canavan) wants to be pedantic about it, I should say that it would enable all public houses to open immediately on Sunday as soon as the clause was brought into operation. I take the view that that would be highly undesirable.
      The purpose of Part I of Schedule 4, which has been eliminated by the Lords, is to provide a procedure under which applications for Sunday opening are made to licensing boards which have the power to refuse them on the ground that the opening and use of the premises on a Sunday would cause undue disturbance or public nuisance in the locality. Part II of Schedule 4 gives a board power to restrict opening hours on Sunday if it is satisfied that the use of the premises is the cause of undue disturbance or public nuisance.
      In addition to the motion that I am moving to disagree with the Lords, I am proposing, on a separate paper, to move Amendments Nos. 4 to 9 to the schedule as it left this place. Those amendments have two main purposes. They are to apply to applications for Sunday opening the relevant procedural requirements applicable to applications for licences and to provide for the currency of permission for Sunday opening to be of the same duration as the licence to which it relates.
      The procedural requirements which it seems desirable to apply to applications for Sunday opening are the display of a notice at the premises concerned intimating the application for at least 21 days

      1513
      before the meeting of the licensing board and the giving of written notice of the application at least three weeks before the board meeting to every occupier of premises in the same building as the licensed premises. As the Government believe that the opening of public houses on Sundays could greatly affect neighbouring owners or occupiers, we consider it right to ensure that they are given adequate notice of the possible development. This would be achieved by the addition of the new paragraph 4A contained in Amendment No. 4 which has the effect of applying the relevant procedural requirements in Clause 10. We wish to ensure that applications for renewal of a public house or refreshment licence state whether the licence holder is applying for Sunday opening. New paragraph 11A, contained in Amendment No. 6, would make suitable provision.
      In terms of Part I of Schedule 4, as originally drafted, an application for Sunday opening once granted by a licensing board has no limit of time, except that imposed during the currency of a suspension order under Clause 31. It seems sensible and right that the grant of Sunday opening should last for the period of the relevant licence and that it should then require to be renewed when renewal of the licence is sought. The proposed new paragraphs 12A to 12D contained in Amendment No. 9 will have the effect of tying the grant of Sunday opening to the currency of the relevant licence, taking into account the provision for appeals. The remaining amendments to Schedule 4 are essentially drafting amendments taking account of the main changes which I have outlined.
      I recommend the retention of Schedule 4. Therefore, I have explained the amendments that I propose to move to the schedule so that hon. Members will be absolutely clear about what we are doing here.
      I hope it will be accepted by the House that these amendments, strengthening Schedule 4, do so in a very modest and sensible way. It is nonsense to suggest that they add massive restrictions to the schedule. These are, in fact, very sensible and necessary provisions.
      As to the general arguments concerning safeguards, I shall not go through them in the detail that we had on Report. The safeguards in the Bill as it left this
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      place were entered without a Division. There was a general acceptance, both by those who were in favour of Sunday opening and those who were against Sunday opening, that if Sunday opening were to be permitted in Scotland it would be necessary to write certain safeguards into the Bill—in particular the safeguard of an application under Schedule 4 concerning the rights of people living in the vicinity, and so on. That was well accepted, and I am not aware that the circumstances in which we made that decision have changed in any way since the matter was very fully discussed in this House. I explained at the Report stage what the Government had in mind.
      Inasmuch as there has been a change in the situation, it is a change relating to Sunday opening, in the sense that since Report we have seen a number of further statistics, reports and so on which give even more information than we had in the past as to the extent of the problem of alcoholic misuse in Scotland. But this would be an argument for strengthening and not for weakening the provisions in the Bill.
      It would be a profound mistake, and very much against the sense of the debate that we had on Report, if we were now to consider, as the House of Lords ask us to do, the elimination of these safeguards—and especially the safeguards in Schedule 4.
      9.0 p.m.
      At earlier stages, many hon. Members described very graphically the problem which some of their constituents had already because of noise, inconvenience and sometimes even rowdiness from public houses open on six days of the week, and they took the view that for those public houses to be open on seven days would cause a qualitative change in the inconvenience to their constituents which they would find intolerable. The safeguards which we put in the Bill related safely to inconvenience. They were not related specifically to the standards of the licensed premises themselves, because I accepted that standards about licensed premises generally should apply to seven days of the week.
      But there is a particular sense in regard to noise, inconvenience and the rest in which the addition of opening on a seventh day has particular relevance,

      1515
      and I think strongly that it should be possible for local residents and other objectors to have these matters argued out at the licensing board. The board at the end of the day, of course, does not need to accept the representations. It is free to make its decisions on the facts and arguments presented to it. But to say that it should not even be possible for people living in the locality of public houses at present open for six days to make representations about opening on Sundays, as the Lords suggest, would cause legitimate offence and possibly considerable hardship to many of our constituents.
      Therefore, for these reasons, without going over the matter again in detail, since we have debated the matter extensively before, I ask the House to disagree with the Lords in their amendments. When we come to the appropriate point, I shall ask the House to accept the amendments that I am suggesting to Schedule 4 of the Bill as it left this place.
      Mr. Malcolm Rifkind: Earlier today, we considered Scottish education and went on to consider Scottish rating. Now we have moved to Scottish drinking and that is to be followed by Scottish sex. For once, the Government seem to have their priorities right, even if we disagree about the merits of the arguments.
      The Secretary of State gave his reasons clearly for believing that the other House erred in changing the Bill and removing the safeguards which the Government wished to insert in this legislation. In doing so, he made it clear that his personal position remains, as ever, opposed to the principle of Sunday opening. I start from an opposite position. I proposed the amendment in Committee to allow Sunday opening, and it was carried.
      Starting from the opposite end to the Secretary of State, nevertheless, I come to the same conclusion. There is a strong case for allowing the safeguards which were inserted by this House on Report to remain in the Bill. I stress that I speak for myself. This is not a matter on which parties as such have views. Some of my hon. Friends will disagree with me, and some Government supporters will disagree with the Secretary of State. But I feel that the circumstances that we are
      1516
      considering justify safeguards of the type that the Government have indicated.
      I read with interest the debate in the other House when this matter was considered and when the noble Lord, Lord Guest, spearheaded the campaign to remove these controls from the Bill. In the course of his speech, the noble Lord said:
      "Can it"—
      meaning Scotland—
      "not be trusted with the same opening hours on a Sunday as in England? I have said before in this House that Scotland is being treated like a child who is given a sweet and then is told, 'You cannot eat it unless you behave yourself'."—[Official Report, House of Lords, 28th October 1976; Vol. 376, c. 649.]
      I have heard this type of argument used before, but I do not believe it is relevant to the matter to be determined by the House. I do not think that it is right, either, to say that the matter should be left out because England has certain licensing laws and that, if England does, Scotland automatically should have the same. Equally, there is no case for slavishly departing from the English pattern simply because the English have it in that way. We must consider these matters on their merits.
      Are there good arguments in favour of safeguards for Sunday opening now that the House has agreed on the principle itself? In deciding that question we cannot overlook the fact that Scotland does have a very different tradition from England and Wales. In England, particularly the question of Sunday opening is generally accepted, and has been so for many years. It does not arouse great passion or controversy, and it is something which is accepted by the whole population as being natural. I look forward to the time when there is a similar approach in Scotland.
      Having said that, however, we cannot overlook the simple fact that the decision of this House to allow Sunday opening, while greeted with approval by the majority of Scots, was strongly resented by a significant minority of the population. It still arouses great emotion, not just from the Free Churches and one or two sectarian organisations but from large numbers of ordinary people who feel very strongly, and it is right that their views should be taken into account.

      1517
      By accepting that the principle that different opening hours on Sunday is not in dispute at this stage, the House has accepted that different circumstances can and should be applied to Sunday as compared with other times of the week. This is a matter which allows for special safeguards. When considering what safeguards are justifiable or acceptable we must consider that the legislation applies to the whole of Scotland, and not just to urban or rural areas. It affects the whole population, and not just people who live above or next door to public houses.
      If we could have differential legislation, and pubs could open whenever people in rural areas—or other areas where people do not have to live next door to pubs—wanted them to do so, there would be an argument for a completely liberal approach. But we must face the fact that we have one Bill affecting the whole of Scotland and we must ensure that special attention is paid to the problems of people who live above and next door to public houses. We must do this through the medium of the licensing court.
      There is another factor which is particularly important. If the safeguards are not put into the Bill, automatically every public house in Scotland would be entitled to open its doors on Sunday. That is not necessarily objectionable, but with each and every one of the present licence holders, the licence was granted as a result of an application for six-day opening, not seven. In some areas no objections were raised to the application for a licence but there might have been had the residents known that the licensee would be entitled to open on Sunday as well.
      In some areas there were objections to licences but these were overruled by the licensing court. We cannot assume that they would have been overruled if the application had been for Sunday as well as the other six days. Had the licensing court known that the consequence of the licence was seven-day opening, it might in many cases, have refused the licences. The licensing court did not have to consider whether the granting of a licence to any pub in Scotland would result in that pub opening seven days a week. If it had been known, it is reasonable to
      1518
      assume that in some areas licences might have been refused.
      Mr. Tom McMillan: When the publican applied for the licence he applied under the law as it stood and the licensing court granted the licence in compliance with the law. The court must deal with the law as it stands and nothing else.
      Mr. Rifkind: I accept the hon. Member's point. I am not trying to blame anyone. Of course the applicant applied for his license and the court considered the application in accordance with what the law stipulated at the time. If these safeguards are not put into the Bill, however, a public house will automatically be able to open on the seventh day of the week, even though the merits of its opening on a Sunday were never considered by the licensing court and should not have been as the law stood. The only way to resolve that problem is, as the Government have indicated, by requiring a licensee, if he wishes to open on a Sunday, to go to the court once more and to apply for such permission. The licensing court can then consider the application on its merits and come to a considered decision.
      The consequence of not having the safeguards is to enable public houses automatically to open seven days a week, even though the licensing court might not have favoured such a proposal when the original application was made. There are therefore very good reasons why some form of safeguard is necessary. Safeguards must take account of the substantial minority of people who still feel strongly about the whole principle of Sunday opening. Their views should be taken into account, not to lead us to oppose the principle of Sunday opening, but to ensure that not too much damage is done to their view of what a Sunday should be.
      It is necessary to have a safeguard because we must take account not simply of public houses in rural areas or those with residences nearby, but especially those in city centres where the permitting of seven-day drinking could create substantial difficulties for local residents. Only by the use of these safeguards will consideration be given to circumstances where a licensee will be opening his premises on the seventh day.

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      I hope that the House will accept the safeguards. I do not accept every detail of them, but they are reasonable. I hope that they will not become a permanent requirement of the licensing system, but for the next few years, until a new system is properly introduced, they present themselves as a reasonable compromise which will enable people throughout Scotland to welcome the reforms of licensing law and to ensure gradual but steady progress towards a more civilised approach to drinking north of the border.
      Mr. John P. Mackintosh: For once I find the arguments advanced by the hon. Member for Edinburgh, Pentlands (Mr. Rifkind) singularly unconvincing and even muddled. They were not entirely straightforward. He advocated the special safeguard not because there might be a nuisance or disturbance, but as a concession to people who oppose the principle of Sunday opening. People in Scotland who object to drinking of all kinds, and particularly to the public houses being open on Sundays should, at the hon. Member's invitation, suggest that Sunday opening would create undue disturbance, but they should do so because they oppose the idea in principle. That is an unsatisfactory argument for the hon. Member to advance since he accepts the principle of Sunday opening. He should not say to people that if they do not like the pubs being open on a Sunday, they should cook up an objection on the grounds of nuisance and by that means secure their objective.
      These people have been defeated. The majority has come down in favour of Sunday drinking. If the opponents do not want the pubs to open, they must make their case on general grounds, not on the basis of their attitude, which has been rejected.
      Mr. Rifkind: The hon. Member is right in one sense, but he must accept that the decision of the House that licensing hours on a Sunday should be different from those for the rest of the week might give rise to a nuisance. Surely a different situation arises on a Sunday, because if it did not it would not be necessary to have different hours.
      Mr. Mackintosh: The difference is that Sunday is a day when people are not at work, and it is therefore necessary to
      1520
      have different house from those which apply on working days.
      The hon. Gentleman said that we needed a safeguard. It is wrong to suggest that there are no safeguards in the Bill anyway. There are the safeguards which apply to licences on every day of the week. There is the key safeguard in Clause 32, and that will apply if we accept the Lords amendments. Safeguards are already there. The hon. Gentleman merely wants to put in a special set of safeguards which do not apply during the rest of the week.
      He wants special standards on Sundays. I find it hypocritical and unpleasant for people to suggest that it is possible to have noise, disturbance and unpleasantness on Mondays, all sorts of foul habits on Tuesdays, create hell on Wednesdays, but that on Sundays, none of this must occur.
      I want the same satisfactory standards applied throughout the week. The safeguard is there in Clause 32 which says:
      "Where a licensing board considers that licensed premises are no longer suitable or convenient for the sale of alcoholic liquor, having regard to their character and condition, and the nature and extent of the use of the premises, the board may decide to hold a hearing with a view to making a closure order".
      That is far broader because it looks at the internal conditions of the premises as well as the environs and people's behaviour.
      9.15 p.m.
      If they are unsuitable, a licence may not be granted. We have all had experience of licence applications in our constituencies being turned down or withdrawn if standards or behaviour of people on the premises are unsatisfactory. I find it a particularly odious bit of old-fashioned sanctimonious Presbyterianism for people to suggest that we want two standards—one for Sundays and one for the rest of the week. One of the objectives of a reform of the licensing laws should be to raise standards of pubs and behaviour.
      I have read only too often what my hon. Friend the Member for Edinburgh, Central (Mr. Cook) has said on this subject and no doubt I shall hear him again tonight making the same point about tenement pubs. I understand his position and I want to take a much stronger line. If a pub is unfit ad creates a nuisance

      1521
      or disturbance on Sundays, it should not be open at all. It is curious and Scottish to say that people may be foul all week, but that they must clean themselves up and behave on Sundays.
      The hon. Member for the Western Isles (Mr. Stewart) will be well aware of double or treble standards with, for instance, one door at the front of the pub being used during opening hours and another door at the back of the pub being used afterwards. I want one proper standard.
      Mr. Donald Stewart: Does not the hon. Gentleman accept that in whatever part of Scotland one may live, there are certain things which give greater offence on Sundays than on other days and that there are things which people would put up with on weekdays but which they find offensive on Sundays?
      Mr. Mackintosh: It is a particularly odious, hypocritical and unpleasant point of view which says that children may play and make a row on weekdays, but may not make a sound on Sundays. Good behaviour is a seven-day-a-week practice. Whatever standards and drinking habits we want in pubs in Scotland, do not let us say that we can derogate from them for six days out of seven. We must apply the same high standards throughout the week.
      This point of view was well put in another place by, among others, the father of the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith), who is a former Under-Secretary of State. The Minister tonight did not deal very fully with the subject of alcoholism. The Minister of State in another place completely gave up that argument. He said that alcohol was available in hotels and all over the place in Scotland and that the aim of the Bill was to end the discrimination against one class of premises. I hope that we shall not hear any more of that argument tonight.
      Do we want two standards or one good standard? I hope that all hon. Members will vote for one proper standard in public houses and in behaviour and not the old, two-standard hypocrisy which has crept into our lives.
      Mr. Teddy Taylor: The hon. Member for Berwick and East Lothian (Mr.
      1522
      Mackintosh), in one of his usual arguments, seems to think that he has the monopoly of common sense and that everyone who disagrees with him is wrong, foolish, misguided or hypocritical. Irrespective of what the hon. Gentleman thinks, along with those whom he would represent, there are a considerable number of people—I suggest a majority—who think that a pattern of living that involves five days' work, one day of recreation and one quiet day is not offensive to the majority. I suggest that the majority like to have one day that is quieter than the rest, one day of recreation and five days' work, although normally those conditions are not available to Members of Parliament, who often have to work for seven days a week in unreasonable conditions, as you are well aware, Mr. Speaker.
      If people wish to live their life in that way, why should the hon. Member for Berwick and East Lothian and some of his trendy friends try to foist their Chelsea ideas on those who are not prepared to accept them? Although I disagree with the hon. Gentleman, I classify the House of Lords as being far more irresponsible. Their Lordships have shown themselves collectively—I should not think of attacking them individually and I do not believe that we are allowed to do so anyway—to be a bunch of clowns.
      Mr. Speaker: Order. In order that all should go well, it is customary for one House not to abuse the other. That is the general rule.
      Mr. Taylor: I am sorry, Mr. Speaker. However, it is clear from their decision that very few Lords live in Glasgow tenements above public houses. It would be interesting to have a statistical survey, but I think we can accept—the Secretary of State may have some information on the matter—that very few Lords live in that style in Glasgow. I am convinced that if more Lords lived in those circumstances their Lordships would not have come to the same decision.
      Mr. Norman Buchanan: Perhaps the hon. Gentleman should accept that their Lordships are acknowledged to be experts on the subject. The expression "As drunk as a Lord" is commonly used.
      Mr. Taylor: It could well be that they have more experience of drink as a practice and as an investment, but I should not like to venture an opinion.
      I say to the hon. Member for Berwick and East Lothian and those who feel like him that their Lordships came to their view irrespective of whether a Sunday licence will cause undue disturbance to a locality, even if it will cause an undue public nuisance. Irrespective of those considerations, they are in favour of a public house opening on Sundays. There is no question of that not necessarily happening if one person or two or three people say that they do not like it. We are talking about a general public disturbance or public nuisance in a locality.
      One of the advantages of the fragile safeguard that we put in the Bill is that it gave people in the community some sort of say about the life style that they want in their community on a Sunday. I am worried that their Lordships seem to have taken into account only the interests of brewers and publicans, not the interests of the people and the staff. If we have no safeguards, it is quite certain, irrespective of whether it is said that they need not open, that the vast majority of public houses will open on a Sunday.
      In some places it will be a licence to print money. According to all the evidence, it will lead to more drinking, and, therefore, to greater income. In the absence of any safeguards, it is almost inevitable that the majority of public houses will open. On reading the debate in another place it seems that no consideration was given to the position of staff.
      Mr. Tom McMillan: I wish that I were in a position to act as a shop steward for staff in public houses. Does the hon. Gentleman agree that they are some of the worst-paid members of the community, especially those who work for brewers? When the Bill becomes an Act, I should like to be in a position to negotiate their new wage terms.
      Mr. Taylor: Yes, that is something that we should all think about before we change laws.
      I am worried that these changes are being made with no attention being given
      1524
      to the intolerable living standards and life styles of those who work in public houses. Managers of public houses are on duty for six days a week. If they choose to carry out their responsibilities properly, they may well be in the position of having to be on the premises seven days a week if the Bill as it stands becomes an Act. It is intolerable that we should go ahead with proposals that will inflict that sort of life style on some one who works in a public house.
      We should take into account not only the interests of brewers and publicans and those who will make a considerable amount of extra money out of the Bill, but the interests of those who live in our communities in Scotland and the interests of staff. I therefore feel that we should have safeguards.
      The hon. Member for Berwick and East Lothian said that he did not like the idea of two tiers of decision. What we should have had in the Bill is a two-tier system based on incentives whereby one could get extra facilities only if one were prepared to play one's part in improving facilities. What I refer to as the safeguard of Clause 32 is not a safeguard in relation to the effect on the community. It is a safeguard only in relation to the premises. It concerns premises which are suitable or fit for the selling of drink. Even if a public house is made of diamonds with glass, it can still cause considerable offence in a community if it makes provision for Sunday drinking.
      Therefore, I agree entirely with the Secretary of State. We have made a major blunder in permitting Sunday opening, as we do in the Bill. However, if we are to destroy the few fragile safeguards that have been inserted just because their Lordships have come to that decision, we shall make the situation a great deal worse and we shall inflict a pattern of life upon people who certainly do not want it, and we shall have no provisions to provide for it unless we have the present safeguards.
      Mr. Canavan: The proposed restrictions in Schedule 4 would be unfair. They would operate unfairly, first, against the individual publican or the prospective licence holder. The duplicity of standards as proposed by the Government would mean that many prospective

      1525
      licence holders would have to cross two hurdles if they wanted to have their establishment open on a Sunday. The Government have not satisfactorily explained why they want to impose these double standards. There is much to be said for the argument that if a pub is not good enough to be open on a Sunday, then it should not be open during the week anyway.
      I understand the problems in constituencies such as that of my hon. Friend the Member for Edinburgh, Central (Mr. Cook). I used to live in a tenement in his constituency. I know that in such urban areas there are problems associated with people coming out of pubs at 10 p.m. or, as the Bill proposes at 11 p.m. It is not nice to hear disturbances at night or to find one's stair messed up with urine in the morning.
      I have listened to my hon. Friend the Member for Edinburgh, Central (Mr. Cook) with much respect. However, his argument concerned stopping a particular pub opening throughout the whole week, or perhaps providing better toilet facilities inside and outside pubs. It is an argument for stopping people urinating where they should not do so and having more adequate police supervision. However, surely he would not argue that urinating in a close on a Sunday is any worse or any better than urinating in a close from Monday to Saturday.
      The Sunday restriction order as proposed in Schedule 4 is unfair in another respect. Paragraph 15 says:
      "The licensing board may make a Sunday restriction order in relation to individual premises or in relation to a group of premises in respect of which the same type of licence is held."
      That means that if there has been misbehaviour in one particular establishment the board has the power to impose a Sunday restriction order not merely on that establishment but on establishments in the whole area. One pub in an area may be responsible for a Sunday restriction order covering the whole area. Therefore, some good licensed premises could suffer from this restriction simply because of bad behaviour at one particular establishment.
      I recognise, too, what the Secretary of State said—that if the Lords amendment is accepted we shall have a great number of pubs, not necessarily all—
      1526
      opening on a Sunday. It is optional, but I expect that most pubs would open on a Sunday and that this may present difficulties concerning the conditions of work and payment of staff, and so on. They are not insurmountable difficulties. No pub will be forced to open. It will be purely optional.
      There is a great case for fighting for better conditions for the bar staff irrespective of Sunday opening. They could have a more flexible shift arrangement. I have experience of having worked in a pub. I was employed by one of the biggest licence holders in Scotland, Scottish and Newcastle Brewers. At that time I was paid the princely sum of five bob an hour. Last year the pre-tax profits of Scottish and Newcastle Brewery exceeded £30 million. There is plenty of money in the brewers' pockets to pay the staff decent wages, so let us not listen too much to those who exhibit pseudo-sympathies for the staff. So long as the staff get organised through trade unions to fight for better conditions and better pay, they have nothing to fear.
      9.30 p.m.
      If the Government's proposals go ahead there will be unfairness towards the consumers as well. The existing law is that only hotels with four or more bedrooms can apply for a seven-day licence. In some areas there are plenty of hotels, but in other areas people who want a quiet drink on a Sunday have to walk miles to get a pint. In areas where there are no hotels and clubs it is unfair that the consumers should have to travel a long distance to get a quiet pint on a Sunday night.
      In urban areas where there is a scarcity of hotels we sometimes have a situation where it looks as if everyone and his brother, sister and granny squeeze into the public bar of the hotel and there is absolutely mayhem on a Sunday night. There is nothing more degrading to the so-called Scottish Sabbath than the public bar of some of our hotels in Scottish cities on a Sunday night. People crowd together in barbaric conditions because that is the only place where they have the opportunity to get a drink. If there were more and better facilities, people's drinking standards would be far more civilised and that would lead to a far more civilised society in Scotland.

      1527
      It is interesting to note that it is 16 years since the first Guest Committee reported. Guest recommended the Sunday opening of pubs. At that time the Government diluted the Guest Committee's recommendations. They did away with the stupidity of the bona fide traveller nonsense which applied on a Sunday. Now, only hotels with four or more bedrooms can get a seven-day licence. Often they are pseudo-hotels which do not cater for residents. They have four wee rooms, which they call bedrooms, just to get a seven-day licence.
      In 1973, the Clayson Committee recommended the Sunday opening of pubs. Again, here we have the Government of the day diluting the recommendation by making the restrictions proposed in Schedule 4.
      I see that there are four Members of the Scottish National Party present tonight. SNP Members are always complaining about unfair disparities between Scotland and England. I hope that they will join us in Lobby tonight. One unfair disparity between Scotland and England is the licensing law, particularly in respect of the opening of pubs on Sunday. Hon. Members who back in their constituencies might hypocritically condemn Sunday opening are not averse to knocking it back here during the week. I hope therefore that all 11 SNP Members come into the Lobby with us tonight. The hon. Member for Moray and Nairn (Mrs. Ewing) is not here. She might be on the vino in Brussels rather than on the whisky downstairs, for a change. But I hope that as many SNP Members as possible will support us in the Lobby tonight.
      Surely the Scottish people, by and large, are responsible—
      Mr. Andrew Welsh: On a point of order, Mr. Speaker. Is it in order for the hon. Member for West Stirlingshire (Mr. Canavan) to refer to another hon. Member in that way?
      Mr. Speaker: Order. It is never acceptable for an hon. Member to make charges against other hon. Members if any implication can be drawn from the remark made by the hon. Member for West Stirlingshire (Mr. Canavan) I know that he would wish to withdraw it. Perhaps he would make it clear.
      Mr. Canavan: I apologise, Mr. Speaker, and withdraw that comment. I merely suggested that the hon. Lady is having a wee refreshment in Brussels tonight rather than downstairs.
      Can the Scottish people not be trusted to have the same drinking facilities as can the English on a Sunday? Can they not be trusted to have the same civilised standards? I think they can.
      I find myself in a strange position since on this occasion I disagree with a Labour Minister and agree with the House of Lords. However, what convinces me that I am on the right side is when I hear the hon. Member for Glasgow, Cathcart (Mr. Taylor) saying that he will vote with the Government on this issue. I still believe that the Lords should be abolished, but in this respect its Members have shown a far more enlightened attitude than have the Government.
      Mr. Michael Clark Hutchison: On a point of order, Mr. Speaker. With due respect, I believe that there was an imputation made against the hon. Member for Moray and Nairn (Mrs. Ewing), with whom I am not politically in alignment. I do not think an adequate apology was made to the hon. Lady.
      Mr. Speaker: I understood that the hon. Member for West Stirlingshire (Mr. Canavan) had withdrawn his remark.
      Mr. Hector Monro: I am worried that for the second time this Session I find myself agreeing with the policy advanced by the hon. Member for West Stirlingshire (Mr. Canavan), even though I do not agree with his language or his imputation.
      I do not intend to reopen the debate on alcoholism, which was well ventilated in Committee and on Report. Those who are interested in trying to improve this problem have had their say and have indicated how best the situation can be dealt with. I personally feel that the licensing laws of Scotland will not make any major difference one way or the other to the illness of alcoholism.
      We must decide tonight whether we want to remain in the present situation, which is entirely unsatisfactory. Do we want a compromise such as that put forward by the Secretary of State for Scotland and by my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind), or

      1529
      should we try to raise the standards by implementing the ideas of the Clayson Committee? After all, this important subject comes before the House only once every 25 years and therefore we should take the opportunity to grasp the nettle. We cannot let matters stand as they are.
      A compromise is always an unsatisfactory solution. Therefore, we should accept the wise advice of Lord Guest and other noble Lords in another place who debated these matters at length and advanced admirable arguments about their reasons for dealing with the amendments in the way in which they did.
      It is difficult in Scotland to legislate for the whole country at once. Grave fears have been expressed by the hon. Member for Glasgow, Cathcart (Mr. Taylor) and others who represent urban constituencies in which tenement pubs are common place. The situation in those areas is very different from the situation in rural towns and in the countryside in other parts of Scotland.
      Hon. Members have already mentioned the grossly overcrowded hotels in Scotland on a Sunday. Once we have given way on the principle of the consumption of alcohol on a Sunday—which has been the case for some years via the hotels—I believe that we should move into the area covered by the Clayson Committee, which took the view "Let us try to ease the pressure on Sundays and try to bring higher standards into the pubs than now exist". That is the whole tenor of the Bill. Then we shall reduce the consumption of alcohol, because people will not be fighting like tigers to get into the cramped cocktail bars in those hotels that are open.
      There is much more to the matter than the simple prevention of the consumption of alcohol on Sunday. The Secretary of State's amendments would restrict the opening of public houses more than would the Clayson proposals or the proposals put forward in another place.
      Therefore, I believe that it is much better to take the wise advice of Clayson and to accept all the problems of staffing and so on that may follow. The incentives of good pay and conditions overcome many such problems. We should look towards the end of the century and try to raise the whole standard of public houses and hotels in Scotland. We shall not do that by continuing restrictions.
      Mr. Robin F. Cook: It would be unfair to pretend that I had not intended to speak until I heard the attack made by my hon. Friends the Members for Berwick and East Lothian (Mr. Mackintosh) and West Stirlingshire (Mr. Canavan) on the speech I was not going to make, but it is a new and flattering experience for me to have a speech of mine attacked before I had uttered even a word of it. It is all the more remarkable as, unlike more distinguished hon. Members, I had not even issued to the Press an embargoed copy of what I was going to say.
      My hon. Friends are correct. I come to the debate with a strong commitment to the Government's amendment because I represent a constituency in which a large proportion of my electors live in tenements piled on top of a public house, quite often one that serves not only that locality but the region as a whole, including the area which my hon. Friend represents and the area in which he lives.
      My hon. Friends will be relieved to hear that I do not propose to rehearse the many arguments with which I wearied the Standing Committee on behalf of those electors. I am sufficiently wise to know that if I have not yet moved my hon. Friends with my electors' problems I shall not succeed tonight, but it is worth recalling that on Report in July there was no doubt that the majority of hon. Members were sympathetic to the safeguards then approved to protect the people in that position.
      Mr. Mackintosh: That is not so. There was no vote.
      Mr. Cook: If the majority were not with the proposal, we would at least have had a vote. We did not have a vote in July because my hon. Friend realised that he was in a minority.
      Mr. Mackintosh: I was asleep.
      Mr. Cook: That would explain some of my hon. Friend's speeches.
      Those safeguards gained the support of both sides of the House. The hon. Member for Edinburgh, Pentlands (Mr. Rifkind), from the Opposition Front Bench, described them as important and desirable. That view was shared by many hon. Members in the Chamber that night. Unfortunately, that desirable and

      1531
      important compromise was upset by the decisions of the other place.
      It is not open to us in this debate to question the constitutional arrangements or raise the partisan decisions that have been made over recent weeks, but pertinent questions about a two-Chamber system are raised by a situation in which this House, after prolonged debate, arrives at a balanced compromise only to see it destroyed by another place, which clearly was not listening to our debate.
      I have studied with care the debate in the other place. I have read what was said by the noble Lords before they took their decision. I am aware that "Erskine May" advises me that I must be courteous and moderate in what I say about the other place. I labour under the same constraints as the hon. Member for Glasgow, Cathcart (Mr. Taylor). Yet I must say I found the contributions to that debate disappointing.
      9.45 p.m.
      It is hard not to come away from that debate with the impression that those who participated lacked comprehension of the way in which working people live in an urban environment in Scotland. Lacking that comprehension, they lacked compassion for the problems that come with it. As the hon. Member for Cathcart has said that the only people for whom concern was expressed in that debate were publicans who might fail to get through such tests as might be applied by the licensing board.
      Two arguments were produced in the course of that debate. First, why are we different from England? The provision does not exist in England and people asked why such a safeguard should be written into the law of Scotland. I do not yet despair of the hope that we may make laws for Scotland that are not only different from those of England but also better.
      There is a real difference which is why we have to provide these safeguards. The urban environment in Scotland is different from the urban environment in the English regions. There are some people who live above public houses in England, mostly the publican and his family. But nowhere in England does the figure approach the large number of families—often up to 20 in a tenement—piled on
      1532
      top of a busy public house such as I can take hon. Members to within my own constituency. The situation is different and there must be safeguards. We need make no excuse when people point to the difference in the laws between England and Scotland.
      The second argument was that if the public houses are open on six days of the week they should necessarily have a right to be open on the seventh day. That is exactly what my hon. Friends and the noble Lords were saying. That is what the Bill would provide within the safeguards.
      People who urge this argument are labouring under a misapprehension. We are not saying that we should prevent a pub from opening on the seventh day because of the quality of the pub or the character of the publican or the people who go there. The reason we are saying that there should be safeguards to prevent that public house being opened on the seventh day relates purely to its location. Location is not catered for in Clause 32. That clause refers to
      "character and condition, and the nature and extent of use"
      but not to location. What we are dealing with is not a licensing matter but a planning matter.
      As the hon. Member for Pentlands said, tenants of public houses in the past have gone to the planning committee and have received permission to be open on six days. But they might not have received that planning permission if the planning committee had been aware that they would be open on Sunday. That is a well-understood planning principle and it applies to fields other then licensed houses.
      Mr. Tom McMillan: Can my hon. Friend explain what planning has to do with the day of opening?
      Mr. Cook: My hon. Friend has served on a planning authority but he may not have served on the planning committee, as I have, and as other hon. Members have. As any Member who served on a planning committee is aware, the hours for which a premises will be occupied—whether they be a public house or an industrial or commercial concern—are highly relevant to the decision that the local planning committee takes.

      1533
      If one asks for permission to open an industrial premises the committee will ask the hours on which it will be open. One is more likely to get planning permission if the premises are open from 9 a.m. to 5 p.m. than if one has work shifts throughout the night and on Sundays.
      If my hon. Friends the Members for Berwick and East Lothian and West Stirlingshire are to be thoroughly logical, what they should say is that no factory should be given planning permission to be open unless it could be open on a Sunday The logic of their approach to public houses is that if one is not prepared to give planning permission for Sunday, those with planning permission for only the other six days should be shut.
      That will not happen. Licensing boards and planning committees will not take away the livelihood of those who already have permission to operate six days a week. It is a chimera to think that a licensing board will weed out those which are not fit to open on Sunday and close them down for the other six days. I think that my hon. Friends understand that.
      But even if elected members were prepared to do that, it would be unnecessarily harsh. There are public houses which open six days a week which are well run, in which there are no disputes and where people do not urinate when they leave, even up the adjacent stair, and where those living nearby have lived for decades with the background noise, nuisance and smell and do not want to close them for the six days.
      All they say is that they do not want them open on a Sunday, on their day of rest, when all the family are at home. They are entitled to object. Unless we replace these paragraphs they will not have that right. We have the duty to restore to them that right which the Lords sought to deny them.
      Mr. Russell Johnston: The hon. Member for Berwick and East Lothian (Mr. Mackintosh) summed up the argument against the Government's motion—a motion which I support—in a way which showed a profound misunderstanding of the Government's argument. He said that those who supported the amendment supported two standards
      1534
      while he supported one good standard. He said that we were supporting two levels, one for the six days of the week and a different one for Sunday, and that that was hypocrisy. He wanted a high standard, hopefully improving, on all seven days.
      It is not like that at all. Far be it from me to pretend that there is not a great deal of hypocrisy about drink in Scotland; of course there is. But a sizeable proportion of the community regards Sunday as different—whether for sacred reasons or because of the respite it offers from the hurly-burly of the previous six days. They apply different standards to it and that is not hypocritical: they simply look upon it differently.
      People who take that view often consider other activities than drinking in a different way on Sunday. For example, the fact that many people do not approve of league football on Sunday does not mean that they disapprove of league football. They simply argue that mass entertainment in our major cities with all its resulting complications is not desirable on a Sunday.
      I therefore do not agree with the hon. Member that support for the Government's motion is a cantish or hypocritical approach to a real problem. In a strange way it will make the legislation more flexible and permit a more sensitive approach to local situations even than the local option, which was what I supported.
      Now, particularly in the urban areas, with very large districts—it could probably not be based on anything smaller—the local option would become virtually meaningless. Under the Government's proposal, the circumstances obtaining in particular places and affecting individual public houses would be scrutinised. I think that that commends the Government's proposals.
      In a moderate, restrained and well-structured speech—I say that without offence—the Secretary of State repeatedly used the word "safeguards". That is a good word to look at. It means that one is trying to protect, to respond to and to be careful of the problems and attitudes of groups of people. Surely that is a good thing to do. I shall certainly be doing that in supporting the amendment.
      Mr. William Ross: I am surprised by some of the remarks that I have heard today, bearing in mind that we are seeking to put back into the Bill provisions with which we were perfectly satisfied when it left this House and to which many hon. Members have referred as desirable safeguards.
      When I questioned my hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh) about this matter, I did not get the impression that the people who were arguing the desirability of Sunday opening were lacking in vigilance. I thought that they were following the Bill carefully and closely. When I made my speech, I suggested that, although I was not entirely happy about the safeguards, if these safeguards were necessary for Sunday opening, they were equally necessary for Monday, Tuesday. Wednesday, Thursday, Friday and Saturday.
      We are making a new start. I suggest that the standards that we set for Sunday should be the standards for weekdays as well. Only by accepting these standards and applying them to the rest of the week can we have the desirable improvement which has been asked for. I do not think that we shall get that improvement without doing anything. We had this improvement business in 1953 when we first embarked on Sunday opening. My hon. Friend the Member for West Stirling-shire (Mr. Canavan) told us some sad tales about his granny, and all the rest of it. The one person who would never be seen in a Scottish pub was my hon. Friend's granny.
      We want to see these standards applied. My hon. Friend made his heart-burning cry. Apparently he is opposing his right hon. Friend and saying that he is on the side of the Lords. One can imagine that the first hymn next Sunday will be
      "Who is on the Lord's side?"
      But we must not forget that the next hymn will probably be
      "Courage, brother! do not stumble".
      I hope that we shall not waste much time. I am not happy with the Bill as it is. The hon. Member for Edinburgh, Pentlands (Mr. Rifkind)—I think this was mentioned by my right hon. Friend the Secretary of State—said that we were dealing with the whole of Scotland. This was a balanced Bill when it was produced. I had something to do with it when I
      1536
      was Secretary of State for Scotland. We are taking away from different parts of Scotland and areas of cities the right to make up their own minds in the form of a referendum. We are wiping that out.
      I find it very difficult to understand why another place should now say that, without any safeguards, there will be an automatic right given to all pub owners to open on a Sunday. I think that the other place is living up to its irresponsibility in a democratic sense.
      Sunday is different from the other days of the week, and I am delighted that it is. Trade unionists think that it is different. If a man works on a Sunday, he gets more than for working during a weekday, because Sunday is the recognised day of rest. The pattern of life on Sunday is different.
      When the Bill left this House—

  BUSINESS OF THE HOUSE
  It being Ten o'clock, the debate stood adjourned.
  Ordered,
  That Government Business may be proceeded with at this day's Sitting, though opposed, until any hour.

  LICENSING (SCOTLAND) BILL
  Question again proposed, That this House doth disagree with the Lords in the said amendment.
  Mr. William Ross: One of the other amendments made in the House of Lords was to change the Sunday opening hours by extending them to 11 a.m. until 2.30 p.m. and 5 p.m. to 11 p.m. This is something else that my hon. Friend the Member for Berwick and East Lothian accepted. He must have been asleep for most of that day.
  Mr. Mackintosh: I was not only not asleep but I heard my right hon. Friend saying that he did not want fall-back positions because they would not work.
  Mr. Ross: The one thing that will work will be the power given to the licensing court. That is what we have not got at present. The person who wants to open on Sunday has to make virtually a new application, and then

  1537
  it is looked at by the licensing court in the light of the safeguards. What my hon. Friend the Member for Glasgow, Central (Mr. McMillan) wants to do in supporting the Lords is to give the right not to the licensing court—to which objection could be made by those affected—but to the pub owner. That is quite wrong in view of what we are doing elsewhere. We have gone a long way in this and it is necessary, in order to—
  Mr. Tom McMillan: The publican has to re-apply to the board occasionally for his licence.
  Mr. Ross: Occasionally, yes, for the renewal of licence. The rights in relation to individuals objecting to renewal are different from those where a new licence is involved, as my hon. Friend well knows.
  It is right to focus on this. The pattern is changing on Sunday. It is being changed by everything we do. No Sunday trading Acts are applicable in Scotland. It was never thought to be necessary in a Presbyterian Scotland to have Acts of Parliament to allow shops to open and football and cricket matches to take place on a Sunday. There is more restriction in England than in Scotland simply because of that. Celtic are to play Ipswich on a Sunday. If we hurry up and get the Bill through, we can have the pubs open as well. Does my hon. Friend relish that idea?
  If some people get their way, step by step, with competitive football matches on Sundays and the pubs open, we shall also have community hymn-singing, led by the hon. Member for—
  Mr. David Lambie Mr. David Lambie (Central Ayrshire)rose—
  Mr. Ross: We shall have community hymn-singing—
  Mr. Lambie Mr. Lambie rose—
  Mr. Speaker: It looks as though the right hon. Gentleman is not giving way.
  Mr. Ross: I think that we were right in the first place when we put in these safeguards, and we are right to follow the Secretary of State's advice and put them back.
  Mr. George Thompson: I am one of the few Members to speak tonight on this matter who did not make
  1538
  a speech on Report. In the middle of the night in question I decided to exercise—
  Mr. Robert Hughes: The hon. Member fell asleep.
  Mr. Thompson: No, something much more virtuous. I decided to exercise a self-denying ordinance. For the convenience of the House I decided that I would not make a speech. But when we arrived at 10 minutes to 10 the following morning, I wondered whether I had expedited the business of the House at all by my self-denial.
  There has been mention of the old fashioned bona fide traveller. I was a mature student in Edinburgh University in the early 1960s. The bona fide traveller conditions in those days meant that I and many of my friends took long walks over the Pentlands on Sundays because it was possible to take a bus out to Balerno for a grand, healthy walk across the hills, arrive at a hotel somewhere on the other side and get a pint and some sandwiches. The only thing that we were not allowed to do was sing or play the piano.
  Then I went to France for a year as a teacher. When I came back, the law had been changed. I am sorry to say that I was one of the few of the old band which had walked across the Pentlands on Sunday afternoons who continued to carry on this good custom, despite the fact that, when I had crossed the hills, there was no hotel open waiting to receive me and, as I did not like standing round in the dark waiting for a couple of hours, I took the next bus back to Edinburgh.
  It has been said that there are different drinking habits as between Scotland and England and, indeed, as between Scotland and many other countries. I notice in my own area in the summer that, if I go into a bar and ask for "a half", the barman is likely as not to try to hand me a half-pint of beer, whereas in the winter he would not dream of doing so and would know that I was asking for whisky. The tourist from England and other places comes into the area in the summer and deranges the habits of the well-trained barman in my constituency.
  I have to confess that my opinion on this matter has changed in the course of our consideration of this Bill. Before it

  1539
  started, I was convinced that we needed universal Sunday opening—"The Jolly Beggers" approach. We in St. John's town of Dalry had both bars open on Sundays because they were both in hotels so that all the outlets for drink in bars on Sundays were open as they would be on week days. So I asked myself whether we could turn to other places and say to them "We are all right but, of course, you are different. Your cannot get a drink near your own homes on a Sunday." I wondered whether this was not another example of some of us in Scotland behaving as the unco guid and the rigidly righteous—a sort of alcoholic elitism.
  That was my opinion when I first considered the Bill. But I listened carefully to nearly all of the many speeches on Report, and I read carefully letters sent to me by constituents and others. I paid attention to what was said to me by city Members on one side and on the other side of the great divide. I remembered, too, pubs that I had seen when travelling from my own home to such notable places as Bannockburn and Stirling and, quite frankly, I changed my mind.
  I do not want us to continue a system where people in certain of our towns and cities have to travel miles and miles on a Sunday to get a drink. I think that it leads to the sort of scenes and the sort of drinking habits that we want to avoid. I believe that the Bill with the safeguards restored will make the proprietors of undesirable premises alter their premises to bring them up to the standard where they will be able to open on Sundays because they will have satisfied the licensing boards that their premises are now suitable.
  I had one difficulty because of the speed with which the Bill with the Lords amendments came back to us. It was that I had no chance to go back to those of my constituents who had written to me and to whom I had written after the Bill passed through this House on Third Reading and to consult them further on the matter. I find myself tonight disagreeing with the Lords, and agreeing with the Secretary of State in his desire to maintain these safeguards, and I hope my support will not do him any damage.
  Mr. William Small: I am puzzled about the matter
  1540
  we are discussing. It is the kind of transcendental thought process which exists between this House and another place.
  Some of my colleagues are pretty learned people, but I have an idea that they may have got it wrong. The Bill can be corrected only in this place. We here are the guardians of the rights of men and women alike. Men and women have the same rights, and I speak purely in platonic terms. Those equal rights were given force by the Sex Discrimination Act which was passed so recently.
  We are seeing here the wisdom, thought and revelation of the other place, and that can command my support. I support also my right hon. Friend the Secretary of State. When the Bill went to the other place, it contained no reflection of pagan hopes. To interfere with the Bill in the way that the other place did was an analogy of the situation in which the Christians would never kiss the lepers.
  Mr. Tom McMillan: I believe that the House of Lords has shown the courage that we lack. It has faced up to the licensing situation in Scotland much better than we have. If the Opposition look at their amendments and speeches, they will see that they have settled for half a loaf. They wanted to maintain a principle as much as I did.
  The House of Lords has given us the chance to make good the loss. If we follow through the fall-back position of my right hon. Friend, when an applicant applies for a seven-day licence and he gets turned down, he applies to the sheriff. The sheriff is asked to make double standards and he will not do that. What sheriff, having granted a six-day licence, will then tell a licensee that he cannot open on the seventh day? If we make bad laws, it is bad for this House, and this is a bad law.
  Hon. Members have mentioned noise. In Scottish cities noise has changed very little, but pubs have changed a great deal. One of my constituents lives next door to Tennant's Brewery and the noise abatement officer visited him because it was thought that the noise from the brewery was depriving him of sleep. Noise from pubs is measured in the same way, and there is the same surveillance as of factories and vehicles.

  1541
  The Lords have looked at this matter and have come up with the right answer. I think we should consider very carefully how this procedure will work. In the Bill there is a provision dealing with canvassing. If in one area there are five pubs and one is granted a seven-day licence while the other four are not, the pub with the seven-day licence will attract customers of the other pubs not only on Sunday but on the weekdays. This is offensive and unjust, and if we come to the fall-back position of my right hon. Friend, this will be the situation.
  The Lords have got it right, and we should have the courage to support them.
  Mr. Buchan: I said on Report stage that I found myself in the unique position in a sea of certainty of being the one hon. Member who did not know. The only reason I abstained was that the safeguards were written into the Bill. If the safeguards had not been there I would have voted against the Bill at that stage. This is a certain lesson for us.
  10.15 p.m.
  But I must emphasise that the situation has changed. There seems to be an acceptance in this House that a majority of people in Scotland are in favour of unrestricted drinking hours, but I see no basis for believing that. My hon. Friend the Member for West Stirlingshire (Mr. Canavan) told me that there had been a poll in the Sunday Mail, but I hope that we shall not rely on a poll which requires people to respond to an invitation to write into a newspaper. That is the worst of all criteria, and therefore we must stop that nonsense.
  It is clear that since the passing of the Bill there has been a great deal of opposition to it, not just on the question of the restrictions but to the Bill itself. One of my arguments for not voting against the Bill has been that in the long run it is necessary to liberalise our licensing law in order to bring about a more civilised situation. However, while that is a basis for making this change, it is not the basis for saying that we should proceed without the safeguards. In allowing seven-day opening we are thinking of those who drink, but in the safeguards we are concerned with those who do not drink but are surrounded by the drinkers.
  The vast pressure for this change has come partly from those of us who accept
  1542
  the case for liberalisation, such as my hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh), but most vocally from the brewers and the trade. I do not believe that the brewers of Scotland want a seven-day licence because they think that it will lead to less drink being taken. They want it because they expect more drink to be taken, and if that is not their view they are very bad business men, a quality I have not seen in them in the past. We would not have half the concert halls in Edinburgh if it were not for the brewers, and so a strange fruit is borne by the consequences of drinking.
  The basic argument advanced by the other place—and I believe that it is the basic argument of my hon. Friend the Member for Berwick and East Lothian—is that if the pub is not fit to open on a Sunday it is not fit to open the other six days. That is an irrefutable argument, except that it is not an argument with which we must deal. That is not the position that the Lords have taken up. They have said that if a pub is fit to open on six days it is fit also to open on a Sunday, but that does not follow and the argument has not been justified either here or in the other place. If a pub is fit to open for six days we must then examine the conditions which apply on the seventh There are plenty of circumstances in which we can endure certain disturbance and public nuisance in a certain period, but when that nuisance is applied over a longer period it becomes unendurable. That can certainly be the case in relation to Sunday opening in an area which can already be sore pressed with six-day drinking.
  Mr. Neil Carmichael: Does my hon. Friend not agree that one of the difficulties in his argument is that there will be a tendency for objections to be made in what one might term the good areas, while in the less fortunate areas, where there are perhaps already too many pubs, the people will be less articulate so the pubs will open on Sundays in those places but not in the other areas?
  Mr. Buchan: What my hon. Friend says is a true generalisation. One of the pities is that this is bound to happen in all circumstances. Objections tend to come from more articulate people. However, if we considered his argument here,

  1543
  we should have to stop all planning objections because at planning inquiries the middle class tend to be articulate and the working class, particularly in the conditions which my hon. Friend has described, tend not to complain. It may be that they do not object, but that is no argument for not giving them the freedom to object.
  It does not follow that because it is right for a pub to open for six days, it should therefore have a right to open on the seventh day. That argument has never been taken head on either here or in another place. That was the argument adopted by another place and that is where they made their error. My hon. Friend the Member for Berwick and East Lothian and other hon. Members have made the same error.
  Their argument is not irrefutable. What is irrefutable is the position of licences. Pubs are operating under licences granted for six days a week opening. The argument is now that we have changed the conditions under which the licences are granted. There are many activities for which licences are given on one basis and when that basis is altered, the licences have to be altered. The case is irrefutable. There must be a fresh application for a seventh-day licence. The circumstances in which the licence was granted will no longer prevail. Objections on the grounds in Schedule 4(6)—not in Clause 32—will have to be examined. They include the question of public nuisance and undue disturbance.
  I find it intolerable that people who accepted this argument without a vote in this House on Report are now willing to capitulate when it comes back from the Lords. Where were their arguments on Report? That was the time for them to state their case.
  We are right to reject the Lords amendment. The Lords have been illogical and have not understod the conditions of people in urban areas of Scotland.
  Mr. Michael Clark Hutchison: As everybody else has spoken, I suppose that I had better speak, too. The Bill was discussed thoroughly in the Scottish Committee and I thought it was rather a good measure when it left this House. Everybody in South Edinburgh is delighted
  1544
  with it, and I shall support the Secretary of State.
  Mr. Alick Buchanan-Smith: We have had a good, broad and sometimes entertaining debate. I was a little worried when the hon. Member for Glasgow, Central (Mr. McMillan) was exhorting us to take courage. Was it a little advertising on the side for a certain brand or brands?
  The speech of the right hon. Member for Kilmarnock (Mr. Ross) was one of the most entertaining. What the right hon. Gentleman said about the hon. Member for West Stirlingshire (Mr. Canavan) may be covered by using the phrase "God moves in a mysterious way". Perhaps that phrase is as appropriate as any other.
  I shall make only one or two observations as the argument has been well rehearsed tonight and previously. I must confess that at the beginning I took very much the same position as the hon. Member for Berwick and East Lothian (Mr. Mackintosh). Like the hon. Gentleman, I do not want two separate standards. If the debate were about standards, I think that what the hon. Gentleman said would have been highly relevant.
  In this instance the hon. Member for Renfrewshire, West (Mr. Buchan) is absolutely right. If we could see the Sunday standard applied to the rest of the week and could be sure that that was the objective, I should be more persuaded by what the hon. Gentleman said.
  Another reason for my taking the view that normally I should be inclined to support the hon. Member for Berwick and East Lothian is that one of the factors I should like to see in going towards a more flexible system is consideration being given to locality. That is a matter that was raised in Committee. Surely it is right that consideration be given to the locality in which a public house is operating. If we have a restrictive system, it is much more likely that we shall have every public house either opening or closing. Such a situation would not necessarily meet the needs of the community.
  There are two arguments that are of importance in this debate and they have been well rehearsed. One of the arguments was put forward by my hon.

  1545
  Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) while the other was introduced by the hon. Member for Edinburgh, Central (Mr. Cook). The first is that we have to accept that we are moving away from six-day licences to seven-day licences. We have to take into account that the public houses that now have six-day licences will be able to move to seven-day licences and that some of the considerations which held when those public houses received planning permission or licences for six days may not now apply—in other words, a completely different set of circumstances may apply when consideration is given to the granting of a seven-day licence.
  These safeguards are, broadly speaking, on balance justified in meeting such a change. If they were not present, we should in one sense be disfranchising many people who would otherwise have made objections.
  The second main argument is perhaps the most important of all. With respect, I suggest that it was the one that was missed in another place. It is the argument that was put forward by the hon. Member for Edinburgh, Central. As the hon. Gentleman said, we are not talking about standards and the real issue is not concerned with standards. That is the point that was made when we debated the matter in Committee and when the principle was first agreed. We are talking about location. That is the important argument. The only way in which we can deal with location is by adopting the safeguard that the Government have provided. Location is important if we are to take account of the wishes of the people in Scotland who will be affected.
  We are taking a great step forward, a step that I believe to be in the right direction. I am not like the Secretary of State in that, this is a principle that I have supported wholeheartedly throughout all stages. However, if we are to take steps such as this, we must have regard to the practical difficulties. I believe that the Government's safeguards meet the problem of location and that they should be supported. For that reason I hope that the Secretary of State is supported.
  Mr. Millan: I shall speak only briefly because the arguments have been well rehearsed. From the speeches that have
  1546
  been made it seems that most Members agree with the view I expressed earlier.
  As the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) has said, in moving to Sunday opening we are moving into an entirely new situation. It is right that existing licences were granted in a different situation when there was not Sunday opening. All that the safeguards do is to provide an opportunity of procedure for the possibility of Sunday opening, or an application for Sunday opening to be considered. The safeguards do not prevent Sunday opening. They merely say that in the new circumstances there should be an opportunity for the arguments to be rehearsed and for objectors to be heard before any decision is made.
  If we were to accept the Lords amendments we should be denying any sort of rights to those who may be seriously affected by Sunday opening. I accept the point that has been made by several Members, including my hon. Friend the Member for Renfrewshire, West (Mr. Buchan), that we have to have regard not only to the potential customers of the pubs on a Sunday but to others who may be affected by their opening.
  10.30 p.m.
  Sunday considerations are different from those of the rest of the week. I say that not from a sabbatarian point of view but for all sorts of social reasons. Certainly in terms of the social implications or the implications in an individual locality, opening on seven days is different from opening on six days.
  Concerning standards, the argument works both ways. One could well argue that if the hurdle of Schedule 4 was not surmounted by the applicant—in other words, if the application for Sunday opening was turned down—the pub should be closed for the whole of the week, for the other six days as well. That is what hon. Members are arguing. That is as logical as an argument that says that because they are open for six days a week, they must automatically be opened on the seventh day. One could equally say that if the applicant cannot get through the Schedule 4 procedure, the result should be that the pub should be closed for the rest of the week. I seriously considered that as a logical answer to the problem. However, we

  1547
  must deal with the practicalities of the situation.
  A number of hon. Members have not applied their minds to the practicalities of the situation, the attitudes of local councillors on licensing and so on. Even as Members of Parliament, whatever we feel about Sunday opening, it would not be right to put a publican at hazard in that if he applied for Sunday opening he might finish up by not being open at all for the rest of the week. That would be a hardship and the matter should not be dealt with in that way. Equally, however, it could be a hard-
  Question accordingly agreed to.
  Amendment made to the words so restored to the Bill: in page 4, line 36, at end insert:
  ship to many other people who are affected by pub opening times if they had no opportunity to put a point of view about the circumstances in which a pub not previously open on Sunday was to open on Sunday. That is what the safeguards are about.
  I hope very much that the House will agree with my recommendation that we should disagree with the Lords amendment.
  Question put, That this House doth disagree with the Lords in the said amendment:—
  The House divided: Ayes 90, Noes 36.

  Division No. 371.]

  AYES

  [10.32 p.m.

  Archer, Pater

  Gow, Ian (Eastbourne)

  Roper, John

  Armstrong, Ernest

  Gray, Hamish

  Rose, Paul B.

  Ashton, Joe

  Grimond, Rt Hon J.

  Ross, Shephen (Isle of Wight)

  Bain, Mrs Margaret

  Hamilton, James (Bothwell)

  Ross, Rt Hon W. (Kilmarnock)

  Banks, Robert

  Hardy, Peter

  Rowlands, Ted

  Bean, R. E.

  Harper, Joseph

  Sainsbury, Tim

  Beith, A. J.

  Harrison, Walter (Wakefield)

  Silkin, Rt Hon S. C. (Dulwich)

  Bishop, E. S.

  Henderson, Douglas

  Small, William

  Brown, Hugh D. (Provan)

  Hunter, Adam

  Smith, John (N Lanarkshire)

  Buchan, Norman

  Hutchison, Michael Clark

  Stallard, A. W.

  Buchanan-Smith, Alick

  Irving, Rt Hon S. (Dartford)

  Stanbrook, Ivor

  Campbell, Ian

  Johnston, Russell (Inverness)

  Steel, David (Roxburgh)

  Cant, R. B.

  Jones, Dan (Burnley)

  Stewart, Donald (Western Isles)

  Cocks, Rt Hon Michael

  Judd, Frank

  Stewart, Rt Hon M. (Fulham)

  Coleman, Donald

  Kaufman, Gerald

  Stoddart, David

  Cook, Robin F. (Edin C)

  Lamond, James

  Strang, Gavin

  Corrie, John

  Leadbitter, Ted

  Taylor, Teddy (Cathcart)

  Cox, Thomas (Tooting)

  Le Marchant, Spencer

  Thompson, George

  Craigen, J. M. (Maryhill)

  McDonald, Dr Oonagh

  Walker, Harold (Doncaster)

  Deakins, Eric

  McElhone, Frank

  Welsh, Andrew

  de Freitas, Rt Hon Sir Geoffrey

  McNamara, Kevin

  White, James (Pollock)

  Dempsey, James

  Marshall, Dr Edmund (Goole)

  Whitehead, Phillip

  Doig, Peter

  Millan, Rt Hon Bruce

  Wigley, Dafydd

  Dormand, J. D.

  Murray, Rt Hon Ronald King

  Wilson, Gordon (Dundee E)

  Douglas-Hamilton, Lord James

  Ogden, Eric

  Wise, Mrs Audrey

  Eadie, Alex

  Page, John (Harrow West)

  Woodall, Alec

  Ellis, John (Brigg & Scun)

  Palmer, Arthur

  Wrigglesworth, Ian

  English, Michael

  Penhaligon, David

  Fitt, Gerard (Belfast W)

  Prescott, John

  TELLERS FOR THE AYES:

  Fletcher, Ted (Darlington)

  Reid, George

  Mr. Ted Graham and

  Forrester, John

  Rifkind, Malcolm

  Mr. Alf Bates.

  Golding, John

  NOES

  Bagier, Gordon A. T.

  Knox, David

  Prescott, John

  Brotherton, Michael

  Lambie, David

  Selby, Harry

  Canavan, Dennis

  Lester, Jim (Beeston)

  Skinner, Dennis

  Clarke, Kenneth (Rushcliffe)

  MacCormick, Iain

  Sproat, Iain

  Cohen, Stanley

  McGuire, Michael (Ince)

  Taylor, Mrs Ann (Bolton W)

  Crawford, Douglas

  McMillan, Tom (Glasgow C)

  Torney, Tom

  Evans, John (Newton)

  Madden, Max

  Urwin, T. W.

  Fowler, Gerald (The Wrekin)

  Marshall, Jim (Leicester S)

  Watt, Hamish

  Gilmour, Sir John (East Fife)

  Mawby, Ray

  Woof, Robert

  Gourlay, Harry

  Miller, Dr M. S. (E Kilbride)

  Havers, Sir Michael

  Monro, Hector

  TELLERS FOR THE NOES:

  Hicks, Robert

  Ovenden, John

  Mr. John P. Mackintosh and

  Hunt, David (Wirral)

  Phipps, Dr Colin

  Mr. Hugh McCartney.

  Johnson, James (Hull West)

  'other than an application under paragraph 11A of that Schedule where no objection is made in relation to the application'.—[Mr. Millan.]
  Lords Amendment: No. 4, in page 5, line 18, at end insert:
  "and the clerk of the board shall accompany the board when it so retires unless the board otherwise directs"
  Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
  This amendment places beyond doubt the position of the clerk of the board when a board decides to retire to consider any decision. There may be some doubt on this matter. The Law Society of Scotland drew the matter to our attention and this amendment will put the situation right.
  Question put and agreed to.

  LICENSING (SCOTLAND) BILL
    Clause 10

      APPLICATION FOR LICENCE
      Lords Amendment: No. 5, in page 7, line 16, leave out "types" and insert "type".
      Mr. Deputy Speaker (Sir Myer Galpern): With this we are taking Lords Amendments Nos. 26 and 28.
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      These are all drafting amendments, and I would merely point out that no issue of principle arises.
      Question put and agreed to.

    Clause 11

      SPECIAL PROVISIONS FOR APPLICATIONS MADE OTHER THAN BY INDIVIDUAL NATURAL PERSONS.
      Lords Amendment: No. 6, in page 8, line 15, after "employee" insert "or agent".
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Deputy Speaker: With this we are taking Lords Amendments Nos. 7, 8, 11, 15, 16, 17 and 18.
      Mr. Millan: Lords Amendment No. 6 widens the provisions of Clause 11 about
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      company licences to take account of the tact that the person responsible for the day-to-day running of the premises—the joint licence-holder with the company—may be an agent, for example a lawyer or accountant, rather than an employee of the company. Therefore, the words "or agent" are included. The other amendments are consequential.
      Question put and agreed to.
      Lords Amendments Nos. 7 to 9 agreed to.

    Clause 16

      OBJECTIONS IN RELATION TO APPLICATIONS
      Lords Amendment: No. 10, in page 11, line 30, leave out "where practicable".
      10.45 p.m.
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      The amendment places an absolute obligation on the chief constable to intimate his objection to the applicant before the hearing. I think that this is right and fair to the applicant.
      Question put and agreed to.
      Lords Amendments Nos. 11 to 13 agreed to.

    Clause 24

      SPECIAL PROVISIONS RELATING TO APPLI CATIONS FOR RENEWAL OF A LICENCE.
      Lords Amendment: No. 14, in page 16, line 7, leave out subsection (1).
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      The amendment leaves out of the clause the requirement that an applicant for renewal of a licence, other than an off-sale licence, must produce a certificate about food hygiene from the local authority. The view was taken in the Lords that as the local authorities' public health officers will be exercising continuing supervision over licensed premises, as over other food premises, under the food and drugs legislation, there is no need for this further check at the time of the renewal of a licence. On balance I agree,

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      although I do not feel strongly about the matter.
      Question put and agreed to.
      Lords Amendments Nos. 15 to 18 agreed to.

    Clause 31

      SUSPENSION OF LICENCE ON RECEIPT OF COMPLAINT
      Lords Amendment: No. 19, in page 20, line 37, leave out from "misconduct" to end of line 39 and insert
      "on the part of persons frequenting licensed premises occurring in those premises or any misconduct in the immediate vicinity of licensed premises which is attributable to persons frequenting those premises."
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      This is a rather better formulation of the wording in the clause. The amendment enables a licensing board in considering the suspension of a licence to take account of misconduct by customers of the licensed premises either in the premises or in the vicinity. It also makes the clause rather more comprehensive.
      Mr. Teddy Taylor: The Bill as drafted said:
      "any misconduct occurring in the vicinity of the licensed premises on the part of persons frequenting those premises."
      The amendment, which I think is better, speaks of any misconduct which is "attributable" to them. Does that mean that it would not be necessary, as I believe it would be under the Bill as drafted, to prove that, say, people involved in a fight had been drinking in the premises? If there were frequent fights outside a public house, it would seem that under the Bill unamended it would be necessary to prove that the people concerned had frequented the public house. Am I correct in thinking that with the new words no such proof is necessary?
      Mr. Millan: I think that that is one of the effects of the amendment. It adds misconduct in the premises, but, as the hon. Gentleman said, it is misconduct
      "attributable to persons frequenting those premises."
      The amendment also brings in the concept of the "immediate vicinity", which
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      I think to be right. "Vicinity" by itself in the old formulation was perhaps a little too general.
      Taking the amendment as a whole, we have a far better wording than we had before.
      Question put and agreed to.

    Clause 34

      OCCASIONAL PERMISSIONS
      Lords Amendment: No. 20, in page 23, line 42, at end insert "by a licensing board".
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      This amendment makes it clear that the limit of four occasional permissions a year for a voluntary organisation, to allow it to sell alcohol at a function outwith licensed premises, is a limit of four permissions from one licensing board. Some voluntary organisations are national organisations and they may employ different licensing boards. It is impossible to check the number of applications which may have been made in those different areas. The amendment makes this clearer.
      Question put and agreed to.

    Clause 35

      CONSENT OF LICENSING BOARD REQUIRED FOR RECONSTRUCTION, ETC. OF CERTAIN LICENSED PREMISES
      Lords Amendment: No. 21, in page 24, line 29, leave out "construction" and insert "reconstruction".
      Mr. Millan: I beg to move. That this House doth agree with the Lords in the said amendment.
      The amendment takes out the word "construction" and inserts "reconstruction". This is a drafting error. It should have been "reconstruction".
      Question put and agreed to.
      Lords Amendment: No. 22, in page 25, line 7, after "board", insert "by order".
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.

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      This is a drafting amendment to take care of a defect in the wording.
      Question put and agreed to.

    Clause 37

      POWER OF LICENSING BOARD TO MAKE REGULATIONS
      Lords Amendment: No. 23, in page 26, line 15, after "licences" insert "and occasional permissions".
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      This amendment enables a licensing board to make regulations with respect to the making of applications for occasional permissions. It already has power to regulate the making of applications generally and it seems sensible to give it the power to do the same with occasional permissions.
      Question put and agreed to.

    Clause 38

      POWER OF LICENSING BOARD TO MAKE BYELAWS.
      Lords Amendment: No. 24, in page 27, line 6, at end insert—
      "(ff) for the granting of a licence of a type other than that applied for;"
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      The amendment would empower the licensing board to make a byelaw allowing it to grant a licence of a type other than that applied for. A similar provision in the original Bill was eliminated because we thought that the provision had been seldom used and we saw no use for it. We have had representations since then, particularly by representatives of the entertainment industry, that a provision of this type might be of advantage in a case, where, for example, a public house licence was applied for and refused in respect of a cinema. The licensing board, though not willing to give a public house licence, might be willing to give an entertainment licence. It is necessary to have some way in which this can be done.
      We are doing it in this case not by general provision but by allowing the
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      licensing board to make an appropriate byelaw. These byelaws will be subject to the confirmation of the Secretary of State. I can say now that in confirming them I shall be confirming them in the sense that the byelaw may provide for the licensing board to give a lesser licence rather than a greater one. If it were a greater certificate, or a more open one, it might be subject to abuse.
      With that explanation, I hope that the amendment will be accepted.
      Question put and agreed to.

    Clause 39

      APPEALS TO SHERRIFF
      Lords amendment: No. 25, in page 27, line 38, at end insert—
      "() On good cause being shown, the sheriff may hear an appeal under this section notwithstanding that it was not lodged within the time mentioned in subsection (2) above."
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      This amendment enables a sheriff to hear an appeal which would otherwise be time-barred on good cause being shown to him. This matter was raised with me during Report when flexibility was asked for. I think that the amendment gives some flexibility.
      Question put and agreed to.
      Lords Amendment No. 26 agreed to.

    Clause 50

      GRANTS OF NEW LICENCES AND RENEWALS IN NEW TOWNS
      Lords Amendment: No. 27, in page 36, line 4, at end insert—
      "() Before granting or renewing a licence for any premises in a new town, the licensing board shall consult the fire authority for the area."
      Mr. Millan: I beg to move, That this House does agree with the Lords in the said amendment.
      The amendment would bring the handling of applications for licences in new towns into line with the procedure for other areas by requiring a licensing board to consult the fire authority before granting or renewing a licence. There is no reason why new towns should not

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      be treated exactly the same as other areas, and the amendment puts matters right.
      Question put and agreed to.
      Lords Amendment No. 28 agreed to.
      Lords Amendment No. 29 disagreed to.
      Lords Amendment No. 30 agreed to.

    New Clause A

      RESTAURANT IN PUBLIC HOUSES MAY HAVE PERMITTED HOURS ON SUNDAYS IN CERTAIN CASES
      Lords Amendment: No. 31, in page 44, line 21, at end insert new Clause A—
      "A.—(1) This section shall apply to any premises for which a public house licence is held and in respect of which an application for Sunday opening has not been granted under Schedule (Sunday opening of premises in respect of which a public house licence or refreshment licence is or will be in force and Sunday restriction orders relating to licensed premises) to this Act—

      (a) if the holder of the licence gives notice of the application of the section to the premises in accordance with sub-section (6) below, and

      (b) as from such date as may be specified in the said notice:

      Provided that a licence-holder shall not give notice of application as aforesaid, and this section shall not apply to the premises for which he holds his licence, unless—

      (i) the licensing board for the area within which the premises are situated is satisfied that the premises are structurally adapted and bona fide used, or intended to be used for the purpose of habitually providing the customary main meal at midday or in the evening, or both, for the accommodation of persons frequenting the premises, and that the part of the premises mentioned in subsection (3) below does not contain a bar counter; and

      (ii) in the case of premises situated in a new town as defined in section 52 of this Act, the committee constituted under section 47 of this Act for the new town have notified the licence-holder that they have no objection to the application of this section to the premises.

      (2) While this section applies to any premises, the effect shall be that for the purposes mentioned in subsection (3) below there shall be permitted hours in those premises on Sundays, such permitted hours being the period between half-past twelve and half-past two in the afternoon and the period between half-past six and eleven in the evening.
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      (3) The purposes referred to in subsection (2) above are—

      (a) the sale or supply to persons taking table meals in the premises of alcoholic liquor supplied in a part of the premises usually set apart for the service of such persons, and supplied for consumption by such a person in that part of the premises as an ancillary to his meal; and

      (b) the consumption of alcoholic liquor so supplied.

      (4) While this section applies to any premises, then for purposes other than those mentioned in subsection (3) above, or in parts of the premises other than the part so mentioned, or except as otherwise provided by this Act, there shall be no permitted hours on Sundays.
      (5) This section shall cease to apply to premises on such day as may be specified in the notice if the holder of the licence gives notice of the disapplication of the section from the premises in accordance with subsection (6) below:
      Provided that this section shall cease to apply to premises at any time on the licensing board ceasing to be satisfied as mentioned in paragraph (i) of the proviso to subsection (1) above.
      (6) A notice of the application of this section to, or of the disapplication of this section from any premises—

      (a) shall be in writing;

      (b) shall, in the case of a notice of application, specify the date from which the section is to apply to the premises and, in the case of a notice of disapplication, state that the section is to cease to apply to the premises on the date specified in the notice;

      (c) shall be served on the chief constable not later than 14 days before the date specified as aforesaid.

      (7) The holder of the licence for premises to which this section applies shall keep posted in some conspicuous place in the premises a notice stating that this section applies thereto and setting out the effect of its application, and if any licence-holder contravenes this subsection he shall be guilty of an offence."
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Deputy Speaker: With this amendment we are to discuss also Lords Amendments Nos. 32 to 37 and No. 48.
      Mr. MillanThis group of amendments follows because the House has agreed that safeguards are necessary for Sunday opening. The new clause which is the subject of Amendment No. 31 re-enacts Section 8 of the Licensing (Scotland) Act 1962 in a slightly revised form. That section provides that restaurants and public houses may open on Sundays, and

      1557
      since that time the number which have done so has steadily increased.
      Without the new clause, it would be necessary for those licence holders—I understand that there are about 200 of them—who are already allowed to open on Sunday to apply under Schedule 4. We have safeguards, but no one would want those licence holders to have to go through that procedure. The new clause would allow that machinery to be set aside and the present position to continue. The other amendments are consequential.
      Mr. Teddy Taylor: As the Secretary of State said, a number of restaurants open on Sunday and there is no complaint about them. On the other hand, the new clause would impose severe restrictions. It refers to premises which do not contain bar counters: drinks may be consumed with meals only. Is he satisfied with the supervision of these premises to ensure that they are bona fide restaurants in all respects? is this something which the hoards should consider or for which the Government have some responsibility? In view of the increase in numbers, is he satisfied with the present arrangements.
      Mr. Harry Gourlay: Subsection (3)(a) of the new clause uses the words:
      "… supplied for consumption by such a person in that part of the premises as an ancillary to his meal"?
      In order to help the police forces of Scotland in interpreting the legislation, would my right hon. Friend say what constitutes a meal in the first place? Is there any criterion as to how long one must take to complete one's meal and therefore how long one may be supplied with alcoholic liquor within the law? Does the meal finish on completion of the first cup of coffee, or may one drink 10 cups of coffee so that one may drink until the last minute of the period of the extension?
      The way in which the present law is being interpreted by some police forces in Scotland would indicate that if one has a cup of coffee with one's meal and finishes that at five minutes to 10 o'clock, or under the new legislation at five minutes to 11 o'clock, one is not entitled to have another drink served from the bar. On the other hand, if a customer decides to have a second cup, or a third, or to exaggerate the position, a tenth, is he still
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      entitled to be served with liquor? Perhaps the Secretary of State could give some guidance.
      11.0 p.m.
      Mr. Millan: I am always reluctant to give authoritative guidance on the operation of a piece of legislation because to some extent these matters are not for the Government but for the court or in this case for the licensing boards. On the general question of supervision of this section of the 1962 Act, we at Government level are not aware of particular difficulties.
      Conditions are laid down, as my hon. Friend has said, about the question of a separate part of the premises and the fact that this has to be a genuine meal and not just sandwiches and an excuse for a drink. These matters are supervised. I can only say that I have no reason to suppose that there is any particular difficulty.
      The idea of a licensed restaurant opening on a Sunday is something which an ordinary member of the public, as a potential customer, understands. It is under police supervision. It is not a matter of practical difficulty, although questions of interpretation of what is a meal, compared with something else which is not a meal, are questions for the court rather than for me.
      Mr. Gourlay: Surely the court, in interpreting the law, would have some regard to what is said in the House and what the House means by its words? I know that it has been said previously that a judge in court has to interpret the words in the Act, but we should give some indication at least to the police forces because they instigate prosecutions in the first place. They go to threaten licence holders that if they walk into premises and discover someone drinking, with an empty coffee cup in front of him, they intend to report that to the procurator-fiscal for consideration of prosecution.
      Unless the Secretary of State makes a statement, some areas in Scotland—I shall not name a particular area—will be affected, areas where the police have been rather vigorous in interpreting the present law.
      Mr. Millan: My hon. Friend the Member for Kirkcaldy (Mr. Gourlay) has

      1559
      some particular circumstances in mind but since I do not know what they are, or in which part of the country they prevail, it is not possible to comment with any knowledge. However, it is not for me to interpret the law, nor does anything I say on the Bill or in other ways have any influence on the law. The law is in this Bill and in previous legislation. That is what the court looks at, not at what the Minister says in introducing it.
      I know that at different times there have been suggestions that we should put in a definition of table meals. I am not sure that they have ever been defined, but I will check and let my hon. Friend know if I am wrong. A precise definition is difficult and it would be better to leave it to common sense and interpretation. Similar considerations apply to when a meal is finished.
      Mr. Rifkind: The right hon. Gentleman said that he was not sure whether a table meal had been defined. Clause 138 defines "table meal". The right hon. Gentleman will find it at the top of page 84 of the Bill.
      Mr. Millan: I am sorry about that. The hon. Gentleman is right. But there "table meal" is defined more in the sense of where the meal is eaten rather than what it consists of. The idea of a table meal is to avoid the snack at the bar attracting a restaurant licence. Such a licence is granted only if separate premises are provided for people to sit at tables to consume meals. A meal as distinct from a snack is not defined. That was what I had in mind.
      The other matter is to a large extent one of interpretation by the courts. In doing that they will have in mind the new permitted hours laid down in subsection (2)
      "half-past twelve and half-past two in the afternoon and the period between half-past six and eleven in the evening."
      I cannot give any more precise guidance than that.
      Question put and agreed to.
      Lords Amendment Nos. 32 to 37 agreed to.

    Clause 84

      POWER OF POLICE TO ENTER LICENSED PREMISES
      Lords amendment: No. 38 in page 56, line 27, after "offence" insert "has been or"
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      This is a slight extension to the authority of a constable to enter off-sale licensed premises to occasions when he has reasonable grounds for believing that an offence has been committed as well as when an offence is being committed. It is a minor improvement.
      Question put and agreed to.

    Clause 86

      RESTRICTION ON CREDIT SALES
      Lords Amendment: No. 39, in page 57, line 24, leave out "or"
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Deputy Speaker: With this we may take Lords Amendment No. 40.
      Mr. Millan: Lords Amendment No. 39 is a paving amendment for Lords Amendment No. 40 which adds premises with an entertainment licence to the list of those in which it is not an offence to accept payment for alcoholic liquor by a credit token. It was represented to us by the entertainment industry that it should be possible to pay by credit token for private functions, such as a dinner-dance, which included the supply of alcoholic liquor, at premises with an entertainment licence. The amendment enables that to be done.
      Question put and agreed to.
      Lords Amendment No. 40 agreed to.

    Clause 88

      ORDER TO CLOSE LICENSED PREMISES
      Lords Amendment: No. 41 in page 58, line 5, leave out "in" and insert "under"
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      This amendment corrects a small drafting error.
      Question put and agreed to.

    New Clause B

      POWER OF POLICE TO ENTER CLUBS
      Lords Amendment: No. 42, in page 72, line 36, leave out Clause 113 and insert new Clause B—
      "B.—(1) If a justice of the peace or sheriff is satisfied by evidence on oath that there are reasonable grounds for believing—

      (a) that any registered club is being so managed or carried on as to give rise to a ground of objection to the renewal of its certificate of registration, being one of the grounds of objection specified in section 107 of this Act; or

      (b) that an offence under this Act has been or is being committed in any registered club;

      he may by warrant authorise a constable to enter the premises of such club at any time, if need be by force, and to search the premises and seize any documents relating to the business of the club and to take the names and addresses of any persons found in the premises.
      (2) If any person found in the premises of a club refuses to give his name and address on being requested to do so by a constable acting under a warrant granted in pursuance of the foregoing subsection, or gives a false name or address on being so requested, he shall be guilty of an offence."
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      Mr. Deputy Speaker: With this we may take Lords Amendments Nos. 49 and 50.
      Mr. Millan: Lords Amendment No. 42 makes the provision in the Bill about the power of the police to enter a registered club similar to the provision in existing legislation—namely, that entry would be authorised only by a warrant from a justice of the peace or sheriff.
      The amendment fulfils an undertaking given on Report by my hon. Friend who, incidentally, is not here because he is suffering from 'flu. I am sorry that he is not here also for reasons other than humanitarian sentiments towards him. The amendment fulfils an undertaking which he gave on Report to maintain the status quo as regards police entry to registered clubs. It was clear on Report
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      that there were strong feelings on both sides of the House that the rather more stringent provision that we were providing at that time was not acceptable.
      We gave an undertaking that we would revert to the previous position, and that is what we did in the Lords. That is the effect of Lords Amendment No. 42.
      The other Amendments, Nos. 49 and 50, are consequential to Amendment No. 42, and perhaps at this time I do not have to explain them in detail.
      Mr. Thompson: I have to admit that, due to the late hour at which the matter was debated on Report, I was taken somewhat aback by what happened. We had all been assured, I think, that the Government were determined that the main provisions of the Bill were unalterable, and therefore it was a surprise to me when I found the Government caving in to pressure on this matter. I regret that I did not intervene in that debate to make my point clear. One advantage of having a second revising Chamber is that it gives us a chance to come back to something we may have missed, as a result of sleepiness, on an earlier occasion.
      I should like to see Clause 113, as it stood when the Bill went to the Lords, becoming the law of the land, because I think that the law ought to be the same for people who do their drinking in pubs as for people who do their drinking in clubs. I do not see why we should make flesh of one and fowl of another.
      There was a great deal of argument about the fact that the club is an extension of the home. Some of us do not have that extension to our home, therefore we are unable to benefit from it. In fact, I am told that there are no clubs in St. John's town of Dairy. We have to entertain our guests at the local bar in the hotel. Therefore we shall not have the advantages that people in clubs will have if the Lords amendment is agreed to.
      It seems to me that a well-conducted club would have nothing whatever to fear. I do not for a minute think that, even if we had adhered to Clause 113 as it stood in the Bill, the police would have spent their time prying into clubs that they knew to be perfectly well conducted.
      I must therefore record my opinion that we ought to keep Clause 113 as it was,

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      and that we ought to disagree with the Lords in this amendment.
      Mr. Michael Clark Hutchison: I thank the Secretary of State for putting the provision back in the form in which it left this House. I thank him on behalf of the New Club, the Western Club, the railwaymen's clubs, the golf clubs and the policemen's clubs. He was absolutely right.
      Mr. Canavan: I, too, should like to put on record my thanks to the Under-Secretary of State, the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing), who unfortunately is not able to be with us tonight because, as I understand, he has influenza.
      Earlier this year the Under-Secretary and I attended a meeting in Bannockburn Miners' Welfare Club, at which there were representatives from most of the clubs in Stirlingshire. They put several points to us, related to the Bill, about which they were genuinely concerned.
      One of the points related to the original Clause 113, which proposed the right without a warrant of police entry to clubs. At present the police require a warrant in order to enter a club. Under the original Clause 113 as proposed, such a warrant would not have been necessary. I therefore tabled an amendment on Report to preserve the status quo in regard to police entry. One of my amendments was to delete the whole of Clause 113. Another was to allow the police in only after they had a warrant. After receiving assurances from the Secretary of State that a suitable Government amendment would be tabled in the Lords, I withdrew my amendments. I therefore welcome this Government amendment, and I am pleased to have the opportunity to support it.
      11.15 p.m.
      The hon. Member for Galloway (Mr. Thompson) asked why we did not have uniformity with regard to the rights of police entry in respect of pubs, clubs and other licensed establishments. With respect, there is a big difference between a pub and a club. As the name implies, a pub is a public place. A club is not. The only people allowed to drink in a club are registered members and their guests. Every club has a registered list
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      of members, and it is only people whose names and addresses are on that list who, with their signed-in guests, are allowed legally to drink in the club. There is that big difference. There is a check on the people in a club at any one time. Not anyone can walk into a club, as he can into a public house.
      The club is also different from the public house in that it is run by a democratically-elected committee, and that committee is responsible for the internal discipline structure of the club. Most clubs are very well run with this internal discipline structure. I know of one area in my constituency where, if a person is suspended or expelled from one club in the town because of bad behaviour, the other clubs also operate the suspension or permanent ban.
      There would be genuine concern amongst many club members in Scotland if the police were coming in, especially at 11 o'clock at night, and badgering people by asking their names and addresses, and so on. It would do a great deal to destroy the generally good relationships which exist between the police and the community. The police are better engaged in looking for real criminals, especially at 11 o'clock at night, than in going round badgering people in clubs. If they have genuine grounds for suspicion, they can apply for a warrant, as the Lords amendment proposes.
      This is the second time tonight that I have supported a Lords amendment. On the previous occasion I mentioned that I was supporting the Lords amendment rather than the Labour Government. I never thought that I should live to see that day. It may be an indication of how far to the right this Government have gone. I am glad that they are moving back a bit to the left in the shape of this amendment, and I happily give them my support.
      Mr. Teddy Taylor: We have just witnessed an example of the remarkable faith that the hon. Member for West Stirlingshire (Mr. Canavan) has in the House of Lords. When this matter was discussed on Report although he received an assurance from the Government, it was entirely dependent on the good will of the Lords passing the amendment which the Government wanted.

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      We have to remember, however, that when the assurance was given, it was not given on the basis of argument. It was given because the Under-Secretary in charge of the Bill knew that he was on a loser. He argued against the case at present before us but said that he knew that he was on a loser.
      Before we make a decision on this matter, we ought to know whether the police have expressed any views on it. I accept that there is a problem in that there are two different kinds of clubs. There is the bowling club, for example, where members can play bowls and then drink. There are also drinking clubs throughout Scotland. If there is reasonable suspicion that an offence is being committed in a club is it fair to insist on a search warrant being obtained, bearing in mind that it may take considerable time and that by then the cause of the offence may have disappeared?
      Have the Police Federation, the chief constables or any other group expressed a view on this matter? If so, what is it?
      Lord James Douglas-Hamilton: Is it not the case that the Chief Constable for the Lothians expressed to the Government his forcible opposition to the deletion of Clause 113, and that he made it clear that if the clause were deleted the job of the police would become more difficult? If when trouble blows up in a pub the police are compelled to get a warrant, by the time they return with it the troublemakers will have disappeared and the police will be unable to follow up the incident successfully.
      Was not this matter dropped on Report because if it had not been dropped the whole Bill would have been at risk? Surely, if members of clubs are behaving themselves properly they have nothing to fear.
      Mr. Millan: We have had a short rehearsal of the arguments which were advanced on Report. There is a respectable case for the original clause. If there were not, it would not have been in the Bill in the first place.
      It is a very powerful argument to say that if a club is well managed it has nothing to fear from police entry. But surely there is a powerful argument, too, that a club is entirely different from a pub, and that if the members are behaving responsibly and reasonably and are enjoying themselves, they should not have to put up with the unrestricted entry by the police. We have to make a judgment between these arguments. The chief constables would like unrestricted right of entry. If there is trouble the job of the police is made a lot easier by that. But that is not the only consideration. We have to balance that against the interests and rights of the club members.
      The hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) said that the Government had dropped the proposal on Report because it looked as though we would be defeated. That is saying that the House was against the proposal. But the House did not pass an amendment which was defective in certain respects and which would have had to be adjusted in the other place. Instead my hon. Friend the Under-Secretary sensibly said that if my hon. Friend the Member for West Stirlingshire (Mr. Canavan) would drop his amendment the Government would introduce a similar provision in the other place. As is usual in such a situation, the other place co-operated, and we therefore have the amendment. I appreciate that not all hon. Members like it, but I commend it to the House.
      Question put, That this House doth agree with the Lords in the said amendment:—
      The House divided: Ayes 74, Noes 8.

      Division No. 372.]

      AYES

      [11.23 p.m.

      Archer, Peter

      Carmichael, Neil

      Ellis, John (Brigg & Scun)

      Ashton, Joe

      Clarke, Kenneth (Rushcliffe)

      English, Michael

      Bagier, Gordon A. T.

      Cocks, Rt Hon Michael

      Evans, John (Newton)

      Bain, Mrs Margaret

      Cohen, Stanley

      Forrester, John

      Banks, Robert

      Coleman, Donald

      Fowler, Gerald (The Wrekin)

      Bates, Alf

      Corrie, John

      Gilmour, Sir John (East Fife)

      Beith, A. J.

      Cox, Thomas (Tooting)

      Gourlay, Harry

      Brotherton, Michael

      Crawford, Douglas

      Grimond, Rt Hon J.

      Brown, Hugh D. (Proven)

      Deakins, Eric

      Hamilton, James (Bothwell)

      Buchan, Norman

      de Freitas, Rt Hon Sir Geoffrey

      Harper, Joseph

      Campbell, Ian

      Dormand, J. D.

      Harrison, Walter (Wakefield)

      Canavan, Dennis

      Eadie, Alex

      Hunter, Adam

      Hutchison, Michael Clark

      Miscampbell, Norman

      Smith, John (N Lanarkshire)

      Irving, Rt Hon S. (Dartford)

      Murray, Rt Hon Ronald King

      Steel, David (Roxburgh)

      Judd, Frank

      Ogden, Erie

      Stewart, Rt Hon M. (Fulham)

      Knox, David

      Palmer, Arthur

      Strang, Gavin

      Lambie, David

      Penhaligon, David

      Taylor, Mrs Ann (Bolton W)

      Lamond, James

      Prescott, John

      Urwin, T. W.

      Leadbitter, Ted

      Reid, George

      Walker, Harold (Doncaster)

      Lester, Jim (Beeston)

      Rifkind, Malcolm

      Wise, Mrs Audrey

      McCartney, Hugh

      Ross, Stephen (Isle of Wight)

      Woodall, Alec

      McElhone, Frank

      Ross, Rt Hon W. (Kilmarnock)

      Woof, Robert

      McMillan, Tom (Glasgow C)

      Sainsbury, Tim

      McNamara, Kevin

      Silkin, Rt Hon S. C. (Dulwich)

      TELLERS FOR THE AYES:

      Marshall, Jim (Leicester S)

      Skinner, Dennis

      Mr. A. W. Stallard and

      Millan, Rt Hon Bruce

      Small, William

      Mr. Ted Graham.

      NOES

      Doig, Peter

      Stewart, Donald (Western Isles)

      TELLERS FOR THE NOES:

      Henderson, Douglas

      Taylor, Teddy (Cathcart)

      Lord James Douglas-Hamilton and

      Knight, Mrs Jill

      Watt, Hamish

      Mr. George Thompson.

      Le Marchant, Spencer

      Wilson, Gordon (Dundee E)

      Question accordingly agreed to.

    New Clause C

      SALE OR SUPPLY OF ALCOHOLIC LIQUOR IN CERTAIN THEATRES
      Lords Amendment: No. 43, in page 76, line 1, leave out Clause 120 and insert new Clause C—
      "C. A theatre erected before 1st January 1904 shall be treated for the purposes of the sale or supply of alcoholic liquor in the theatre as if an entertainment licence were in force in respect of the theatre."
      11.30 p.m.
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      The amendment deals with theatres erected before 1st January 1904 and their licences. The previous provision was not properly drafted and left an unfortunate gap. The new provision makes matters right.
      Question put and agreed to.

    Clause 139

      TRANSITIONAL PROVISIONS
      Lords Amendment: No. 44, in page 84, line 41, after "sections" insert "8"
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      This is the clause dealing with the transitional provisions, and it is desirable that the fees payable by applicants to licensing boards, which need revision and which will be prescribed in regulations made by the Secretary of State should be prescribed in good time for the start of operations by licensing boards in July 1977. The amendment enables regulations
      1568
      to be made before 1st July 1977 by adding the appropriate reference to the clause to allow that to be done.
      Question put and agreed to.

    Clause 140

      SHORT TITLE EXTENT AND COMMENCEMENT
      Lords Amendment: No. 45, in page 85, line 40, leave out "purposes" and insert
      "provisions of this Act or for different proposes, or for the purposes of the same provision in relation to different cases"
      Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
      This is basically a drafting amendment, but it gives slightly more flexibility by the introduction of these provisions.
      Question put and agreed to.
      Lords Amendment No. 46 disagreed to.
      Amendments made to the words so restored to the Bill:
      No. 4, in page 91, line 32, at end insert—
      '4A. Section 10(2)(b) and section 10(5) of this Act shall, with any necessary modifications, apply in relation to an application for Sunday opening as they apply in relation to an application for the grant of a new licence.'
      No. 5, in page 91, line 43, after 'that', insert
      ',except as otherwise provided by this Act.'.
      No. 6, in page 92, line 16, at end insert—
      '11A. An application for the renewal of a public house licence or refreshment licence under section 10 of this Act shall state whether

      1569
      the applicant is making an application for Sunday opening.'
      No. 7, in page 92, line 17, leave out '5 to 9' and insert '4A to 10'.
      No. 8, in page 92, line 18, after '11', insert 'or 11A'.
      No. 9, in page 92, line 20, at end insert—
      '12A. The grant of an application for Sunday opening under paragraph 2 or 11 above shall come into effect on the making of the grant except where there were objections at the hearing the grant shall not come into effect until—

      (a) the time within which an appeal may be made has elapsed or

      (b) where an appeal has been lodged, the appeal has been abandoned or determined in favour of the applicant for the grant.

      12B. The grant of an application for Sunday opening under paragraph 11A above shall come into effect on the renewal of the licence to which the application relates.
      12C. If an application for Sunday opening is made under paragraph 11A above any existing grant of such an application shall continue to have effect—

      (a) until the first mentioned application is granted by the board;

      (b) if the first mentioned application is refused, until the time within which an appeal may be made has elapsed, or if an appeal has been lodged, until the appeal has been abandoned or determined.

      12D. The grant of an application for Sunday opening shall cease to have effect when the licence to which it relates ceases to have effect.'—[Mr. Millan.]
      Lords Amendments Nos 47 to 50 agreed to.

  Schedule 7

    MINOR AND CONSEQUENTIAL AMENDMENT OF ENACTMENTS
    Lords Amendment: No. 51, in page 107, line 35, at end insert—
    "The New Towns (Scotland) Act 1968
    5A. In section 18(2) (disposal of land by development corporation), for the words "exciseable liquor" there shall be substituted the words "alcoholic liquor".
    5B. In section 47(1) (interpretation), after the definition of "the Act of 1845" there shall be inserted the following definition—
    '"alcoholic liquor" has the meaning assigned by section 138(1) of the Licensing (Scotland) Act 1976;'."
    Mr. Millan: I beg to move, That this House doth agree with the Lords in the said amendment.
    Mr. Deputy Speaker: With this we are to take Lords Amendment No. 53.
    Mr. Millan: These are basically drafting amendments. They replace the words "exciseable liquor" by the words "alcoholic liquor", which is the new term of art used in the Bill, and they provide for repeals of previous definitions.
    Question put and agreed to.
    Lords Amendments Nos 52 and 53 agreed to.
    Committee appointed to draw up Reasons to be assigned to the Lords for disagreeing to certain of their Amendments to the Bill: Mr. Buchanan-Smith, Mr. James Hamilton, Mr. McElhone, Mr. Millan and Mr. Rifkind: Three to be the quorum.—[Mr. Millan.]
    To withdraw immediately.
    Reasons for disagreeing to certain of the Lords amendments reported, and agreed to; to be communicated to the Lords.

  SEXUAL OFFENCES (SCOTLAND) BILL [Lords]
  Considered in Committee.
  [Sir MYER GALPERN in the Chair]
  Clauses 1 to 6 ordered to stand part of the Bill.

  Clause 7

    GROSS INDECENCY BETWEEN MALES
    Question proposed, That the Clause stand part of the Bill.
    11.38 p.m.
    Mr. Malcolm Rifkind: I wish to oppose Clause 7. I am conscious that this is a consolidation measure and I do not intend to address the House on any of the merits of the clause, both because it would be incompetent to do so and because it is not relevant to my argument.
    As the Committee will be aware from the debate on Second Reading last week, the clause relates to offences between males in Scotland. In particular, it continues the provision of the Criminal Law (Amendment) Act 1885 whereby homosexual acts between consenting adults in

    1571
    private will continue to be a criminal offence in Scotland.
    As the Committee is aware, that behaviour is no longer a criminal offence south of the border, but no legislation has been introduced to a similar effect north of the border. Despite that, it has been the practice of successive Lord Advocates—and it was confirmed by the present Lord Advocate that it is the policy of the Crown—not to prosecute acts of homosexual activity between consenting adults in private. I do not wish in any way to question the merits of the matter. The basis of my opposition to the clause is that it is totally wrong as a matter of basic constitutional principle that Parliament should be asked to approve in a consolidation measure of an activity's continuing to be a criminal offence while at the same time the Lord Advocate informs the House that the Crown has not the slightest intention of treating such activity as a criminal offence despite Parliament so determining.
    This is an unprecedented matter because, although the Crown always has discretion in particular cases to decide whether to prosecute an accused person, I cannot think of any parallel where the Crown has stated in advance that a whole category of behaviour, despite its being a criminal offence, will not in practice be subject to prosecution by the Crown.
    No doubt the Lord Advocate will repeat what he said on Second Reading—that this consolidation Bill does not change the law and the situation will legally remain exactly as it has been up to now. Of course that is correct, and constitutional lawyers and Members of Parliament will appreciate the strength of that argument. However, as a Parliament we must be conscious not simply of the technical consequences of what we are doing but of the effect that it will reasonably have on public attitudes towards the matter.
    Clearly the public as a whole will simply say that in 1976 Parliament gave its affirmation once again to this behaviour continuing to be a criminal offence. It would be reasonable to ask Parliament to do that if the Crown, the Government and the Lord Advocate confirmed that it should be treated as a criminal offence and be subject to prosecution. However, it is wrong and contrary to the public
    1572
    interest that Parliament in 1976 should be asked to approve the inclusion of behaviour which the Crown has no intention of using as the basis for a prosecution.
    Of course this is a consolidation measure, but it is important to stress that the Lord Advocate has himself conceded that there are many sexual offences that are not included in this consolidation Bill. Perhaps I may remind the House of them. According to a parliamentary reply given to me, the main statutory provisions not included in this consolidation Bill are certain provisions of the Burgh Police (Scotland) Act 1892, the Vagrancy Act 1824, the Incest Act 1567 and various local Acts. Thus, if the clause were to be removed it would in no way lead to this being an exception. It cannot be argued that all sexual offences are being consolidated in the Bill. Only some offences are being consolidated. We are arguing that this particular measure should be excluded.
    The other point that I would stress is that I believe strongly, as do those hon. Members who have made their views known on this matter, that it is one thing for the Crown to overlook the provisions of an 1885 Act, much of which is no longer relevant to modern circumstances, but it is a quite different matter and quite unwise—I would even go so far as to suggest that it is improper—that the Crown should disregard the contents of a 1976 Bill when it has asked Parliament to approve that Bill in 1976 and Parliament has given that approval.
    Parliament should not be asked to make a fool of itself or to stand on its head. If the Government wish the matter to continue as a criminal offence, let them be quite clear about that and treat it as such. If, however, the Government do not want to treat it as a criminal offence, if there is no possibility of bringing forward amending legislation at this stage, the least they can do is to leave matters as they are. They have worked reasonably well over the last few years under old Acts of Parliament. The Government should leave the matter in that way rather than cause unnecessary worry and concern to a large section of the population and make the job of the police much more confusing.
    While undoubtedly the police will be guided by the Crown, nevertheless, if the

    1573
    ordinary police constable knows that this behaviour has taken place and that in 1976 Parliament repeated this within its legislation, he is put in a difficult and unfair position in deciding whether he should take the matter further and seek to establish evidence that he could put before the courts.
    For all those reasons, the inclusion of the clause is unnecessary, unwise and unfair. Certainly it brings Parliament into disrepute, and it should not be allowed to stand part of the Bill.
    Mr. Robin F. Cook: I intend to be brief. We had a very good Second Reading debate, which turned very largely on Clause 7. It is worth recalling that the great mass of opinion expressed in that debate was hostile to the inclusion of the clause. All six speakers who followed the Lord Advocate were hostile to its inclusion, with the exception of the hon. Member for Edinburgh, South (Mr. Hutchison), to whom I shall return later.
    11.45 p.m.
    I agree entirely with the comments made by the hon. Member for Edinburgh, Pentlands (Mr. Rifkind). We are not debating a reform of the homosexual law. It is overdue for overhaul, because for decades we have not been implementing the law as it stands. I am under no illusion that what we decide tonight will affect the law either way. The law will remain as stated in the 1885 Act until either this or a future Government have the courage to bring it into line with their practice or a private Member takes the opportunity of the Ballot to carry through a reform of the law. Even though the law will not be changed by what we decide on Clause 7, it is important that we do not consolidate it in a measure which we are passing through the House in 1976.
    There are three reasons why Clause 7 should not be included in this consolidation measure. The first, which I shall not elaborate as we have already dealt with it adequately, is that we are apparently not prepared to prosecute under part of the clause. If we are not prepared to prosecute under part of the clause, we should not put it before Parliament in a Bill which when enacted will bear the date 1976.
    Secondly, we have to recognise that social attitudes have changed since 1885.
    1574
    It is a matter of judgment and speculation how much they have changed. There are some people whose attitudes have not changed since St. Paul wrote to the Romans, but there has been some change. No hon. Member could honestly say with conviction that in consolidating Clause 7 we are expressing the wish of the people of Scotland in 1976. That being so, we should at least fully debate the issue before restating the law. We should not in the process of consolidation, restate a law which does not reflect present-day social attitudes.
    Thirdly, we should recognise that since 1885 the law in the rest of the United Kingdom has been changed. In the previous debate I said that the law in Scotland need not necessarily agree with the law in England and Wales and that Scotland should not necessarily be afraid to differ from England on a point of law. But I firmly believe that it would be intolerable, as long as we are one country—the United Kingdom—that a private act concerning individuals should be liable to criminal proceedings in only one part of the country and be perfectly legitimate in another part.
    That was why I was surprised at the line taken by the hon. Member for Edinburgh, South in the Second Reading debate. There is no stauncher Unionist than he, yet the position he took strikes at the very concept of the United Kingdom which we represent in the House. For all those reasons, we should not consolidate Clause 7.
    The arguments have not been answered. In the Second Reading debate my right hon. and learned Friend the Lord Advocate rested his case entirely on technical, legal arguments. He said that, whether or not the clause was included, the law would stand as it is at present. But, mercifully, we are not all lawyers. When we meet in the House we must consider matters not as lawyers but as politicians. As politicians we must have regard not simply to the technical effect of the law but also to the wider social impact which our decisions will have on the country outside. In considering that wider social impact, we have to remember that we are not legislating for a nation of 5½ million lawyers. Very few people outside the Chamber comprehend what is meant by consolidation. They do not comprehend that a

    1575
    statute we pass in 1976 has no technical effect either on the nature of the law or on Crown policy.
    There is no doubt that the clause has caused widespread apprehension among people who are liable to be affected by it. That is plain from my mail. This apprehension in part is related to the point made by the hon. Member for Pentlands. Some who are liable to prosecution under Clause 7 are doubtful whether the ordinary policeman on the beat is sufficiently sophisticated to appreciate that we do not expect him to implement the measure we are passing in 1976.
    I understand that the Lord Advocate intends to circulate chief constables saying that he wants no change of policy. In other words, although he is restating the law in 1976, he does not want the police to implement this part of it. It is an unfortunate precedent that he should go to the length of circulating chief constables in that way in relation to a measure passed in 1976. It is liable to blunt their enthusiasm for implementing other statutes passed in the course of this Session.
    Lastly, we surely must pay some regard to the effect that inclusion of this clause in a consolidation measure might have been on the Assembly when it meets for the first time. There will be some hon. Members in the Chamber now who will no doubt serve in the Assembly, but the bulk of them—
    The First Deputy Chairman: Order. The hon. Gentleman has gone on long enough in that vein. Will he get back to what we are considering?
    Mr. Cook: There are moments when I think I am at the Golden Lion Hotel, Stirling.
    I shall sum up briefly. My concern is that the impression will be given in the Assembly that this Parliament, meeting in 1976, affirmed the view that homosexual acts in private between consenting adults should still be liable to criminal prosecution. I do not believe that that is the view of the people of Scotland, and I do not believe that it is wise for Parliament to state that view. Therefore, I hope that Parliament will reject Clause 7.
    The Lord Advocate (Mr. Ronald King Murray): I hope that the Committee will resist the proposal that Clause 7 should not stand part.
    To leave out Clause 7, even with the amendment to Schedule 2 which has been tabled, would go completely against the spirit of this consolidation. As stated in the twelfth edition of "Maxwell on Statutes" at page 20,
    "a consolidation statute is one which collects the statutory provisions relating to a particular topic and embodies them in a single Act of Parliament."
    This Bill consolidates the whole of the Criminal Law Amendment Acts. It does not seek to pick and choose parts to be consolidated and parts to be left in the original enactments.
    Hon. Members supporting the amendments seem to be under the misapprehension that there are two kinds of provisions in the Criminal Law Amendment Acts, first-class provisions and second-class provisions. Only first-class provisions are for inclusion in the consolidation Bill, and second-class ones—such as Section 11 of the 1885 Act as re-enacted in the present clause, to which the lion. Member for Edinburgh, Pentlands (Mr. Rifkind) objects—are to be relegated and sent back to the 1885 Act.
    Mr. Rifkind: The right hon. and learned Gentleman accuses me of suggesting that there are two classes of law. Is that not exactly what he is advocating—that because it is unfair it is a part of the law that can be ignored?
    The Lord Advocate: I knew that I should not have given way to the hon. Gentleman. I do not propose to do so again.
    It is difficult to see how this approach makes any sense except by reference to the merits of the provisions, which would take us outside the bounds of order. But it is in any event completely misconceived. From the point of view of legal authority, there is absolutely no difference whether a provision is left in its original enactment or consolidated. The exercise of dropping the clause is a pointless and peevish demonstration of disapproval, particularly when one recalls that the original complaint was that the present Bill was too narrow in its scope in that it did not cover all sexual offences.

    1577
    If Clause 7 is dropped, its scope will be still narrower.
    In the same vein, I would emphatically refute any suggestion that an old enactment is somehow less potent than a recent one and so less qualified for consolidation, or that the inclusion of an old provision in a current consolidation revitalises it or gives it new force. As Lord Hanworth, Master of the Rolls, said in the case of Gilbert v. Gilbert, reported in 1928 Probate, the purpose of a consolidation Act is
    "to reproduce the law as it stood before".
    In no sense is it upgraded or given force which it did not previously possess.
    Another fallacy which must be refuted is the idea that because a small part of Clause 7 is not to give rise to prosecution, and is in that sense not fully enforced, the clause is not in force. That obviously is a non sequitur. The Lord Advocate's discretion not to prosecute does not change the law. All of what is struck at by Clause 7 remains unlawful until a substantive change in the law is made—and this cannot be done by consolidation.
    It is wrong and mischievous to suggest, as the hon. Member for Pentlands did, that the provisions of the clause are a dead letter. The clause is alive in every sense to protect young males of under 21, to protect those who do not fully and freely consent to a homosexual act and to strike at such acts in conditions other than total privacy. It is an important measure of social protection for young males comparable to similar provisions elsewhere in the Criminal Law Amendment Acts for the protection of young females.
    To show that the clause is very far from a dead letter, I need only cite the figures for prosecutions and convictions for offences under Section 11 of the 1885 Act in 1974 and 1975. There were 49 prosecutions and 39 convictions in 1974, and 76 prosecutions and 73 convictions in 1975.
    It is also wrong to suggest that the only provisions relating to homosexuality are those of Clause 7. There are provisions in Clause 12(1) and in Clause 13(1)(b) which cover homosexual as well as heterosexual situations.
    In conclusion, I caution hon. Members against allowing a desire for possible reform
    1578
    of the law as to homosexual acts between consenting adults in private in Scotland to lead them into doing permanent damage to the process of consolidation. That danger is real.
    Mr. David Steel: The Lord Advocate has given a lucid and coherent technical explanation of his stand. I do not argue with him on it, but I think—because I know him well enough that he can wear another hat as a reforming politician—that he cannot expect us to accept "Maxwell on Statutes", Lord Hanworth and the rest that he quoted against the powerful arguments of the hon. Members for Edinburgh, Pentlands (Mr. Rifkind) and Edinburgh, Central (Mr. Cook).
    The House of Commons has rules against tedious repetition. I know that they apply to repetition in one speech, but perhaps in this case they should apply to the speeches of all lion. Members, and I do not wish to enlarge on the arguments already advanced. However, I repeat that it is undesirable that the law should be left in a state where executive action decides whether it should be implemented. I accept that the Lord Advocate is prepared to give instructions that the procedure followed for a number of years shall continue to be followed. But the House has no guarantee that the right hon. and learned Gentleman will remain Lord Advocate for ever. What would happen if the hon. Member for Edinburgh, South (Mr. Hutchison) were Lord Advocate? I do not suppose that the same policy would be pursued.
    Therefore, we are right to say that many of us do not accept that the provisions of the 1885 Act should remain on the statute book. If we accept that proposition, we should certainly resist the Lord Advocate's argument in the name of the purity of consolidation, which was the sole argument he advanced against the updating of the law.
    I took the Lord Advocate's argument that parts of the clause still need to be retained in the interests of the protection of people, but he met the argument earlier when he said that the 1885 provisions remained in force. I would far rather see the position left as it is, with certain parts of the 1885 Act having fallen into desuetude. The last thing Parliament should do is to agree that they should be technically updated to form

    1579
    part of the law which Parliament has apparently seriously considered in 1976.
    I hope that those of us who feel strongly on the issue will carry it to a Division.
    Mr. Norman Buchan: I was surprised at the tone and content of parts of the speech of my right hon. and learned Friend the Lord Advocate. On the one side, some of us are arguing the social case for the provisions not being re-enacted. On the other side, my right hon. and learned Friend has argued the legalistic, technical case about the importance of a consolidation measure not being tampered with. His tone tonight was rather different, making the point that the clause remains live and active. He underlined this by referring to certain aspects of the clause such as the question of procurement of persons under a certain age. No one denies that socially or legally the clause remains active. However, it also relates to consenting adults in private.
    We clearly cannot amend the clause in this way. Therefore the best way to meet the legal argument about this part of the law remaining in force is to leave this provision in the 1885 Act but not to give it further endorsement by passing it tonight. I also reject the argument of relating it to other provisions in the clause.
    12 midnight
    The Lord Advocate dealt with what he regarded as a number of fallacies. He said that he had been criticised because the Bill was too narrow. That is incorrect. What I said on Second Reading was that the consolidation measure did not include all aspects of sexual offences and for that reason there was no objection to leaving this one out also. That is very different from saying that we criticised the Bill simpliciter as being too narrow. I am sure that the Lord Advocate would accept that.
    The deletion of the clause would not change the law, but it would give security to people who are worried about the present situation. That itself would not affect the consolidation measure because, that which is left in will still be consolidated.
    1580
    Since this measure does not include the whole of the sexual offences law, no problem remains. It is not enough to say that all the sexual offences are included. There are a number of others which are not. There is no argument for leaving this aspect out. Certainly no argument has been adduced by the Lord Advocate in respect of the social point, the legal point or the consolidation point. In my view, all his arguments fell. I only wish that he would help the Committee by agreeing with us and withdrawing the clause.
    Mr. Michael Clark Hutchison: The Lord Advocate is right. This is a consolidation measure, and if we want to discuss homosexuality it should be done in a separate Bill or by some other means. I shall certainly support the right hon. and learned Gentleman.
    I have been attacked a little. I would remind the hon. Member for Edinburgh, Central (Mr. Cook) that I voted against a change in the law. I am a Unionist, and that is my answer to the hon. Gentleman. However, hon. Members did not take my advice.
    The Lord Advocate is right: this is a difficult subject. I do not want to be hard on anyone. I think that the law as it stands in Scotland is being conducted admirably. The hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) suggested that if I were Lord Advocate things might be different. Yes, they probably would be, because I might chase some of the rotten apples.
    Mr. George Reid: We in the Scottish National Party regard Clause 7 as a free-vote issue, as do the other parties. Before the passing of the Bill of the hon. Member for Pontypool (Mr. Abse), there were fewer prosecutions for homosexuality in Scotland than there were in England and Wales—
    The First Deputy Chairman: Order. We are not debating that at the moment.
    Mr. Reid: I was merely dealing with the hypocrisy of the matter, Sir Myer.
    The inclusion in the Bill of this Victorian piece of legislation is, in essence, hypocritical. The Lord Advocate would argue against that and say

    1581
    that no new legislation is involved. He is right, but I doubt whether that will be understood by the public at large or by policemen on the beat. I had a letter as recently as Monday this week from a minister of the cloth urging me to extirpate homosexuality in language which would be more appropriate to the denizens of Sodom and Gomorrah. Therefore, there is a gap in understanding. Some members of the Scottish minority groups who have been left in peace in recent years fear that they are being stigmatised as common criminals in a piece of 1976 legislation.
    What is more important is that the clause brings Parliament into disrepute. The House is being asked to put on to the statute book something which a Minister of the Crown assures us will never be acted upon in the Scottish courts. That is what the Minister tells us, although he cannot bind his successors It is one thing to cast a blind eye at legislation which was passed when sexual mores were Victorian and markedly more illiberal than they are today, but it is quite another thing to ask hon. Members in the last quarter of the twentieth century to re-enact a measure which is not enforceable. That is "Alice in Wonderland" stuff. What sort of law is it that is unenforceable? Measures of this type can only bring Parliament into disrepute with the general public.
    The Lord Advocate says that he is neutral and is simply following the recommendations of the Scottish Law Commission. I respect that, but the Bill itself is not neutral. It does not consolidate all the law on Scots sexual offences. Someone in the Scottish Law Commission had to go through enactments with a fine-tooth comb, making value judgments about what should be put in and what should be left out. The Bill does not cover the Burgh Police Acts, the Vagrancy Act or the Incest Act of 1567. If they can be excluded, presumably there would be nothing wrong with leaving this clause out. Its inclusion, while it will not change the law, is bound to reinforce and buttress it and give it new prominence in the public mind in Scotland.
    I am not even sure that the 1885 Act sits comfortably within the frame of this measure. The offences listed relate in large part to minors. The provisions
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    about the white slave traffic, impersonation of a husband and the behaviour of masters and mistresses are clearly minimal in their competency compared with, the number of homosexuals in Scotland. All the clauses apart from Clause 7 deal with heterosexual offences. They should be consolidated separately from homosexual offences.
    I do not know where the pressure for this measure comes from. Lawyers to, whom I have spoken admit that it would be handy in a legal sense, but they are not desperate to see it on the statute book. Many of them have made the good point to me this week that, if the Government can find time for this Bill, the time would have been better spent on reforming the Scots law on homosexual offences, recognising the hypocrisy of the situation and rescinding the 1885 Act. For those reasons, I hope that the Lord Advocate will think again.
    Mr. Teddy Taylor: I am surprised at what the hon. Member for Clackmannan and East Stirlingshire (Mr. Reid) says about parliamentary time. Consolidation measures usually stir something up. That is what has happened tonight.
    If Clause 7 had not been in the Bill, I should not have been unduly worried, because, as the Lord Advocate said, it would not have made any difference in the law. But it is in the Bill. Although no change in the law is intended, if the House had decided to insert a provision like Clause 7 where none existed previously that would have been interpreted outside as a significant action. Conversely, if Clause 7 is removed that, too, will be seen as significant.
    It is not good enough to say that this does not matter. The hon. Member for Edinburgh, Central (Mr. Cook) said that the inclusion of the clause had caused apprehension. The hon. Member for Renfrewshire, West (Mr. Buchan) said that its removal would give security to those who are worried. It will do nothing of the sort. We are told that whether Clause 7 is in the Bill or not makes no difference to the law. Therefore, hon. Members are really asking us to give the impression that a change is being made in the law.
    Mrs. Margaret Bain: Does not the hon. Member agree

    1583
    that the reiteration of this legislation is causing concern because it seems unlikely that a Bill will be brought forward to reform the laws relating to homosexuals in Scotland?
    Mr. Taylor: No consolidation measure causes concern to anyone unless it is used, as this one is, to achieve something which has not been achieved through a Private Member's Bill. If people want to change the law on homosexuality, they should present a Private Member's Bill or a Government Bill. They should not achieve their object by playing around with a consolidation Bill. I am sure that if there were a proper Bill I should be
    Question accordingly agreed to.
    Clause 7 ordered to stand part of the Bill.
    Clauses 8 to 22 ordered to stand part of the Bill.
    Schedules 1 and 2 agreed to.
    Bill reported, without amendment.
    Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
    Bill accordingly read the Third time and passed, without amendment.
    on the same side as my hon. Friend the Member for Edinburgh, South (Mr. Hutchison), but we are not discussing that tonight.
    If we took out Clause 7, our action would be interpreted as though Parliament had made a fundamental decision on a moral issue. A consolidation measure is not the occasion for making that decision. It should be made later, at the proper stage. I support the Lord Advocate.
    Question put, That the clause stand part of the Bill:—
    The Committee divided: Ayes 37, Noes 27.

    Division No. 373.]

    AYES

    [12.10 a.m.

    Ashton, Joe

    Graham, Ted

    Smith, John (N Lanarkshire)

    Bates, Alf

    Harper, Joseph

    Stewart, Rt Hon M. (Fulham)

    Brotherton, Michael

    Hunter, Adam

    Stradling Thomas, J.

    Brown, Hugh D. (Provan)

    Hutchison, Michael Clark

    Taylor, Teddy (Cathcart)

    Campbell, Ian

    Irving, Rt Hon S. (Dartford)

    Thompson, George

    Cocks, Rt Hon Michael

    Leadbitter, Ted

    Urwin, T. W.

    Cohen, Stanley

    Le Marchant, Spencer

    Wilson, Gordon (Dundee E)

    Coleman, Donald

    McCartney, Hugh

    Woodall, Alec

    Corrie, John

    McElhone, Frank

    Woof, Robert

    Deakins, Eric

    McMillan, Tom (Glasgow C)

    Doig, Peter

    Millan, Rt Hon Bruce

    TELLERS FOR THE AYES:

    Dormand, J. D.

    Murray, Rt Hon Ronald King

    Mr. James Hamilton and

    Douglas-Hamilton, Lord James

    Ross, Rt Hon W. (Kilmarnock)

    Mr. Thomas Cox.

    Ellis, John (Brigg & Scun)

    Small, William

    NOES

    Bidwell, Sydney

    Lambie, David

    Rifkind, Malcolm

    Buchan, Norman

    Lamond, James

    Ross, Stephen (Isle of Wight)

    Canavan, Dennis

    Lester, Jim (Beeston)

    Skinner, Dennis

    Carmichael, Neil

    McNamara, Kevin

    Steel, David (Roxburgh)

    Cook, Robin F. (Edin C)

    Marshall, Jim (Leicester S)

    Taylor, Mrs Ann (Bolton W)

    English, Michael

    Morrison, Charles (Devizes)

    Wise, Mrs Audrey

    Evans, John (Newton)

    Ogden, Eric

    Forrester, John

    Penhaligon, David

    TELLERS FOR THE NOES:

    Fowler, Gerald (The Wrekin)

    Prescott, John

    Mr. A. J. Beith and

    Hicks, Robert

    Reid, George

    Mrs. Margaret Bain.

    Knox, David

  WHITE HART TRAINING CENTRE, HARROGATE
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Graham.]
  12.21 a.m.
  Mr. Robert Banks: I am particularly grateful to Mr. Speaker for giving me this opportunity of raising the extremely important subject of the cost of the White Hart training centre in Harrogate to the National Health Service, not only because it is a matter of very great concern in my constituency but because of its significance in the NHS picture.
  This debate takes place against the background of several factors. Expenditure by the NHS has risen since 1971–72

  1585
  from £1,981 million to an estimated £4,564 million by 1975–76. The Government are borrowing something over £10,000 million this year to finance this rate of expenditure in the NHS and in other departments.
  This increase in the rate of Government spending has drawn people from the industrial productive sector of our economy into the non-productive sector of Government administration. It has meant the mortgaging of the young generation to the yoke of indebtedness and vast borrowings. It has brought about a deep and worsening financial and productive crisis, with a serious loss of confidence in the Government here at home and abroad. These conditions dictate careful and restrained expenditure and the placing of emphasis on sustaining productive industrial growth.
  The White Hart was built as a hotel in the 1840s, and in 1952 it emerged as a hospital for patients having physiotherapy treatment. It later became an annexe to the Royal Bath Hospital, having 120 beds for rheumatic patients. In 1970 it was closed because it was said that the building was unsafe and its repair too expensive.
  In 1974, when I had the honour to be returned as the Member of Parliament for Harrogate, the future of the empty building was in doubt. I supported those who valued its architectural and landscape importance to the town. Therefore, when the announcement was made later in the year that the Secretary of State had decided to recondition the building and convert it into a 54-bedroom centre for training senior administrators, I shared the general feeling of relief that some useful purpose had been found for the building, which was already owned by the NHS.
  Work became apparent early in 1975, and when I sought information by letter from the Minister I was told that the cost of conversion would amount to approximately £290,000, that the centre would open in April 1976 and that the estimated running cost would be in the region of £80,000 per annum.
  I wrote again in July of this year for confirmation of the figures given earlier. Owing to the delay in obtaining a reply, I tabled a Question and ascertained that the estimated running cost was now
  1586
  £235,000—an increase of £155,000 per annum in one year. The conversion cost was later estimated to amount to £297,728 in a letter which I received on 10th August.
  The Under-Secretary has a duty now to explain this gigantic increase in estimated running costs and to say whether a proper costing of this costly enterprise was worked out before the scheme was approved. Whether the running costs are paid entirely by the Department in London or partly by health authorities sending students on courses at the centre is neither here nor there. The fact is that the cost has to be borne by the National Health Service as a whole and paid for by the taxpayer. I should be grateful to know how the capital and running costs are funded and whether cash limits on the centre apply
  The overriding question is how this expensive scheme came to be given priority over other expenditure in the NHS and how such an expensive project was justified in the first place. How is it that it is so necessary to spend this amount of capital and to burden the NHS with an overhead of nearly £250,000 a year, which will rise with inflation, to train senior staff in the five-star hotel conditions that I have seen at the White Hart? It has brought yet more bureaucrats and staff into the NHS to train senior administrators with management responsibilities, and there is now yet one more building to be maintained and administered.
  I am told that there are 38 members of staff at the centre in all, and they include our porters. Will the Under-Secretary please clarify this and indicate the salary and wage scales applicable?
  The significance of this case for the country is that it is an example of where expenditure should have been cut to reduce overall expenditure and the National Debt. Above all, it is an example of misjudged priorities. I have the impression that the money was there in the appropriation and that the Minister was determined to spend it. The scheme was undertaken by the Department in Whitehall, and I understand that the regional health authority held only a watching brief on the conversion works.
  I visited the White Hart on 29th September when a course was being held for district dieticians. This was shortly

  1587
  after the centre had opened. There are 94 district dieticians in the NHS, and I cannot help wondering whether those who were on the course were in the senior administrative bracket that the centre is designed to train.
  I could not find one example anywhere to show that some small expense had been spared. Each bedroom has piped radio equipment, and my impression was one of expense, quality and prestige. A visiting delegation from a foreign Parliament would undoubtedly be immensely impressed to stay there. The cost of conversion includes, I trust, all equipment, furniture and general furnishings, and I look to the hon. Gentleman for confirmation of the final conversion costs and running costs and the cost of those items separately of which I have given prior notice in other questions.
  The building is carpeted throughout, and my impression is that this is the sort of luxury to which even our best hotels do not run. How much carpeting was supplied and at what cost per square yard, on average?
  I was surprised to see a television studio and to hear that an element of the training was in making television appearances. How much did this cost, and why is public money being spent to train management in the art of television rather than to obtain greater efficiency in their jobs—or is it that it is fun for the course members? I hope that the hon. Gentleman will answer this.
  The principal's conference room on the ground floor is furnished in a style and quality which might be featured in the glossiest international magazine to illustrate the most sumptuous style of the top British executive. Nothing in embassies that I have seen abroad can match what I saw as a way to impress. No doubt the hon. Gentleman will be able to give us an example of the cost of just one elbow chair, for instance, the cost of this room and the furnishing of it.
  I received a letter a few days ago in the course of which the writer said:
  "When we saw the bar … we were amazed. It is all like 'Alice in Wonderland'. There are hospitals where two operations cannot be done at the same time because there is only one set of instruments. It is obvious there is no check on public money."
  1588
  Many people have similarly expressed amazement and wonder at the sight of the bar. They are taxpayers' and as such they have the right to know the cost. I ask the Under-Secretary to satisfy that curiosity tonight.
  How right the writer of that letter is. Is it any wonder that people are disillusioned with the National Health Service or with a Government who direct spending in this way? There is a little boy in my constituency who has been told that he must wait a year for an important ear operation because of the waiting list for surgery cases. How can the Under-Secretary justify the scheme when there are cases such as that, when there are doctors and consultants who are exasperated with the National Health Service, when phase 2 of the Harrogate district hospital is still waiting to be built and when other similar schemes in Yorkshire are in the same boat? Similarly, the question is raised as to why the scheme came to be put into operation when there are 980 other NHS training establishments already in existence. Was it impossible to utilise some of those facilities? Was it necessary to embark upon this capital and overhead cost of the White Hart when so many hotels, private colleges and universities are able to provide facilities and accommodation?
  The Under-Secretary knows that this was an expensive error of judgment. I hope he will earn our respect by admitting it. Training, if it is the right training, is important in improving efficiency. That was always the case, before and since reorganisation. But the country has been brought to its knees financially, and to set up a training school at this cost when so many cheaper alternatives are available is a scandalous disgrace.
  The White Hart is only part of the story. Bureaucracy has a natural tendency to spread, and four houses were purchased close to the White Hart. Why were they bought and what did they cost? How much has been spent on them and what is their future?
  At the end of this sorry tale, what can we hope for? I trust that the debate will serve as a check on other schemes in the Minister's mind. I hope that every

  1589
  economy will be made to reduce overheads at the centre. I hope that the expensive furniture will be put to more productive use in our embassies abroad and that a utilitarian sense of proportion will result in replacing furniture by something which is more commensurate with the function of the centre.
  Ultimately, it is the will of Ministers to respond to Parliament which is the strength or weakness of our democracy. It is little use Sub-Committees of the Public Accounts Committee reporting critical findings on expenditure by Ministers if they are ignored. I trust that the Under-Secretary will take notice of the debate tonight and of the need to spend on necessity rather than superfluity.
  12.33 a.m.
  The Under-Secretary of State for Health and Social Security (Mr. Eric Deakins): I am grateful to the hon. Member for Harrogate (Mr. Banks) for having given me some notice of the detailed points he would raise. That enables me to deal with the matters in a fairly short speech.
  The issues which the hon. Member has raised are important ones. Good financial management and a proper sense of priorities have always been important in the administration of the NHS: they are doubly so today in our constrained economic circumstances when we can no longer look for the same pace of growth in this service as in the past. I am glad of the opportunity, therefore, to put the various questions about the White Hart Training Centre into perspective.
  First, let me deal with the basic facts. The centre comprises a Georgian building originally designed as a hotel. This was acquired by the National Health Service in 1952 and was used as a hospital for rheumatic diseases until 1971. The centre provides 53 bedrooms and full related training facilities. The centre is a national one, the only one of its kind in the NHS. Its primary purpose is to provide training at national level for senior staff—earning from around £4,000 to over £10,000 a year—with important management responsibilities. The main focus of the training provided at the centre will be the effective management of particular "functional" services—for example, supplies, catering, domestic services, pharmaceutical services and so on—the more
  1590
  effective working together of these different functional services and the study of new or developing NHS problems and policies.
  The cost of converting, furnishing and equipping the building for use as a training centre was funded by the Department as a special development under the Health Service Capital Building Vote. Conversion and structural alterations, including making good serious structural defects which had contributed to the building's closure as a hospital, cost £298,000. In addition, some £102,000 was spent on furniture, furnishings and equipment, including £11,000 for television and related equipment required for training purposes.
  Four houses were also purchased at a cost of £50,000 on the basis of local advice that the centre would require to provide residential accommodation for a proportion of its catering and domestic staff. Owing to a change in the local employment situation in the area since this advice was given, the need for such accommodation has proved to be less than was estimated. One of the houses provides bed-sitting accommodation for four members of staff; two of the houses have been put on the market for sale; the future of the fourth house is still under consideration.
  The centre opened for business in September of this year and its estimated gross running cost per annum is £235,000.
  In order to clarify the situation in the light of figures quoted by the hon. Gentleman, I should say that the figure of approximately £80,000 was the forecast of the net annual running costs of the centre given to the hon. Member in June 1975. At that time the gross running costs were estimated at £195,000 and it was expected that an income of over £100,000 would be received from health authorities as contributions to the cost of courses their staff were attending. Price increases since the gross figure was calculated have largely contributed to the current estimate of £235,000. Although some activities at the centre will be rechargeable, in drawing up the programme for the first full year it is now envisaged that a larger proportion will be financed centrally from existing funds available in the overall training budget.
  The running cost represents a cost per student week of about £150, which splits

  1591
  roughly equally between training costs and hotel costs. The approved staff establishment for the centre is 45 and the number of staff at present in post 43. I am providing the hon. Member with details of the staff establishment and salary and wage scales.
  The need for such a centre as the White Hart now provides had been recognised since at least 1968 and plans had been prepared for a considerably more expensive project in Cambridge. These were rejected in 1973 and the decision made to seek an alternative location. The White Hart was chosen after inspection and assessment of some half-a-dozen buildings in various parts of the country.
  The decision to provide a national training and studies centre for the NHS was a direct recognition of the importance attached by my Department to its management effectiveness in the NHS its provision was certainly not an error of judgment. With its total of some 800,000 staff, the NHS is the largest employer in the country, and NHS services cost about £3,068 million per annum, of which £717 million is accounted for by the family practitioner services and £1,793 million by salaries and wages. The NHS does not direct the clinical treatment of patients by doctors, but the facilities required for the purpose and the services needed to support it together constitute an immense business enterprise, which calls for management skills and expertise of a high order if its resources are to be used cost-effectively for the intended objective, namely, the prevention and treatment of illness.
  A few figures can illustrate the scale of NHS operations. For example, hospital domestic services, an unglamorous but vital service, cost some £160 million a year. A district catering manager will typically be responsible for a budget of £1 million a year. In supplies, where annual expenditure exceeds £600 million, a systematic effort is being made to improve the training of staff and to examine new methods of procurement, stores development and organisation. These are but three examples of a much wider range of services. But in these alone a 1 per cent increase in effectiveness could secure economies of £9 million per annum.
  1592
  A great deal of money is at stake, therefore, in efficient management of the NHS, and training for managers and potential managers must play a vital role in securing this and related economies and improvements. There can be no question, of course, of centralised training for the very large numbers involved, and most management training within the NHS is arranged or commissioned by the authorities concerned at district, area or regional level as appropriate. But most large organisations within the public and private sectors—for example, the National Coal Board, the clearing banks, and large industrial and commercial companies—also see very good reasons to supplement local training requirements by a national centre designed specifically to meet the training needs of senior management staff. Before the opening of the centre at Harrogate, the NHS was almost alone as a major national organisation in lacking this facility.
  The centre's current programme includes courses for catering and domestic managers, personnel officers, regional pharmaceutical officers, regional statisticians, directors of nurse education and staff of the remedial professions. It will be noted that the total gross running costs of the centre amount to less than one-hundredth of 1 per cent. of the total cost of NHS services.
  The hon. Gentleman has also suggested, however, that, whatever the justification for the decision to establish a national training centre at Harrogate, due economy was not exercised in the arrangements to give effect to it. This is a view which I cannot accept.
  It is important to recognise that the very intensive work undertaken at such a centre is not simply, or even primarily, a matter of classroom instruction and formal study. A national centre brings together senior staff with a wide range of experience in practical situations, and to provide the means of sharing this experience and the lessons which can be drawn from it is one of the essential objectives of the training. Common rooms which provide the right sort of atmosphere for discussion of problems in an informal and social environment are therefore an integral part of the requirements for a

  1593
  senior staff training centre, and they need to be equipped with this in mind. Use of such descriptions as "luxury" is obviously a matter for subjective judgment. But the appointment of the rooms for general use must be such as to provide an attractive and comfortable environment. The furnishing of a centre also has to take into account that rooms and furniture will be subject to a good deal more use, wear and tear than would be expected in an ordinary home. It would be false economy to buy cheap furniture, furnishings and equipment which would need relatively soon to be replaced.
  All these points were taken into account in the brief to the planning team and the consultant architect to aim for a reasonable but not extravagant standard. It was understood that the aim should be a standard equivalent to that of a three-star hotel. The present appearance of the centre must, of course, be influenced by the architectural quality of the building, the good proportions of the rooms and the fact that the furnishings are still in a new and unworn state. The cost both of the conversion work and of the furnishing and equipment was generally consistent with this brief. For example, despite price inflation, ruthless pruning by the architect and project team reduced the actual conversion cost by 17 per cent. compared with the original budget estimate. Most of the bedrooms have no shower or bathroom attached, most of the walls are simply emulsion-painted and considerable expense which would have been involved in making good poor-quality floors was eliminated by the decision to provide instead a thick carpet underlay.
  For one room only, intended for use on special occasions and referred to by the hon. Gentleman as the principal's
  1594
  conference room, the project team decided that a special standard of furnishing was required. Furniture for this room cost a total of £4,168, which included the cost of 12 elbow chairs purchased at a cost of £101·70 plus VAT each. As to the other particular matters asked by the hon. Gentleman, I understand that the contract price for the bar fittings and seating was £3,468·09 and that a total of 3,484 sq. yds. of carpeting was purchased for the centre at an average price, inclusive of VAT, of £3·66 per sq. yd.
  Catering standards at the White Hart are also modest. Students have to make their own morning and late night tea or coffee in a communal utility room, and, of course, all drinks provided from the bar and any wine taken with meals have to be paid for by the students.
  I have also compared the overall running costs of the centre at Harrogate with information provided confidentially about costs for a sample of other national training centres within both the private and public sectors providing training for senior managers. Costs in all the centres in the sample appear to be markedly higher than at Harrogate, with a cost ranging from about £200 to £276 per trainee week for the other centres as compared with our estimate of £150 for Harrogate.
  Having given those detailed statistics, I hope that I have clearly explained to the hon. Member, the House and the world outside the reasons for having this centre, how we have arrived at the costs, and the measures taken to keep them within a reasonable level.
  Question put and agreed to.
  Adjourned accordingly at fourteen minutes to One o'clock.

ENERGY
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CIVIL SERVICE
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  A80
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EMPLOYMENT
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DEFENCE
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AGRICULTURE, FISHERIES AND FOOD
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SOCIAL SERVICES
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INDUSTRY
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PRICES AND CONSUMER PROTECTION
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TRADE
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  Sport and Recreation

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR On the Woolsack.
Prayers—Read by the Lord Bishop of Southwell.

AIRSHIPS AS FREIGHT VEHICLES
Lord DAVIES of LEEK: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have considered the possibility of relieving pressure on road transport by the use of the modern airship as a heavy freight vehicle and if not are they now prepared to initiate such an experiment in this relatively safe field of locomotion.
Baroness STEDMAN: My Lords, the Government have given no detailed thought to the use of airships to relieve pressure on the roads. At first glance the operational advantages of airships—that is, their ability to move fairly large loads of passengers, goods or both between specially equipped points—suggest that if such a system could be made successful it would be more likely to capture traffic from rail than from road. However, we believe any development of this kind is best pursued on a commercial basis rather than by Government.
Several noble Lords Several noble Lords: Hear, hear!
Lord DAVIES of LEEK: My Lords, while thanking my noble friend for that Answer, and being encourage by the "Hear, hears" that were sotto voce throughout the Chamber, may I ask my noble friend whether she is cognisant of the fact that 18 million internal combustion engined vehicles transversing the roads of England are making a marvellous concrete slum out of England's fragile beauty, and that in this human formicary, human beings no longer seem to count. Secondly, my information is—
Several noble Lords: Question!
Lord DAVIES of LEEK: If noble Lords would wait and understand English grammar, they would know that that is the beginning of a conditional clause.
Several noble Lords: Hear, hear!
Lord DAVIES of LEEK: My Lords, is my noble friend aware that already the National Enterprise Board have been approached tentatively by Aerospace Development, who are selling 22 airships to Venezuela? They are already consultants to Shell and to the American navy. And this is not a jocular question; it is a question of importance to the future of Britain's engineering. In view of the fact that there was a slight amount of hope in my noble friend's Answer, may I ask whether she w ill encourage the National Enterprise Board to investigate the possibilities of the use of these airships in the future?
Baroness STEDMAN: My Lords, on the first part of my noble friend's question about the concrete jungle that may be created in this country, I may say that 17 per cent, of the traffic on our roads is commercial traffic. Nine per cent. of that consists of light vans and only 8 per cent. consists of heavy lorries. Therefore the roads are needed not only for the lorries but also for cars, et cetera. As to approaches to the National Enterprise Board, that matter of course is not the responsibility of my Department. I can advise my noble friend that a number of approaches have been made to the Department of Industry in the past few months asking about support for the development of various airship schemes. The parties concerned have been told the kind of information that they would need to supply before the Government could consider the possibility of any financial assistance.
Lord HALE: My Lords, in view of the necessity for energy conservation, will the noble Baroness give, in terms of megajoules per passenger kilometre, the energy consumption used in transport by airship and a comparable loaded aeroplane?
Baroness STEDMAN: Not without notice, my Lords.
Lord GAINFORD: My Lords, may I ask the noble Baroness whether Her

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Majesty's Government are aware that in the United States the United States Navy and the National Aeronautics and Space Administration are sponsoring considerable inquiries into the possibilities of the use of airships for both military and civilian purposes? If so, have the Government any contact with the United States' Government for exchange of information on such matters?
Baroness STEDMAN: Not to my knowledge, my Lords; but I will find out and write to the noble Lord.
Lord LEATHERLAND: My Lords, may I ask my noble friend whether she does not think that there are already far too many gas bags about, without having them flying over us every hour of the day and night?
Baroness STEDMAN: My Lords, I hope my noble friend is not referring to Members of this House!
Lord THOMAS: My Lords, would the noble Baroness agree that in the present economic state of this country, any Governmental money spent on investigating the doubtful merits of airships as transport vehicles would be grossly extravagant and utterly unwarranted?
Baroness STEDMAN: My Lords, I am inclined to agree with the noble Lord. From the proposals that the Government might expect to receive, and from the work that they have done themselves, they are not sure that moving heavy loads by an airship would be an economic proposition. There are certain problems involved in the picking up and setting down procedures, and interruption by the weather. It has also been estimated, on very crude statistics, that there are only sufficient such loads in the United Kingdom to keep one airship operational.
Lord THOMAS: My Lords, will the noble Baroness accept my thanks for that answer?
Lord DAVIES of LEEK: My Lords, may I finally ask my noble friend whether she will take no notice of the old curmudgeons who pour scorn on this method of transport, since in 1913 the Daily Mail in a leading article said that aeroplanes would never fly?
Lord FOOT: My Lords, may I ask the noble Baroness this question? When, in her original reply to the Question, she drew a sharp distinction between the carrying on of a businesss on a commercial basis and carrying it on as a public enterprise, was she making a general statement of policy on behalf of the Government?
Baroness STEDMAN: No, my Lords.
Viscount St. DAVIDS: My Lords, is the noble Baroness aware that there is one thing an airship could be used for which would be particularly valuable—that is, the carrying of a particular kind of indivisible heavy load which, because of its width, blocks up roads and traffic, causes us to spend vast sums of money on policing the situation and is a thorough nuisance to everybody else? Would the noble Baroness not agree that if such a load could be picked up by airship it would be a good thing?
Baroness STEDMAN: My Lords, there may be something in that argument, but we are not satisfied that airships could ever offer a viable alternative to road haulage. We accept that when there are very large loads on the road they do cause chaos and delays; but even if the consignments were small, the distribution pattern would be so complex that the problems that would have to be faced in developing an adequate network of roads to get from the point of landing and to the point of taking off would possibly add to the concrete jungle that my noble friend referred to earlier.
Lord GAINFORD: My Lords, is the noble Baroness aware that there are people in this country who are designing airships that could give an almost door-to-door service between this country and Europe?
Baroness STEDMAN: My Lords, we have no information about that at the moment.

OIL EXPLORATION: LICENCE APPLICATIONS
2.45 p.m.
The Earl of LAUDERDALE: My Lords, I beg leave to ask the Question

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which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will now comment on the reports, mentioned during Questions on 20th October, of pressures allegedly brought to bear on oil companies applying for new licences under the Fifth Round to agree to BNOC participation in licences already granted before BNOC came into being.
Lord STRABOLGI: My Lords, suggestions that undue pressure has been applied to companies during the participation negotiations are quite unfounded. The noble Earl has also made reference to a letter sent to certain of the companies which have applied for Fifth Round licences. I should like to assure him that this letter was simply an invitation to these companies to indicate their attitude to the principle of participation. Noble Lords will recall that one of the factors which the Secretary of State for Energy has announced that he will bear particularly in mind when examining applications, is the degree to which the applicant has demonstrated his agreement to the conceding to the State of a majority share in any discovery made under existing licences. Her Majesty's Government have already sufficient information, in respect of many of the applicants, to assess this. It was necessary, however, that those companies about which not enough was known should be given an opportunity to indicate their acceptance of this important element of Her Majesty's Government's policy for the development of the United Kingdom's offshore oil resources.
The Earl of LAUDERDALE: My Lords, in thanking the noble Lord for that very smooth reply, may I ask him whether he considers that a 10-day ultimatum can properly be called an invitation?
Lord STRABOLGI: My Lords, I am sorry if the noble Earl thought my reply was smooth. It was intended to give him as much information as possible. This is quite a straightforward matter. The different factors were spelled out in the London Gazette and the Edinburgh Gazette on 20th August. The seventh factor (g)
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made it clear that one of the points to be taken into account was State participation in existing contracts. Certain of the companies did not comment on this in their applications and so a letter was sent on 12th October, asking for their views.
The Earl of LAUDERDALE: My Lords, I am sure the noble Lord will appreciate that I appreciate his efforts to give a helpful reply. I do not doubt for a moment that that is his purpose. But would he not agree that this letter, which refers to a "fair" price instead of a "market" price as hitherto in such discussions, does break new ground and therefore goes beyond the published general conditions which were made known some months back? In view of that, would the noble Lord consider asking his right honourable friend to publish his letter so that any doubts may be set at rest?
Lord STRABOLGI: My Lords, participation negotiations are being conducted on a basis that will leave the companies financially no worse off. BNOC will, of course, pay the market price for the oil taken under participation agreements in the form now being negotiated. Perhaps the noble Earl will contain himself for a moment because I am just going to come on to his second point. With regard to the letter of 12th October, I have it here on the file. If the noble Earl would like me to send him a copy I shall be happy to do so. I will also make a copy available in your Lordships' Library and publish it in Hansard.—[See below.]
Lord SLATER: My Lords, is my noble friend aware that, in view of the Question and supplementary question put by the noble Earl, Lord Lauderdale, one gets the impression that this is where vested interests come into the picture and one really feel, in view of the questions asked by the noble Earl, that he must have tremendous interests which are vested inside—
Several noble Lords: Oh! Oh!
Lord SLATER:—inside this particular issue on which he has questioned the Minister?
Lord CARRINGTON: My Lords, I really must ask the Leader of the House

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whether it is proper to make allegations of that kind.
The LORD PRIVY SEAL (Lord Peart): My Lords, I hope that my noble friend Lord Slater will withdraw his remark.
Lord SLATER: My Lords, I do not see why my noble friend the Leader of the House and the Leader of the Opposition are taking exception to the question which I have asked. Is it not the custom of this House for individuals, who have vested interests in certain organisations and so on to declare those interests? As I understand the position, there is nothing to stop any Member from asking a direct question about whether the individual concerned has a vested interest.
Several noble Lords: Withdraw!
The Earl of LAUDERDALE: My Lords, may I set your Lordships' minds at rest and declare that I have altogether 200 shares in Shell, and those are the only shares I have in any oil company of any kind whatsoever, or have ever had at any time.
Lord PEART: My Lords, I hope that my noble friend will really withdraw graciously.
Lord SLATER: My Lords, is my noble friend the Leader of the House—
Several noble Lords: Withdraw!
Lord SLATER: Shut your mouths! Is my noble friend the Leader of the House aware that I have been in this type of life too long to be drowned by people on the other side. But I withdraw the statement that I made to which they take exception.
The Earl of LAUDERDALE: My Lords, can we get back? May I thank the noble Lord, Lord Strabolgi, for offering to publish this letter? If he would publish it in Hansard that would be helpful, because it would clear up the question whether it refers to a fair price, as I understood, or whether it refers to a market price, which the noble Lord said is the Government's position in this matter.
Lord ORR-EWING: My Lords, will the noble Lord consider whether it is
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reasonable, as this letter suggests, on anything of such importance as retrospective participation on existing licences, that they should have an answer to this letter within 10 days? I think it is a little unreasonable on an enormous business venture of this kind, where millions of pounds and many jobs are at risk, and it is pressing the bargaining power of the Government a little far. Would the noble Lord also confirm that if it ever was said that a resident's licence should be withdrawn, that was improper and will never be said on any future occasion?
Lord STRABOLGI: My Lords, with regard to the first part of the noble Lord's question, this was a question of principle that was being asked, and it was decided by my right honourable friend that the time which the noble Lord has mentioned was sufficient. With regard to the so-called threats to withdraw—I cannot remember whether it was passports, residents' permits or something like that—there is absolutely no truth in that. It is absurd.
Baroness ELLES: My Lords, can the Minister inform the House whether he is satisfied that the participation agreements are not in contravention of the monopolies provision of the EEC Treaty? Also, will he kindly inform the House whether any consultation has taken place with the European Commission on this monopoly activity of BNOC?
Lord STRABOLGI: My Lords, I think that that is quite a different question.
Lord BLYTON: My Lords, is the Minister aware that it is a poor company which applies for a licence and does not know the basic principle of the Government, that they want 51 per cent participation in any licences granted for this oil which belongs to this country, instead of its being handed over to private enterprise to make profits? If some day we have to nationalise it, it will cost millions of pounds in compensation.
Lord STRABOLGI: My Lords, there is a great deal in what my noble friend has said. The White Paper stated the Government's belief that majority State participation in existing licences provides

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the best means for the nation to share fully in the benefits of North Sea oil.
The Earl of LAUDERDALE: My Lords, will the noble Lord answer one other point? He has been good enough to deny altogether the story, which I brought to this House in good faith, about a threat to withdraw a resident's permit. He said that that kind of thing is absolute rubbish, and I am very glad to hear that it is. But is he aware that the noble Lord, Lord Balogh, who unhappily is not here—he is a great friend of mine and I wish that he were here—told us in the Committee stage of the Petroleum and Submarine Pipelines Act that the Government would use their strongest cards and full bargaining power, and on another occasion said, "We have other cards up our sleeves", and there is reason to expect the Government to use all kinds of pressure?
Lord STRABOLGI: My Lords, all I can say is that Her Majesty's Government do not conduct their negotiations like that.
Lord PARGITER: My Lords, can my noble friend say whether or not—
Lord PEART: My Lords, I think that we should proceed.
Lord PARGITER:—there would be quite so much worry about a fair or a market price, if the fair price happened to be higher than the market price?
Following is the letter referred to:
DEPARTMENT OF ENERGY
12th October 1976
Dear Sir,
Your company is amongst those which have recently applied for an offshore petroleum production licence.
Fifth Round licences will of course be awarded on the basis that BNOC is a 51 per cent. partner from the outset, but the Gazette Notice inviting applications set down that one of the factors which the Secretary of State would bear in mind when examining applications would be the degree to which:

(a) the applicant; or

(b) any existing licensee in whom he has a controlling interest; or

(c) any existing licensee who has a controlling interest in the applicant;

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has demonstrated his agreement to the conceding to the State a majority share in any discovery made under existing licences.
The Government is already in discussion with companies with existing commercial oil fields and a number of other companies have informed us that they accept the principle of participation in the event of a discovery being declared commercial. We now seek an indication of the attitude towards participation of those companies with interests in existing licences whose views are not already known, or are known in respect of part of their licence interests only.
Our intention is to seek an indication of your acceptance of the principle of majority State participation in the event of a commercial discovery in any of the licence interests presently held by your company. Where no commercial development is in prospect it is not our intention to initiate a new round of negotiations at this stage, but your acceptance would mean that when any find in which your company has an interest through an existing licence is declared commercial, your company would be prepared directly to enter into negotiations with the Department for majority State participation in that interest. While the terms of participation would be negotiable in each case and could be expected to vary according to circumstance, you will no doubt know that participation agreements so far concluded provide for BNOC to have an effective voice in the decision making processes of the field, and a right at its option to take up to 51 per cent. of the petroleum produced but on a basis which secures to the company a fair price for any taken up.
To confirm that our records are complete, if categories (b) or (c) above apply to your company I should be grateful if you would notify me of names and addresses within the next few days.
When replying to this letter, would you please write on behalf of any company in category (b), and ask any company in category (c) to write to me direct, in both cases covering all the interests presently held by the company concerned.
In order that your application may be given full consideration within the time available I should be grateful if I could have your reply within ten days of the date of this letter.
Yours faithfully
(Signed) Robert Priddle.

AVRAIL AND VENEZUELAN RAILWAY CONTRACT
2.55 p.m.
Lord RHODES: 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 the British consortium Avrail has withdrawn from bidding for the Venezuelan railway contract.
Lord ORAM: This is not a matter for which the Government had responsibility

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but they had been assisting the company with normal export services. Avrail Limited is a properly constituted commercial company, and its decision to withdraw from bidding for this contract was based on the commercial judgment of its shareholders. I understand that the reasons were a combination of the unusually onerous conditions of contract and the estimate of the cost, which led the company to the decision that it could not make a competitive bid.
Lord RHODES: My Lords, does the Minister agree with the statement attributed to the British Ambassador in Venezuela that the consortium pulled out too soon?
Lord ORAM: My Lords, as I have said, this was a matter of commercial judgment upon which I would not wish to comment. I believe that the remarks made by Mr. Taylor in Venezuela have been misrepresented in the Press. He used the word, "unfortunate", but that related to the general situation arising out of this decision.
Lord RHODES: My Lords, in fairness to the consortium, may I ask whether the Minister agrees that the fear of cost escalation due to sterling devaluation was the main reason for withdrawing?
Lord ORAM: My Lords, I think that a new estimate of costs was made and that was part of the reason for the withdrawal. But, obviously, the value of sterling entered into that.
Lord ORR-EWING: My Lords, does the noble Lord agree that in heavy engineering projects of this kind, which may last five or seven years, the rate of inflation is of tremendous importance, as the noble Lord has said? Therefore, is it not of paramount importance that we, on all sides of this House and in another place, should do everything we can to reduce the rate of inflation? If we do not, our competitors all over the world will beat us for heavy capital projects of this nature.
Lord ORAM: My Lords, it has been stated many times that the Government's view of inflation is as the noble Lord has said; that is, a major objective of our general economic policy.
Viscount ECCLES: My Lords, as the President of Venezuela is expected in this country within three weeks, would the Government try to get this consortium together again, and look particularly at the question of the performance bonds, which I think bulk large in the withdrawal from competition?
Lord ORAM: My Lords, the performance bonds were, indeed, a major factor. As to getting the consortium together again, Her Majesty's Government would be willing to play the same role, if asked by the commercial concerns, on a second occasion. But in relation to this project, since bids have to be in by 6th December I do not think that that is really a practical proposition.
Lord POPPLEWELL: My Lords, does my noble friend agree that our industries are finding difficulties in many of these foreign contracts? It is argued that the severe conditions imposed by many would-be customers are rather too harsh for our people to bear. But in this developing world trade other nations are competing, so will my noble friend ask his honourable friend to use his best offices to get industry to have another look at this type of project?—because, if we want to get over our balance of payments difficulties and take our share in world trade, there must be some new appraisals by our industrialists of these foreign orders.
Lord ORAM: My Lords, the need for us to be competitive is well-known. But in relation to this project, I think I have made it clear that the conditions laid down were quite unusual.
Lord RHODES: My Lords, is not this a prime example of devaluation nor always helping exports?

AIRCRAFT AND SHIPBUILDING INDUSTRIES BILL
3 p.m.
Further considered on Report.
Clause 6 [Duties of the Corporations to review and report on management of their affairs]:
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 58:
Page 9, line 24, after ("interest") insert ("or is against the commercial interests of the Corporation").
The noble Lord said: My Lords, I beg to move Amendment No. 58 which seeks to insert the words "or is against the commercial interests of the Corporation". This is a rerun of an Amendment which we discussed at the Committee stage when a certain amount of confusion, which has subsequently been cleared up, reigned between the noble Lord who answered the question and myself. The trouble was that in the course of the confusion we lost sight of what seemed to us to be two quite important points. The more general point was most particularly alluded to by the noble Viscount, Lord Simon, from the Liberal Benches.
May I say again that we are seeking to address ourselves to the problem of making these Corporations as workable as possible and setting up a satisfactory relationship between the Minister and the Corporations which are being set up under the Bill. The situation, as I understand it, and it has been confirmed to me in a letter from the noble Lord, Lord Kirkhill, under what has now become Clause 6 of the Bill is that the first thing which happens is that within six months there is what I call a management audit. A kind of consultant's report takes place on these industries which is submitted to the Minister within six months. We got into some difficulty because the clause goes on to say that from time to time when it considers it appropriate, or the Secretary of State so requires, further reports may be submitted.
Already the Bill states that certain parts of these reports can be omitted when it is considered by the Minister that their inclusion would be against the national interest. One could have circumstances in which it would be in the interests of the Corporations to omit certain sections of these reports. It is fair to say that most noble Lords, and certainly I include myself, are in favour of as much information as possible being submitted to Parliament. But we have to try to be realistic.
As I have said, it raises the question that was raised by the noble Viscount, Lord Simon, of confidentiality of reports
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between an industry and its Minister and the danger that if a report is to be published the person submitting the report may feel that it is necessary to hold back some part of the information he would otherwise have put into the report. I said at the Committee stage that this was taking up the whole issue of the publication of advice given by civil servants to Ministers. I know that this is not the point to which we are addressing ourselves here but it is the general point which the noble Viscount, Lord Simon, was seeking to make in this connection and I hope that the noble Viscount will give me the benefit of his advice in a moment.
If I may try to make an analogy, although it is not an exact one, the premature publication of the fact that British Leyland was about to replace the Mini model would be quite damaging to the sales of the Mini until such time as the new model had been phased in. One can think of analogies with the aircraft industry or, indeed, with the shipbuilding industry. It seemed to us that it would be liable to protect the interest of a free exchange of information between the Corporation and the Minister if this provision were made in the Bill, whereby what one might call economically sensitive information could be held back so that the free exchange of such information could take place untrammelled by the dangers which could result from premature publication.
I hope that I have not made what, on the face of it, is a fairly simple point sound too complicated. It is a matter of some importance, although I hope and believe that it is not in any sense a Party point. At the Committee stage we failed to make the point clear, but I hope that I have clarified it now. My Lords, I beg to move.
Viscount SIMON: My Lords, may I support what has been said about this Amendment by the noble Lord, Lord Strathcona and Mount Royal. We discussed the point in Committee and I expressed the view strongly that what was essential was absolute frankness between the Boards of the two nationalised industries and the Minister, and that this might well be vitiated if there were a danger of matters which were against the commercial interests of the Corporation being published. I am afraid that I do

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not have the reference with me, but I thought that at the end of the discussion the Minister said that in his view what was against the commercial interests of the Corporation would be against the national interest and could, therefore, be excluded. That seemed to me to be a very good way out of the situation, but it would be even more certain if these words could be added. I cannot see any objection to adding these words, but I shall wait to hear what the noble and learned Lord says in reply to the Amendment.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): My Lords, as the noble Lord, Lord Kirkhill, pointed out during the Committee stage debate, this point had been made in Committee in another place where it was agreed that it should be considered. The noble Lord explained in Committee that the Government were not convinced of the need for an Amendment on these lines, and that remains our position. It remains our position because we think that there is a misunderstanding among noble Lords opposite about the kind of matter which will be contained in a report made under Clause 6. It is essentially a report about matters of organisation and will cover such questions as whether the Corporations should be organised on regional or functional lines, whether the vesting subsidiaries should retain their old identity and so forth. Matters of the kind which have given rise to the concern which has been expressed are unlikely to be contained in any such report.
All of these points have been made before in Committee and the Government remain of the view that the Amendment is unnecessary. I should also add that a clause in the terms of the present one is contained in other nationalisation measures and that this would be a new departure and might suggest there was something wrong with the previous clauses. However, I am empowered to say, and am able to say to your Lordships that if your Lordships feel strongly that this matter ought to be amended in the terms now proposed we should not resist, in a Division, the moving of the Amendment.
Lord STRATHCONA and MOUNT ROYAL: My Lords, the noble Lord has
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rather surprised us by the acceptability of the Amendment which he is expressing. It leaves me slightly uncertain about what to do because it is difficult, as it is a Report stage Amendment, for noble Lords again to express their views. I think in the circumstances it would be proper to suggest that I move this Amendment, on the understanding that the Government are prepared to accept it, but I suppose I must also say, as they are being so co-operative, that if on second thoughts they feel it is a terrible thing we might have to agree to take it out again later if the case appeared to be pressing.
On Question, Amendment agreed to.
Clause 7 [Machinery for settling terms and conditions of employment etc.]:
3.11 p.m.
Viscount SIMON Viscount SIMON had given notice of his intention to move Amendment No. 60:
Page 9, line 28, leave out ("consult") and insert ("seek consultation with").
The noble Viscount said: My Lords, this is the second of a pair of Amendments; we have already discussed the first one and the noble Lord, Lord Winterbottom, explained very clearly that the Government preferred the original wording. I do not think it is really worth while taking the time of the House to deal with this point. I am only wondering whether, to make honours even, the noble Lord, Lord Winterbottom, will leave the other Amendment which was carried by mistake in the early hours of the morning so that we shall be able to say that there is at least one Liberal Amendment which has been accepted by the Government. Subject to that I do not intend to move the Amendment.
Lord WINTERBOTTOM: My Lords, I am not quite certain of the position. We are now talking about Amendment No. 60 which I think went with Amendment No. 56. Is the noble Viscount mentioning the issue of decency and fairness on Amendment No. 60 or on Amendment No. 62?
Viscount SIMON: My Lords, it is not to do with Amendment No. 62. I will not move it, but I will speak to the noble Lord, Lord Winterbottom, afterwards.
Earl FERRERS Earl FERRERS moved Amendment No. 60A:
Page 9, line 29, leave out ("or professional organisation").
The noble Earl said: My Lords, this is an Amendment to leave out the words "or professional organisation". At the Committee stage we had a long discussion about the correctness of everyone being consulted, particularly when industrial democracy was being spoken about. It has always been our intention and our belief on this side of the House that everyone should be consulted as regards the future of these two Corporations, particularly where industrial democracy is concerned. However, this particular clause refers to collective bargaining and it has always been the accepted principle of professional organisations that they do not involve themselves with collective bargaining processes. If the Bill were to remain as it is, I think that bodies such as the Institution of Mechanical Engineers or even the Law Society or the Royal Institute of Naval Architects could in fact be consulted over matters to do with collective bargaining. We think that this should not be so, and for that reason we tabled the Amendment to exclude those professional bodies from consultation where it relates solely to collective bargaining. I beg to move.
Viscount SIMON: My Lords, these words were put in on the basis of an Amendment moved by my noble friend Lord Lloyd of Kilgerran, and we feel that it is desirable to retain them. In my opinion the clause as drafted is not completely correct and one might need to discuss with noble Lords opposite the possibility of some adjustment of the wording. What we have in mind is this. There may in a large organisation be quite a small group of highly qualified specialists who conduct essential work, who are not members of any trade union and who are certainly not the substantial proportion of the people employed in the plant or factory, or whatever it may be, but it seems to me that that small group of highly qualified professional people have just as much right to have proper machinery in existence for the purposes specified in subsection (3)(a) for the settlement by negotiation of terms and conditions. If they are not put in this clause in some way it appears that the sort of people to whom I am referring would simply be
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at the mercy of the employers to say, "These are your terms", and that is the end of it. I should have thought it was desirable in some way to get these small groups of highly qualified people put into a position where they are entitled to have proper machinery for settling their terms and conditions of employment. It was on those grounds that we thought it right to put these words in, and it is on those grounds that I think it is right to retain them.
Lord COOPER of STOCKTON HEATH: My Lords, are the people to whom the noble Viscount has just referred covered by subsection (2):
"It shall be the duty of each Corporation to seek consultation with other organisations not being relevant trade unions"?
Viscount SIMON: My Lords, if, with the leave of the House, I may speak again in reply to that question, the answer is that the next clause refers specifically to people who represent substantial proportions of the persons in the employment of the Corporation, and this might not be a substantial proportion at all—it might be a very small proportion.
The MINISTER of STATE, NORTHERN IRELAND OFFICE (Lord Melchett): My Lords, it may be helpful for me merely to say, in keeping with the happy relations which exist between noble Lords immediately opposite and the Government, that we are quite happy to accept these Amendments.
Lord CAMPBELL of CROY: My Lords, I am grateful that the noble Lord, Lord Melchett, is starting the day—as far as he is concerned—by accepting this Amendment, but I should like to say something on the point raised by the noble Viscount, Lord Simon. The words "or professional organisation" appear in subsection (4) of the previous clause—Clause 6—which we have been discussing, and there it is a duty laid upon the Corporation to consult with professional organisations. This is a matter which my noble friend Lord Carr feels strongly about, with all his experience of having served at various times in the Ministry of Labour and then having been Secretary of State for Employment, and he spoke about it at the Committee stage. He feels that it

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is not the place for professional organisations to be involved in the machinery for settling terms and conditions of employment. To his knowledge most of those organisations would prefer not to be involved in the way suggested in the Bill as now drafted. Clearly the Government have come to the same conclusion and I am glad that they have accepted this Amendment.
I just wanted to take this opportunity of explaining to the noble Viscount, who was naturally anxious about this point, that we feel that professional organisations are being consulted at other points in the Bill, although if there is any suggestion that there is some place which is appropriate for them where consultation should be added, of course we shall be glad to consider that at the Third Reading.
On Question, Amendment agreed to.
Viscount SIMON Viscount SIMON had given notice of his intention to move Amendment No. 62:
Page 9, line 43, at end insert ("incorporated in the United Kingdom.").
The noble Viscount said: My Lords, this, again, is the second of two Amendments and we discussed the other one towards the end of our discussion on the last occasion. I have now had an opportunity of reading what the noble Lord, Lord Winterbottom, said, and in view of that I do not propose to move this Amendment.
Clause 8 [Formulation of the Corporations' policies and plans and conduct of their operations]:
3.19 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 65:
Page 10, line 13, at beginning insert—
("Except in so far as it is satisfied that adequate consultation has already taken place having regard to the particular subject matter for inclusion in the plan").
The noble Earl said: My Lords, this Amendment is similar to one which we tabled at the Committee stage of the Bill. Its object is simply to prevent any repetition over the preparation of the corporate plan of a process of consultation with the relevant trade unions which has been going on anyway as a result of other consultation provisions in the Bill. Clearly it is right that over the preparation of the
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corporate plan there should be consultations, and it is right that this should happen. We feel that as the Bill is at present drafted it might put a duty on the Corporations to consult even further with trade unions when they have already in fact done so. The noble Lord, Lord Melchett, believed that such repetitious consultation would, on a commonsense basis, be avoided and that therefore the Amendment was unnecessary. On the other hand, we thought that it would be very prudent to put it quite clearly in the Bill that if in fact consultation had already gone on there is no point in putting a statutory duty on the Corporation to further that consultation once it has been achieved. I beg to move.
Lord MELCHETT: My Lords, when we discussed this Amendment in Committee, both I and the noble Lord, Lord Carr of Hadley, were agreed about what we wanted and expected to happen under corporate planning procedures. But the noble Lord, Lord Carr, was concerned that this clause as drafted would not achieve the happy result we both wanted to see. At that stage, we agreed that the words of the Amendment which the noble Lord moved in Committee probably did not achieve the desired effect. We both agreed to go away and think about the matter. I certainly have given the matter some thought since Committee stage and have taken further advice on it. First I would emphasise that in drawing up these provisions the Government were most anxious to strike the right balance between the requirement to consult and the need to ensure that the consultations were not so onerous as to inhibit the corporate planning procedures. We hope that the development of industrial democracy, encouraged by the consultation provisions in the Bill, will mean that there are frequent consultations with the unions at various levels on a wide range of subjects. Many of these subjects may be included in the corporate plan—the most obvious example, perhaps, is employment. I have looked carefully at this again, and have taken legal advice.
As a result I can assure noble Lords opposite that where a particular subject covered in the corporate plan has already been discussed between the unions and the Corporation, the Corporation would not have to consult the unions about it again to meet the requirement in Clause 8.

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This would have been met by the earlier discussions. All the clause requires is that at some stage there shall have been consultations between the unions and the Corporation about the subjects to be covered in the corporate plan. These consultations can be formal or informal, and need not be expressly for the purpose of the plan. What the clause does not require is a formal consultation procedure on the plan itself.
Our hope is that by not specifying how consultation shall take place in detail we have left the unions and the Corporations maximum scope for arriving at an arrangement which is acceptable to both, and which makes sense to both parties. What we intended to do, and what I am advised, after thinking about this carefully again, we have achieved in drafting the clause is both what the noble Lord, Lord Carr of Hadley, wanted and what the Government want. We have done our best to strike the right balance between ensuring that consultations are worth while, but not so onerous as to detract from the effective implementation of planning procedures. As I have explained, this means that where the Corporation has consulted a union about a subject covered in the corporate plan, the Corporation will not be under an obligation to consult them again. I hope, with that further explanation of the practical effects of the Bill as it is drafted and the assurance, I think, that the clause actually achieves what we both wish it to achieve, that the noble Earl will not press his Amendment.
Viscount SIMON: My Lords, in this case I find myself in agreement with the noble Lord opposite about this. I did not think it needed quite such a long explanation because the clause says it shall be the duty of the Corporation after consultation to formulate the plan. [f there has in fact been adequate consultation, then the formulation is after consultation.
Earl FERRERS: My Lords, I am grateful to the noble Lord, Lord Melchett, for having given this consideration and for having taken further advice on it. We were concerned merely to see that the Bill was as tidily drawn as it should be. There was nothing between us on the substance of the Amendment. I think that the noble
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Lord, Lord Melchett, inadvertently referred to the fact that he wanted to make sure that the Corporations and the unions would have as much freedom as possible to discuss. The noble Lord forgot line 14 which puts the obligation to consult not only with relevant trade unions but also with professional organisations. I am sure that was an error into which the noble Lord inadvertently slipped, having for-gotten Committee stage. I am sure he really intended to say that it is the intention of the Government to allow the Corporations as much freedom as possible to consult with the relevant trades unions or the professional organisations, as the case may be. That being so, I appreciate the trouble that the noble Lord has taken in having made quite certain that our Amendment would not be an improvement to the Bill. Therefore, I am happy to withdraw it. I beg leave to do so.
Amendment, by leave, withdrawn.
Clause 9 [Furnishing and publication of information by the Corporations]:
3.25 p.m.
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendment No. 72A:
Page 11, line 32, at end insert—
("(2A) Without prejudice to the generality of subsection (2) above the Secretary of State shall direct each corporation to publish at least such information as, had it been a company listed on the Stock Exchange daily official list it would have been required to make available to its shareholders to conform with the regulations of the Stock Exchange for the time being in force.").
The noble Lord said: My Lords, we are now dealing with Clause 9, which deals with the furnishing and publication of information by the Corporations. I think it probable that it would be to the convenience of your Lordships if I spoke also to Amendment No. 72B, because they are very closely related points, and the arguments I wish to put forward for one are virtually the same as I would wish to put forward for the other.
My Lords, in these two Amendments, we are simply seeking that the two Corporations shall be required to maintain the same standards, no higher, but the same standards as public companies in the private sector are under in their obligation to maintain, either by virtue of the rules of the Stock Exchange, with which they

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must comply in order to obtain a quotation, a listing of the Stock Exchange, or by virtue of the obligations of the Companies Acts. We believe that the nationalised Corporations both could and should conform to the practice which is rightly expected of companies in the private sector in these matters of giving information. It is true that their reports may contain somewhat different information from those given by public companies in the private sector. In some cases, nationalised Corporations may give more information. All we are saying is that they shall have imposed upon them a minimum standard, no higher but no lower than the minimum standard imposed on public companies in the private sector. I hope that the Government will feel able to accept this Amendment.
I know that the Government will say to us that this is what public Corporations will try to do. But we really cannot see why companies in the private sector should be under an absolute obligation to do so either because of the operation of company law or because of the operation of the laws of the Stock Exchange, which, although not law, must be complied with if the Corporations are to maintain their Stock Exchange quotations. I hope that noble Lords from all parts of the House will find this reasonable and that the Government will be able to comply. Therefore, I beg to move.
Lord WINTERBOTTOM: My Lords, may I say how grateful I am to the noble Lord, Lord Carr of Hadley, for speaking to these two Amendments together, because it helps progress. We have much sympathy with the aim of the Amendments, but I am not able to accept them because I think they seek to apply technically inappropriate mechanisms, but I hope that the assurances we can give will satisfy the noble Lord who moved this Amendment, and other noble Lords.
I should explain why we do not think these Amendments are workable. First, the Stock Exchange requirements are aimed specifically at ensuring that information relevant to the trading of quoted securities is available to those engaged in such trading—for example, on such matters as the allotment of shares under a prospectus, company meetings and so on. The Corporations are not in that position,
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and the legitimate and proper interest of Parliament and public in their performance, prospects and situation is best met by ensuring that information on them, rather than on narrower questions related to valuation of securities, is available.
Second, as the noble Lord has said, the Stock Exchange rules are non-statutory and it would be contrary to normal practice to write into a Statute a requirement to abide by rules made by someone not acting under Statute. Third, as regards statutory requirements bearing on companies, it will, of course, be the position that the Corporations subsidiaries will he bound by the Companies Acts and will have, for instance, to lay their accounts at Companies House. The fact that they have been nationalised does not mean that they at once lose their statutory obligations to publish their accounts.
Turning now to the more positive side, and this is where I win over noble Lords opposite, I want to assure noble Lords that we expect these Corporations to meet the best commercial practice as a minimum. I believe that in general that is true of existing nationalised industries, though no doubt there are instances where less is provided than should be. In general, both their accounts and their reports are highly informative and go beyond the minimum requirements applying to companies. If necessary, the Secretary of State could use Clause 9 to require fuller information to be published—or Clause 18 to specify additional information in the annual accounts. At the Committee stage noble Lords promised to write to the chairmen of the two Organising Committees drawing their attention to your Lordships' debate on half-yearly accounts; and I am going to see that that happens. I willingly now add to that undertaking an assurance that I will draw to their attention, with approval, the general objective of this Amendment and ask them to take it into account. I hope that, with that assurance, the noble Lord will feel able to withdraw the Amendment.
Lord LEE of NEWTON: My Lords, I hope we are all agreed on the very reasonable suggestions made by the noble Lord, Lord Carr, on the importance of any nationalised industries not complying with that minimum requirement. I do not know whether the noble Lord, Lord Carr, would agree, but my only fear is if you

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write this kind of thing into a Bill some people then construe a minimum to be a maximum. We can get some people to comply with the letter, whatever it is, but to many of us that would not be quite satisfactory. One would like to think that there was a far better spirit obtaining in either public or private industry than merely a minimum written into a Statute. I would hope that, as the noble Lord, Lord Carr, said, we are not going to see any lesser standard in the nationalised industries than in private ones. It would be appalling if that happened.
Lord WINTERBOTTOM: My Lords, my noble friend cannot quite have grasped what I said: that the actual Stock Exchange requirements are the minimum. We believe that the Corporation should meet the best commercial practice as a minimum.
Lord CARR of HADLEY: My Lords, I appreciate what the noble Lord, Lord Winterbottom, has said and the spirit in which he has said it. I can see that the Stock Exchange rules are technically inappropriate because, as the noble Lord said, they are relative to trading and the Corporation is not engaged in the sort of trading to which these rules apply. I take that point. I am less sure that I take the point about the Stock Exchange rules being non-Statutory. In this Bill we have done one or two things which the Government know are governed by lack of statutory application. The standards of disclosure arc to be based on a Resolution of the House of Commons. I know that a Resolution of the House of Commons is a very powerful influence on Members of Parliament. I am not sure that it has statutory force. It is very important that a Member who does not keep those rules is unlikely to have the full freedom and influence in the House of Commons that he would wish to have, just as a company that does not keep to the Stock Exchange rules, even though they are not statutory, will lose its right to a quotation—and that would be very nearly the kiss of death to that company. So non-statutory rules are quite a strong force in compelling minimum standards of behaviour.
I take the point of the noble Lord, Lord Lee of Newton, that there is a danger
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that minima become maxima. I am bound to say—and I do not say this with any emotional prejudicial edge to my remark—that nationalised Corporations do not live up to these minima at the moment. They do in some ways, but in terms of timing I am not aware that nationalised industries make a habit of producing half-yearly statements of how they are getting on, and I do not think any large company would be able not to do that. I cannot see why they should not do so. Even if they made the minimum their maximum, it would be a better minimum than their present normal practice. On the whole, if I may advise your Lordships, I think it would be wise for us to feel grateful to the noble Lord for what he has said. I assure him that we shall not forget it and I am sure that in the messages he sends through to these new Corporations he will make clear to them that they must not forget it either.
As the noble Lord is in such a mood of good will, and wanting some good will from us, I do not know whether I could persuade him to say one more word on behalf of the Government—or perhaps the noble Lord, Lord Melchett, could say a word on behalf of the Government if the noble Lord is inhibited, although I suspect that the House might give him leave to say a few words. Since they are not going to write it into the Statute for these particular Corporations, could he help us by giving this advice—indeed I might almost say instruction—to all nationalised Corporations and not just these two, to follow these good practices in future. If the Government would tell us that they would encourage all nationalised Corporations to do that I think we should be very happy to withdraw the Amendment.
Lord MELCHETT: My Lords, it is of course the Government's wish that all nationalised and non-nationalised industries should follow the best practice in giving information and publishing reports as often as possible, but I think it would be going a little far for me at this stage to undertake, on behalf of the many Government Departments which would be involved, to draw particular attention but I have no doubt that our heart is where the heart of the noble Lord is.
Lord CARR of HADLEY: My Lords, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 11 [Financial duties of the Corporations]:
3.38 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 78:
Page 12, line 34, leave out ("by the determination").
The noble Earl said: My Lords, this clause is the one which puts the financial provisions into the Bill, and subsection (1) states clearly that,
"The financial duties of each Corporation shall be such as may from time to time be determined by the Secretary of State with the approval of the Treasury and after consultation with the Corporation concerned."
Subsection (5) states:
"The Secretary of State shall not make, and the Treasury shall not approve, a determination under subsection (1) above, unless satisfied that the duties to be imposed on the Corporation concerned by the determination are likely, taken together, to result in an adequate return on the capital employed …"
In the Committee stage of the Bill when the noble Lord, Lord Melchett, replied to Amendment No. 115 he gave an assurance that the financial duties to be imposed on the Corporation under this clause would not override other duties which are laid down elsewhere in the Bill or imposed by virtue of other provisions in the Bill. At the same time he said that there need be no fear of a determination being made which imposed an unduly low financial return.
On Second Reading the noble Lord, Lord Kirkhill, spoke of the stringency of the financial disciplines within which the Corporations could operate. He said that would mean that it would be no easier for them than for a company in the private sector to undercut their competitors. These Amendments are addressed specifically to the possibility that a conflict could arise between the financial duties and the other duties, where the Corporation would find itself in a cleft stick. These other duties, we are told, would be paramount, and the noble Lord, Lord Melchett, said as much in col. 1022 of Hansard on 18th October:
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"It would not be possible, unless the Act specifically said so, which it does not, for a determination made under Clause 10 to override any duty imposed by the Bill."
But the financial duties are to be as stringent as in the private sector, where the final sanction is receivership or even liquidation.
The first Amendment, which leaves out the words, "by the determination", seeks to ensure that the Secretary of State will look to the other non-financial duties when making a determination under subsection (1) and not merely to the new financial duties which he is about to impose. Amendment No. 79—which, if I may, I would refer to at the same time, because these two go together—is to insert a new subsection after subsection (5) whereby the Secretary of State is given the responsibility for resolving the dilemma. If he found there was no way in which one of the Corporations could be made to achieve an adequate return on capital in view of its other duties, such as, for example, keeping open shipyards which may be unprofitable, he would have to come to Parliament and state, first, how serious the problem was, and secondly, what he proposed to do about it. He could alleviate the position of the Corporation in keeping open uneconomic shipyards through his powers under this Bill or under other Statutes, such as getting finance for some temporary employment or seeking money under the Industry Act, or he might simply have to acknowledge that the Corporation had been set an impossible combination of tasks. But, at all events, he could be pressed to quantify the resulting deficiency, and to that extent there would be a chance that the Corporation's financial duties would not be abandoned altogether in the face of these difficulties without Parliamentary approval or discussion.
It is hard enough, as we all know, for a nationalised body to fulfil its statutory financial obligations. This was pointed out only the other day in another place, when attention was drawn to the fact that the National Freight Corporation has an obligation under the Transport Act 1968 to be profitable taking one year with another and at present its accumulated deficit is £51 million. If British Shipbuilders, for instance, had to keep open unprofitable yards in obedience to a

1279
direction which the Secretary of State may give under Clause 5, they would find it harder still to make ends meet. I would think that the Organising Committee is evidently very concerned at this possibility, for only last week the chief executive designate is reported in the Press as having said that in such a case British Shipbuilders would maintain the loss-making yards only as administrator for the Government. The Government might have come to suitable arrangements with the Organising Committees; I do not know. These Amendments would ensure that similar problems would receive appropriate attention in the future.
Clause 2 gives the Corporations very specific duties: what they are allowed to do and what their objectives are. Clause 5 gives the Secretary of State the right to give specific directions to the Corporations. This clause enables the Secretary of State to make the determination to say what their financial objectives are. It is perfectly possible that the instructions which the Secretary of State gives under Clause 5 could make it impossible for the Corporations to meet those financial objectives.
There may be perfectly good reasons why the Secretary of State should give those directions under Clause 5, but if he is going to give directions which make it impossible for the Corporations to meet their financial objectives, then the purpose of these Amendments is to say that he should explain to Parliament what it is that he has told these bodies to do, what the financial objectives are, and why it will, therefore, be impossible for the Corporations to meet those financial objectives. It makes it possible for Parliamentary control or discussion to take place about the directions which the Secretary of State may give to the Corporations which may result in them not being able to meet their financial obligations. I hope the noble Lord will think this is a reasonable provision to be incorporated into the Bill. I beg to move.
3.46 p.m.
Lord MELCHETT: My Lords, I am afraid this Amendment—which I know will surprise noble Lords opposite and make a change from the progress we have been making this afternoon—is not acceptable to the Government. Indeed, I believe
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it is based on a series of misconceptions. I imagine one of the things behind it is the idea that a Corporation might be in a semi-permanent situation of making a loss, and the noble Earl gave us one example of a nationalised industry which he felt was in that position. The logic behind the Amendment must be that in such a case the Secretary of State could not honestly or realistically set a financial duty of earning an adequate return, so he should instead report the position to Parliament and state the corrective measures which he proposed to take. First, these industries are not domestic utilities whose prices are likely to be restrained, even if we ever get in the distant future a Government of the Party of noble Lords opposite. These industries operate in international markets and their prices will be set, as they are now, by international competition.
Of course, we may find that one of the industries is in difficulties in the short to medium term. This is likely to be the case with British Shipbuilders because of the particularly long downswing of the international shipbuilding cycle affecting all shipbuilding companies worldwide. Our shipbuilding strategy will have to take account of that, of the likely timing and extent of the eventual upswing and of the corrective measures to improve efficiency that may be necessary. Those factors are likely to affect profitability adversely in the short term; but, taken over the full extent of the shipbuilding cycle, we believe that British Shipbuilders will be viable and profitable. We do not, therefore, accept that there is likely to be any inconsistency between the financial and other duties to which the Amendment is directed. As the noble Earl said, there may be cases where a particular yard is kept open, at the request of the Government, not for commercial but for employment or social reasons.
However, I understand that there is no power, contrary to what the noble Earl said, in Clause 5 to direct British Shipbuilders to keep a yard open. Clause 5 does not give power to give specific directions of that kind. The Government have already announced that in such a case, in a case where a yard is being kept open for social or employment needs, we would not expect the Corporation to incur the additional costs to the detriment of its profitability, but would pay an

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explicit grant under the Industry Act 1972. I think that, of itself, very largely answers the point of the Amendment and many of the points which the noble Earl made in moving it.
Of course, the noble Earl may say that these are fine words, but nationalised industries have run into acute difficulties, for whatever reasons, in the past, and have been unable to meet their financial duties to break even, taking one year with another. That is, of course, quite true. For example, for various reasons, previous Governments of both Parties decided to maintain a coal industry at a higher level than would have been indicated by the then prices of oil. Many would argue that subsequent events proved that Governments of both Parties were right in pursuing that course, though that is another argument. But the result was that substantial reductions of capital were necessary. In our view that is the right way to deal with the matter. If an industry is, for whatever reason, operating in circumstances where it cannot, or could not, however efficient, service its capital, then that capital overstates the value of the assets and should be reduced.
In the unhappy event that one of these industries proved to be unable to earn an adequate return on its capital and measures of reconstruction and improvement were insufficient, the Government, of whatever Party, would need to come to Parliament with their proposals. We of course decline to contemplate the possibility in this Bill, because it would be destructive of the very attitudes and commercial approach which we believe are essential to the success of the industries which we all want to encourage. But, as I say, in the unhappy event of such a reconstruction being necessary, the Government would of course need to come to Parliament.
A recent example, I suppose, which I took through your Lordships' House concerned the Post Office Giro, where some capital reconstruction was felt to be necessary and public dividend capital issued. In that case we were able to have a very full debate on the Bill in another place and in your Lordships' House about the financial position and other aspects of Giro's performance. From that point of view I think that Parliament would have an adequate say over any measures
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which a Government proposed to take if the industry got into the very serious position which we all hope neither of these two industries ever will.
Lord HAWKE: My Lords, before the noble Lord sits down, could he just clear up one point arising from his speech? He said that it is a very cyclical industry. What happens if he realises that in the bottom of a cycle it is quite impossible to give them any determination that can provide an adequate return on capital? Do they automatically have to come to Parliament to write off that capital, even though he believes that in the next upturn that capital will be able to be serviced?
Lord MELCHETT: My Lords, when we were discussing the financial obligations that would be placed on the Corporation we went into this point in some detail and I said then that it might well be necessary to impose a financial duty on the Corporation which involved some such formula as taking one year with another, so that one could look over as the noble Lord, Lord Hawke, has suggested, not only the few years in the middle of a downturn but the whole cycle of a major industry like this. I think it would be possible to set sensible financial objectives under the terms of the Bill as it is now drafted.
Viscount SIMON: My Lords, what concerns me is what is the position if the Secretary of State has made a determination in accordance with this clause, after consultation with the Corporation, and then, for reasons which may be quite unforeseen, the Corporation decides it is unable to fulfil the determination. That is one of the circumstances in which, with this Amendment, I thought that it would be incumbent upon the Minister to come to Parliament and explain what had happened. Secretaries of State, with the best will in the world, may sometimes make mistakes, and so may corporation, and I think the object here is that in those circumstances the Secretary of State would have to come to Parliament and explain what had happened. Or have I misunderstood the noble Lord?
3.54 p.m.
Earl FERRERS: My Lords, I do not think that the noble Viscount, Lord

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Simon, has misunderstood me, and I think that he has understood the noble Lord, Lord Melchett. What this Amendment seeks to do is to enable the Secretary of State to come and explain the situation not to Parliament but in a report which can be laid before Parliament. I should like to think that I found Lord Melchett's arguments more convincing. I am afraid to say that I do not really find them convincing, because we believe that it is wholly right that these two nationalised Corporations should have financial objectives. It is a perfectly right and sustainable argument that they are going to function as public bodies, as nationalised bodies, and therefore they should have financial objectives put on to them. As the noble Lord, Lord Melchett, said, this may take the form of saying that taking one year with another they should achieve certain objectives. Clearly this must be relatively flexible.
Clause 2 makes it perfectly clear what they are to do. But one of our criticisms all the way through the Bill has been that the Secretary of State has colossal powers of interference. The noble Lord, Lord Melchett, said that he would not have the power under Clause 5 to tell them to keep open various shipyards. But one does not know what the circumstances of the future may be. Maybe unemployment would be desperate in a certain area; maybe some other unforeseen occurrence would come about which would make the Secretary of State feel that he has to give a direction to these Corporations. The result of that direction could well be that the Corporations would not be able to meet the financial objective. As the noble Viscount, Lord Simon, said, it is only right that in those circumstances the Secretary of State should not be able just to get away with it, but should have to explain in his report why the Corporations would now not be able to achieve the objectives which they had been given, and what his reasons for doing this were.
Lord MELCHETT: My Lords, I am grateful to the noble Earl for giving way for a moment. May I make two brief points? First, I said that I did not think that the power existed under Clause 5 to make the sort of direction which the noble Earl is saying could be made. In any event, the Government have made it
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clear that they will use the Industry Act 1972 if it is necessary to subsidise in keeping a yard open for some purpose or another. I take this opportunity, while intervening in the noble Earl's speech, as I cannot really make another speech, to make the point that if the Corporation is unable for some reason or other to meet the objectives the Secretary of State has laid down for it, the Secretary of State would have to revise those objectives and they would be laid before Parliament, and Parliament would presumably then have a chance to question the Secretary of State on any revised objectives.
Earl FERRERS: My Lords, I was in fact coming to those two points. The noble Lord, Lord Melchett, said that the Secretary of State would not be able to give directions under Clause 5. If that is so I will accept his view there, and also that it would be the intention, if they wanted to keep shipyards open, to make grants under the Industry Act. That is understandable, and I am grateful that we have had that point clarified. But I am bound to say that the remark of my noble friend Lord Carr the other day reminded me of what I have in mind. As a result of an intervention by the noble Lord, Lord Leatherland, about the nationalisation of Rolls-Royce, my noble friend said that this was a thing which suddenly blew up and the Cabinet had to take a decision within two days. I am not resting the whole of my argument on the fact that the keeping open of various yards would be a reason for having his Amendment, but I think there could be occasions in the future when some other oddity might all of a sudden blow up and action would have to be taken within a short period of time. I should have thought that it is precisely possibilities of that kind which would be covered under Clause 5. If that were the case it is only right that the Secretary of State should be obliged to lay before Parliament the reasons why these Corporations would not be able to fulfil the objectives which they were given.
I do not wish at this juncture to press this point, other than to say, with the greatest respect, that I think that the noble Lord, Lord Melchett, is probably, on balance, wrong. But I do not think that there is a vast amount between us. I think merely that it would have been better that the Secretary of State should be

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obliged to put this in a special report which could then be discussed by Parliament. In those circumstances, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 12 [Borrowing powers of the Corporations and their wholly owned subsidiaries]:
4 p.m.
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendment No. 87:
Page 15, line 2, at end insert—
("( ) Before a draft of an order under sub-section (6) or subsection (7) above is laid before the Commons House of Parliament in accordance with the preceding subsection, the Secretary of State shall lay before Parliament a statement in which shall be given so far as is practicable and in his opinion not contrary to the commercial interest of the Corporation concerned, the following information regarding that Corporation, namely,—

(a) its plans for capital investment;

(b) the trends expected in the amount and value of its production and sales;

(c) the amount, sources and application of the funds available or likely to be available to it;

(d) the sources of finance from which it proposes to borrow;

(e) its present arrangements and future plans for repayment of the amounts mentioned in subsection (6)(a) or subsection (7)(a) above; and

(f) such further information as to trends in the Corporation's financial results and capital employed as may be available and has not been published in the Corporation's Annual Report or in any other statement of its results.").

The noble Lord said: My Lords, we now come to Clause 12, which deals with the borrowing powers of the Corporations and their wholly owned subsidiaries. Subsections (6) and (7) lay down the maximum amounts allowed to British Aerospace and British Shipbuilders respectively by way of borrowing and public dividend capital and provide for those amounts to be increased up to a point by Affirmative Resolution. The Amendment calls for the equivalent of a prospectus to be made available to Parliament before such an increase is approved; that is to say, we want the Secretary of State to come forward to Parliament with a prospectus about the needs which we define here, before Parliament is asked to approve by Affirmative Resolution an extension of the borrowing powers and
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the rights to public dividend capital beyond those laid down as initial amounts in the Bill.
The things which we particularly want to know about before Parliament is asked to approve any extension are those listed in the Amendment; namely, the Corporations' plans for capital investment, the trends which the Corporations expect in the amount and value of their production and sales, the amounts and sources of funds available or likely to be available to them, the sources of finance from which they propose to borrow, the present arrangements and future plans for the repayment of the amounts mentioned in subsections (6)(a) and (7)(a) of the clause and such further information about trends in their financial results and the capital employed as may be available but which has not been published in their annual reports or in any other statement of their results.
I have correctly described the Amendment as one which demands from the Corporations and the Secretary of State the equivalent of a prospectus before Parliament is asked to approve by Affirmative Resolution the extension of borrowing powers. The noble Lord, Lord Melchett, will recognise the very words contained in the Amendment because although by now our summer holiday seems a long time ago, he at least, if not many other noble Lords, will remember that just before we adjourned for the Summer Recess we were discussing what was then the Iron and Steel (Amendment) Bill which was doing for the iron and steel industry just what is contemplated here for these Corporations. One of the things that the Opposition complained of in another place was that there was not an adequate prospectus provided before Parliament was asked substantially to increase the borrowing powers of the Steel Corporation, and when that Bill came to this House I moved an Amendment in these terms.
With the summer holiday mood upon us there were not many noble Lords present when that business was transacted and we had to go through the various stages of that business in rather double quick time; while I was telling Lord Melchett that the Opposition could not possibly let the Bill go through until that was dealt with, he was telling me that in

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that case I could not have my summer holiday. I am not quite sure whose pressure on the other was the greater, but it must have been about equal because on that occasion we came to what I was prepared to accept on behalf of the Opposition, and I hope in the interests of the whole of Parliament, as a reasonable compromise in that I accepted from Lord Melchett his statement that it was impracticable, at any rate at that moment, for the Government to write into the Bill the actual terms of the Amendment, but he gave Parliament an assurance that what the Amendment asked for would be done.
What we are asking for in this Amendment is that we shall write into this Bill, as we now have time to do so, the requirement for a prospectus—no more and no less than the Government were prepared to give an undertaking to the House would be provided by the Steel Corporation in future. That is the purpose of the Amendment. I believe that this is good, sensible and standard practice, particularly as in this Bill, whatever else we may dislike about it, the Government are stressing the need for these Corporations to be efficient, economical and in general terms normally to show an adequate return on the capital which they employ. If they are to do that, it is important that they should justify to us—they can look upon Parliament as their shareholders' meeting and as their bankers—as their shareholders and bankers in proper prospectus form the reasons for their request for a substantial increase in their borrowing powers. I hope that your Lordships, regardless of where one may sit in this House, will feel that this is in no way onerous but is simply the good commercial practice that one would expect of any corporation which will carry out the kind of duties, in an efficient, economical and profitable fashion, which the Government are laying on these Corporations.
Lord WINTERBOTTOM: My Lords, the Amendment seeks to put into the Statute a requirement for prior publication of information relating to the new Corporations. I would remind the noble Lord, Lord Carr of Hadley, that the pressure about which he was speaking was not only in terms of the summer holidays; it was the pressure of our
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domestic circumstances that I think made harmony reign in July. In justifying an increase within the limits of existing legislation, the Secretary of State normally gives in the debate on the Statutory Instrument which has to be laid a great deal of information about the financial position of the Corporation in question; sometimes a White Paper is issued in support, or the Corporation may publish a brochure, and this must depend on the circumstances of the case. This is a necessary part of the process of Parliamentary control over the finances of a public corporation.
The Secretary of State is, however, constrained by the need to protect the commercial interests of the Corporation and this fact may be recognised in the main text of the Amendment. However, much of the information contained in the headings listed would run counter to the commercial interests of the Corporations set up under the Bill. Both Corporations will be operating in the international market in fierce competition with overseas companies. To disclose publicly, at least in any precise form, such information as future plans for capital investment and estimates of future production and sales could give a material advantage to their competitors.
To amplify this, I have never believed in open diplomacy openly arrived at. This particular act of nationalisation, whatever one may think of it, differs from earlier acts of nationalisation when we were dealing purely with the infrastructure of our economy. What we are now dealing with is a group of companies which have to operate in the real world of private enterprise, where they must compete with companies owned privately abroad or owned by the State abroad. Noble Lords will I am sure agree that the publication of too much information which might be of advantage to our commercial adversaries would be disadvantageous to the companies which we are proposing to take into public control. We believe therefore that the requirements set out in the Amendment are inappropriate to legislation and could, despite the exclusion of commercially sensitive information, be damaging to the Corporations. It is in fact unprecedented.
Lord CARR of HADLEY: My Lords, is the noble Lord aware that we have

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deliberately included in the Amendment the words:
"… the Secretary of State shall lay before Parliament a statement in which shall be given so far as is practicable and in his opinion not contrary to the commercial interest of the Corporation concerned …"?
The noble Lord will see, therefore, that we have covered the precise point he was making, in the wording of the Amendment.
Lord WINTERBOTTOM: My Lords, we acknowledge this. The noble Lord is quite right. He has clearly taken great care in drafting his Amendment and we are in full agreement that there must be sensitive areas which cannot be included in a statement to Parliament. I believe that the noble Lord would also agree that, whereas we have to safeguard the Corporations' commercial tactics and commercial information from other companies which may benefit from the knowledge, we must strike a balance between the need for commercial secrecy and adequate information for Parliament. I am certain that the noble Lord will agree that Parliament needs as much information as possible on which to judge the orders granting borrowing powers to the Corporations. I willingly undertake, if the Amendment is withdrawn, to bring forcefully to the attention of my colleagues who are concerned with the nationalised industries and the coordination of the Government's practice in relation to them the views expressed by the noble Lord and his colleagues on this Amendment.
4.11 p.m.
Lord ORR-EWING: My Lords, I should like to give the noble Lord a further reason why he might press the matter, because there is no great difference between the two sides of the House on this point. He will remember that one section of the Bill was designed to—and here I am quoting the Minister—advance Socialism but that another was to advance industrial democracy as much as possible. Much of the Bill is directed towards the advancement of industrial democracy. He will remember that the trade unions—that is, the third of the workers in the aerospace industry who are in a trade union—are to be given much of this information. Capital programmes are to be put forward, how much is to be spent
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will be revealed: we are told that all this will be part of participation. So it is not only in the interests of one side that Parliament should be given the same facilities for sensible discussion about the future of the Corporations as are the workers in that industry. So I believe that this is a further argument in favour of putting forward something of this nature.
Surely, the noble Lord will also bear in mind that successive Governments have tended—and this was so during the seven years when I was a Minister—to over-emphasise the need for secrecy. If you really want to get the commercial details, you can discover most of what you want to know from informed technical magazines, articles in the scientific Press and all sorts of other areas. It sometimes seems to me that the only people who are not allowed to get this information are in Parliament. I believe that Parliament would be better informed, that our debates would be better conducted and that the public purse, which is now so important, would be better guarded if this sort of information were made available.
Lord ROBBINS: My Lords, may I with great respect say that I do not think that the noble Lord, Lord Winterbottom, has provided any concrete evidence whatever that, if regard be had to the section of the Amendment to which the noble Lord, Lord Carr, drew attention, any harm could possibly be done by writing this provision into the Bill?
Baroness WARD of NORTH TYNESIDE: My Lords, I also wish to support the Amendment. I have noticed that the noble Lord, Lord Winterbottom, is always sympathetic. Generally, when he is giving an answer, he says that he has very great sympathy and then goes on to object. I do not see much point in having very great sympathy if nothing happens as a result. The noble Lord said that he would bring this to the notice of his colleagues, and I am sure that that is a very sym-pathetic reply, but how can he say what would be the result of taking this to his colleagues? I like to have things absolutely clear. Has he or has he not the power? Is he telling us that this is a very good Amendment and that what my noble friend Lord Carr said covered everything that the noble Lord thought

1291
was right, but that he still cannot accept it because he has to put it before his colleagues? That sounds quite sensible, but surely the noble Lord must have some responsibility as he speaks in this House for this very important Bill with very important Amendments. What good is it for the noble Lord to say that he will bring the matter to the notice of his colleagues if he does not say that he will come and tell us what they have said so that on Third Reading we can have it put into the Bill?
Even in the days when I was in another place, when Ministers said that they would bring a matter to the notice of their colleagues I always liked to know what was the result of doing that. If his colleagues do not agree with the sympathy felt by the noble Lord, Lord Winter-bottom, what is the good of that? Why can we not have it exactly as in this very important Amendment with which, apparently, the Government agree because the Minister must already have power from his colleagues to accept sound Amendments. Otherwise what would be the good of having a debate at all?
Lord MELCHETT: My Lords, I should like to make two very brief points. I accept that there is an element of the Government trying to have it both ways. We are acknowledging that the Amendment of the noble Lord, Lord Carr, would allow the Secretary of State not to provide information that was contrary to the commercial interests of the Corporation. I think that it is possible to argue that that would leave very little information to be given at all. On the other hand, it is also possible to argue that were some information to be given, it could still not he in the best commercial interests of the Corporation for it to be given, even though this let-out is included in the Amendment.
However, I feel that, apart from that slight technicality about which I confess that I am not too happy, there are two important points to make. First, as the noble Lord said when the Bill dealing with the Steel Corporation's borrowing powers came to your Lordships' House in July, the Corporation, when pressed by Parliament to give more information, very readily acceded to that wish and undertook that they would in future give the information
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when such an order was due to come before Parliament. They did that because Parliament in effect said, "This order should not go through without our having this information." Of course, there will be nothing in the future to stop Parliament from saying, if an order or a Bill to increase borrowing powers or whatever it happens to be comes before them, that they simply will not pass the Bill or the order unless the Corporation concerned brings them the information they require. I believe that that is a reasonable safeguard for Parliament. We are talking about Bills and orders that have to go through Parliament and have to be debated, and Parliament can of course say to the Corporations through the Government, if need be, "We want more information."
The other point that is quite clear is that the Government accept entirely the need for the Corporations to give the sort of information that the noble Lord has asked for in this Amendment. I do not say the exact information because circum-stances can differ from industry to industry and from time to time. It is for those reasons that I should be much happier to see this not put into the Statute in a rather inflexible form, but to have it left to the arrangements which recent experience has shown achieve the desired results and on which my noble friend—who, I can assure the noble Baroness, Lady Ward, carries a very great deal of influence with his colleagues—has undertaken to express the opinions of your Lordships. I hope that, with that assurance, the noble Lord will not press the Amendment.
Lord SELSDON: My Lords, I had not intended to intervene on this Amendment because I had thought that the noble Lords, Lord Winterbottom and Lord Melchett, might have paid attention to some of the points which I tried to raise in Committee. In Committee, I moved two Amendments to try to make the Government's job easier when it came to net return on capital. First, I moved that the requirement should be that the Corporation should make a net profit. The Government did not accept that. I therefore moved an Amendment that the Corporation should not make a loss and I used as a precedent the Commonwealth Development Corporation, which is the

1293
only Government body that is required by Statute not to make a loss, and which has never made a loss.
I thought that at this stage perhaps one should put down more Amendments, but I had assumed that the Government would bear in mind the concern that we had expressed from these Benches about the possibility of these two Corporations, if they were not properly financed or properly managed, being a major and on-going drain on the economy. One pointed out that the Government were taking over liabilities, really open-ended liabilities, and we asked whether the Government would give us some idea of the level of commitment that would be required by these liabilities.
The Amendment put down by my noble friend—and he may not have appreciated this when he put it down—is fairly critical of the whole question of the future financing of these industries and to future sales. The Government tend to live a little in the past and go back to the day when the Bill was drafted, when we had a totally different financial and economic situation. The guarantee of Her Majesty's Government and of the Treasury no longer carries the same power that it did when the last Government were in power, and every day the level of indebtedness is causing concern. Quite frankly, I feel that some of the points raised in the Amendment ought to be left in.
The commercial argument is a perfectly viable one, but the' noble Lord cannot have it both ways when he says that this is not a nationalised industry but a private sector operation which is under Government control, or when he tends to draw a comparison between the private sector and a nationalised industry. We cannot pursue one rule for one lot and another rule for another. Any private sector corporation in the same position would be required to disclose to its shareholders the kind of information which is asked for here.
I should like to ask the Government—and I asked the noble Lord, Lord Winter-bottom, this previously—whether they could make some comment, even at this stage, on the financial aspects of this exercise. First, we have asked him whether he would give us a ball park figure as to how much it would cost.
1294
We have had no answer to that question, and therefore in Committee I pointed out that through various channels and by making various inquiries, one had come to the conclusion that the kind of commitment which the Government would be making of national resources, of taxpayers' money, over a three year period would be in excess of £2 billion.
The Government said that it does not cost the nation anything. I shall not repeat again the arguments one can advance upon the effect of borrowings of this kind upon DC or M3 or the money supply in general, which is a general problem with the Government. My concern is that without any knowledge, without the publication of any information, and without any assurance from the Government at this stage that we are not going into something which will cost us more than the nation can afford and which will create inflation, create an increase in money supply and all the problems that go with it, we should not allow this to go further. One of the duties of your Lordships' House must surely be to push the Government to disclose any information which at this stage of the development of the Bill could have an adverse effect upon the financial position of the nation.
Let us assume, as I pointed out before, that the total cost of capital, of setting up this operation is to be of the order of £800 million. The Government would in fact confirm that, because they were kind enough to point out that the gearing on a nationalised industry should be of the order of 60/40, and if one assumes that the current borrowing powers are 40, one comes to a capital figure of around £800 million. I think that in this current climate the general statement by the Government that it does not matter, that it will cost the nation nothing, that it is only a transfer of assets, needs looking at. I think, too, that one must give those who may manage these Corporations an understanding—and they may already have it—that they will be properly financed and properly capitalised.
If the noble Lord will bear in mind the point he made about exports and sales and problems abroad, he will realise that those who buy the kind of equipment produced by these industries will require that it is produced by an industry well

1295
capitalised, of standing, and with adequate financial resources. The requirements for performance bonds, guarantees and everything which may go with this can be quite substantial. I should like to point out to the noble Lord, Lord Winter-bottom, that it is not a question of what the total cost of this is to be, but how this is to be financed. The Government have indicated that they will issue long-dated stock. Since the Committee stage the position has changed even more and they have made, in numerous communications with the industry, comments that it does not matter, that all the industry will not particularly off-load or get rid of the stock that they are issued with. But they will immediately, because Government stock is continuing to go to a discount. The coupon which this would have to carry at the moment, as I pointed out previously, would be about 16.1, and would be rising and likely to rise. The effect of a large issue of Government stock, of gilts, at the moment in the market could be quite serious, and the repercussion effects down the line would be very substantial indeed.
If only the Government would be kind enough to give me some assurance that the estimate that one has made, backed by reasonable information—I said to the noble Lord, Lord Winterbottom, that I could give him some of these figures privately—means that we are not entering into a liability which could exceed £2 billion. I am not talking about the profits, because the profits which may be generated may be well sufficient to fund that kind of financial commitment. But even at those levels, for a national shipbuilding and aviation or aircraft industry that is not a large amount of money by international standards.
I feel it is important that if we are to have a company which, as the noble Lord pointed out, will be competing with the private sectors in the world, then it should be financially sound, properly constituted, and required to make, subject to the rider on commercial secrecy, which is already in here, proper financial returns, because, as has been made clear, it will have to borrow. It may seek to borrow without a Treasury guarantee. If it seeks to borrow without a Treasury guarantee and wishes to borrow abroad—and it may have to do
1296
this at the moment because of the differential in interest rates, whether or not it is desirable—it will have to disclose the kind of information that is asked for here. I hope that the noble Lord can give us some reassurance on costs because many of us on these Benches, particularly those of us with financial backgrounds, are concerned about the amateur approach to the financial structure of these industries. I think that the noble Lord would do well, in pursuing the same theme as the noble Baroness, Lady Ward of North Tyneside, to bear in mind Macaulay, which was something like:
"The reluctant obedience of distant provinces generally costs more than it is worth."
4.27 p.m.
Lord CARR of HADLEY: My Lords, I do not think that the Ministerial reply we have had to the Amendment is good enough. It sets a standard—and I am sorry to say this—which is lower than Parliament has a right to expect. I have great sympathy for the noble Lord, Lord Winterbottom, and indeed for the noble Lord, Lord Melchett, and others, because they are not Ministers in the Department involved, and anyone who has had experience as a Minister, at whatever level, knows that it is difficult enough to manage these matters if one is actually a Minister within the Department involved. I can imagine, although I have not experienced, the terrible difficulty there must be in conducting the Bill as a Minister from outside the Department.
But I think that the brief which the noble Lord, Lord Winterbottom, was given was grossly inadequate. It did not show the seriousness which Parliament has a right to expect. It appeared to pay no account to the debates on an exactly similar subject which we had in July on the Iron and Steel Bill. Clearly it was based almost entirely, as its main defensive point, on the question of commercial interest which, as I had to point out to the noble Lord, we had thought of and had specifically covered in the wording of the Amendment. I really do not believe that the Department can seriously have taken the trouble even to read the Amendment; otherwise it could not have put up that brief. I am sorry to use harsh words—
Lord MELCHETT: My Lords, that is a little harsh. If the noble Lord

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will look at Hansard, he will see that my noble friend, just before the noble Lord intervened when my noble friend was making a speech, explicitly stated that those words appeared in the Amendment and stated what effect we thought they would have. So the noble Lord can criticise the effectiveness of our reply, but I ask him to withdraw the allegation that we have not even bothered to look at the Amendment. We certainly have.
Lord CARR of HADLEY: I will certainly withdraw that particular remark which I would not have used—and I am sorry to have used it—had I not felt very strongly that we have had a most unsatisfactory reply to the Amendment. I do not believe that the reply has come to grips with either the terms of the Amendment or the arguments used to support it. The reply really does not even equal the assurance which the noble Lord, Lord Melchett, gave us in debates on the Iron and Steel Bill back in the summer. In order to accommodate the Government we were prepared to accept then a verbal assurance and not to press for its inclusion in the Bill. But it is treating us rather ill, when there has been plenty of time, that some months later we should have to be content not only with another verbal assurance but with a verbal assurance lacking in the precision and universality which the noble Lord gave to Parliament on that occasion.
I do not believe that this is an area in which we should be moving back. I am sorry if I used harsh words; I apologise genuinely for that. I would not have used them if I had not felt rather angry, I am afraid, at the way this matter has been dealt with. It is not good enough, for example, for the noble Lord to tell us that of course the Secretary of State would normally give such information, at least in the debate, when Parliament was being asked to agree to the order. One of the major points we made on the Iron and Steel (Amendment) Bill back in the summer, both in another place and here, was that that is too late. The Affirmative Resolution procedure is carried through in a single debate in a single day. It usually lasts only an hour or two at the most, or if it is very important a whole day. But usually it takes much less than a whole day, at the end of which one has to vote for something
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as it stands or against something as it stands, with no possibility of amendment. It is much too late to form a judgment to vote either for it or against it—which is the only option one has—when one is given the necessary information to form one's judgment only in the course of the debate.
I am speaking from memory, but what led me to he satisfied with the assurances given by the noble Lord, Lord Melchett, back in July, was not only the nature of the information which he assured the House would be given but also the fact that he assured us that Parliament would be given it in advance of the necessary debate. I would say to your Lordships that that is the absolute minimum with which Parliament ought to be satisfied.
In this particular case we are dealing with companies which are about to go into these Corporations and which are at this moment subject to prospectus requirements. We are not asking that in future they should be subject to any disciplines of disclosure to which they are not already subject. The Government are saying to us that once these companies become nationalised they should be subject to less discipline of disclosure than they are subject to at the moment, and I believe that that is an unacceptable proposition. I cannot see why when a particular day comes and these companies become companies within a nationalised Corporation, a nationalised holding company, rather than subsidiary companies within a private sector holding company, the duties of disclosure upon them when they want more money should be automatically reduced as compared with what they are at the moment. If the British Aircraft Corporation and Hawker Siddeley, which have to operate in this international competitive market at the moment, can do so successfully and have to meet these disciplines of disclosure, why on earth should not the nationalised Corporations also be able to operate successfully and be subject to precisely the same—no more—disciplines of disclosure?
It is simply not good enough 2nd I am afraid I must ask your Lordships to divide on this Amendment. I can only say to the Government that if they believe that the wording is in any way too rigid they have an opportunity when we come to Third Reading to make that wording a little less rigid in order to meet their requirements. I hope your Lordships will

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believe that it is right that we should insist that these companies in future must submit to the same disciplines that they have already proved able to submit to successfully at present and in the past.
4.34 p.m.
On Question, Whether the said Amendment (No. 87) shall be agreed to:
Their Lordships divided: Contents, 152; Not-contents 70.

CONTENTS

Aberdeen and Temair, M.

Ferrers, E.

Munster, E.

Amherst, E.

Ferrier, L.

Newall, L.

Amory, V.

Fraser of Kilmorack, L.

Northchurch, B.

Ampthill, L.

Gage, V.

O'Hagan, L.

Amulree, L.

Gainford, L.

Orr-Ewing, L.

Arran, E.

Gladwyn, L.

Penrhyn, L.

Avebury, L.

Gore-Booth, L.

Platt, L.

Balerno, L.

Goschen, V.

Rankeillour, L.

Banks, L.

Gray, L.

Redesdale, L.

Barrington, V.

Grey, E.

Reigate, L.

Belhaven and Stenton, L.

Gridley, L.

Robbins, L.

Belstead, L.

Grimston of Westbury, L.

Robertson of Oakridge, L.

Berkeley, B.

Hailsham of Saint Marylebone, L.

Rochdale, V.

Blake, L.

Rochester, L.

Boothby, L.

Halsbury, E.

Ruthven of Freeland, Ly.

Boyd of Merton, V.

Hampton, L.

Sackville, L.

Brentford, V.

Hankey, L.

St. Aldwyn, E.

Bridgeman, B.

Hanworth, V.

St. Davids, V.

Brock, L.

Harding of Petherton, L.

St. Just, L.

Brookeborough, V.

Hawke, L.

Saint Oswald, L.

Byers, L.

Hives, L.

Sandford, L.

Caccia, L.

Hunt, L

Sandys, L.

Campbell of Croy, L.

Hylton-Foster, B.

Selkirk, E.

Carr of Hadley, L.

Inverforth, L.

Selsdon, L.

Carrington, L.

Ironside, L.

Sempill, Ly.

Cawley, L.

Jessel, L.

Sharples, B.

Chalfont, L.

Kemsley, V.

Simon, V.

Chelwood, L.

Kimberley, E.

Spens, L.

Clancarty, E.

Kings Norton, L.

Stamp, L.

Clwyd, L.

Kinloss, Ly.

Strang, L.

Cobham, V.

Kinnaird, L.

Strathcarron, L.

Cork and Orrery, E.

Lauderdale, E.

Strathclyde, L.

Cornwallis, L.

Lloyd, L.

Strathcona and Mount Royal, L

Cottesloe, L.

Lloyd of Kilgerran, L.

Strathspey, L.

Craigavon, V.

Long, V.

Sudeley, L.

Cromartie, E.

Lothian, M.

Tenby, V.

Cullen of Ashbourne, L.

Lucas of Chilworth, L.

Terrington, L.

Daventry, V.

Lyell, L.

Thurso, V.

De Freyne, L.

McNair, L.

Todd, L.

Denham, L. [Teller.]

Mancroft, L.

Trefgarne, L.

Derwent, L.

Mansfield, E.

Tweedsmuir, L.

Drumalbyn, L.

Margadale, L.

Vickers, B.

Dundee, E.

Marley, L.

Vivian, L.

Eccles, V.

Merrivale, L.

Wade, L.

Effingham, E.

Mersey, V.

Ward of North Tyneside, B.

Ellenborough, L.

Molson, L.

Ward of Witley, V.

Elles, B.

Monck, V.

Westbury, L.

Elliot of Harwood, B.

Monckton of Brenchley, V.

Winstanley, L.

Emmet of Amberley, B.

Mottistone, L.

Wise, L.

Exeter, M.

Mowbray and Stourton, L. [Teller.]

Wolverton, L.

Falmouth, V.

Yarborough, E.

NOT-CONTENTS

Allen of Fallowfield, L.

Caradon, L.

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

Aylestone, L.

Castle, L.

Bacon, B.

Champion, L.

Fisher of Rednal, B.

Birk, B.

Collison, L.

Gordon-Walker, L.

Blyton, L.

Cooper of Stockton Heath, L.

Hale, L.

Bolton, L.

Davies of Leek, L.

Hamnett, L.

Brimelow, L.

Davies of Penryhs, L.

Harris of Greenwich. L.

Brockway, L.

Donaldson of Kingsbridge, L.

Henderson, L.

Burntwood, L.

Douglass of Cleveland, L.

Houghton of Sowerby, L.

Kaldor, L.

Peart, L. (L. Privy Seal.)

Stow Hill, L.

Leatherland, L.

Phillips, B.

Strabolgi, L.

Lee of Newton, L.

Popplewell, L.

Summerskill, B.

Llewelyn-Davies of Hastoe, B.

Raglan, L.

Taylor of Mansfield, L.

Lloyd of Hampstead, L.

Rhodes, L.

Vaizey, L.

Lovell-Davis, L.

Ritchie-Calder, L.

Wall, L.

McCluskey, L.

Rusholme, L.

Wallace of Coslany, L.

MacLeod of Fuinary, L.

Russell, E.

Walston, L.

Maelor, L.

Sainsbury, L.

Wells-Pestell, L. [Teller.]

Melchett, L.

Shinwell, L.

Williamson, L.

Morris of Grasmere, L.

Slater, L.

Willis, L.

Murray of Gravesend, L.

Snow, L.

Winterbottom, L.

Noel-Buxton, L.

Stedman, B. [Teller.]

Wootton of Abinger, B.

Oram, L.

Stewart of Alvechurch, B.

Wynne-Jones, L.

Pargiter, L.

Stone, L.

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
4.44 p.m.
Clause 20 [Vesting in British Aerospace or British Shipbuilders of securities of Scheduled companies]:
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendment No. 108:
Page 21, line 30, leave out ("which shall not be before the date of the first meeting of the next Parliament").
The noble Lord said: My Lords, it may be for the convenience of your Lordships if we were to take with this Amendment, Amendment No. 178. If it is not for the convenience of the Government, I will not do that. I must confess that I realised only recently that it would be convenient and would save the time of the House to take these two Amendments together. I can assure the noble and learned Lord that the arguments which I am sure he has been given to deal with Amendment No. 108 will be exactly the same as those which will have been given for Amendment No. 178.
Lord McCLUSKEY: My Lords, may I deal with the question which has been raised, whether we should take the two Amendments together. If the noble Lord, Lord Carr of Hadley, moves Amendment No. 108 it will be the Government's intention to accept it. It follows from that that we need not concern ourselves at this time with the later Amendment. The attitude to that will be explained to the House when we come to it.
Lord CARR of HADLEY: My Lords, that is helpful and I suppose I can see why that is so. I had better explain to the House—even if we are going to take Amendment No. 178 later on—the reasons
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for my moving Amendment No. 108. We have told your Lordships on more than one occasion that reluctantly we do not feel that we can support a Division to remove the aircraft industry from the Bill because we thought that that would be in breach of the basic convention which has been established. Instead, we have moved that the nationalisation of the aircraft industry—I am not talking about the shipbuilding industry—cannot become operative until after the next Election. In Committee, we inserted into Clause 20 the words in line 30 on page 21 which we are now seeking to remove.
At first sight, this may sound odd. I am most grateful to the noble Lord, Lord Melchett, for pointing out out the technical inadequacies of the Amendment which I moved on that occasion. Therefore I am setting the Ministers an example by taking very seriously the words of comment which are made on our Amendments. So wise were the words of the noble Lord, Lord Melchett, on the inadequacy of my original Amendment that I am now removing the original Amendment and instituting another one. Technically, that means removing altogether the words given in Amendment No. 108; but in case any noble friends are concerned about that I should like them to look at the words of Amendment No. 178 concerning what is generally called the commencement clause. Your Lordships will find that instead of this technically inadequate Amendment in Clause 20 we shall be making it quite clear in the later Amendment that an order bringing vesting day about in respect of the aircraft industry cannot be made until after the next General Election.
I do not think I need rehearse all the arguments about this matter again. We made clear in our debates two days ago how strongly we believed that the nation-

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alisation of the aircraft industry is wholly contrary to the national interest. It will lead to less investment, less technical advance, less exports and less employment than would be the case in the future if the industry were left in its present form in private hands. We have made those views very clear indeed. We also believe, on all the evidence which can be accumulated, that to nationalise the aircraft industry is contrary to the wish of the people of this country and also of those who work in the industry.
As to the delay which this would cause, I would point out that it is the Government who have caused delay and uncertainty over the past two and a half years. The further delay, waiting for the next General Election and its result, will he very short indeed compared with the period of delay which has already been imposed by the Government. I therefore have no hesitation in recommending your Lordships to follow this course. This Amendment is a paving Amendment for the later one. I am for the moment drawing back in order to jump the better at a later stage. I beg to move.
The Earl of LAUDERDALE: My Lords, I intervene briefly to welcome the cordiality which gilds our discussions this afternoon. How pleasant it is to have this rapport between the two Front Benches as if they were heavenly twins. No doubt the acceptance of this Amendment by the Government will be followed by the acceptance of others—at least, we hope so, because some of us are getting terribly bored with this Bill. What is boring is hearing the same answers and seeing the same Amendments go down again and again. I was reflecting this afternoon on some of my less happy experiences at university. I sometimes received 5 out of 100 for essays that I wrote, or what was called at my university a "delta double minus". I think that is all some of the Government answers have been worth. This answer has been a very satisfactory one. Let us hope that from now on we shall get good answers, co-operative answers, and the Government's readiness to consider Amendments which are put from this side.
Of course, if this Amendment is thought to lead to some foul contrivance at the end of Bill, that is another matter. But I
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am sure that the noble and learned Lord, Lord McCluskey, who is always so good humoured and the noble Lord, Lord Melchett, who is also good humoured, will respond to the general air of good will that now subsists between the two Front Benches, and that we shall see them throughout the rest of this Bill accepting our Amendments from time to time—not every one, of course—because, if so, they will get more and more co-operation from our side.
Lord MELCHETT: My Lords, I think we should be even more good humoured if the noble Earl would be good enough to acknowledge that this is not the first Amendment we have said we are willing to accept this afternoon. It may be that the noble Earl has not been here all the way through the proceedings—I know he has accused me before of not noticing him when he has been here—but I think we have been proceeding very well this afternoon and it would keep everyone good humoured if the preceding acceptances, as well as this one, were acknowledged. There is also the fact, of course, that we are going to accept this particular Amendment, as my noble friend has already said. When we come to the later ones, it may be a different matter.
Lord McCLUSKEY: My Lords, perhaps I might say to the noble Earl that I have spoken only twice this afternoon and on each occasion I have accepted an Amendment.
The Earl of LAUDERDALE: May I just say, by leave of the House, that that is what I find so agreeable and so acceptable today.
Clause 22 [Certain loans from associated persons to be treated as securities]:
4.53 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 110:
Page 24, line 6, after ("not") insert ("or persons none of whom was").
The noble Earl said: My Lords, Amendment No. 110 enables us to get back to what we were discussing at Committee stage and, by leave, I should like to speak to Amendments Nos.110 and 111 together. The fact is that nowadays

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companies very often follow the practice of borrowing their money from consortia rather than from individual lenders. At Committee stage we pointed out that one of the problems could be that if money is borrowed from an individual, it is considered to be equity and to be treated as such, and therefore must be valued at a certain date as if it were redeemable immediately. In that way, it would attract a lower rate of compensation than money which is borrowed from a consortium. The noble Lord, Lord Kirkhill, tried to point out to us when replying that there was no real need for worry because the singular included the plural and that where "lender" is referred to in fact the word means "lenders" as well. But I asked the noble Lord whether he would be kind enough to look at the point again and to make quite sure there was no flaw—and here I am referring to col.1094 of the Official Report—because, although there is nothing between us here and what we are worried about has been covered, this point is one of substance now that funds are frequently borrowed from consortia.
I do not think that the issue to which the noble Lord, Lord Kirkhill, addressed himself in his reply was in fact the one I was concerned about. He said that "lender" would cover "consortia", but the point I was trying to make was that if a company borrows from an individual the risk is greater than if he were borrowing from a consortium. Therefore, for compensation purposes it could well be that the money borrowed from an individual, where it is to be regarded as equity, could attract a lower rate of compensation than if it were borrowed from a consortium. If I may give an example, a subsidiary company very often borrows money from the parent company and it may well be that it could borrow something like £20 million. If that were so and if the money were to be treated as coming from an individual lender, in fact it would carry a very much greater risk than if that sum had been borrowed from a consortium of, say, 10 different banks. In this part of the Bill, money that is borrowed, even though it is to be borrowed from a parent company, is to be treated as though it were borrowed from outside. I think the noble Lord, Lord Kirkhill, failed to answer the point that if the money was to be borrowed from
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a consortium it would in fact attract a higher rate of compensation than if it were borrowed from an individual lender. That is the reason why I put down this Amendment again, and I should be very grateful if the noble Lord, Lord McCluskey, could explain the Governments view on this matter. I beg to move.
Lord SELSDON: My Lords, I do not think that my noble friend and I feel very strongly about this Amendment. The reason it is down again is not so much that the Government partly failed to satisfy us at Committee stage but rather so that there should be no doubt about it. Therefore, I should like to ask the Government for a few words of comfort so that those who may be lending money may feel completely reassured.
One of the concerns that we have about this Bill is that all too often the Government say: "This could happen, but it is unlikely." The whole object of law is to be precise and I think we are being fair in our criticism that many aspects of this Bill are not precise. So all I would ask the noble Lord to say is that those who are borrowing money at the present time need have no cause for concern because they will be paid and there will be no problem about anomalies which could be related to that. I think it is important, in view of the impreciseness of many aspects of the Bill, that there should be no concept of any form of reneging whatever, or that any lender should be adversely affected in any way. I know there is a splendid Victorian Bill which declares that "masculine" shall be "feminine". That, of course, is perfectly acceptable in most Acts and would be acceptable for this legislation; but if the Government could give a few words of comfort it is important that they should be on the record.
Lord McCLUSKEY: My Lords, if I may, in the absence of my noble friend Lord Kirkhill, reply to the Amendment moved by the noble Earl, Lord Ferrers, the Government's attitude to this Amendment has already been explained. Whatever the purpose or motive behind it, the Amendment does not achieve anything that is not already achieved by the application of the section in the Interpretation Act 1889. No Amendment is necessary to cover the point because,

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under the Act of 1889, unless the Act in question specifies otherwise—and this Bill does not—the singular in an Act of Parliament subsumes the plural. Thus the reference to "person" and "lender" in Clause 22 means "persons" and "lenders" in the plural, and so the provisions may be applied accordingly.
In reply to the point that the loan may have been made by a consortium, I am not quite sure who would be in the consortium and whether the noble Earl is envisaging a consortium of one associated person with several non-associated persons, or all associated persons. But if the loan had been made by a consortium of an associated person and some non-associated persons, then it is unthinkable—not just unlikely—that the non-associated persons would have taken no securities in return for their money in a case involving long-term finance. In reply to the noble Lord, Lord Selsdon, I hope I can properly assure him from the Front Bench that there is no question whatsoever of reneging.
Earl FERRERS: My Lords, I am afraid that, not surprisingly, I did not make the point as clearly as I should have done. Under Clause 22(1),
"… the Secretary of State may, at any time within the period of 9 months beginning on the date of transfer, serve a notice on the person to whom the debt is owed stating that, in the opinion of the Secretary of State, the right to repayment of the debt should be treated as a security of the acquired company".
So where there is a debt the Secretary of State can say, "This should be treated as a security". I have in mind the situation where a subsidiary borrows from a parent company. Paragraph (b) of subsection (1) states quite clearly that such borrowing from a parent company should be treated as if it were a borrowing,
"from a person who was not an associated person, the terms of the provision of that money would have been likely, assuming the debtor not to be the subsidiary of any company, to be such as to require the issue to the lender by the debtor of securities".
The point which I hope the noble Lord can think about yet again—and I believe that is important—is that if a company were to make a borrowing from a single lender, the terms might be more onerous than if the borrowing were from a consortium. It may well be that if a consortium
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of people were prepared to put forward the appropriate money, because 10 banks were involved, their conditions might be less onerous than if there were a single lender. A single lender might say, "I will lend this amount of money, but it must be out for a long time", whereas a consortium might not impose such rigorous conditions. If an individual lender said, "If I am going to lend that amount of money, it has to be out for 15 years", it is possible that that sum would come within Clause 22. But if, on the other hand, the borrowing came from a consortium which was quite happy to have a shorter term, then it would not come within Clause 22. Therefore, depending on whether the borrowing was from an individual or from a consortium, the compensation payable could be of a different nature.
I realise that this is something which it is a little difficult to ask the noble and learned Lord to answer immediately across the Floor of the Chamber, because it is a complicated point. He was quite right in saying that the singular embraces the plural, but the fact that the plural is a possibility might make the financial provisions different from what they would be in the case of the singular, and that is why I put down the Amendment again. If the noble and learned Lord wishes to have leave to answer that point, I am sure that the House will give it. But if he does not, then I shall be quite happy for him to write to me.
Lord McCLUSKEY: My Lords, by leave of the House, may I direct attention to the subsequent provisions which will be contained in this clause if it is amended? They are really a redraft of provisions which are presently contained in the clause as it now stands. As I understand it, what we are talking about are the facts that determine whether or not a debt is deemed to be a security. We are not determining the terms on which that security is deemed to have been issued. The security will be deemed to have certain terms. That is a matter which one hopes will be determined by agreement, or failing agreement, by arbitration. That is why paragraph (b) in Amendment No. 115 states:
"on what date and terms and for what consideration any such security should be treated for those purposes as having been issued by the acquired company."

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Although I will, of course, think more about it, it appears to me at the moment that that is the answer to the point which the noble Earl has asked me to consider.
Earl FERRERS: My Lords, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.9 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 113:
Page 24, line 10, leave out ("within the meaning of section 19(5) above").
The noble and learned Lord said: My Lords, with leave, I would take Amendments Nos.113, 114, 115 and 116 together, and would inform your Lordships that there are other Amendments which are consequential upon them. The consequential Amendments are Nos.121, 122, 131, 138, 150, 159 and 161. This large group of Amendments arises directly out of discussions which we had in Committee on Clause 22. It became clear during those discussions that the drafting of the clause would benefit from some clarification and these Amendments seek to achieve this result.
There are two principal points which the Government Amendments Nos.113 to 116 inclusive seek to achieve. First of all, following discussions in Committee on Amendments Nos.126 and 128 the Amendments which are made here, Amendments Nos.113 and 122, clarify the meaning of "securities" for the purpose of the clause. Secondly, Amendment No. 115 simplifies the arbitration process. Under the clause as drafted, there are three possible points of arbitration: first, the point where the debt is identified; secondly, the type of security, and thirdly the value of the security. The Amendment combines the first two so that. settlement may be reached more quickly. This is in everybody's interests.
The remaining Amendments to Clause 22 are merely drafting changes which arise as a direct consequence of the Amendments which I have mentioned specifically. Similarly, the Amendments which I have described as consequential, the Amendments to Clauses 26, 31, 37 and 40, follow as a drafting consequence to the Amendments proposed to Clause 22. I hope that as a result of these Amendments, which
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involve no change of policy, noble Lords will now feel that the purpose and intent of Clause 22 is clearer. I beg to move.
5.12 p.m.
Lord SELSDON: My Lords, noble Lords opposite will know the considerable exception which we take to Clause 22 as a whole and will forgive me if I spend a moment upon it. As we know, the question of intercompany loans will vary from one company to another and has such an intangible basis that in no way should these loans be considered in relation to the question of the valuation of the companies concerned. It is totally against all accounting practice. In the case of any private sector acquisition, normally it would be a matter for valuation by independent authorities.
One of our concerns, which relates also to Clauses 36 to 38 and the whole question of compensation to which this clause indirectly refers, is that we do not like the way in which the clause is structured, nor do we like its content and the implications behind it. Your Lordships will be aware that the question of the relation-ship of a subsidiary to its parent is variable and depends upon the type of business that the subsidiary may be doing, its location, its general sphere of operations, its financial position, the domestic or international borrowing of the company and the level of interest which may be charged by the parent to the subsidiary.
We are concerned about the fact that the Government are trying to legislate on something for which no legislation can be fair. That said, in the Amendments that the Government have put down we have seen the first real sign that they are prepared to listen to those people who are more qualified and better able to judge the implications than are their own advisers. In fact, if the Government had consulted the private sector regarding the drafting of the Bill, they would have avoided many of these anomalies. Therefore, from a purely technical point of view one welcomes the Amendments that the Government have proposed because they go some way towards resolving certain of the difficulties, intangibles and doubts which this clause will create. Therefore, I support the Amendments, although should not like noble Lords opposite to feel that I support in any way the contents of Clause 22.
Earl FERRERS: My Lords, like my noble friend, I am very grateful to noble Lords opposite for having gone at least some way towards making this clause clearer, although, as my noble friend Lord Selsdon has said, we do not like the clause. However, the Government have been kind enough to try to meet some of our points. The noble and learned Lord, Lord McCluskey, has said that certain Amendments arc consequential, but when we come to Amendment No. 38 I should be grateful if he would not move it formally because I have something to say upon it. I should also draw the attention of the House to the fact that there is a misprint in Amendment No. 115. The last line of paragraph (a) says:
"… or by whose wholly owned subsidiary the debt is owned,".
I think it ought to say "owed" rather than "owned". I draw the attention of the noble Lord to that point, although I do not think that it is of great importance.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 114:
Page 24, line 15, after third ("the") insert ("whole or part of the").
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 115:
Page 24, line 23, leave out from ("Where") to ("as") in line 34 and insert ("a notice has been served under subsection (1) above, the questions—

(a)whether the right to repayment of the whole or part of the debt ought to be treated for the purposes of vesting and compensation as a security of the acquired company by whom or by whose wholly owned subsidiary the debt is owned, and

(b) on what date and terms and for what consideration any such security should be treated for those purposes as having been issued by the acquired company,

shall be settled by agreement between the Secretary of State and the person on whom the notice was served within the period of 3 months beginning on the day on which he was so served or, in default of such agreement, by arbitration under this Act.
(4) If the arbitration tribunal are satisfied that the right to repayment of the whole or any part of the debt in question ought to be treated").
The noble and learned Lord said: My Lords, I beg to move Amendment No. 115. I acknowledge the error which the noble Earl Lord Ferrers, has pointed out.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 116:
Page 24, leave out from beginning of line 39 to ("for") in line 40 of page 25 and insert—
("(5) If, by reason—

(a) of an agreement under subsection (3) above, or

(b) of the revocation or amendment of a notice under subsection (4) above,

the right to repayment of the debt or of any part of it does not fall to be treated as a security for the purposes of vesting and compensation, subsection (2) above shall to that extent cease to apply on the date of the agreement or the date when the notice is revoked or amended.
(6) If—

(a) the parties have agreed under subsection (3) above that the right to repayment of the debt or of any part of it ought to be treated as a security, or

(b) the arbitration tribunal confirm the Secretary of State's notice as respects the right to repayment of the debt or any part of it,

the right which falls to be treated as a security shall vest in the relevant Corporation on the operative date of the notice as a security of the acquired company issued to the creditor on such date and terms and for such consideration as have been determined by agreement or arbitration under subsection (3) above and be treated as such a security—

(i) for the purposes of section 20 above, and

(ii) subject to subsection (7) below, for the purposes of any provision of this Part of this Act relating to compensation for securities or the issue of securities.

(7) A right to repayment shall not be so treated").
5.18 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 116A as an Amendment to Amendment No. 116:
Line 11, at the end insert—
("and the person to whom the debt is owed shall be entitled to claim from the relevant Corporation such compensation as the arbitration tribunal shall determine in respect of the loss suffered by him by reason of the application to that extent of the said subsection (2).").
The noble Earl said: My Lords, here we are dealing with a situation where the Secretary of State can serve a notice on a parent company in respect of a loan to a subsidiary requiring that loan to be treated as a security, thereby lowering its value. If the Secretary of State serves such a notice and the company thinks that this is unfair—that it should be treated not as a security but as a loan and therefore should be repayable in full—the

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company can go to the arbitrator, and two years later the arbitrator may say that the Secretary of State was wrong and that it should have been regarded as a loan, not as a security. We put down the Amendment at the Committee stage and I withdrew it after the noble Lord, Lord Kirkhill, said that he would write to me. The noble Lord was kind enough to consider the point and to write to me, and the relevant paragraph of his letter says this:
"I also undertook to write to you in connection with Amendment No. 127. Again we see no need for such an Amendment. Clause 21 will only be applied in relation to debts incurred before the 28th February 1974. Generally they will be of longer standing. During the period in which the debts have been outstanding it is clear that the lender, normally the parent company, has been content to let the position rest. As long as the money has remained tied up in the subsidiary it must be assumed that the parent has had no other use for it and did not regard the debt as giving rise to a loss.
"the fact that the Secretary of State serves a notice with respect to that debt, thereby formally freezing its repayment, does no more than continue the situation which has existed in any case for a number of years. The service of a notice, even if it is subsequently revoked or withdrawn, does not in any way alter the potential loss situation which existed before nationalisation."
That is the end of the particular quotation from the letter of the noble Lord, Lord Kirkhill, that I wish to make.
It is all very fine for the noble Lord to assume that if a parent company lender has been content to let the position rest it had no other use for the money and that it did not regard the debt as giving rise to a loss. Of course if the parent company had lent the money to an outside company it would have been able to obtain interest on that money. Lending it to a subsidiary it gets no interest, and it is true that the situation might have been acceptable to a parent company while the borrower remained its subsidiary, because the object of lending the money in the first place was to provide the subsidiary with funds so that it could earn profits which in due course would benefit the lending parent company.
As soon as the Bill becomes law that situation abruptly ends and the parent company will receive neither interest nor the benefits of the profits which that money might have engendered from the subsidiary. The money that was lent has therefore virtually become dead money especially if, as is likely, it carries no interest and the parent company will be
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most likely, from that point on, to suffer loss as long as its repayment is frozen by a notice served by the Secretary of State under Clause 22. It is this loss which this Amendment seeks to ascertain and to recompense in certain circumstances. In fact one is really saying that if this loan is frozen by the Secretary of State the parent company gets no benefit from that loan, no benefit from the interest on it and no benefit from the profits.
In the circumstances where the company thinks this was an unjust decision we will take it to the arbitrator End if the arbitrator, after having discussed it, says that in fact the Secretary of State was wrong and this should not have been regarded as a security but as a loan and therefore should have been repayable earlier—that the Secretary of State has been shown, for the best of reasons, to have made an error—it seems only right that the company should be recompensed for the interest on that money which they would have had and which, by the freezing of the assets, they have not been able to have. It was for that reason that I tabled this Amendment to the Amendment moved by the noble and learned Lord, Lord McCluskey. T beg to move.
Lord SELSDON: My Lords, I, too, must support this Amendment, for one simple reason. We are not living in a static position, and if one is to have this sort of loan frozen for a period of time and we see the tremendous fluctuation, not only in interest rates but also in world liquidity and the ability of people to borrow, there could be circumstances where a company could be severely penalised or handicapped by having finances or loans of this sort frozen for a relatively long period of time. It is a question of what one means when one refers to, "a relatively long period of time". I believe it took eight years to settle the compensation for coal. We are not saying that it may be eight years in this case, but one only has to look at the difference in interest rates over a two year period, if one harks back, and one only has to look at the likely change in the fluctuation of interest rates during the coming months.
Further, if I may put myself in the shoes of noble Lords opposite and those of my noble friends, we are all concerned that

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those who are competent at running productive industries should invest, and invest as rapidly as possible, to take advantage of whatever upturn may come in world trade, if and when it does come, because it is certainly later than we had originally anticipated. Thus, there is an anomaly here that companies could be severely penalised. There is not only the actual fact of the loss which they may incur—or one could argue that if interest rates were to go down at a really dramatic rate, perhaps even a small gain which they could incur—but also the psychological effect of knowing that one has money tied up for an unforeseen period of time without any adequate compensation will certainly be a restrictive factor on the deployment of funds that one may wish to use for other investment.
If we couple this factor with the certain requirement that because of capital gains many companies receiving Government stocks will have to hold those for a year in order to avoid tax, the amount of money that could he taken out of productive reinvestment is very considerable, looked at on a broad front. I am not so much thinking of some of the unsuccessful companies but the more successful ones who could really be penalised. It is not just the simple cost of it but the fear of the delay, and the time that something is frozen and the effect of interest rates on it. One must also look at the likely effect on the borrowing ability of the parent because undoubtedly those who would lend would look at money that might be tied up in subsidiary loans.
I hope the noble Lord will feel that this Amendment is not in any way an attempt to change the structure of Clause 22 but rather to add something which will enable one to benefit from it and certainly to clarify the position. I think if he has not been involved with companies which may be going into liquidation or which are under blight or in limbo for a period of time, he may not appreciate how very disconcerting it is to have money tied up in this way without any knowledge that one could be recompensed in the end if things went wrong. I hope the noble and learned Lord will bear that in mind and will speak to his right honourable friend in another place about it.
Lord McCLUSKEY: My Lords, plainly noble Lords who have spoken to this
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Amendment understand fully what Clause 22 is intended to achieve, but for those who have not spoken and perhaps have not studied it as fully, I might just give a word of explanation before I turn to answer what was said about the Amendment. The clause provides for certain inter-company debts which have the nature of securities, to be treated as securities for the purposes of vesting and compensation. The clause, as a matter of machinery, provides for the Secretary of State to serve a notice in relation to any debt in existence at the date of transfer, stating that it will be treated as a security, and such a debt will, if the notice is confirmed—and that is done either by agreement or by arbitration—be valued in the same manner as all other securities which vest under the Bill. I must tell noble Lords that this point which has been spoken to by the noble Earl, Lord Ferrers, has been given due consideration, but I regret that for the first time this afternoon I have to adopt a negative attitude and say that I am unable to accept this Amendment.
The basic answer is that the Government do not consider that as a result of the service of the notice there will be any prejudice. Perhaps I may formulate that in three ways. First, the Secretary of State will not use his powers under Clause 22 indiscriminately. If he decides to serve a notice with respect to a particular inter-company debt it will be only after very careful consideration of all the factors affecting that debt, and in such circumstance that there will be little doubt that the debt should be treated as a security.
Secondly—and this perhaps is in response to the point made by the noble Lord, Lord Selsdon, about time—it is the intention of the Government that there should be the minimum of delay in settling any question as to whether a debt should be treated as a security. Indeed at a later stage in connection with another Amendment I shall be saying to your Lordships that the Secretary of State hopes to serve these notices on or about the first date when they can be served. Given the Secretary of State's intended use of the provision, it is not likely that any significant loss would fall to the creditor. But we see a danger that if the Bill were to provide for the payment of compensation in respect of rights to repayment temporarily taken away but subsequently

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restored, then there could just be a positive incentive to creditors to delay settlements so as to maximise the claim for compensation.
My Lords, on the third point I really need not elaborate, because it is the one contained in the passage from the letter which the noble Earl, Lord Ferrers, read. That is an argument which I put forward under the same head of no prejudice. In all the circumstances, I would ask noble Lords to reject this Amendment.
Lord ROBBINS: My Lords, may I just speak purely as a Cross-Bencher, with no other interest at all? I am quite amazed at the attitude of the Government, first in taking it for granted that it is a suitable thing that the power of deciding whether a debt should be decreed as a security, which I should have thought was certainly a matter for judicial rather than political decision, should be trusted to the Secretary of State; and secondly, that if it should prove on appeal to arbitration that the Secretary of State has made a mistake, the mistake should not be compensated for. To me, that seems to be almost the nadir of the arguments advanced in connection with the finances of this Bill.
Earl FERRERS: My Lords, I find myself wholly in sympathy with the noble Lord, Lord Robbins. This seemed to me such a small Amendment, one that could be justified simply on the rare occasion where the Secretary of State had made a mistake, even though that mistake were made with the best of intentions. The noble and learned Lord, Lord McCluskey, said that the Secretary of State will not serve a notice indiscriminately; he will go through all the facts and so on, and it is only when he has the facts and is quite certain that he is right that he will then serve the notice. I have no doubt that he may well be right, but what is the point of an arbitrator? The only point of an arbitrator is if one may dispute. If a case goes to an arbitrator and the arbitrator says, "Well, as a matter of fact you were wrong"—there is nothing in the Bill to stop the company from going to the arbitrator on the notice of the Secretary of State; they can go to the arbitrator, and he can say that the Secretary of State is wrong.
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The only point of this Amendment was to say that in the unlikely occurrence that the Secretary of State was wrong, why should the company be penalised? Why should they not be entitled to be reimbursed because the Secretary of State made an error? The noble and learned Lord said. that the Secretary of State will serve notices on the first day that he possibly can, which is understandable. But if he can serve notices so quickly, is the noble and learned Lord quite certain that he will have had time to make sufficient inquiries so that he cannot possibly make a mistake? It seems to me that if the Secretary of State is going to make service of the notices as soon as possible, there is a possibility that there may be an error.
All this Amendment does is to say that if there is an error, then the company should have recourse to compensation. I find it such a small point and yet one of such obvious justice that I should have thought that the noble and learned Lord could have accepted it. I still wonder whether he could not accept it. I still wonder whether he would be prepared even to look at it. He knows I cannot oblige the noble and learned Lord and break the rules of the House by making another speech, but I should be happy to give way if he could make such an obvious amendment in justice. But if he feels that he cannot—and he is not giving much indication—I must say he is spoiling his track record. The noble and learned Lord has spoken three times and has accepted two Amendments, and now he has refused to accept this Amendment, which really would embarrass the Secretary of State not one iota. The noble and learned Lord prefers to remain seated. I can only say that I shall have to withdraw my Amendment.
Amendment to the Amendment, by leave, withdrawn.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 121:
Page 26, line 4, leave out ("or subsection (7)(a)").
The noble and learned Lord said: My Lords, I beg to move Amendment No. 121.
5.37 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 121A:
Page 26, line 12 at end insert—
("( ) If the terms on which a security is to be treated under this section as having been issued include any charge on assets of the acquired company subsection (5) of section 39 below shall not apply for the purpose of determining the base value of that security.")
The noble Earl said: My Lords, we will try the noble and learned Lord again and hope that he will get back to his usual accommodating form, because this is a similar but not the same Amendment, and refers to the same Part of the Bill. It refers also to an Amendment which I moved at the Committee stage. I withdrew the Amendment because the noble Lord, Lord Kirkhill, said he would be kind enough to write to me. The noble Lord, Lord Kirkhill, was kind enough to write to me, and in his letter he said:
"During our discussions in the Committee on Amendment No. 129 to Clause 21 of the Aircraft and Shipbuilding Industries Bill, I undertook to look again at what you said about the cancellation of charges on debts treated as securities. Having considered the points raised in the debate, we remain of the opinion that no amendment is necessary. Clause 21, as you know, provides for inter-company debts other than those of a generally short-term nature like bank overdrafts not covered by a form of security to be treated as if they were securities for the purposes of the Bill's vesting and compensation provisions. Any debt treated as a security will be available on the same basis as the type of security it is deemed to represent. The reality of the situation is that most, if not all, debts treated as securities will be debts in substitution for equity share capital. In such cases the question of charges on assets cannot arise. It is for this reason that we consider Amendment No. 129 was unnecessary".
That was a similar Amendment to the one I am moving now.
Of course, it may happen that some debts treated as securities will be debts which would, in the case of an independent company, have been represented by equity share capital instead of loans by the parent company. It certainly cannot be predicted in advance that all debts which under Clause 22 are to be treated as securities will be treated as equity share capital. Indeed, the noble Lord, Lord Kirkhill, admitted as much in the paragraph of his letter which I have just read, in which he said that most, if not all, of such debts would be treated in this way. The clear inference is that not all could
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necessarily be treated in such a way. The principle on which Clause 22 is based is that you have to look at a debt owing by an acquired company, for example, to its parent company and then decide whether, if the borrower were an independent company instead of a subsidiary, the raising of that same amount of money would have required it to issue securities to the lender and, if so, what type of securities those would have been. Where the money lent to the parent is of long standing and where there is a strong case that the debt should be treated as a security it may possibly be appropriate for the notional security to be regarded as equity share capital.
On the other hand, it is much more likely that the lender would, if he were lending to an independent company, have required a debenture with the benefit of a charge on assets. After all, the equity capital is risk capital and lenders do not commonly take risks where they can be avoided. Therefore, in my view Amendment No. 121A is necessary to ensure that if a debt is treated under Clause 22 as a debenture with the benefit of a charge, making it therefore more valuable for compensation, the benefit of that charge is not lost when it comes to be valued for compensation by reason of the application of Clause 39(5). I understand that there are companies which could be seriously adversely affected if this Amendment is not accepted. I hope that the noble Lord will be prepared to agree that this is a reasonable Amendment. I beg to move.
Lord McCLUSKEY: My Lords, it may be for the convenience of the House if I were to reply at once because, as the noble Earl will detect from the smile on my face, I am once again in the happy position of being able to accept an Amendment. A similar Amendment was discussed at the Committee stage and my noble friend Lord Kirkhill agreed to look further into the matter. As the noble Earl has said, he did so and wrote the letter which has been referred to. We looked into the matter yet again, both yesterday and this morning, and while we still believe that the problems raised by noble Lords in discussing this matter on a previous occasion and by the noble Earl today are likely to be very much the exception rather than the rule, acknoledging the possibility that some persons

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may be disadvantaged under the existing provision, in principle we accept that this should be put right. I am happy to say that I am prepared to accept this Amendment, subject only to the possibility of some slight improvement in the drafting if it is necessary at a later stage.
Earl FERRERS: My Lords, I am again greatly indebted to the noble and learned Lord. His presence on the Government Front Bench is most encouraging and we hope that he will continue in this happy and mellifluous vein. Perhaps I may be permitted to say that we on this side would not think any less of the noble and learned Lord if he would care to readdress his mind to the previous Amendment which he spoiled his track record by not accepting. If he liked to come back to that one at Third Reading, we should be only too delighted. I was a little disappointed when he said that they had looked at this problem last night and this morning. I thought he was going to say that the cogency of the argument which I put forward had led to their acceptance of the Amendment. However, we are very grateful to him. I am quite certain that there will be only rare cases when these provisions will be required, but in those rare cases I am sure it is proper to put this into the Bill. I beg to move the Amendment.
Lord MELCHETT: My Lords, whatever the reasons we have for accepting the Amendment, I hope that somebody will tell the noble Earl, Lord Lauderdale, who I regret to see is not in his place, that we have been accepting a few Amendments in his absence.
Lord MELCHETT Lord MELCHETT moved Amendment No. 122:
Page 26, line 12, at end insert—
("( ) In this section—
"operative date" in relation to a notice means—

(a) where paragraph (a) of subsection (6) above applies, the date of the agreement,

(b) where paragraph (b) applies, the date of confirmation of the notice by the arbitration tribunal; and

"securities" has the same meaning as in section 20 above.")
Clause 26 [Final payments of dividend and interest]:
5.46 p.m.
Lord REDESDALE Lord REDESDALE moved Amendment No. 130:
Page 31, line 30, at end insert ("and for the purposes of this paragraph there shall be taken into account the largest amounts, if an", approved in the case of those securities under section 25(1)(c)(ii) above, and, in the case of each of those amounts and the amounts approved under section 24(1) above, where the number of days comprised in the final financial period exceeds, or is less than, the number of days comprised in the period of control in respect of which that amount was approved, that amount shall be treated as increased or, as the case may be, reduced by multiplying that amount by the fraction, of which the numerator is the number of days comprised in the final financial period and the denominator is the number of days comprised in that period of control.")
The noble Lord said: My Lords, this is a somewhat technical Amendment. It seems that in the Government's view Clause 26(1)(b) requires payments and dividends to be made in the final financial period, of the same amount that would have been permitted had that period been a period of control, and therefore governed by Clauses 24 and 25. The object of the clause is to secure that dividends will be paid right up to vesting day, even where the accounts for the final period up to vesting day are not prepared until after vesting day. Presumably that is why the provisions are mandatory because these dividends will be paid after the companies have changed hands.
Where the provisions of 26(1)(b) fall short of their intended effect is in the situation where a company has obtained approval under Clause 25(4) to pay higher dividends than the formula based on the lesser of, first, net revenue for the period and, secondly, the dividend paid in the basis financial year, either because there is no basis financial year for some reason or because the formula produces an inadequate result. Where such approval has been obtained in respect of previous periods of control under Clause 24(1), then presumably 26(1)(b) enables that same approval amount to be paid in respect of the final financial period, but that amount is a fixed amount and does not vary pro rata to the length of the period of control under Clause 25(4). The Amendment provides that the amount previously approved should vary pro rata

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if the final financial period is shorter or longer than the period of control in respect of which the approval under Clause 24(1) was given.
Secondly, Clause 26(1)(b) does not appear to be quite clear as to what happens in a final financial period if the Secretary of State has previously approved an amount under Clause 25(1)(c)(ii) in the absence of a basis financial year. The Amendment therefore also seeks to make it quite clear that where such an amount has been so approved, that amount should be able to be used for the purpose of calculating the dividend payable in the final financial period. It is necessary, further, to allow this amount to be varied pro rata if the final financial period is shorter or longer than the period in respect of which it was approved, because once again the Secretary of State will approve an amount only under Clause 25(1)(c)(ii), and the provisions of Clause 25(4) are only effective to provide pro rata adjustments to that amount where it can be related to a basis financial year. There being no basis financial year there can be no such adjustment unless the Amendment is passed. I look forward to hearing the Minister's reply.
Lord MELCHETT: My Lords, I am tempted to ask the noble Lord, Lord Redesdale, to explain it all again. I confess I did not understand very much of what he said. However, I am advised that as a result of discussions at the Committee stage, if not of the very detailed and I am sure accurate explanation which the noble Lord has given us this afternoon, the existing drafting in this part of Clause 26 is not as clear as it might be; therefore I am happy to continue with what I am sure is on the way to being a record number of Amendments accepted on any major Government Bill of this sort by accepting this Amendment, once again subject only to the qualification that we may want to look at the detail of the drafting at a later stage. I am happy to accept the Amendment.
Lord SELSDON: My Lords, I am now at a complete loss. I had spent a little time in trying to work it out, and I made helpful speeches trying to point out to the noble Lord that if the Government did not accept certain Amendments this
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afternoon, if they had behaved in the way I thought they were going to behave, I should have to resign my job. But with the acceptance of this Amendment one can only assume that somehow those arguments have gone home, and I would say to the noble Lord, "Thank you very much indeed." It gives one hope that when we take a complicated subject such as this and present reasoned arguments there is some give and take on the Government side. Had one known that there was this sort of flexibility one might have been tempted to be a little more adventurous.
Lord HAWKE: My Lords, now that the noble Lord has accepted this Amendment it becomes part of his Bill. I wonder whether he could just explain what it means?
Lord MELCHETT: My Lords, with the leave of the House, may I suggest to the noble Lord, Lord Hawke, that he gets together with his noble friend Lord Redesdale and goes through the speech which Lord Redesdale made so cogently and brilliantly to the House. I have no doubt that his noble friend will be able to explain much better than I can the purpose of his own Amendment.
Lord REDESDALE: My Lords, I am grateful for the kind way in which the noble Lord, Lord Melchett, has accepted our Amendment, and doubtless I shall have an opportunity of speaking to the noble Lord later and explaining the Amendment in greater detail.
Lord McCLUSKY: I beg to move Amendment No. 131:
Amendment moved—
Page 31, line 34, leave out from ("were") to end of line 37 and insert ("owed any sums the rights to repayment of which are treated as securities under section 22(6) above, payments of interest which has accrued in respect of them").—(Lord McClusky.)
Clause 28 [Removal of company from companies to be acquired.]
5.53 p.m.
Lord MELCHETT Lord MELCHETT moved Amendment No. 133:

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Page 36, line 28, leave out ("disposes of") and insert ("transfers to any other person").
The noble Lord said: My Lords, with this Amendment I should like to speak to Amendments Nos.135 and 136. These three Amendments to Clause 28 are the direct result of an undertaking given by my noble friend Lord Winterbottom during discussions in Committee on Amendment No. 142. In examining the undertaking which my noble friend gave, it has become clear that the clause as drafted is indeed inaccurate, and I am most grateful to noble Lords opposite for directing our intention towards this inaccuracy. I can say to the noble Lord, Lord Selsdon, that we are always willing to consider all the points made to us—I am delighted that the noble Earl, Lord Lauderdale, is here to hear me say this—and one can always come forward with Amendments, whenever appropriate, to put right errors in the Bill. At present in Clause 28(8)(b)(ii) there is a reference to "the transfer" but there is no previous reference in the subsection to any "transfer" but rather to a "disposal". In the context of "securities" the appropriate word is "transfer" and not "dispose" or "disposal". These three Amendments put the drafting right. I beg to move.
Lord SELSDON: My Lords, the speed with which we are now seeing the Government accept Amendments is exciting, because it encourages one to think that the Government are beginning to understand some of the aspects of compensation. I think we doubted this before. All I would say to the noble Lord, Lord Melchett, is that obviously he is a great reader of Johnson, who said:
"Integrity without knowledge is weak and useless, and knowledge without integrity is dreadful and doubtful".
—or "dangerous and dreadful". I would say, "Thank you once more. I just wish I had known about all this before, because I could have spent more time in the office trying to help the balance of payments.
Earl FERRERS: My Lords, much the same goes for me, too. The noble Lord, Lord Melchett, has been kind enough to say that he agrees that the Amendment we put down earlier and against which his noble friend Lord Winterbottom argued so vigorously was a suitable
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candidate for inclusion in the Bill. I am glad the noble Lord has agreed to this, and I am also glad to hear his unique statement: he said, I think, that this part of the Bill was drafted in error. It almost makes one feel inclined to suggest that the Bill be recommitted, because we have felt that very much of the Bill has been drafted in error. Now that the Government are beginning to see the wisdom of our arguments, it would be nice if we could go over some of them again. This is only a very small Amendment; it means merely that it is not just the disposal that is void but the whole transaction. We are most grateful to noble Lords for the courtesy they have shown in investigating the points that we made at Committee stage and making these Amendments now.
Earl FERRERS Earl FERRERS had given Notice of his intention to move Amendment No. 134:
Page 36, line 31, after ("the") insert ("transaction effecting such").
The noble Earl said: My Lords, this Amendment was put down in order to encourage the Government to put down their own Amendment. I am happy not to move this one.
Lord MELCHETT Lord MELCHETT moved Amendment No. 135:
Page 36, line 31, leave out ("disposal") and insert ("transfer").
Lord MELCHETT Lord MELCHETT moved Amendment No. 136:
Page 36, line 35, leave out ("the transfer") and insert ("it").
Clause 30 [Recovery of assets transferred away.]:
Lord MELCHETT Lord MELCHETT moved Amendment No. 137:
Page 41, line 13, leave out ("its application") and insert ("relation").
The noble Lord said: My Lords, Amendment No. 137 is purely drafting. I beg to move.
Clause 31 [Dissipation of assets by transactions involving holders of securities etc.]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 138:
Page 41, line 38, leave out from first ("of") to end of line 43, and insert ("any sum the right to repayment of which could be treated as a security under section 22(6) above").
The noble and learned Lord said: My Lords, I beg to move Amendment No. 138. This was the one—I would remind the noble Earl—on which he said he might wish to speak. It is in fact, in the Government's view, purely consequential on Amendments Nos. 113 to 116 inclusive.
Earl FERRERS: My Lords, it pains me to get up to speak on an Amendment which the noble and learned Lord has said is consequential, and indeed where the Government have tried to clarify the Bill, but I believe that this Amendment might possibly have recreated a doubt which had already been corrected. Clause 31(1)(e) and Clause 40 both at present refer to the repayment of a debt which would, following the service of a notice under Clause 22, have been treated as a security. The words "would, following the service of a notice" are most important, because they make it necessary to ascertain not only whether the debt could have been so treated but whether in fact it would have been so treated. This involves the same procedure being gone through as required by Clause 22 itself, to ascertain whether a debt ought to be so treated. I venture to suggest that Amendment No. 138—and I think there is a similar one, No. 159—could possibly now obscure the position, by merely referring to a sum the repayment of which could be treated as a security under Clause No. 22. Any debt of a certain nature could, of course, be treated in that v, ay if Clause No. 22 were applied. It is really necessary to go further into the circumstances to find out whether in fact it would be so treated.
I think it is necessary, therefore, at least to preserve the existing words in both Clauses 31 and 40, which make the position clear. The words are in fact,
"would, following the service of a notice under section 22 above, have been"
instead of the words "could be" which the noble Lord's Amendment has in it.
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I realise that the noble and learned Lord might have been slightly taken aback on what is a rather detailed point. If he does not feel—I was going to say "capable", but that would be wholly the wrong word to use—obliged to answer it now, perhaps he would be kind enough to give the point some consideration between now and Third Reading, and if he thinks there is substance in what I have said I am sure that the noble and learned Lord would accept that, and he could always make the appropriate Amendment later on if necessary.
Lord McCLUSKEY: My Lords, my present impression—and it is no more than that—is that the Amendment is all right and achieves the purpose which the noble Earl, Lord Ferrers, has in mind. But I want to be positive, and I shall certainly consider this matter, and if we come to the view that the matter can be clarified in order to give this subsection and this particular paragraph the sense that it ought to have, then we shall certainly take the necessary steps to achieve that.
6.2 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 138A:
Page 42, line 13, after ("if") insert—
("(a) it is a transaction the effect of which is to transfer or grant to any person any property or rights belonging to the company in connection with the business of repairing, refitting or maintaining ships carried on by it other than at a shipyard or other works in which the company had an interest in possession on the initial date, or
(b)").
The noble Lord said: My Lords, I beg to move Amendment No. 138A, and I suggest that it would be for the convenience of your Lordships' House if at the same time three associated Amendments were discussed with it. They are Amendments Nos.140A, 156A, and 177A. These Amendments follow the decision on ship repairing which was taken by your Lordships' House late on Monday evening. First, I should like to eliminate any misunderstanding that appeared to arise between the noble Lord, Lord Melchett, and me in that debate on Monday evening because I was making the general

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point that ship repairing had never, so far as I knew, been proposed by the Labour Party for nationalisation on its own. It had always accompanied shipbuilding. I was well aware that it had appeared in Labour Party documents, but it always appeared there with shipbuilding. If the Labour Party had not proposed that the shipbuilding industry be nationalised, it is perfectly clear that they would not have put forward ship repairing.
I agree with the noble Lord, Lord Melchett, who I think misunderstood what I was saying, when he said that ship repairing was deliberately placed in the Labour Party's proposals. I agree with that, but I suggest that it was only placed there because shipbuilding was there. The assumption that the framers of the Labour Party's policy made three years or more ago was that the two industries had to be treated together because they were closely interrelated, and statements which Ministers have made since then, including in your Lordships' House, seem to confirm that. My contention is that that assumption is wrong; that they are very different kinds of industry, and that in particular over the last 15 years they have diverged rather than drawn more closely together, I hope that I have been able to take the opportunity of clearing up that particular misunderstanding between us. There was not time for it at about a quarter to midnight on Monday evening when the House obviously wanted to get ahead with dividing.
These Amendments are necessary in order that the Bill will be consistent with the decision that was taken on Monday evening to remove the ship repairers from the Bill. There is at least one case where a company is involved in ship repairing as a completely separate business. By chance it is a department of the company and the ship repairing activity is not in a separate company or a subsidiary company, and that is the company of Vosper Thornycroft, where, by historical accident, ship repairing is a completely separate activity but is a department within one company. In order to take independent ship repairing out of the Bill and to remove it from nationalisation it is necessary therefore to make these Amendments. I described them during the Committee stage, so I shall not repeat all that I said then. It is
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part of the neat excision which I suggested on Monday evening that we ought to make in this Bill.
The Amendments would apply to those companies who, on the initial date, carried on business as ship repairers as well as shipbuilders. It will enable them, if they wish—it is permissive; they do not have to—to reorganise their affairs so that their shipbuilding and ship repairing are treated differently. I have mentioned Vosper Thornycroft. In that case the department which carries out ship repairing is entirely separate and autonomous. It has its own managing director, its own accountant, its own labour force, and its own managers, and it is separated geographically on the other side of the River Itchen.
In order to ensure that ship repairing as a whole is treated in the way that we proposed last Monday evening, these Amendments should be made. Then Vosper Thornycroft, if they wished, and any other company in a similar position, will he able to separate their department dealing with ship repairing from the rest of the company. I must point out that this Amendment would not have the effect of depriving the new nationalised Corporation proposed, British Shipbuilders, from having the ship repairing facilities in the companies which they are taking over, or indeed taking on more ship repairing, if they think it necessary, within their own domestic sphere in order to carry out repairs on their own ships. This is part of a neat excision which will take independent ship repairers out of the Bill without causing undue difficulties for the new nationalised Corporation should that Corporation come into existence under this Bill. I beg to move.
The DEPUTY SPEAKER (Baroness Emmet of Amberley): My Lords, the reference to Amendment No. 139 in the Marshalled List is incorrect and should read:
Page 43, line 24, after ("and") insert the words printed in the Marshalled List.
Lord ORR-EWING: My Lords, I should like to speak to this Amendment. The noble Lord, Lord Melchett, has made much of the PA Consultants' Report. I normally carry it around with me, and I have for the last six or seven days in

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these debates, but as I am in danger of rupturing myself by carrying copies of Hansard both from the Commons and this House—
The Earl of LAUDERDALE: And the Manifesto.
Lord ORR-EWING: And the Manifesto. I always carry that, too.
The DEPUTY SPEAKER: My Lords, may I interrupt the noble Lord and apologise to the House. It is Amendment No. 138A.
Lord ORR-EWING: My Lords, I am speaking to Amendment No. 138A. I am glad I anticipated the noble Baroness's ruling.
Lord CAMPBELL of CROY: My Lords, perhaps I could clarify this. I think that reference was made to the following Amendment, and that has now been corrected. We are on Amendment No. 138A, and I do not think that it is incorrectly down on the Marshalled List.
The DEPUTY SPEAKER: No, my Lords, my reference was to the next Amendment.
Lord ORR-EWING: My Lords, I will not delay the House for long on this issue. As I have said, we have had many quotations from the PA Consultants' Report, but I noticed when examining it after the last debate that there was a grave omission; there was absolutely no mention in that report of the ship repairing and shipbuilding facilities in the Southampton area. I am glad to say that this has been picked up—the Minister has referred to it on many occasions—and the trade unions have made representations to the Government because they have felt as acutely concerned as many others about this highly successful company.
I endorse what my noble friend Lord Campbell of Croy said; that despite the arguments that the Government have put forward about there being a commonalty between ship repairing and shipbuilding, I believe that to be the opposite of the truth. I wish to emphasise that they are, in their technologies, time constants and general organisation, diverging rather
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than coming together. The argument has been used that ship repairing had to be included because there was a useful interchange of personnel. Anticipating that argument—the thought that it might come up again—I have been in touch with Vosper Thorneycroft (perhaps the argument will not be repeated after I have stated some figures) and I find that in the last 12 months in the hourly paid employees group, only one in 200 of the group's strength has been transferred, and then for short periods, to work on the ship repairing side. The details are that eight fitters went for one week from Woolston, Southampton; five coppersmiths for four months; 11 electricians for five months; and two polishers for a few days, giving a total of 25 people. Therefore it is hardly right to say that there is a tremendous interchange, that this is a great facility and is a great reason for nationalising ship repairers at the same time as nationalising shipbuilders. I hope, therefore, that this arguemnt which the Government have adduced will not be used again because it does not hold water.
Viscount SIMON: My Lords, I wish from these Benches to support the Amendment. Having decided that ship repairing should be removed from the scope of the Bill, it seems only logical that in regard to those shipbuilding companies which carry on a ship repairing business as a quite separate business within the ambit of their operations—Vosper Thorneycroft has been mentioned and there may be others involved—we should not seek to transfer to British Shipbuilders that operation which, if, purely by chance, the corn pany had decided to make a separate company, it would not have been so transferred. The arguments about the nationalisation of ship repairing have been fully rehearsed and we need not go into them again, but on the basis that we have decided that ship repairing should be left out of the scope of Bill, it seems quite reasonable that in a case such as the one which the noble Lord, Lord Campbell of Croy, explained, some means should be found for leaving them out of the Bill because clearly if no special means were found they would be left in, I think under Clause 5.
Lord MELCHETT: My Lords, this group of Amendments is part of the aim

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of noble Lords opposite to remove ship repairing from the Bill. I have already explained—and the noble Viscount, Lord Simon, referred to the number of times we have discussed this issue—that the Government have a commitment to nationalise ship repairing. These Amendments are, therefore, totally unacceptable to the Government. I have already pointed out that many ship repair facilities and operations are closely integrated with shipbuilding yards. It would be wrong to agree to hive off the ship repairing part of a single company from the shipbuilding part of the same company. That would be breaking up the company's structure to the disadvantage of British Shipbuilders.
Lord ORR-EWING: My Lords, may I ask the noble Lord to deal with the arguments rather than simply saying they are closely integrated? My noble friend Lord Campbell of Croy referred to the total separation across a river of the two sides of shipbuilding and ship repairing, and I referred to the fact that there is only a marginal interchange of personnel. How can the Minister still maintain the argument that they are closely integrated with common facilities?
Lord MELCHETT: The noble Lord, Lord Orr-Ewing, gave an instance of the interchange of labour, my Lords, and although he said that it was marginal, I should have thought it would be very useful to be able to interchange that amount of labour. It may be that when these companies are under British Shipbuilders they will be able to learn rather more than they obviously have been able to learn—if the noble Lord's figures are correct, and I have no way of knowing whether or not they are and, indeed, whether they are representative of the companies that this Amendment would affect—and it may be that more will be learned from the international competitors to which I have drawn attention and that there will be more exchange of labour when that is a sensible and economical use of resources as between shipbuilding and ship repairing.
I do not want to go over all the arguments again because, as I said, we have done that at great length. I repeat that the breaking up of these companies would be to the disadvantage of British Shipbuilders. The companies involved—
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Vosper Thorneycroft, Hall Russell, Swan Hunter Shipbuilders Limited and Robb Caledon—are all shipbuilding companies in this category which carry on ship repairing and shipbuilding in one company. It would be totally illogical and, I believe, extremely difficult to try to hive off the ship repair facilities in those cases where they are so closely integrated with shipbuilding.
As I say, this group of Amendments is totally unacceptable to the Government. However, as the noble Lord, Lord Campbell of Croy, said, we had a vote on the principle involved on Monday evening and I do not intend to waste the time of the House by dividing on each of the subsequent Amendments to which we come, but I reiterate that these Amendments are not acceptable to the Government.
Lord CAMPBELL of CROY: My Lords, I am grateful for the support of my noble friend Lord Orr-Ewing, with his personal knowledge and experience of the industry, who has tonight and on former occasions underlined the entirely different character of the ship repairing industry from shipbuilding. Where the particular company which we have used as an illustration, because it has a large ship repairing department, is concerned, its ship repairing facilities are entirely separate, as I have indicated. The noble Lord, Lord Melchett, mentioned other companies and I would reiterate that this is not an Amendment which requires these companies to hive off ship repairing; it permits them to do so if that seems to them the sensible thing to do in their own circumstances. It is, therefore, an enabling Amendment but it does not oblige companies in different circumstances to hive off their ship repairing activities. As Lord Melchett said, we have been over this ground and at this stage I only wish to add that, after hearing the Government's reply, we see no reason to change our views on this subject.
The DEPUTY SPEAKER: In calling the next Amendment, No. 139, I should point out that it is incorrectly printed. The reference should read
Page 43, line 24, after ("and") insert …."
the words as printed on the Marshalled List.
6.20 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 139:
Page 43, line 24, after ("and") insert ("unless in the case of persons who did not benefit from the transaction the tribunal are satisfied that the transaction was not entered into with a view to defeating the object of any provision made by this Act or (if the transaction was entered into before the passing of this Act) with a view to defeating any provision which might reasonably have been anticipated to be likely to be contained in this Act").
The noble Lord said: My Lords, the House will be grateful to the Chairman for pointing out the error in the references. The Amendment relates to a discussion we had with the noble Lord, Lord Winterbottom, at the Committee stage. What we are once again seeking to do is to point out to the Government that there can be transactions which are entered into in perfectly good faith by directors who are doing what they believe to be their duty. Under the clause as it stands, it is possible for such directors to be descended upon by the Minister and treated in a way that seems unjust. The noble Lord attempted to give us some reassurance during our discussions about this subject at the Committee stage but, on re-reading what he said, the industry was not entirely reassured. Because of the conciliatory way in which noble Lords opposite have been dealing with some of the Amendments on further consideration, we were hoping that they might have seen the light. So, at this stage, may I content myself with inviting them to meet us on this Amendment? I beg to move.
Lord MELCHETT: My Lords, as the noble Lord has said, Amendment No. 139 would allow directors of vesting companies to avoid the adverse consequences of Clause 31 if they could demonstrate that a transaction governed by that clause was not undertaken in anticipation of nationalisation. As the noble Lord said, a similar Amendment was moved in Committee and was withdrawn to allow noble Lords opposite an opportunity to reflect. I hope that after I have again explained why this Amendment is entirely inappropriate, noble Lords will decide not to press it.
Clause 32 deals with onerous transactions. These are, by nature, unusual or imprudent transactions which cause a loss and could be foreseen to cause a loss
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to the company. In the commercial world, particularly in the aircraft and shipbuilding industries, many decisions would involve a loss, as was pointed out during the Committee stage. It is bound to be a matter of commercial judgment whether a particular risk is justified and as was said in Committee, a successful business is one where the decision is exercised wisely. However, the risk cannot he eliminated entirely and a decision taken in good faith can in the event turn out badly. This is recognised by everyone and we should not wish to penalise directors in such a case. Clause 32, therefore, has effect only where it can also be demonstrated that the transaction was undertaken in anticipation of nationalisation.
However, the situation under Clause 31 is entirely different from that under Clause 32. The transactions covered by the clause—the so-called "material" transactions—are by their very nature unusual. I think that this is apparent from the definitions of "material transactions" in subsection (1). Again this was pointed out during the Committee stage. They include capital and special dividends, premature redemption of securities, and sales of assets where the proceeds pass direct to shareholders. Because they all benefit shareholders they have a direct implication for the compensation terms. This is the main difference between the material transactions and the onerous transactions dealt with in Clause 32. Clearly, none of these transactions can be considered to be in the normal course of business. Equally, the clause relates only to transactions during a period when nationalisation is imminent. The fact that the transactions are unusual and were carried out in the full knowledge of impending nationalisation, in the Government's view clearly leads to the conclusion that there must have been at least some degree of anticipation in the transactions' taking place at all. That is something that we have again considered very carefully since the discussion at Committee stage. As I said to the noble Lord, our view remains as it was then.
If the Amendment were carried, it would be likely that directors would seek to argue before the arbitration tribunal, if only as a means of delaying the ultimate decision. This is the undesirable aspect of the effect of the Amendment which,

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again, was pointed out during the Committee stage. While we accept that very few of the transactions are likely to be sensibly arguable in front of the tribunal, there will, if the Amendment is accepted, be nothing to stop directors putting a point to the tribunal and considerably delaying matters. Such a delay would be in no one's interests and would involve both the directors of the vesting companies and the Corporations in unnecessary and time-consuming arguments. Release of the directors from the provisions of the clause as envisaged by the Amendment could make it easier for material transactions to take place, and if that were the case the basis for compensation under the Bill would be invalidated. That is something that would not be acceptable to the Government.
I am aware of not having said anything very new on this Amendment compared to the Committee stage, but it is the same Amendment and, having considered it carefully, I regret to say that the Government find themselves with little more to say about it. Our attitude remains the same as it was during the Committee stage.
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am grateful to the noble Lord, Lord Melchett, and I am fully aware that he is trying. I do not believe that there is an enormous amount between us. I am in no way seeking to exonerate—that is not the word I am looking for, but it will have to do for now—directors who are clearly trying to get round the Statute and engaging in what the noble Viscount, Lord Simon, at the Committee stage called "evasive transactions". What seems to us to be objectionable is that the noble Lord used a series of rather subjective judgments in replying on behalf of the Government.
If I understood him correctly, he said that if there was an usual transaction in the circumstances that we like to describe as "blight"—the threat of nationalisation—the Government's assumption would be that it was a dishonest transaction or—and perhaps this is the safer word—an evasive one. The implication which they go on to propound is that it is a dishonest transaction that is designed to get round the provisions of the Bill. Our greatest objection to this is that it puts the onus of proof on the directors to
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show that the transaction was not an evasive transaction. That seems to me in principle to be an objectionable position for us to get into. I do not believe that if it is looked at in that way the noble Lord will greatly disagree with what I am saying, in principle. Where we get into difficulty is what is done about it in practice.
The noble Lord went on to say that if directors are provided with ready made access to appeal to a tribunal, this will open up the possibility of what I believe is called "vexatious delay" or "vexatious litigation" or whatever one happens to call it. I accept that, but what I had rather hoped to extract from the Government was an admission that there was a danger of putting directors—who, judging by the normal opinion that the Government seem to have of those who direct companies, may have been foolish rather than deliberately knavish—in a position of vulnerability. The onus of proof is placed the wrong way round. In those circumstances I had hoped that the Government would say, "We see the point here; we don't want to give up the fallback situation that we have, but we recognise that there could conceivably be an unfair onus of proof put upon a director who might have made a mistake quite inadvertently, bearing in mind that we are saying that any unusual transaction is a suspicious transaction of itself".
I do not think that this is the kind of issue on which it would be even remotely proper to divide the House at present. But having said that I am disappointed in what the noble Lord has said, I will read carefully what he has said and perhaps he has given us some further assurances which we are seeking. If this is the best we can extract from him we will put up with it for the time being. Therefore, I wish to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 32 [Onerous transactions: disclaimer and recovery of losses]:
6.30 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 140A:
Page 44, line 29, at end insert
("( ) it is a transaction the effect of which is to transfer or grant to any person any property or rights belonging to the

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company in connection with the business of repairing, refitting or maintaining ships carried on by it other than at a shipyard or other works in which the company had an interest in possession on the initial date; or")
The noble Lord said: My Lords, this Amendment was discussed with Amendment No. 138A just now, and I beg to move it formally.
Clause 36 [Compensation for vesting of securities]:
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 141:
Page 48, line 19, leave out ("subsection (4)") and insert ("subsections (4) and (4A)").
The noble Lord said: My Lords, I beg to move Amendment No. 141. This is directly associated with Amendment No. 143 and I think therefore that it would be for the convenience of the House if Amendment No. 143 were discussed at the same time. We discussed similar Amendments at the Committee stage, and I explained to the Committee that we felt that if the Government are to have the opportunity of reducing compensation in certain special circumstances they should also accept that they have a responsibility to increase it in other special circumstances. There are companies which will be affected by the Bill which since the last of the relevant days, that is 27th February 1974, have considerably improved their positions, but little allowance will be given for these improvements as the Bill is now drafted. The improvements have arisen to a large extent from their own efforts and success.
The Government have today made some welcome acceptance of some of our Amendments, including those to this Part of the Bill, and I hope that they will be able to indicate this evening that after considering what has been said in Committee they are also prepared to accept what is proposed here, particularly Amendment No. 143. But I want now to examine the whole of the Government's attitude towards compensation—this is the appropriate moment to do it—as it was indicated during the Committee stage. During the Committee stage we listened to what the Government had to say on various Amendments and it is now possible for us
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to draw up what is their general attitude. I should like to draw attention to the misconceptions which unfortunately underly that attitude and I should also like to give some illustrations.
A number of my noble friends took part in those debates and questioned the Government about their intentions and about the meaning of the Bill. In particular my noble friend, Lord Selsdon, has gone into great detail into the whole of the terms of compensation as set out in the Bill. But throughout the debates during the Committee stage the Government refused to budge from the position which they had adopted at a very early stage in the Bill. When one reads the Hansard records of what happened in another place one finds that we were getting almost identical replies here to those being given at an early stage in the discussion in another place. I hope that the change in the Government's attitude that has been apparent earlier today will be continued.
However, the Committee stage showed that the whole Government case rested on one premise; namely, that the stock market measures the earning power of a company's assets. The attributes of using a stock exchange quotation as a measure, which were cited by the Government as evidence of the fairness of the measure—the independence and objectiveness of a stock market price, and the present level of the stock market—are all applicable only if they are relevant. If the stock market does not measure the earning power of a company's assets—and we believe that it does not—then it is not the relevant market for the commodity that needs to be measured; and that commodity that needs to be measured is the whole of a business or an undertaking that is to be incorporated.
A stock market is a market for dealing with parts of a business, often small parts of a business, but what we are concerned with here in the compensation terms is the value of the whole of a business, and in most of the cases they are subsidiary companies. My noble friend Lord Carr of Hadley and the noble Lord, Lord Robbins, exposed this defect. The noble Lord, Lord Robbins, described it as the conceptual mistake, and my noble friend described it as the grand structural defect; and this is the main misconception which

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clearly underlies the Government's proposals as they now stand. A small block of shares is a different commodity from a controlling holding.
The stock market is a market for small blocks of shares. The value of such blocks of shares is their value to individual investors. The earning power of those shares is the present and prospective dividend income. The stock market is not a market for whole companies, and stock market share prices are not the prices at which companies change hands. During the Committee stage my noble friends gave examples of companies changing hands, the numbers that have done so in recent years, and the prices at which they have changed hands compared with their Stock Exchange valuations.
Because the individual investor cannot realise his share of the company's assets or enjoy his share of a total income from them, the price at which small blocks of shares change hands practically never reflects the value, or cost, or earning power of the industrial assets which underpin that share. Therefore an aggregate of small blocks of shares which, when taken together amount to a controlling holding, do not have the value of a controlling holding so long as they remain held by different investors. It cannot possibly enable the owner who controls a company to replace what he has lost, a whole business, with something of equivalent earning power. The owner cannot buy another company at the Stock Exchange quoted price because the stock market is not a market on which companies are bought or sold. I will briefly refer to the examples we gave where the Government themselves have been involved in schemes for valuation. As my noble friend Lord Carr of Hadley pointed out, the Export Credits Guarantee Department ensures British companies that have subsidiaries overseas against expropriation. There the Department, we understand, recognises the distinction between the value to a Stock Exchange shareholder and the real value of a company to its parent company. That is a Government scheme, but that principle is not being brought into the Bill.
My noble friend also mentioned the Industrial Commercial Finance Corporation. That Corporation was set up under Government auspices and it is specifically
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prevented from selling any subsidiary companies except on an asset basis. So the Government are not even following consistently what has been policy in other cases, and that is the huge flaw in the Government's argument. The stock market is not a market in which whole companies are bought or sold.
Now I come to the illustrations. At the Committee stage I gave the illustration of Kincaid, a marine engine manufacturing firm, and one of the six which are to be nationalised under the Bill. The figures which I gave immediately prompted the noble Lord, Lord Robbins, (I am sorry that he cannot be here at the moment) to point out that this was virtually expropriation. I remind your Lordships that from the report and accounts for the period up to the end of last year it is clear that Kincaid's turnover has increased almost fourfold since the relevant period for compensation, its profits are four and a half times higher, and its reserves and net assets have almost doubled. That is a comparatively small firm which has done exceedingly well in the period of almost three years since the compensation period in question, and under the scheme that the Government have in the Bill it looks as if this firm will not have any benefit from the advances it has made during that period.
I should like to refer to another company; namely, Yarrows. In the five years to June 1975 Yarrow (Shipbuilders)—that is the shipbuilding company which is in the Bill—has undertaken contracts for several overseas companies. The total value of export work was £56 million representing 49 per cent. of the total turnover of £114 million and profits earned on export contracts amount to £7·9 million which was over 80 per cent. of all contract profits in the five-year period. Yarrows also had an average share price during the reference period of 116p, giving a market capitalisation of £4·64 million for the Group. Since the end of the reference period Yarrow (Shipbuilders) alone has announced pretax profits of over £7 million and over £5 million for the years ended 30th June, 1974 and 1975 respectively.
That comparison of the profits with the valuation of the parent company share price is an extraordinary comparison if one does not take into account the success

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of the company over the last three years. There was no public knowledge of any of these profits during the reference period and it is therefore unlikely that a notional share price arrived at in accordance with the Government's proposals could adequately reflect the future profitability. Of these profits only £0·5 million has been distributed so far to the parent company by way of dividend; all the remainder I am told is still retained within Yarrow (Shipbuilders) either having been invested in capital development projects or in the form of liquidity. If the compensation basis remains unaltered, all of the retained profits earned since July 1973 will he confiscated without proper compensation.
Another company is Vosper Thornycroft. This company again has done exceedingly well and I can give some figures. In the last five years, total investment in the company has been £7 million. Of this the shareholders have provided £2 million by direct subscription and the rest has come by way of profits ploughed back into the company. Yet the Government's proposed compensation terms value the whole company at only £4.2 million. Those are examples of three companies—one that I mentioned at the previous stage, the Committee stage, and two more where I have just given some of the figures—where the value in fact is likely to be very much higher than the value which the Government under their scheme would place upon those companies.
My Lords, under our Amendment No. 143, the compensation scheme would take into account exceptional development which had occurred since the relevant date. I hope that the Government will give very careful consideration—if they have not done so already since the Committee stage—to the effect of their scheme. We have enabled the Arbitration Tribunal to have more latitude in the factors which they will take into account. Cases of the sort which I have described and the Government's way of dealing with them under the Bill, will simply give the impression to everyone abroad that this is tantamount to expropriation. The fact that no account is being taken of the improvements which these companies have made since the relevant period gives the impression that the Government are set on confiscating these assets without
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any thought of compensation. That cannot be good for confidence in Britain, confidence which is very much needed at the present time.
6.45 p.m.
Lord SELSDON: My Lords, everything that I could have said to try to persuade the Government that the whole concept of compensation for this Bill was wrong, I said in the middle of the night a few weeks ago. It is the only time in my life that I have ever asked questions of somebody who I thought had very high standards of integrity and was behaving in a fair way, and got not one answer that I could accept when I read through the matter afterwards. I came to the conclusion, therefore, that in the interests of expediency, the Government had taken legislation drafted for previous nationalisation Bills and had tried to apply compensation formulae adopted then for this Bill, when the principles, the concepts and the companies are totally different. What I tried to argue the other night was not about how much people got for their businesses but about whether the whole principle of valuation for compensation under the Bill was fair, and I will repeat, if I may, some of those arguments as succinctly as I can.
First of all, the principle or the method that the Government are using is a private sector method totally governed by codes of practice and not by law: it is a Stock Exchange valuation, the way that shares are valued for a trading matter. We have argued the question of minority shareholdings. The point I raised with the Government was this: "Would they please consult with the Council of the Stock Exchange." I should like to ask them whether they have done that, because I pointed out that the Council was willing to consult but they felt they could not interfere because the Government were not a quoted company and all but one of the companies to be nationalised was unquoted. I understand that there has been no consultation at all with the Stock Exchange. Yet, on other matters relating to the Bill since Committee stage I understand that there has been consultation and I believe that it is as a result of that consultation that the Government have begun to understand some aspects of compensation

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and have therefore accepted certain Amendments. If the Stock Exchange were in consultation with the Government to decree and decide jointly with them that this method of valuation was unfair, then I think the Government should heed it.
Since I could not get the domestic Stock Exchange to come out on a limb—because naturally they did not want to be seen to be hobnobbing with the Conservative Opposition or to interfere in any way because they have very high standards and observe a very high code of practice and do not interfere in matters of this sort—I consulted certain other international stock exchanges both in the Continent of Europe and in other quarters of the world and spoke to certain friends who would be willing to be named should it be desirable, and there is not one stock exchange I could find in the world that would agree that a share valuation was a fair price for a business. It may be that the whole system of stock exchanges and private investment is totally wrong, but it is a crucial point to me that when those who know about the business say that this is not a fair method, the Government should not adopt it. Therefore, we could say that it would be much more suitable for the purposes of the Bill if it was a simple statement under compensation that the Secretary of State will pay what he feels to be fit and we would then leave it to the tremendous fairness of the Secretary of State—and the noble Lord, Lord Winterbottorn, has assured us that he will be fair. It is wrong to use a method and to put forward proposals that the world knows are unfair because it will prejudice things that may come after. It is also against the whole system and basis of integrity of this country.
That is the emotional plane upon which one wishes to advance this. The effects which will come if this goes through are not related wholly to the amount of money it will cost to acquire businesses and the amount of paper which the Government may issue, because I would argue that in the current climate, looking at it from the point of view of the recipient of Government paper, that Government paper is not a fair method of remuneration because it is likely to go to a discount and to create all sorts of problems and nobody will hold it.
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If the noble Lord, Lord Winterbottom, says that he and his Government believe that, despite what has been said from these Benches, a share price is a fair valuation for the business, then I presume that is that and one cannot push things. I put forward Amendment No. 156 with no intention of pressing it the other night. I was then caught in an embarrassing position: I had never pressed an Amendment in your Lordships' House and when various noble Lords from all sides of the House said, "We would like you to press this and will support you", I was not quite sure what to do. That Amendment stands in the Bill. I suggest that the Government bear in mind and acknowledge that a share valuation is not an ideal method but that there has to be some form of base to start and rat her than starting again and going through the arguments of asset bases, or net worths or independent assessments, let us leave as much as possible to the Arbitration Committee, which is what we are asking.
I point out to noble Lords, too, that in these investigations I consulted with people in the private sector who know these companies. We came to the conclusion that if there were five or six of us who independently were given the job of valuing these premises, we could all arrive at a value within a matter of weeks and would probably not be more than 10 per cent. out as a whole. Many of us find that our job is valuing businesses.
I must ask whether the Government will drop this principle. They can try other methods, but let us leave as much as possible to the power of the arbitration tribunal. When we come to that later, let us see that the arbitration tribunal will be fair; let us ensure that the arbitration tribunal is made up of people who know their job and understand these things, people who will be accepted both by the Secretary of State and the Department and the companies concerned.
I mentioned to the noble Lord—and we did not receive au answer the other night—that one of the methods employed with some success over the years of valuing non-quoted securities has been that which has been carried out by the Department in connection with capital transfer tax or estate duties, where one is valuing shares held in non-quoted companies as part of the estate of a deceased

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person. The arrangements arrived at—although occasionally they give grounds for argument—have been accepted by all quarters as fair. If there is already a method by discussion and agreement of valuing shares in non-quoted companies, I suggest that that method should be used. To try to ram home something which anybody who knows anything about it believes is wrong, unfair and based on a false premise, is dangerous. It is dangerous to democracy as a whole if your Lordships' House support the proposal that the Government are putting forward.
I know that the noble Lord, Lord Winterbottom, has listened before to some of the things I have said. I feel strongly about it because I am paid and employed by people in this area. When one sees something that is so blatantly unfair, one has to speak out against it.
6.52 p.m.
Lord ORR-EWING: My Lords, many of us have been round this buoy time and time again. I do not want to detain your Lordships for too long. Previously I have drawn the most glaring examples where inequity and unfairness rears its ugly head if the compensation formula is to be too rigid. I particularly mentioned Yarrow. Tonight I want to mention some of the facts and figures about Vosper which are just as glaring. If I may refer to Lord Melchett's reply when I intervened in his windup on a previous clause, he said that he hoped that Vospers, when they had international competition, would learn to interchange personnel. I should like to point out that they have secured £300 million worth of export orders for their ships. It cannot be said that they are lacking in international aid, competition or prowess. The fact that more than 70 per cent. of their order book is for overseas customers is a true reflection of their achievement. According to the Government formula, they are to be compensated to the tune of £4·2 million. That is a rough estimate.
My Lords, if you look at the growth of this successful company, you will see how glaringly unfair this is. In 1966 the company had sales of £6½ million and profits of £0·4 million. By 1974 they had sales of £57 million and profits of
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£3 million. One year later, the sales had gone up from £57 million to £82 million. The profits had gone up from £3 million to £4 million, yet they are being offered total compensation of £4 million. My friends on the Stock Exchange would agree that normally when you have a company to sell, one of the early criteria is: what are its profits? You probably start negotiating at something between five and seven times the annual profits. You take into consideration things like investment.
Here the Government are saying that it is going to be fair in giving one year's profits for a company. They claim that that is fair and equitable. In the past five years they have invested £7 million of their money. Only £1 million comes from the shipbuilding grant which is matched by most of our overseas competitors, who give aid to their shipbuilders in a similar way, and they have paid that debt back in tax many times over to the Government. So we now find a company with an asset value in 1976 of £12 million being offered £4·2 million for that company.
My Lords, you only have to mention these figures in a single instance to see how glaringly unfair it is. I hope that the noble Lord, Lord Winterbottom, who is a fair man and understands these things, will try to draw the terms of reference of the arbitration committee as widely as possible—it has been widened a little over the discussions we have been having in both Houses—and then they can take into account the factors I have mentioned for coming to a conclusion that will inevitably lead to something being much fairer than the present formula being set before the House.
6.57 p.m.
Lord CULLEN of ASHBOURNE: My Lords, the case has been made so clearly by my noble friends that I will speak briefly as somebody who has spent most of his life on the Stock Exchange. I support most wholeheartedly what my noble friend Lord Selsdon suggested: that we remove Stock Exchange prices, particularly notional ones, from the Bill and simply have fair compensation. If the Government make it clear that that is what they are trying to do, I have no doubt that that is what they will do. If

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they put this extraordinary business of notional share prices in, it becomes a terrible red herring and makes everybody suspect that everybody else is wanting to do something different, which I do not believe they do. I hope the Government will take this matter up.
6.58 p.m.
The Earl of LAUDERDALE: My Lords, we are in a difficulty because several questions were asked on Committee which have not been answered. Alternatively, points have been made which have not been followed up. For example, we were told in Committee that the so-called imputed value of non-quoted shares would be entirely satisfactory because the Stock Exchange is an independent and objective quarter for judging these matters. The Government cite the Stock Exchange when it suits them, but they will not listen to those who know the Stock Exchange inside out, who have operated on it, who have spent their days rubbing shoulders with it and who have some proper practical experience of work in the City.
We were told that it is wrong to think in terms of takeover values; that the takeover value does not represent the market value. I quoted in Committee the British Transport Docks Board's bids for Felixstowe Docks and Harbour Board. There the shares stood at 90p and the bid was 150p. The Government in effect, by supporting the Felixstowe Bill, supported that bid. They cannot have it both ways. Is it that the Government think one thing one day and one another, or is it one part of the Government think one thing one day and another part thinks another? That may explain some of the strange legislation before us. The Felixstowe case was not answered.
This is slightly distressing. We have had a good afternoon. On the whole, the Government have been very forthcoming—particularly when I have not been in the Chamber—but the afternoon has been marred by the fact that we have not yet had proper answers to some of these questions. In Committee, my noble friend Lord Carr quoted the practice of the Export Credits Guarantee Department which insures overseas subsidiaries of companies in this country against being expropriated. The Government say that
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that is irrelevant; they say that this is not expropriation. Our argument is that it is expropriation. That is exactly our argument. We have said it over and over again and the Cross-Benches have said it. It is not even a Party point. It is a common sense point. With the greatest respect, if noble Lords opposite do not in their heart of hearts think that it is expropriation, then we are very sorry for them and we must rate their intelligence rather lower than we have hitherto. It is like the "flatearther", when he sees photographs showing the earth from Mars saying, "Of course, the earth is flat anyway".
The noble Lord, Lord Carr, quoted the case of the ICFC, which was set up under Government auspices. They are specifically prevented from disposing of subsidiaries of Companies they control except on an assets basis. The point was made by the noble Lord, Lord Carr, and it was not answered by the Government. Another case was quoted by the noble Lord, Lord Carr, about the practice of the Inland Revenue: when it values a controlling interest in a company for duty purposes, it values that on quite a different basis from that in the case of a minority interest. That point was also raised, but the Government did not answer.
Cogent arguments have been deployed from these Benches by noble Lords who know their way around in these matters: the noble Lords, Lord Selsdon, Lord Orr-Ewing, Lord Cullen of Ashbourne and others. For the sake of this country's reputation for fairness and this Parliament's reputation for serious discussion of serious matters, for the reputation of this House as a revising Chamber—for all those reasons, one hopes that the Government will take another look at this matter, because it is worse than unsatisfactory: it is a disgrace as it stands. I think that noble Lords opposite, in their hearts of hearts, know this to be the case. I do not like using language which is as strong as that, but I also know that it will be taken in good part by my noble friends on the Benches opposite.
It is a very serious inroad into the freedom and the rights regarding property in this country. It is an inroad which is either politically motivated, in which case its motives are base, or it is an inroad made largely by accident because the draftsmen drafted the Bill in a hurry. But however

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it came about, it is no credit to a Government of this country whose integrity we respect, or at least would like to respect, and whose integrity foreign Governments and foreign investors would also like to respect, if, as we hope, people from other countries will continue to invest in this country.
7.13 p.m.
Lord MELCHETT: My Lords, this Amendment, which is identical to a series of Amendments we discussed in Committee, would allow an increase in compensation where a company had undergone exceptional development since the referance period. Compensation is fixed on the basis of a past reference period—that is, the six months up to the end of February, 1974. All the companies named in the Bill were viable concerns at the end of the reference period and the basic assumption is that they will remain in that state until vesting date. Clearly, the prospects of individual companies may have changed since the reference period, but that does not itself, in the Government's view, affect the basis of the compensation. By basing compensation on a past period the compensation payable is fixed, and generally the shareholders are assured as to the basis on which the compensation they will receive will be assessed.
The share-based valuation, of course, has been used in every nationalisation measure since 1945, except for the coal industry. We heard from the noble Lord, Lord Selsdon, and indeed we have heard on many occasions during the various stages of this Bill, that that took eight years to settle. It is probably a precedent which neither side of the House would wish to see followed. In each case, in previous nationalisation measures it has been accepted that an average of the prices quoted on the Stock Exchange official daily list on particular days was an appropriate basis.
By valuing the securities of companies at a past reference period the Government accept the risk of any deterioration in the companies concerned, short of bankruptcy, in the period up to vesting date. As a converse, it is reasonable—and this was a point I myself raised when we were discussing this Amendment during Committee stage—that the Government should
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benefit from any improvements; but whether any of those improvements, if there be any, can constitute an exceptional development in the terms of the Amendment I am very doubtful. That, again, was a point made during Committee stage and it is probably one to which noble Lords opposite have not particularly addressed their minds. It may well be that the terms of the Amendment do not in fact achieve the effect they wish, because I am advised that it would be very difficult to prove, even in some of the particular cases which have been quoted, that exceptional developments, in the terms in which the Amendment uses that phrase, have occurred.
During the Committee stage and again this evening the noble Lord, Lord Campbell of Croy, cited as an example a company which has developed very well since the reference period: John G. Kincaid, the engine builders. I do not deny that this company has done very well in recent years. Indeed, the company made application to the Secretary of State to pay increased dividends, and that request was granted in full in the light of the company's performance. But the Government do not believe that the performance of this company detracts from our general argument for resisting this Amendment.
Shipbuilding is a long-term industry, as is marine engine-building. The performance of the company since the reference period must have been a real prospect at the reference period and hence it will be reflected in the imputed share price. The noble Lord, Lord Campbell of Croy, also referred to Yarrow's dividends. My advice is that it is not true to say that only half a million pounds of permitted distributions has been made. I believe approval has been given for up to £1.1 million. The stock market price of a share represents the price at which it will change hands at a particular moment in time: in other words, it is the true value in terms of the market, at that time—
Several noble Lords: No.
Lord MELCHETT: It is a well-recognised fact that stock market prices do not represent solely the general conditions at the time. The price also takes account of the prospects of a company, in some cases up to several years ahead. Under the Bill, we are seeking to define

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an objective value for shares, and the Amendment of the noble Lord, Lord Selsdon, which has been pressed into the Bill, has in the Government's view completely altered the basis on which compensation is going to be assessed. It has put into the Bill an extremely imprecise and undefined basis on which to value the shares, which is something with which the arbitration tribunal will be faced.
Therefore noble Lords, in addressing themselves to this particular Amendment, although they have spoken rather wide of the Amendment itself, have in fact been addressing themselves to the Bill as it was before the noble Lord's Amendment was included. In the Government's view, it is no longer true to say that the Bill as drafted takes as the basis for compensation the stock market valuation of the companies during the reference period. It is open to the arbitration tribunal, since that Amendment was accepted in Committee, to go very wide indeed. I, for one, have no idea what limitations are put on the arbitration tribunal now that this Amendment is in the Bill. I should be interested to hear from the noble Lord, Lord Campbell, if he is going to speak again to his Amendment, exactly what limitations will be placed on the arbitration tribunal and why the particular effects to which this actual Amendment is addressed cannot be considered by the arbitration tribunal since the noble Lord's Amendment was pressed into the Bill.
Viscount SIMON: My Lords, from these Benches I should like to make one comment on what the noble Lord, Lord Melchett, has been saying. He said that the Government accepted the risk of deterioration in a company's prosperity since the reference date, and he sought to set that off against those companies which have prospered since the reference date. I feel that, taking into consideration the interests of the taxpayer, that is quite wrong. I do not see why we should pay the same amount for a company which has gone down in the world since the reference date. It seems to me it would be far better to try to assess the value of the company at the time when the compensation falls to be paid rather than to refer it back to the reference date and then say: "We will have the swings and roundabouts, and the companies which have done
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badly we will pay too much for and the companies which have done well we will pay too little for."
Lord MELCHETT: My Lords, I wonder whether I may intervene. Naturally, I do not want to prolong the debate, but the noble Viscount must accept that there is one very real disadvantage in the course he is proposing; that is, that the prospects of various companies have been altered by nationalisation. If one takes the period pre-nationalisation as a reference, one avoids the very disturbing fact that some companies will have gained and some suffered, and some shares will have risen, because people have felt that they would get a higher price than the shares stood at on the stock market, and others will have fallen.
Viscount SIMON: My Lords, this only illustrates again the inadvisability of choosing stock market values for the purpose of assessing compensation. But while the prospects of companies may have been affected by nationalisation, the performance has not been affected up to now, and therefore the companies that have performed well should be entitled to get larger compensation, while the companies that have performed badly should get less.
Lord SELSDON: My Lords, with the leave of the House, I must correct the noble Lord, Lord Melchett. I am sure he did not mean to say it, but he said that shares can go up or down. However, there is only one quoted company, so there is only one quoted share to go up or down, and it is not possible for the others. I suggest that he speaks about one quoted company and does not generalise about all the others, because you cannot generalise on this. It is intangible ground, and it is misleading for him to say, as he did, that a stock market price is a true price for a share. It may be a price at which a share changes hands if it is quoted, but if it is not quoted it has no relevance at all.
Lord TREFGARNE: My Lords, I should just like to amplify and underline the point made by my noble friends, Lord Campbell and Lord Selsdon about the value of shares. Several noble Lords have said how the value of shares that

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change hands on the Stock Exchange does not reflect their true value when bought altogether. I asked the noble Lord, Lord Winterbottom, during the Committee stage how it was that he disclaimed the assertion that the Government were expropriating that value of a company which constituted control. I am absolutely convinced that all of my noble friends are quite right on this point, and the Government have failed to take into account the fact that they are acquiring control of every one of these companies. The control is worth something, and I have Amendments down later which I shall move, and perhaps press, to emphasise that point.
Lord RHODES: My Lords, may I ask the noble Lords, Lord Selsdon and Lord Campbell, a question for information? Is it not a fact that up to now the accountancy profession has evaded the identification of criteria on which profitability can be assessed? This could have been done over the years, and they could have been identified; for example, the form of capital employed in a business. I am in sympathy with what the noble Lord, Lord Selsdon, has said, but this is an aspect of this problem which has not been mentioned, and until businesses get down to the basis of the criteria on which profitability can be assessed, we can argue for ever more without coming to any finality. I recognise the difficulty and unfairness, as well as the hard work which has been put into assets which cannot be valued; and if criteria were established on which profitability could be based it would be much better for British industry as a whole.
Lord SELSDON: My Lords, I do not believe that I should be in order if I said anything. I hope that the noble Lord will allow me to speak later. I apologise for having disrupted the proceedings.
Lord CAMPBELL of CROY: My Lords, other speakers having moved this Amendment, may I now make my speech and, if my noble friend Lord Selsdon wishes to intervene in reply to the noble Lord, Lord Rhodes, I will very gladly give way to him. The noble Lord, Lord Rhodes, put forward the concept that the accountancy profession had evaded the basis of criteria on which
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profitability is assessed, and, not being an accountant, that is a new notion to me and I should be very glad to consider it.
Lord RHODES: Carry on.
Lord CAMPBELL of CROY: My Lords, I am not at the moment able to answer off the cuff, but if my noble friend Lord Selsdon wishes to do so, I will gladly give way to him.
Lord SELSDON: My Lords, by leave of the House, I feel that I must say something to the noble Lord, Lord Rhodes. Those of us on this side, and those connected with inquiring into the Bill as a whole, have continually pressed the Government to declare what they feel would be a fair return upon capital, and that, in a way, is a measurement of profit. Within companies connected with aviation at the moment, it is considered that a fair return on capital, and therefore a measure of profitability, would be of the order of between 20 and 25 per cent. Within the shipbuilding industry, or those companies which are in sectors of it which could be profitable, and bearing in mind the tremendous subsidies that are awarded by Eastern nations which totally distort the profitability picture of the shipbuilding industry as whole, the figure would be lower. But that criterion is a reasonable one to apply in these cases. The noble Lord has made the point that it would be advisable for the Government to consult the Institute of Chartered Accountants, who are willing to cooperate in this matter.
Lord CAMPBELL of CROY: My Lords, I am exceedingly grateful to my noble friend, because he has clearly given thought to the point which the noble Lord, Lord Rhodes, raised and will doubtless continue discussions with him on this subject outside the Chamber. I detected, happily I thought, a slight change in the way in which the noble Lord, Lord Melchett, addressed us this evening, and that followed a day in which we have had a number of acceptances of Amendments on this side. But I was sorry that he was not prepared to accept the Amendment. I say that I detected a slight change, because we have not simply had put to us, over and over again, the argument that the scheme is fair, and saying it 100 times means that it is true,

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which has been the Government's attitude in the past. So I am glad that we did not just get that again this evening, even though the Government were not prepared to accept the Amendment.
My noble friends Lord Selsdon, Lord Cullen and Lord Orr-Ewing pointed out that a scheme based on notional share values will lead to gross anomalies and unfairness. The Government's scheme simply does not start to stand up to any examination. The noble Lord, Lord Melchett, said in reply what we have heard before, that in most of the previous nationalisation Acts there were schemes based on share values. But it is a different picture when there are share values. I must remind your Lordships that in this case 42 out of the 43 companies concerned are unquoted. So I do not think that this Bill can be compared with previous nationalisation Acts, and schemes that were in them, because in this Bill the Government are putting forward proposals based entirely on notional share values for these 42 companies.
The noble Lord, Lord Melchett, took issue with me on a figure concerning Messrs. Yarrow. I can only tell him that the information which I have been given is that only £0·5 million of the profits of two years—and this may be the difference—have been so far distributed to the parent company by way of dividend. The noble Lord had a different figure, but this is something which we can settle later. However, I would just make it clear that I was dealing with two years' profits in the figure I gave.
I was glad to hear the noble Lord, Lord Melchett, speak about the amendment of the Bill as a result of the Amendment which was moved by my noble friend Lord Selsdon at the Committee stage. I hoped that that meant the Government were going to follow the intention that lay behind that Amendment. It was an encouraging part of the noble Lord's speech when he said, "We are considering the Bill as it has been amended by that Amendment." As I said in my opening remarks, we have introduced the concept that the arbitration tribunal will take certain factors into account, and I was glad to hear the noble Lord refer to that.
Lord MELCHETT: My Lords, on reflection I think that I ought to put the
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Record straight. What I think I said was that I had the feeling that noble Lords opposite were speaking to the Bill as if it had not been amended.
Lord CAMPBELL of CROY: My Lords, as I said at the beginning of this debate, we thought that this was the moment to discuss the attitude of the Government, as it had emerged at the Committee stage and their apparent attempt to defend this scheme, based on notional share values. The noble Lord has pointed out that my Amendments are not perfect in the sense that they may not be the best way to carry out what I have described. I accept that, but what these Amendments have enabled us to do is to have a discussion on the attitude of the Government and their compensation scheme and to point out again the misconceptions behind the Government scheme and the fact that it simply will not be fair and will produce these gross anomalies. I hope that I have detected some change in the Government's attitude and that they will consider very carefully everything that has been said during this debate, following the points put to us by the Government at the Committee stage. However, I now beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.22 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 142:
Page 48, line 29, at end insert—
("the resulting amount to be increased in the proportion (to the nearest one tenth of 1 per cent.) in which the value of the amount of compensation due to any person has fallen between 28th February 1974 and the first day of the month preceding that in which the compensation is paid to that person or, to the extent that a payment on account of compensation is made in accordance with the provisions of Section 37(6) hereof, in the proportion in which the value of such payment has fallen between 28th February 1974 and the first day of the month preceding that in which such payment is made.
(3A) For the purposes of subsection (3) above the value of an amount of compensation in any month shall be assessed by such means as the Secretary of State, after seeking the advice of an independent accountant, thinks appropriate, having regard to the increase (if any) since 28th February 1974 in the cost of acquisition of industrial assets.").
The noble Lord said: My Lords, I beg to move Amendment No. 142. A similar

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Amendment was discussed at the Committee stage and this one is intended to compensate the owners of securities who are being deprived of the use of the compensation due to them by introducing inflation protection into the scheme. The terms are similar to the provisions in the Pensions (Increase) Act 1971.
During the Committee stage, I pointed out that situations could arise where amounts of compensation would not be paid for some time, perhaps for some years after the date when those due to receive them could have expected them. For example, amounts which are not agreed fall to he determined by the arbitration tribunal and proceedings before that tribunal may well be delayed pending appeals to the Court of Appeal. Although in many cases the amounts arc likely to be agreed fairly quickly, in some cases a long time may elapse before they have been determined. As a result, some shareholders may be paid at any time between 1976 and 1980, and perhaps even later, for securities transferred in 1976 or 1977 in exchange for compensation based on 1973–4 values.
I think there was a misunderstanding at the Committee stage, because the noble Lord, Lord Melchett, stated in his reply that the Stock Exchange prices of shares are not related to inflation.1 have not made any suggestion, of course, that they are. So far as inflation is concerned, one only has to look at what has happened to the share index in recent years to see that the relationship is a very indirect one—if, indeed, there is any relationship at all.
However, my point is simply that compensation may be delayed for several years while the value of money is, regrettably, falling. Of course, all of us hope that inflation will be reduced. Nobody would be more delighted than I and my noble friends if it were reduced to nil, but we must expect that in this respect the next few years are likely to be not very dissimilar from the last five years or so. We hope that inflation will decrease, but we cannot hope for it to disappear. It is protection from the erosion of the value of compensation while time passes that we are seeking in this Amendment. I hope that the Government have had another look at this point about protection from inflation since we discussed it at the
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Committee stage and that they will tell us that they intend to introduce a scheme at the next stage which will look after it. I beg to move.
7.25 p.m.
Lord MELCHETT: My Lords, I confess that I am in the same difficulty with this Amendment as I was in during the Committee stage. Although the noble Lord, Lord Campbell of Croy, has moved the Amendment with the intention of dealing with the problem of the period of time which it may take to fix the compensation and pay over the securities between vesting day and whenever the figure is settled, it seems to me that the Amendment would have a different effect and would seek to protect from the effects of inflation people who have been holding the stocks from the reference period until now.
Although, therefore, the noble Lord is seeking to achieve a slight difference as a result of the Amendment, my advice, as I said at the Committee stage—and I did not give it just to be deliberately difficult but because I was told that this was the effect that the Amendment would have—is that it would mean that the price would be fixed during the reference period and that since then until now an allowance would be made for inflation, whereas the stock market has fallen since the reference period and now stands in general at roughly 25 per cent. (the noble Lord, Lord Selsdon, will correct me if my figures are wrong) below the level at which it stood during the reference period.
I have been trying to find the place in the proceedings during the Committee stage when I referred to this, but I did not have time to do so while the noble Lord was speaking. However, I remember that when we were discussing this matter during the Committee stage we went on to deal with the problem of the payment for securities if there was a delay over fixing the sum to be paid. The noble Lord, Lord Orr-Ewing, and I had more than one discussion about this. I said that the Government's intention was to pay over a proportion of the securities as soon as possible. I believe that we even had an Amendment on the point.
We said that the Secretary of State's intention was to pay over as soon as possible a rather higher proportion of the

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securities than the Amendment demanded and that interest on the securities would remain payable while the compensation terms were being fixed. That discussion probably dealt with the problem to which the noble Lord, Lord Campbell of Croy, has drawn attention. However, I accept that it is a real problem, that undoubtedly it is in everybody's interest that the compensation terms should be fixed as soon as possible and that there should not be a long drawn out arbitration over the matter.
That is one of our objections to the widening and loosening of the terms of reference of the arbitration tribunal which noble Lords opposite achieved during the Committee stage. The fact that the bulk of the securities will, I hope, be paid over very soon after vesting, the fact that interest will be payable on them from the vesting date and also the fact that the Amendment would have a different effect from that which the noble Lord seeks to achieve, should persuade him to withdraw the Amendment.
Lord SELSDON: My Lords, I agree with the opening remarks of the noble Lord, Lord Melchett. This is not an Amendment that, as drafted, I would support. However, I support the principle behind the Amendment. It is very difficult to get over this principle when we are dealing once more with intangible… So far as a quoted company is concerned, I do not believe that there is any need to take into account the question of inflation because during the period of time involved people could have sold shares. It is a relatively free market. I think that the Government should acknowledge, as they acknowledge with their indexed savings plans and their advisers on their indexed pensions, the need to take into account inflation, but they probably recognise that since this started we have seen a depreciation of the value of money by about 60 per cent. By March of next year that depreciation will probably be 75 per cent.
We are faced with a heavy rate of inflation and there are two factors which affect this situation. One is the rate of inflation itself and therefore the purchasing power of money and the second is what one can purchase with that money. At the present moment it is possible to purchase businesses in the United Kingdom cheaply probably too cheaply. I keep trying to
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persuade foreigners to come and invest over here because I tell them that it will never be as cheap again. The country will recover, inflation will come down at some time and prices will go up.
In real terms I suppose the stock market is almost at an all time low in deflationary terms. We hope it will not get much lower because the stock market is a measure of confidence, but the noble Lord, Lord Melchett, will appreciate that the reasons why the stock market is at an all time low have nothing to do with the relative performance of the company concerned. It is almost entirely due to factors influenced by the Government, notably inflation, and Government borrowing in particular. At the moment the factors influencing prices more than anything are the level of Government indebtedness and Government borrowing and public expenditure.
These two points, the devaluation of money itself and the availability of assets to purchase, are interesting because by the time that the companies actually have cash available to make new purchases, or to invest in plant and machinery or whatever it is, and therefore to replace the earning power of the assets which they have lost, prices will be up substantially, and if they are thinking of starting a new operation and if they are thinking of buying a company the value of the company that they would expect to buy, it may be in a year or eighteen months' time, may be perhaps twice or three times what it would be at the moment. That is if the policies that we all wish to see implemented are in fact implemented. I think it is worth bearing in mind that what the Government will be doing as a method of compensation—the money they are paying over—means this. As to the good companies, it is unlikely that they will receive something that can actively replace the assets that they have lost; that is, which will bring them back into the international competitive field on the same level as they were before; for the bad companies, that is another matter.
My concern in regard to this is that we have more and more decline in British industry as a whole. We have some extraordinarily good companies which can compete on a worldwide scale; many of these are companies which are affected by this Bill. I hope the Government will recognise from the comments we have

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made today and in Committee that in these proposals that they are putting forward, if they do not give some consideration to inflation and to the way in which a company can replace those assets on an equally profitable basis, they will be doing a disservice to British industry.
Lord CAMPBELL of CROY: My Lords, I am grateful to my noble friend Lord Selsdon for upholding the principle of this Amendment although it is clear from what has been said that its drafting is not as satisfactory as it might be. The noble Lord, Lord Melchett, has agreed that this is an important point to which we have drawn attention and I hope this discussion will have underlined its importance for those who, despite what the noble Lord, Lord Melchett, said, may find themselves waiting for compensation for a considerable period through no fault of their own. I now beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.35 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 144:
Page 49, line 5, at end insert—
(""independent accountant" means a person who is—

(a) a member of one of the bodies referred to in section 18(8) above; and

(b) appointed, after consultation with the company in question, to advise the Secretary of State in relation to any question whether a special declaration should be made in respect of that company.").

The noble Earl said: My Lords, we come back to this Amendment and to the subject which we spoke about at the Committee stage, in which we suggested that an independent accountant should be invited to give his advice where the Secretary of State was considering making a special declaration. Your Lordships will remember that the Secretary of State may make a special declaration when he has in fact made funds available to a company as a result of which, in the view of the Secretary of State, the company has been prevented from "going bust" and going into liquidation. We suggested that when the special declaration is made the Secretary of State should have the advice of an independent accountant because on the special declaration
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the compensation payable for that company is the reduced amount, and the reduced amount is either 5 per cent. of the notional value of what the shares were in 1974, or the break-up price of the company, and that is a very sweeping power to give to the Secretary of State. We suggested that the independent accountant should be brought in, simply to give his advice—advice which the Secretary of State need not in fact heed.
It was on this particular point that the noble Lord, Lord Winterbottom, in defending the arguments, said that "bankruptcy dropped out of the sky" and happened in a great hurry and therefore it would be inappropriate to consult a whole lot of people. But of course if the Secretary of State is going to take this action he will be advised by somebody, and presumably he will be advised by his officials. It was on this point that many noble Lords asked whether the Government accountancy service would be involved or not and we agreed that we would return to this question. I see that the noble Lord, Lord Winterbottom, is going to answer this and I know he will take into account the very strong views that are held and have been expressed at the Committee stage. It is not a point of huge issue. It just seems to me to be a point of fairness that where the Secretary of State is going to make a special declaration which means that the companies may well end up having much less compensation than they would have done, he should seek the advice of an independent accountant.
It is a fact that there may be some companies which would have been relatively solvent in 1974; terms of trade might have gone against them, they might have required only a small amount of money to keep them solvent and yet, having taken that money, they will, as I have described, have "sipped from the poisoned chalice" and thereafter they will be given only the reduced amount. I hope that the noble Lord, Lord Winterbottom, will be able to say, as has happened on so many occasions this evening, "Yes, we have looked at the matter; we think that the point you have raised is reasonable and therefore we accept the Amendment". I beg to move.
Lord WINTERBOTTOM: My Lords, I wonder whether the noble Earl could

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assist me and the House in my reply. We have here a group of Amendments, two of which—Nos.144 and 166—relate specifically to the independent accountant, and the other Amendments relate more to—
Earl FERRERS: My Lords, I think Amendment No. 166 has gone.
Lord WINTERBOTTOM: My Lords, it is Amendment No. 146. I think the noble Earl is really addressing his remarks mainly to Amendments 144 and 146.
Earl FERRERS: Yes, my Lords; if the noble Lord cares to address himself to Amendments 144 and 146 that is all right, but not Amendment No. 145.
Lord WINTERBOTTOM: No, my Lords, that is another issue. I thought at the earlier stage we had a rather searching discussion with moments of light-hearted-ness, because I seem to remember the noble Lord, Lord Harmar-Nicholls, called in the office cat as an expert and I called in Caligula's horse. Basically there was some doubt in the course of our discussion among noble Lords as to the impartiality of the advice being given to the Secretary of State at a point when he might be called upon to make a special declaration.
I can say that I recognise—indeed the Government recognise—the concern which the movers of this Amendment felt about the lack of control of the Secretary of State. This is a theme which runs through the discussion on the whole Bill. Obviously noble Lords wish to be assured that the Secretary of State will not use his powers under these provisions capriciously. Perhaps Secretaries of State are occasionally given to fits of capriciousness, but in a serious matter such as this, with the eye of Parliament and the country on him, the Secretary of State would be bound to consider carefully any action he took. I can repeat assurances that I have given.
In the exercise of his powers under any Statute, the Secretary of State must act reasonably. He can only act within the framework of the Statute, and is accountable to Parliament for all his actions. At his disposal the Secretary of State has the full resources of Government accountancy experts to investigate and advise on a particular case. There is nothing in the provision to prohibit his seeking outside
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advice if he considers it appropriate. I emphasise that he is not prohibited from seeking outside advice.
My Lords, as I said at the time, potential bankruptcy situations can arise quickly. I speak from personal knowledge of a case in which the need to call in a receiver came out of a blue sky. But if the Secretary of State was required in every case to seek outside advice there would be such delay that the company could collapse before the aid could be given, with all the disastrous employment, regional and social consequences which it might entail. I would add another point. If a special declaration is made, it has to be made before, not after, aid is given. Therefore, as I said on an earlier occasion, it is for the company to decide, with the knowledge at its disposal, whether or not to take the aid or seek salvation elsewhere. The decision is still theirs. I can assure the House that the Secretary of State will act conscientiously, seriously, and certainly not capriciously. I can assure the House that he has advice available to him within his Department, and that he can call upon advice from outside. There may be occasions when rapid action must be taken. For this reason, I ask noble Lords that these two Amendments should not be pressed.
Lord SELSDON: My Lords, I have a certain sympathy with the noble Lord, Lord Winterbottom, on this matter. When we raised the subject in the middle of the night, there was some implication that we might have been criticising the Government accountancy service in some way. I asked the noble Lord at the time whether the head of that service had been consulted on matters such as this, and I do not think the noble Lord had time to answer. I presume that now he has been consulted.
I should rather like to know what the view of the Government is, but when we come to the question of liquidation falling out of the bright blue sky I may say that it is easier to get the private sector moving than a Government Department. If there were a liquidation which came falling out of a bright blue sky now in any part of the United Kingdom, I could have an independent accountant in more quickly than Her Majesty's Government could have one of their advisers. When talking about creditors, which is what one is

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talking about in a liquidation, I may say that there is more confidence on their part if they know that the organisation advising and acting is independent, gives a true and fair view and is bound by the true and fair view concept. That true and fair view concept is not binding on Government Departments. There is a case on both sides for having recourse to an independent accountant. However, if the Government say that they will consult with an independent accountant on such matters, this will be sufficient for me, although, frankly, from my own personal experience, I should doubt it, because it is often difficult to get Government Departments to move quickly, particularly at certain times of the night when they do not happen to be in their offices.
Earl FERRERS: My Lords, in none of these Amendments was it ever intended to reflect adversely on the Secretary of State. I absolutely accept the view of the noble Lord, Lord Winterbottom, when he says that the Secretary of State will act conscientiously, seriously and not capriciously. I am certain he will. But the fact is that on making the special declaration, he can affect hugely the compensation which can be payable. I should have thought it was reasonable to say, "Let us have an independent accountant", and rather as my noble friend, Lord Selsdon, said, one who can be produced very quickly.
I should have thought that this was a perfectly innocuous and harmless Amendment which, again, could only have gone to safeguard the public interest in general, particularly when, as the Amendment says, the Secretary of State has only to seek advice; he has not even got to take the advice. That reminds me of an earlier Amendment on which, regrettably, the noble and learned Lord, Lord McCluskey, blotted his fair copybook by not accepting it. I am sorry the noble Lord, Lord Winterbottom, does not feel able to accept this Amendment, because I should have thought that the argument was in favour of accepting it. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.45 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 145:
Page 49, line 16, at end insert ("or—
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(c) the amount which would have been payable under subsection (3) above, if the special declaration had not been made, less the amount of the payment or assistance which is the subject of the special declaration.").
The noble Earl said: My Lords, again, this Amendment is about the special declaration and the reduced amount which is payable. Noble Lords will remember that when the Secretary of State makes a special declaration saying that the money which he has advanced to the company has resulted in the company not going "bust", the compensation payable will be the reduced amount, which means 5 per cent. of the notional value, or the breakup price. It is perfectly possible that a company may have been in difficulties, or may even not have been in great difficulties but obliged to obtain funds in order to stop it from going insolvent. The amount required to prevent insolvency might have been quite small. As a result of that, the company then will only be paid out on the basis of the reduced amount.
The point we made on Committee stage is one which I would make now. It is that because of the threat of nationalisation, it may well be that the company had no other course to take than to go to the Secretary of State. The Government have rejected this Amendment before, not only here but in another place, on the grounds that if a company is insolvent it is virtually worthless. That is understandable, but does not take sufficiently into account the possibility that the amount needed to restore solvency could be relatively small but would not be obtainable from any other commercial source, simply because the company faces nationalisation. What would have been a fairer thing to say is that the company should be compensated on the basis of its 1974 notional value, less any money which the Secretary of State or the Government had forwarded to the company. In that way there is the known possibility that a company which would have been solvent in 1974 would then be paid out of the minimal amount simply because it had taken advantage of a small loan from the Government. I hope that on reflection the noble Lord would agree that it would be more prudent to take the 1974 notional value which, after all, is the whole basis of the compensation, and subtract from that any funds which

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the company have received from the Government. I beg to move.
Lord TREFGARNE: My Lords, I believe that the assertion of the Government that they might have saved the company from bankruptcy in some cases is a somewhat unreliable one. I am inclined to the view that a company seeking aid from the Government in these circumstances may, with hindsight, appear to have been rescued from liquidation, but it may well not have appeared in that light at the time the loan was applied for. Indeed, had the company appreciated the implications of what they were doing at the time, they might well have sought and secured support from some other source. As my noble friend, Lord Ferrers, has said, for the Government to use the simile of the poisoned chalice, for the Government in those circumstances virtually to deny the company all substantial compensation, is altogether unreasonable. I think the proposal contained in this Amendment is a very proper one and trust it will commend itself to the Government.
Lord WINTERBOTTOM: My Lords, I have considerable sympathy with the noble Earl in the way he has presented his case. I seem to remember that I was also sympathetic when he stated it on an earlier occasion, and I agreed to put his points to my right honourable friend to see whether the Government would consider them. That has been done but I am afriad that we are still unable to accept the Amendment. Perhaps at the risk of boring the House by repeating myself, it may be helpful if I outlined the basic philosophy of the compensation terms before going on to deal with the specific Amendment. Compensation is fixed on the basis of a past reference period which we know about. All the companies named were viable concerns at the end of the reference period and the basic assumption is that they will remain in that state up to vesting date, and I think that that assumption still holds. I cannot think of any of the companies mentioned in the Schedules which are not in a viable condition.
Clearly, if the noble Earl is right the prospects of the companies may have changed since the reference period, but this in itself does not affect the basis of compensation. By basing compensation
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on the past period the compensation payable is fixed and, generally speaking, shareholders are sure of the basis on which the compensation they will receive will be assessed. Noble Lords will agree that this is based on the premise that the companies continue as going concerns up to vesting date. If they collapse, then clearly the basis of compensation is destroyed. This is recognised by the provisions of Clauses 28 and 30 which have already been discussed. For a number of reasons the Government may not be prepared to see a company collapse before vesting day. In these circumstances the Government may decide to support the company with some form of financial aid in the intervening period. If a company is saved from collapse solely by the Government, it is clearly wrong that shareholders should nevertheless receive full compensation as if the company had remained viable by their efforts.
The noble Earl has argued the case of the company in a position where a small amount of money would save it from having to accept either 5 per cent. or breakup value. But if the sum to stave off bankruptcy is only quite small it is most likely that funds will be available from sources other than those of the Secretary of State. I am reasonably certain that a firm's bankers who have supported it over many years would continue to support it. The prospect of nationalisation does not reduce the creditworthiness of a company; in fact it might increase it. After nationalisation the corporate guarantees of companies would of course, apply to subsidiaries. I think that is the answer. Amendment No. 145 seeks to offer a further choice of valuation.
The amount of aid does not have any bearing on the question as to whether the company is solvent without it. It is either solvent, and thus to be compensated in full, or else insolvent and of doubtful value, though I can see options for the company at that point either to soldier on, as I suggested it might well be able to do, or to accept 5 per cent. of full compensation of the amount shareholders would have received had the bankruptcy taken place, or to accept the breakup value. In the remote possibility where shareholders would have received more had the winding-up proceeded, I think noble Lords would agree that to pay them

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would not be in accord with the view that the Government should not be too generous on these occasions. For these reasons I regret that I cannot accept the Amendment, although I have some sympathy with the spirit in which it is moved.
Lord SELSDON: My Lords, I do not want to push this question, but the noble Lord has said certain things which I wonder whether he would care to expand on. He said that in his view at the moment all the companies on the Schedule were totally viable, by which I presume he means that they are not in any financial difficulty and therefore can stand on their own two feet. A few moments later he said that if they were unviable or got into difficulty the Government might reserve the right to support them. This goes back to one of the points I raised earlier about the fear of an open cheque book: that in acquiring some of these businesses the Government may acquire certain liabilities in which, for political or other reasons, it may need to inject funds. I presume that in making that statement the Government have made certain investigations which confirm that all the companies on the Schedule are completely viable. I wonder whether the noble Lord would care to expand on that.
Earl FERRERS: My Lords, the noble Lord might not care to expand on it as he would be breaking the rules of the House, but perhaps the noble Lord, Lord Melchett, would not be breaking them if he responded—but evidently he does not wish to do so. I think the real problem here is that there are two separate cases. I sympathise with the noble Lord, Lord Winterbottom, and I appreciate the fact that he had just as much sympathy for our Amendment and the spirit in which we moved it. I had hoped it would have gone rather further than sympathy with the spirit in which we moved it and attached itself to the Amendment itself. I sympathise with the noble Lord when he says that it is unfair to have a company which in 1974 was operating but because of the terms of sale and so on the company is due to go "bust". However, for the purposes of employment the Secretary of State says, "We cannot afford to let this go 'bust' so we will put money in" and as a result the company keeps going. The
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noble Lord, Lord Winterbottom, said that it would be unfair for the shareholders to benefit from a situation which would have been bankruptcy, but for public purposes, or whatever it is, the company had been kept going.
The second is a different situation, and the one I have in mind, where a company was all right in 1974 and may have the opportunity of getting an order which requires retooling or new funds. It needs money to dispense, and it cannot get that money from the bank. The noble Lord, Lord Winterbottom, said that banks were very helpful and that they would help companies if they were in difficulty; but of course banks are practical folk and they are not going to put their money into an organisation which they know is going to be nationalised, in case the compensation given would result in their not getting the money back. There may well be companies which want to expand and need to get money in order to enable them to fulfil an order, and they have no recourse other than to the Government. If that is the case, it would, in my judgment, be unfair to say, "Because you have accepted from the chalice you shall get only the breakup value or 5 per cent. of the share price". It is that second example that I think would merit the treatment suggested in this Amendment. I am sorry that the noble Lord, Lord Winterbottom, does not feel that he can accept. He still shakes his head with great conviction; I wish he would nod it instead. I should willingly sit down if he would accept the Amendment, but if he will not do so I do not feel moved to press it. I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 147:
Page 49, line 18, leave out ("either").
The noble Lord said: My Lords, with Amendment No. 147 perhaps we could discuss also No. 148. This would bring us to the unmourned end of the question of special declaration on which we have had a very good debate this evening. What is between us here is the fact that we cannot get over to the Government that when they look at the viable com-

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panies which are liable to get into trouble they do not start the story quite far enough back. We have used the word "blight" before, but we would challenge them to produce specific examples of blight.
I should like to suggest to the Government that they must accept that the whole industry is inevitably blighted by the threat of nationalisation. There cannot be any dispute about that. We really feel that the whole of this clause is making rather a mountain out of a molehill. Perhaps it would be more accurate to say that they are afraid of making a sow's ear out of a silk purse, because during the Committee stage the noble Lord made much play of the possibility of our dealing with hypothetical situations. But then he has to concede that the whole of this clause is in fact devoted to a highly hypothetical situation which has shown no signs of happening, and anyway the word "hypothetical" has become rather acceptable for the first time in this Bill. Therefore, the defence of this clause on the Government's side should not be that the whole thing is hypothetical; if it is that hypothetical they would do much better to forget about it. The Government cannot prove what has happened, and we cannot prove what has happened.
Everybody recognises that the possibility of the companies getting themselves out of difficulties by their own efforts—the noble Lord, Lord Winterbottom, used some such expression just now—has been very much vitiated by the fact that they are about to be nationalised. The other sources of finance have been denied them. What happens here—we have not perhaps completely made this plain—is that the company says: "I have suddenly run into trouble. I have no other source of finance except you, because I am about to be nationalised. Please will you lend me some money?" The Secretary of State then says: "Well, I am going to make a special declaration which you will have to agree to before I can lend you the money, and I am saying, in the process of making the special declaration, that if, in my view, you are in such serious trouble, then I reserve the right not to pay you any compensation at all". That seems to me the effect of where we are getting to. We have probably explored that argument at some length during the course of the two other debates we have had on the question of special declaration.
What we are coming back to here is the point that we were trying to make to the noble Lord; we were trying to be entirely practical. All we are really saying is that all the accountants tell us that they cannot be asked to deal with the even more hypothetical situation which is postulated in paragraph (b), where "it is probable that in the foreseeable future" a company might be unable to meet its liabilities without assistance. We have suggested that this is an unreasonable and an impractical provision to have in the Bill. On the ground of pure practicality in this hypothetical situation, we still believe that it would be wise to take this out. I am not terribly hopeful, in view of the previous debates we have had on this point, that we shall convince the Government of our case, but nevertheless I beg to move.
Lord WINTERBOTTOM: My Lords, I do not know whether it is a breach of the Rules of the House, but may I job backwards for a moment. I was resisting attempting to reply to the noble Earl's argument against me: the situation where a company had a chance of developing itself during this period and could not get the money required for undertaking a major new contract, or some such situation. That is not insolvency. That is a problem which can face a company outside the scope of the Bill. I think one must say that the threat of blight has been overplayed tonight, and I would make this as my main point in answering the noble Lord. Industries are not blighted by nationalisation, because any new money put into the companies before vesting is repayable in full. For this reason, there is every incentive for banks to support their clients. This is what I said earlier, but I have said it a little more clearly with a little assistance. Banks will continue to support their clients because they know that they are not going to lose as a result.
May I try to make myself as clear as I can on this point. When a company is running into financial difficulties, its directors will seek to avert a final collapse by early action—that is common sense—and not wait until the receiver is at the door. As soon as the danger signs appear, the company will seek whatever financial assistance it can get to stave off collapse. It may be that it has no option but to turn to the Government, if the size of the problem is too great for any other sources to

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deal with. While the ultimate collapse without assistance might be inevitable and clearly foreseen, it might nevertheless not occur at once. If the Government give aid in these circumstances, taking a long-term view of the situation, it would be just as much to stave off bankruptcy as if the bankruptcy were to happen on the next day. Paragraph (b) of subsection (6), which Amendments Nos.148 and 147 seek to delete, recognises the fact. If the paragraph were deleted, a company could receive aid a mere week before its bankruptcy and thus maintain its right to full compensation. I think this would not be fair, and for this reason I must resist the Amendment.
Lord STRATHCONA and MOUNT ROYAL: My Lords, I was surprised, but pleased, to hear the noble Lord saying that any money advanced by the banks would be repayable in full, because I seem to remember that some of the other Amendments we have been discussing have been attempting to establish exactly this and I had the feeling that that was not the case.
We do not agree about this; there are no two ways about it. If you look at the thinking behind this Amendment in the light of the discussions we had earlier on, about the refusal of the Government to recognise the possibility that companies can improve their situation from vesting day, we end up again by feeling that the Government are really saying, as usual, "It is heads we win and tails you lose". This is a one way street, entirely geared in their favour. However, I accept that it is a narrow point. We hope there will not be any special declarations. In view of the fact that everybody is getting rather hungry, I do not think there is any point in pursuing this further. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord MELCHETT: My Lords, in view of the really remarkably rapid progress we have made this afternoon, I think this might be a convenient moment to adjourn the Report stage until Friday. I beg to move that further consideration on Report be now adjourned.
Moved, That further consideration on Report be adjourned.—(Lord Melchett.)

EDUCATION BILL
8.8 p.m.
The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Lord Donaldson of Kingsbridge): My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a—(Lord Donaldson of Kingsbridge.)
On Question, Bill read 3a.
Clause 1 [The Comprehensive principle]:
Lord ELTON Lord ELTON moved Amendment No. 1:
Page 1, line 19, after ("pupils") insert ("of compulsory school age").
The noble Lord said: My Lords, the effects of the Bill as it stands are to debar local education authorities from placing pupils at schools to which admissions of pupils are made on the basis of selection by ability or aptitude. The Amendment leaves this criterion intact so far as pupils of compulsory school age are concerned. It sets it aside where pupils above this age are concerned. The necessity for this Amendment arises from the need of many local education authorities to avoid building comprehensive schools for excessively large numbers of pupils. Their intention would, therefore, be to obviate this necessity by the building of sixth form colleges. These colleges, unlike colleges of further education and polytechnics, are classified as schools, operate under the same regulations as schools, and provide what is unquestionably a part of secondary education; and they are, therefore, subject to the provisions of the Bill as it now stands. Such schools could not be maintained by the local education authorities under the Bill as it stands unless they operated on the principle that they did not select their applicants for places on grounds of either ability or aptitude.
The Amendment is familiar, since it was tabled at both the Committee and Report stages. On each occasion Her Majesty's Government argued that it was superfluous, and on each occasion I undertook to examine the arguments they had advanced before pressing the matter to a Division. On each occasion I did so, and on each occasion I found the arguments insufficient. This matter has been threshed out and winnowed over thoroughly twice already. We are left with one essential matter at

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issue. Her Majesty's Government agree that entrance to courses will be selective on the basis of qualifications and that those qualifications will be academic, which is to say that the selection will be by proof of ability or aptitude. This is common ground.
They also say, and here they do not persuade us, that entrance to the college as opposed to the courses will none the less not be selective. Finally, they agree that the range of courses offered will be relatively narrow and will be planned specifically to complement and not duplicate those offered at other institutions to pupils of similar ages. This we expected and accept. It follows, regardless of school-masterly, or should I say schoolmarmly, distinctions between admissions to colleges and admissions to the courses which they offer, that where there are more applicants to a college than there are places in it there will have to be selection, and further that where some pupils have suitable qualifications and others do not there will be rejections, and that both acceptances and rejections will be on grounds of ability or aptitude. Noble Lords opposite argue that these will be rejections from courses but not from colleges.
It is also the case, we argue, to follow the matter closely, that if a pupil was to apply not for a place on a course but a place at a college and had no qualifications suiting him to study there, the rejection with which his application must inevitably be met would demonstrate that entry to the college was selective on grounds of ability or aptitude and thus preclude its use—that is use of the college—by the local education authority in question. This being the case, we regard the Bill as being imperfect in this respect and not in a proper state to be enacted.
There are other considerations, but those to which I have alluded constitute I believe sufficient grounds for discontent with this part of the Bill as it stands, since it will have effects quite different from those which noble Lords opposite seek to achieve; effects which indeed they are anxious to avoid. I am sure that they are sincere in their belief that the distinctions they make between admissions to courses and admissions to colleges are sound, but to us they sound a little like sophistry, and they do ask us to assume that the courts will concur with
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them in their really very odd interpretation of what appears to us to be reasonably plain English. I notice that the noble Lord and the noble Baroness sit pointing towards me like a double-barrelled gun. There will, therefore, although this is a Third Reading stage, be an opportunity for them to fire twice. The noble Lord looks as though he has loaded only one barrel.
It is essential that he should inform us, then, what it would be his intention to do supposing some untimely litigious person was to bring a case over the rejection of a pupil for not being qualified for courses for which he has applied or, more likely, an application of a student simply to go to the college. I do not think it will suffice for him to say that this is an exceedingly unlikely and hypothetical case. All cases are hypothetical until they arise, and it is the function of Parliament, and principally the revising Chamber, to anticipate them. Therefore, if we cannot persuade him that our interpretation of the Bill is right, and his is at the best dubious and at the worst wrong, he must tell us, should this prove to be the case, what it would be his intention to do other than to close overnight, as it were, a large number of sixth form colleges up and down the country. We must have that elicited without fail at this stage. I beg to move.
8.14 p.m.
Lord ALEXANDER of POTTERHILL: My Lords, I rise to support the Amendment, which I did at earlier points when this matter was discussed. At that time the noble Lord, Lord Donaldson, disagreed with the figures I quoted. If my memory is right he suggested that there were only some 72 sixth form colleges, and of these the Department felt there were only three that could be regarded as selective. I hope I have quoted him correctly. I have checked the compendium of six form colleges, which lists 88, and gives the names of the colleges and their prospectuses in detail. I have examined carefully those that claim open access, and I find it astonishing if the Department has sufficient naivetè to accept open access as meaning what it says. There are only four of the 88 six form colleges that in my judgment would satisfy Clause 1 in this Bill. The remainder are to a greater or less extent selective, indeed in some cases openly conceded.

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I quote from a particular sixth form college, Bilston, which has open access, but finishes by saying:
"Student entry depends mainly on interview and school recommendation."
Is there a grammar school that would not accept the definition of open access if it was allowed to accept its pupils on the basis of interview and school recommendation? When the noble Lord argues that admission to courses is quite different from admission to the institution, if indeed sixth form colleges only offer certain courses—and this is true of almost all of them, and they mostly require evidence of ability to satisfactorily pursue the course—is this any different from a grammar school which offers 0-level and A-level courses and merely seeks evidence that those who are admitted can pursue these courses satisfactorily? I find it difficult to see the difference.
I have already made clear to your Lordships that I accept the principle of comprehensive education. I believe that Clause I can be sustained if it is restricted to pupils of compulsory school age, leaving sixth form colleges to offer courses. Some of them offer rather a wider range than others; some of them essentially offer A-level and sometimes 0-level courses. Otherwise, as I see it, the 88 sixth form colleges will be compelled to become tertiary colleges, a change which I am bound to say personally I would greatly welcome since I have long advocated tertiary colleges. But I do not believe that this is the Government's intention. I believe that the Government assume that under Clause 1 the sixth form colleges could continue as they are. I am bound to put to them that in my judgment any parent, indeed any ratepayer, taking a local authority to court would be bound to win under the terms of Clause 1 on the grounds that these colleges were indeed in breach of Clause 1. I very much hope therefore that the Government might examine this again, and I hope accept the Amendment as being in the best interests of the Bill itself.
8.16 p.m.
Lord DONALDSON of KINGSBRIDGE: My Lords, I find it impossible not to quote from the Hunting of the Shark:
"Like the Bellman may I say that what I tell you three times is true."
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I really made the Government's position absolutely clear when this Amendment was discussed in Committee and on Report. In Committee I gave the September 1975 statistics which showed that of the then 64 sixth form colleges, only 14 operated a general selective admissions procedure; at Report I gave the latest statistics for September 1976 which showed that of the now 72 sixth form colleges, only three operate a general selective admissions procedure. These facts speak for themselves. All but a handful of comprehansive sixth form provision is open access, including, might I say, Luton sixth form college.
The misunderstanding over Luton is symptomatic of the basic misunderstanding from which we are suffering. By "open-access" I do not mean, as the noble Lord, Lord Belstead, suggested, that colleges must provide any courses at any standard for any pupil who wishes to be admitted. The term "open-access" simply means that there is no general academic requirement—such as 5 0-levels—before a pupil is admitted to a sixth form. This type of general entrance requirement, and this alone, is what the Bill seeks to prevent. I do not feel that more argument on this will get us any further, and I am not prepared to accept the Amendment. In answer to Lord Elton's particular question, if a student is unqualified for a course he will be rejected. There is no question of a student applying to a college without simultaneously applying to attend a course, which I think deals with the point the noble Lord raised.
Lord BEAUMONT of WHITLEY: My Lords, I think we are in something of a dilemma here. If the noble Lord, Lord Donaldson, says it three times I am sure he thinks it is true, but that does not necessarily mean that we have not got ourselves into a rather tricky position. I think that there is considerable force in the points that the noble Lord, Lord Elton, has been putting. On the other hand, I think that his solution is worse than the trouble. I think that if this Amendment was passed we might find ourselves in a situation where the children who want to stay on at school after compulsory school-leaving age is finished, who for years and years we have all been encouraging to do exactly that,

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and who want to stay in a school atmosphere and not go out into a different form of college, will either find that they cannot do it because a local education authority may set up completely selective sixth form colleges, or may find special schools set aside which are really secondary modern sixth form colleges. That would be a disaster. That is the kind of thing which could happen if the Amendment was passed.
I think everyone has got himself into a muddle over this. I think that the Government have got themselves into the most muddle and it is up to them to produce legislation which makes sense. But I do not think this Amendment is the right answer, and if it were to be pressed to a Division I would certainly advise my noble friends to abstain.
Lord ALEXANDER of POTTERHILL: My Lords, the Minister quoted statistics as at September, 1976. May I suggest that I send him a copy of the compendium of sixth form colleges, which lists 88 with their addresses and full details relating to them?
Lord DONALDSON of KINGSBRIDGE: With the leave of the House, my Lords—and we must not have an argument about statistics—I am advised that this list includes sixth-form centres, which accounts for the discrepancy. But we will communicate.
Lord ELTON: My Lords, I cannot profess myself in any way satisfied by what I have heard, and heard, as the noble Lord rightly says, three times. I am tempted to threaten his life with a railway share. In the first instance, it is plainly open to anybody to apply to the principal, head or whatever of a sixth form college and say, "I want to come to your college for a year or two to improve myself, "but he will be told, according to the noble Lord, "You cannot do that; you can apply only for entry to a course; but you cannot apply to do that because you are not qualified, so you cannot come here". It is sophistry to say that that is not selection.
Lord DONALDSON of KINGSBRIDGE: My Lords, we should not be arguing about this, but surely what happens is that the parents say to the
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headmaster what the noble Lord has said and the headmaster replies, "What course would the boy like to do?". They discuss the courses and find that he is qualified for one and not the other and the headmaster says, "He can come and do this one but he cannot do the other". It seems to me to be as simple as that.
Lord ELTON: It may seem simple to the noble Lord but I do not think it will seem so simple to the courts, and our fear is that it will reach the courts. What lie described was, as it happens, a college which is not wholly but partly selective, and those words we shall be referring to later. It is clear, I suspect, from the noble Lord's failure to act at our invitation on an earlier Amendment designed to remove the words "or partly" from the Bill, that it is the intention of his friends at the other end of the corridor to put the words back, and that will have exactly the effect I described, and that is, ruling these colleges out of use by the local education authority. Then it will be too late, because the Commons cannot produce a new Amendment. Therefore we come to this water jump which the noble Lord refuses to leap: what is he going to do then, if the courts find against him?
The noble Lord belongs to a Party which has a goodish track record on this matter. There was the Enfield case, where they found themselves in an analogous if not a similar difficulty, and they went to Parliament with fresh legislation to put things right. Will the noble Lord, regardless of the fact that it will make him look rather silly—because he will have resisted what by then will have been proved to be a sound argument—and his Party take sufficiently swift action to see that the results which otherwise would inevitably follow, to the enormous expense and inconvenience of local authorities, are put right? As the noble Lord, Lord Beaumont of Whitley, said, we are in a dilemma. We are loath to press things unnecessarily and we are loath to pick unnecessary quarrels, but the noble Lord is at the moment putting us in possession of a Bill which does not say what he wants it to say with sufficient clarity for all to be agreed that that is what it says.
We have had the Bill since July, the Commons have had it since the beginning

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of the year and the Parliamentary draftsmen have had it throughout. It is not a lot to ask that a Bill, and a short Bill at that, should at this stage say what the Government want it to say with sufficient clarity to convince us that that is what it means. I have spoken the last few paragraphs at greater length and rather more slowly than is my custom because I hope to tempt the Minister to his feet to tell us, as silence is rather damaging in these circumstances, what they will do if and when this situation arises.
Lord DONALDSON of KINGSBRIDGE: With the leave of the House, my Lords, I will not respond to that hypothetical suggestion.
Lord ELTON: My Lords, it is with enormous reluctance, and I suspect it will prove with hindsight to be against my better judgment, that in order to gain the goodwill of your Lordships and of noble Lords opposite I will not press the Amendment. But I will write to the noble Lord, Lord Donaldson of Kings-bridge, such a letter as he has not received before if such a case comes before the court and the result is what I expect. We shall then take every step available to see that legislation is put through very quickly. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.28 p.m.
Lord BEAUMONT of WHITLEY Lord BEAUMONT of WHITLEY moved Amendment No. 2:
Page 1, line 20, leave out ("wholly")
The noble Lord said: My Lords, it is the object of noble Lords on these Benches to be as helpful as possible, and I hope that with this Amendment we have been exactly that. Your Lordships will remember that in Committee we took out the words "or partly" in subsection (1), so that the provision now reads:
"… local education authorities shall … have regard to the general principle that such education is to be provided only in schools where the arrangements for the admission of pupils are not based"—
originally it was "wholly or partly" but we took out "or partly"
"wholly on selection by reference to ability or aptitude."
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Noble Lords opposite and noble Lords on these Benches held that it was a wrecking Amendment. Although conservative noble Lords denied that it was meant to be, I think there can be no doubt that it was. It seems to me that the words "wholly or partly" were unnecessary in the first place, and therefore I hope for the goodwill of noble Lords opposite in seeking to remove the word "wholly" so that the provision would read:
"… arrangements for the admission of pupils are not based on selection by reference to ability or aptitude."
That would make it absolutely plain, quite clear, very simple and how it should read. I know I shall have the goodwill of noble Lords on the Conservative Front Bench because in another place their honourable friends tabled an Amendment to remove the words "wholly or partly", and, having themselves removed "or partly", they cannot possibly object to my trying to remove "wholly". The Amendment would restore the general tenor of the Bill in a way which would make it simple and easy to understand.
Lord DONALDSON of KINGSBRIDGE: My Lords, may I first say that I appreciate the motive that led the noble Lord, Lord Beaumont, to move this Amendment. During Committee stage the Opposition persisted in forcing an Amendment to remove the words "or partly" from Clause 1—and hence virtually to destroy the comprehensive principle—even when the wrecking nature of the Amendment had been clearly demonstrated. This Amendment, by removing the word "wholly", restores to Clause I a meaningful comprehensive principle. Clause I would now require admission arrangements not to be "based on selection by reference to ability or aptitude", which seems to me, as to the noble Lord, fairly unequivocal. This Amendment is undoubtedly an improvement, and as such I welcome it. I must, however, reserve my Government's position when the Bill is considered in another place, because we shall have to consider carefully the wording of Clause 1 if this Amendment is accepted. Subject to that, I welcome the Amendment.
Lord ELTON: My Lords, this Amendment would seem to have its roots in the Committee stage of the Bill. It was then

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that the noble Lord, Lord Beaumont, spoke to our third Amendment to the Bill which he has since referred to this evening to remove the words "or partly". He said that it was wrecking in effect if not in intention and that,
"maybe the answer is that we should go away again—and I speak for noble Lords on all sides of the House—and try to think of an Amendment to the Bill which would allow a little more flexibility."
He has gone away and this is what he has come back with—an Amendment that will have the effect of restoring the Bill to almost exactly the condition it was in before your Lordships decided in Committee to amend it. Originally he had said that the schools used by local education authorities must be schools where arrangements for the admission of pupils are not based wholly or partly on selection by reference to ability or aptitude. We, arguing that it was difficult to think of many schools that would not have, perforce, to have some element of selection, sought and found your Lordships' concurrence in altering that phrase to, "arrangements not based wholly on selection". The noble Lord, Lord Beaumont, now seeks to make it read, "not based on selection".
"Not based on selection" is simply a weaker way of saying "not based wholly or partly on selection". The difference between the two phrases is very narrow indeed and that between the noble Lord's phrase and "not based wholly on selection" is much wider. So our first objection to this Amendment is therefore that it seeks to overturn a decision that your Lordships have already taken in Committee, which we think is not proper. The noble Lord has adduced no reason sufficiently fresh to suggest that he seeks to do anything else. It is a bad practice to reverse at Third Reading decisions taken in a Committee of the whole House, and that alone is sufficient ground for us to resist the Amendment.
Our second reason is that the noble Lord, Lord Beaumont, claimed, when speaking against the words "or partly" at the Committee stage, that he was speaking for Peers on all sides of the House when he said that we should go away and think of something better. In my remarks on the Question, That the clause stand part of the Bill? I made it clear that he did not speak at least for us.
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It was the view of the Government—in which he encouraged them—that this was a wrecking Amendment. We did not then, and we do not now seek to wreck the Bill. It is a detestable, partisan, doctrinaire and contemptible little Bill and untimely to boot, but we do not seek to wreck it because we wish to keep faith with our undertaking to respect the success with which the Labour Party "conned" the public into voting for a Manifesto of which this is an attempt to act as a fufilment.
We invited the Government, therefore, to introduce a phrase of their own. When we took off the straitjacket of "wholly or partly", we invited them to dress themselves in something more comely and more flexible. This they resolutely refused to do on two applications, and therefore, although they did not make the rod to beat their back, they have colluded in leaving it where it is. Moreover, there is an element of the incongruous in the circumstances in which it is the noble Lord, Lord Beaumont, who brings this doubtful Amendment before your Lordships. It was he, after all, who persuaded your Lordships to introduce into the Bill the words that now stand as new subsection (3) and which read:
"Subject to subsection (1) above local education authorities shall have a duty to arrange for the admission of pupils with particular needs to the schools most suitable for them."
Whatever the defects of drafting that may present, its intentions are honourable and sensible and they are the intentions of a Party that actively espouses the comprehensive clause. They sit very well with the Bill as it now reads. But the requirement within which they are expressed is a requirement that is specifically stated to be subordinate to the requirements of subsection (1). It is in the noble Lord's own words, "subject to subsection (1) above". Very well; what is the principal requirement of subsection (1)? It is the very requirement that the noble Lord seeks to alter. At present it says that the local education authority shall provide for the education of pupils at schools where the arrangements for the admission of pupils are not based wholly on selection by reference to ability or aptitude. That makes sense. It is compatible with our Amendment taking out the words "or partly". It comes close to being the flexible delimitation of our Amendment that the noble Lord set himself to find at Committee stage.

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Indeed, when he produced it at Report stage as Amendment No. 2, that is what we thought it was. But now the noble Lord seeks to alter the requirement to which he has made his new subsection subject to a requirement that no school by which an LEA seeks to discharge the function given to it by the noble Lord of arranging for the admission of pupils with particular needs shall be other than a nonselective school—that is to say, a school that cannot meet some of the most important of those needs (the need to have one's own abilities and aptitudes catered for) except by offering exactly the same spread of opportunities as every other school.
It seems to me that this is a set of circumstances that perfectly illustrates the weaknesses and contradictions of the comprehensive system as it is being built up by the Labour Party and welcomed by the Liberal Party. I have yet to find a better. However, we have a principal reason which is that it is bad Parliamentary practice to reverse at Third Reading a decision of a Committee of the whole House and I feel that that is perhaps sufficient ground on which to stand, though I would ask your Lordships to bear the other matters in mind when considering our opposition to this Amendment.
8.37 p.m.
Baroness ELLIOT of HARWOOD: My Lords, I dislike this Amendment, because I dislike what I call the dictatorial attitude that the Bill takes towards all the education committees throughout the country. These committees were freely elected and are responsible for the education in their area. They are, in my experience, generally very knowledgeable about local conditions and about the children in their area. I know that the object of the Bill is to try to make every school in the country exactly the same. What it cannot do is to make all the children the same. They will be different and the idea that we should dictate from Whitehall to all those people who have worked—as we have all worked—very hard in local government on education and other committees and shall say, "You have got to do this. You can't do anything else. There is no method of having any choice of any kind at all", is
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something I heartily dislike. I dislike the Bill for many reasons but this is the one for which I dislike it most.
If one takes out this word "wholly", that means that one is once again taking out any loophole or opportunity which a local authority might have for dealing with the conditions in its own locality. They are very different and varied. I remember listening to the noble Lord, Lord James of Rusholme, in one of our debates in which he told us that in the area in which he lives—I believe that it is Cumbria—the making of a comprehensive school entails children driving either 12 or 14 miles between two schools in order that the schools should be called comprehensive. Anything more idiotic I can hardly imagine. I cannot imagine being on an education committee and allowing such a thing to happen, but perhaps the education committee on which I sat for many years was more resistant towards dictation from above. The committee in question was not in England but in Scotland, and perhaps there is not so much dictation there. This seems to me to be altogether a most depressing end to the discussions that we have had on this issue, and I very much hope that we shall not allow this Amendment to go through.
Having much old Liberal blood in my veins, I find it very difficult to listen to the noble Lord, Lord Beaumont of Whitley, taking out of a Bill the freedom, which we all fought for in former days, to do what one thought was best for one's children or in connection with education. That has all gone by the board. One has to fit into this pattern, a pattern which may be very good or very bad; we do not know. At any rate there is no alternative at the moment. If this phrase is taken out, the situation will be made even more dictatorial than before and I hope very much that we will not agree to this.
Lord BEAUMONT of WHITLEY: My Lords, one thing that the noble Baroness said must not be allowed to go unchallenged. I suppose that it would not have been left to go unchallenged in any circumstances, because it is a point which the noble Lord, Lord Donaldson of Kingsbridge, and others have made at Second Reading, at the Committee stage, and since. I am afraid, with great respect to the noble Baroness, that it

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just is not true that the object of the Bill is to make all schools the same. That really is not so. There are many comprehensive schools in this country already and anyone who has been around any number of them knows that they are all completely different. It is said that some are worse than others, which means that some are better than others. It all depends upon the way that one looks at it. My view of education is that all schools of any kind are bad, and some are worse than others. That applies to comprehensive schools as well as to others.
Without being led away on these rather odd educational philosophical topics, I must take up the two points which the noble Lord, Lord Elton, put to me. The question of whether or not by this Amendment I am in fact derogating from the Amendment which I put forward previously, and which was passed, is one of these rather muddled matters, rather like the one we were discussing on Amendment No. 1. I certainly take the view that the words,
"the arrangements for the admission of pupils".
have to do with the general admission of pupils. As the noble Lord, Lord Donaldson of Kingsbridge, said on the last Amendment, they are to do with whether there is a general academic standard. They are not to do with whether a particular child, an individual child, cannot go to an individual school because that school has the best facilities for that particular child. If that were done in bulk it would go against Clause 1, but if it is done individually and with sensitivity, and within the comprehensive scheme, it appears to me to be completely allowable and, indeed, what the Bill and the Government envisage—
Several noble Lords: It is not in the Bill.
Lord BEAUMONT of WHITLEY: My Lords, it is in the Bill; noble Lords are wrong here. The phrase,
"the arrangements for the admission of pupils",
does not, I submit, mean anything which covers just individual cases in detail like that. It is about the arrangements which will be made for the general admission of pupils. That is what it says. All right, I have put in the word "general", but even that I do not think
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adds very much. It seems to me that the Government are absolutely on safe ground here and so am I. Now, the noble Lord, Lord Elton—
Lord ELTON: My Lords, will the noble Lord permit me to intervene for a moment because I am not quite sure that I follow his argument. He is saying that if one pupil is rejected on grounds of ability or aptitude, that is not a breach of the general principle. Presumably, if 50 are rejected it is a breach of the general principle. Will he kindly tell us how many one can breach the general principle of and get away with it?
Lord BEAUMONT of WHITLEY: My Lords, why not take the situation of accepting a child? That is what we are talking about. In anything that I have said—in the Amendment that we passed at the last stage; indeed, at no stage—I have not been talking about rejecting children. I was talking about accepting children with special needs—that is the point—and I think that one can, so long as there is a comprehensive system with not a general degree of acceptance, or rather not general acceptance of all children, say, of a particular I. Q., of a certain ability, of a certain aptitude. I hope that the noble Lord is listening instead of giggling. If we have that, I think it is perfectly admissible to make the kind of provision that I talked about on the last occasion for people who need a special course, which was a matter which was raised when we were talking about sixth form colleges, people with a special artistic aptitude which can be catered for in a particular school. It does not seem to me that this is a breach of that at all. I do net know whether the Government want another opportunity to comment on this matter; they have probably had enough of it. But I maintain that this is the common sense of what we are saying.
We get to the case put forward by the noble Lord, Lord Elton; that it is, in fact, a bad thing and against the custom of your Lordships' House that at this stage we should go back on a decision made in Committee. I have known it done; it is not inviolable. I should have thought that there were two very strong reasons for doing it tonight. One is that the Conservative Front Bench have brought this on themselves by saying that this is not a wrecking Amendment when it quite

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obviously is, or by going on to say, "Well, if it is a wrecking Amendment, it isn't meant to he", which is somehow meant to make it all right. If they did not mean to pass this Amendment to wreck the Bill, they should not have passed it. Let us put them back on the right track. If they meant to pass it, it was a wrecking Amendment and they should not have passed it. That is a very good reason why this Amendment should be passed, because it is not the ordinary course of an Amendment as it usually conies up in your Lordships' House to be reversed as a minor Amendment in a Bill—it is a wrecking Amendment. I do not think that it is improper to reverse a wrecking Amendment in this way, particularly when noble Lords think that it is not a wrecking Amendment—
Lord DONALDSON of KINGSBRIDGE: My Lords, I should like to say that I agree with the points he has been making in his last two or three sentences. I certainly think that it is a wrecking Amendment; I have always said so. I think that there would be a case here, if this were the last opportunity of dealing with it. for going against the custom of your Lordships' House. But as our Amendments have to be considered in another place, this Amendment and the original wrecking Amendment, will certainly be among those which will be considered. I think that the noble Lord has done valiant service to us in raising the points he has which will be studied. But I think it is probably unnecessary to breach this general, though not final, convention at this stage because there is another opening later.
Lord BEAUMONT of WHITLEY: My Lords, I accept rather reluctantly what the noble Lord says. Why I accept it rather reluctantly is, I hope, a reason with which the Conservative Front Bench might have some sympathy; namely, that I think it would have been much better if we had been able to find a way past this wrecking Amendment in this House by our own decision, rather than to send it to another place for the Government to put back what was originally in the Bill. It would have been much more sensible; it would have been much more acceptable. But I accept that one has to
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have very strong grounds to breach the conventions of your Lordships' House. Frankly, at this moment I feel that there are very strong grounds, but since we may be able to look forward, we hope, to a rather more constructive future on the remainder of the Third Reading of the Bill, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.49 p.m.
Lord BEAUMONT of WHITLEY Lord BEAUMONT of WHITLEY moved Amendment No. 3:
Page 2, line 21, after ("arrange") insert ("as far as is practicable").
The noble Lord said: My Lords, this is an Amendment which I inserted after listening to and reading the speech of the noble Lord, Lord Alexander of Potterhill, at the point where we put in this subsection (3) which deals with the duty to arrange for the admission of pupils with particular needs to the schools most suitable for them. The noble Lord, Lord Alexander of Potterhill, made the same point which was made by the noble Lord, Lord Elton, on the last Amendment: that once you open the door at all and say that one person can go in, then there is a duty to put everyone in and the whole thing becomes unmanageable. I know I am paraphrasing the words of the noble Lord, Lord Alexander of Potterhill, and I know that he will put me right, but if we put in this Amendment, the words "as far as is practicable", it would give a saving clause which might help to get round that particular difficulty which the noble Lord foresaw. I do not foresee it myself but obviously noble Lords did. I hope this Amendment is drafted properly to qualify the subsection so that it is a greater safeguard for local education authorities. I beg to move.
Lord ALEXANDER of POTTERHILL: My Lords, I greatly appreciate that the noble Lord, Lord Beaumont of Whitley, has tried to meet the point which I raised when this matter was previously discussed and I particularly regret that I do not think he has solved the problem I had in mind. I had hoped that the Amendment he might move would be simply to delete "a duty" and insert "the power". That seemed to me to be the essential problem. If a local education authority

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has a duty to make arrangements for individual children according to their individual needs, the first thing it has to do is to ascertain the individual needs of all the children in its area. It follows, therefore, that not only would it be necessary to restore the 11-plus but a super-plus would have to be devised, to establish not only the differing academic abilities or aptitudes of the children but also any other needs they might have. Its practicability was what worried me.
On the other hand, if a local education authority had the power there would be an entirely different situation, in that you could give effect to the full significance of parental choice. I accept the conception of the noble Lord, Lord Beaumont of Whitley, that comprehensive schools will vary a great deal one from another. Indeed, I noted with great approval that the Secretary of State in his speech made the point very clear that they would in fact vary and perhaps offer different courses and opportunities. That is inevitable. Therefore it would be very desirable to have a degree of flexibility where a local authority, if a parent approached them on the subject or indeed if the head of the school drew their attention to a particular child whose needs did not fit in with that particular comprehensive school, could say, "This child would be very much better placed in another comprehensive school where his or her needs would be more adequately met." If, therefore, the power was there, this could be done. But to place a duty on an authority to do it seems to me to place them in an extraordinarily difficult position.
As a relatively new boy in your Lordships' House I am very ill-informed on procedures in these matters and I gather it is not possible to move what I believe is technically called a "manuscript Amendment" at this stage. I am not sure whether the other place when this Bill goes back to them can alter Amendments we have made or can only either accept or reject them. But I hope that when this Bill comes back, if the Government are sympathetic to this degree of flexibility, it will be possible to find an Amendment which gives a local authority the power, without placing a duty on them—which would in my opinion place an impossible task on them and indeed would be utterly contrary to the intentions of Clause 1.
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I am, however, most grateful to the noble Lord, Lord Beaumont of Whitley, for seeking to meet the point I made.
Lord DONALDSON of KINGSBRIDGE: My Lords, our position can be stated very shortly: we did not agree with this clause which was imposed upon us. We think, however, it is the better for this Amendment.
Lord BELSTEAD: My Lords, I must say that that is pretty cold comfort to the noble Lord, Lord Alexander of Potterhill. I am one of those in your Lordships' House who, although I differ in my view with the noble Lord, Lord Beaumont of Whitley, on the effect of what the Conservative Party did to the words wholly or partly "in Clause 1, believe that we supported the Liberal Party in the insertion of this subsection, and we understand the argument put forward by the noble Lord, Lord Alexander of Potterhill. We hoped that the Government would give at least some cognisance to what someone of the noble Lord's experience has put to the Government. That reply is extremely disappointing and we shall wait with interest to hear what the noble Lord, Lord Beaumont of Whitley, is going to do with his Amendment.
Lord BEAUMONT of WHITLEY: My Lords, it is quite clear what I am going to do with my Amendment. The Government Front Bench think it improves the matter. The noble Lord, Lord Alexander of Potterhill, thinks we made such a mess of it anyway by passing the previous Amendment that there is not much we can do at this stage—if I understand him rightly he does not object to this Amendment; he just thinks it will not do very much. I imagine that the Conservative Front Bench support this Amendment. Therefore, my Lords, I hope your Lordships will pass it.
Clause 5 [Committee of Inquiry]:
8.57 p.m.
Lord BEAUMONT of WHITLEY Lord BEAUMONT of WHITLEY moved Amendment No. 4:
Page 4, line 43, leave out ("and").
The noble Lord said: My Lords, it might be for the convenience of the House

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if with this Amendment we discussed Amendment No. 5. This is a brief point which I want to make. It is important, if we have this inquiry which, as your Lordships know, we on these Benches think would be an extremely good thing, that we study the experience gained by other countries of the comprehensive system. Your Lordships will know that I have quoted twice already, and in order that your Lordships shall accept it as true, as apparently you do from the noble Lord, Lord Donaldson of Kings-bridge, I will say it for a third time, that what is wrong is not a crisis of the comprehensive schools; it is a crisis of the secondary school system and it is common throughout the whole of the Western world. It is for this reason that international comparisons are very important, and the study of international practice, some of it going back a long way further than ours, is important. I say to noble Lords on the Conservative Benches that it is important in making up your mind one way or the other. I am certain that a lot of the evidence will be just as conflicting in other countries as it is in this country. It is important though that we look at it. I am sure the Government will tell us that the Amendment is unnecessary and that the Commission will do exactly that, but I should feel happier if it was, so to speak, put down in the Bill as part of the terms of reference. I beg to move.
Lord DONALDSON of KINGSBRIDGE: My Lords, the clause to which the Amendment applies was added to the Bill on Report against Government advice, and on that occasion I gave the Government's reasons for resisting a Committee of Inquiry. I do not intend to repeat those reasons today. To extend the terms of reference, as this Amendment suggests, in no way ameliorates our fundamental objections to this clause; hut your Lordships have added it to the Bill and as it is there I must look at it. Of course we should expect the experience of other countries to be considered by any such Committee of Inquiry, but multinational comparisons are notoriously difficult. To pay particular regard to the experience of other countries would not necessarily be the most profitable way to proceed in an examination of our own system. However, if the
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noble Lord presses his Amendment we shall not vote against it. The Government reserve their position to consider the whole clause in another place.
9 p.m.
Lord ELTON: My Lords, it is a rare and perhaps agreeable experience to follow the noble Lord so closely in some of the things he said. We also feel that this is a superfluous Amendment. It is not our function to draw up the complete terms of reference on such a committee, only to ensure that those of future contemporary national concern are included. I hope that this short debate will help serve to remind noble Lords—not least those on the Liberal Benches who persist in helping Her Majesty's Government to ram their obnoxious nostrums down the throats of an increasingly repentant electorate—that just about every other evolved nation that has embarked on an advance to the comprehensive principle is now in rueful retreat therefrom. One could hope that the noble Lord, Lord Beaumont of Whitley, would be on the Committee to learn these lessons at first hand rather than at the expense of the taxpayer and the public—almost, but not quite. In the meantime, I can only advise your Lordships that while I am not seeking to dissuade your Lordships from voting for this Amendment if it comes to a Division, I can find little reason for your Lordships to make a great effort to support it.
A Committee such as this as is required by the Bill could scarcely function without reference to foreign experience. In that it is superfluous to particularise. On the other hand, given the chance, it would not be permitted to look at matters such as size, discipline and mixed ability teaching. If you doubt me, my Lords, read what noble Lords opposite said with great animation when resisting the insertion of the clause when we put it in. In that it was necessary to particularise. So I would not seek to get your Lordships to resist Lord Beaumont's Amendments; I would merely reflect in passing that it is his Party which is using to no good purpose the time which Her Majesty's Government are so fond of accusing my Party of wasting.
Lord AUCKLAND: My Lords, this Amendment, particularly paragraph (c),

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has been brought in several years too late. Comprehensive schools have been in action all over the country since about 1949. There have been various comparisons and studies made; headmasters and headmistresses from secondary modern schools have been to America and other countries to study this for the past 20 years. To quote one instance, a diplomat I know in this country, representing one of the East European countries, has one of his children at a well known comprehensive school in London. One of the complaints that he has registered is that the classes are too big and the discipline is not as strict as it would be in his country. In their schools—which are presumably all run by the State—classes are much smaller and discipline is much stricter. While I am sure that this Amendment has been put down with the best of motives, it would be very difficult to put into action. The Commission will have enough to do as it is. As I said earlier, it is my presumption that all this has been a progressive situation since comprehensive schools started and presumably will continue. No Amendment of this kind seems to be necessary.
Lord BEAUMONT of WHITLEY: My Lords, the noble Lord, Lord Elton, is overoptimistic if he assumes that inquiries of this kind will necessarily look at foreign practice. It is one's experience over a long period of years that if an Englishman or English body can ignore anything which happens outside these shores, he or it will certainly do so. When we come to discussing education in this House, very often the only comparison with anything abroad which is ever mentioned is that noble Lords on the Conservative and Cross-Benches raise for us the experience of Russia, and the example of Russia, as if it were a good example to follow the example of a totalitarian country in moving to selectivity away from comprehensive schools. I take the point that one should not over-particularise in this matter as to what the Commission should look at. I hope that this debate will have made its point. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.6 p.m.
Lord BEAUMONT of WHITLEY Lord BEAUMONT of WHITLEY moved Amendment No. 6:
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Page 5, line 4, leave out ("two") and insert ("three").
The noble Lord said: My Lords, this is going to be a very difficult and a very complex inquiry indeed. Noble Lords have said that the inquiry of the noble Lord, Lord James of Rusholme, into teacher training was carried out in a very short time and was an admirable piece of work, as indeed it was. It was simplicity itself—and it was complicated enough—compared with this particular inquiry. We have already said—and it has just been said on all sides of the House—that of course we will look at international comparisons. That will be an enormous task in itself in addition to looking at what we are going to consider at home. It will be very difficult to draw conclusions. I cannot see that we can possibly have a full report within two years. Earlier, the noble Lord, Lord Elton, said that there was nothing to say that it should not be an interim report, and I take that; point. I also see a very good reason in speeding up the sitting of bodies and giving them target dates. It seems to me that for an inquiry of this enormous size the Conservative Front Bench was being harsh and tough in limiting it to two years. I should have thought that three years was a con5iderable improvement. I put it forward as one of my little peace offerings. I beg to move.
Lord ELTON: My Lords, it is always interesting to examine peace offerings. The Red Indians had a habit of burying them, I seem to remember. The suggestion is that we have here an inquiry of such complexity and size that it cannot be expected to report effectively within two years. Leaving aside the matter of whether or not such a report at the end of two years would be an interim one, whether it, would be proper to term it as such or whether a new report would have to be prepared, I would point out to the noble Lord that the James Report—a rather smaller matter—took one year to run to completion. The Bullock Report—a highly complex, sophisticated, statistical analysis over a very wide field outside the schools as well as in them—took barely over two years to complete.
I do not therefore think that the requirement—though it is stiff—)s one that cannot be met. Your Lordships will recall the history of the inclusion of the requirement for this inquiry in the Bill. It came as a Siamese twin to an Amend-

1399
ment which precluded the enforcement of this Bill until the inquiry had reported. As a more substantial peace offering, and one which I suspect took the noble Lord opposite by surprise, I threw the other twin away and said, "Very well: let's have the inquiry". Obviously one could not make so large a concession without considering what was entailed. It seems to me that the setting up of the reorganisation which is envisaged by this Bill will go on apace, but I hope it will not be precipitate because, if it is, pupils and teachers will suffer. I would have thought that an inquiry which reported in two years and the shadow which its advancing report would spread before it would form official opinion sufficiently to have some effect on all but the most immediate results of this Bill. I think if we were to defer that for three years a great many wrong decisions might be taken simply because the Bill had not been published before those decisions were taken. I accept, therefore, with gratitude from the noble Lord that this is a peace offering. I hope it will not be necessary for me to accept it in order for peace to supervene, but I am afraid I cannot advise your Lordships to accept this Amendment.
Lord DONALDSON of KINGSBRIDGE: My Lords, the Government's position is the same as it was on the last Amendment. The clause is not acceptable, but were it to be acceptable the extension from two years to three years would no doubt be sensible. I therefore accept the Amendment as it stands but, in so doing, must reserve the Government's position to consider the whole clause in another place.
Lord BEAUMONT of WHITLEY: My Lords, I think that the noble Lord, Lord Elton, in rejecting my little peace offering is in fact very, very much understating the complexity of this inquiry. If we are really going to look at the changes in standards of schools against the background of complete change in the philosophy of education over the period and against a background of a complete change in our civilisation over the period, then I believe that if one says the Bullock Report was one of great complexity and took two years, this one would probably take six years. It is, I consider, three
1400
times as complex; and if the noble Lord put forward the demand for the inquiry which we supported in the first place, thinking it was not going to be as complex as that, he has made a mistake. However, the proposal was offered merely as an amelioration of what the Conservative Front Bench were putting forward. If they do not want that amelioration, so be it. I beg your Lordships' leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 6 [Duty to implement approved proposals as to maintenance or change in character of school]:
9.10 p.m.
Lord BELSTEAD Lord BELSTEAD moved Amendment No. 7:
Page 5, line 17, at end insert—
(""Provided that the necessary resources for building and equipment have been made available to give full effect to the Secretary of State's approval of the proposals."").
The noble Lord said: My Lords, I beg to move Amendment No. 7 and, if I may, I should like to take with it Amendment No. 8. I have put down these two Amendments again for two reasons. First, I believe that local authorities must be assured that they will not be forced to reorganise their schools without having the necessary resources to do so. Secondly, although I was grateful to the noble Lord, Lord Donaldson, for seeking to assist me at a previous stage, I have reservations about the assurances he was able to give me. Clause 6 lays a duty on local education authorities to implement comprehensive proposals which have been approved by the Secretary of State without any proviso that the necessary resources will be provided. It is this proviso which is incorporated in these two Amendments.
I think it is fair for me very briefly to remind your Lordships of the resources which are available for secondary reorganisation. Hitherto, only £25 million has been allocated specifically for reorganisation, and that was immediately oversubscribed three times and is being spent at the present time. There is at the moment virtually no secondary improvements programme and, with the rapid decline in school population which is forecast by the Department of Education and Science for the next 12 years or so, the basic needs programme will he reduced yearly. With

1401
that will also be reduced the programme for minor works, which is so often so useful to local authorities when reorganising their schools.
All that is encouraging news for public expenditure, but it leaves very little opportunity for the expensive rebuilding programmes which are demanded by reorganisation schemes. In addition, expenditure by authorities on equipment, which is also mentioned in the Amendments, is under great pressure. We read continually of authorities being forced to economise in a variety of ways, from the number of teachers employed to the quality of school meals being served. In the media and in the Press during the last few days we have been hearing and reading of warnings of further impending economies in local authority expenditure. This is fully understandable at the present time, but I must say it leads me to the conclusion that it is a delusion to believe that the necessary resources for building and equipment to enforce reorganisation within the foreseeable future are going to be available. I hope the Government will take notice of the warning which was delivered by the noble Lord, Lord Alexander of Potterhill, on Report stage that authorities will be encouraged to comply with the provisions of this Bill only if they can be assured that resources will be available for them to reorganise properly. So I do not believe that these Amendments are in any sense wrecking, because where resources are not available proposals ought not to be made, and approval should never be given.
The effects of these Amendments would be to prevent the Secretary of State from forcing an authority to propose a botched-up scheme which is never fair, either to staff or to pupils. But the really gaping loophole which these Amendments would plug is the crisis situation, which can occur when proposals have been conscientiously costed, proposed and approved in good faith by all concerned, and then the economic blizzard strikes, the school building programme is cut, local authority expenditure is reduced and an authority is left with the duty under Clause 6 to implement the proposals without the resources to do so.
The noble Lord, Lord Donaldson, has given an assurance that, in that event, under the Education Act 1944 the Secretary
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of State could use the discretion granted by Section 99 not to force a local education authority to implement approved proposals. I hesitate to question the Government's legal advice, but I must say that on rereading Section 99, it still appears to me to allow the Secretary of State to enforce a duty, not to relieve an authority of discharging a duty. I recognise that if the Secretary of State believed that an authority had insufficient resources, then he or she could choose not to enforce the duty to implement by not invoking Section 99, but that would be entirely at the Secretary of State's discretion and it is not written into the Bill. Even then, it would presumably be open to a third party to complain to the Secretary of State that it was unreasonable not to invoke Section 99.
If I am right in the train of thought which I have followed, this seems a most unsatisfactory way to leave the drafting of the Bill, hoping that the Secretary of State will be able to turn a blind eye and, indeed, will he left free to do so. That situation would leave local education authorities in peril of court action under Section 99, if they found themselves without the resources to implement Section 13 proposals, and it would leave the Secretary of State liable to the kind of case about the meaning of the word "unreasonable", which occurred recently over the Tameside situation. To leave Section 99 as the only remedy would appear to be most unsatisfactory, whereas these Amendments make the duty to implement reorganisation proposals, subject to the necessary resources, absolutely clear. I hope that on those grounds the Government may be able to accept these two Amendments. My Lords, I beg to move.
9.17 p.m.
Lord ALEXANDER of POTTERHILL: My Lords, I share the view of the noble Lord, Lord Belstead, that the Government might look at this sympathetically. There are very real problems involved in reorganisation. The worst thing that could happen is that this is done badly. That is the worst thing that could happen in the interests of the Bill. The noble Lord referred to the falling birth rate. Some of the small comprehensive schools that are now being established will not be viable within five or six years, because within that period they will have lost at

1403
least a quarter of the pupils they now have, and they will continue to go down. So that we are talking of comprehensive schools of 200 or 300.
The Secretary of State has said that she will be reluctant to approve a school of more than 1,000—a view which I readily share. But if you have a school of very much less than 1,000, then, again, within a measurable period of time it will be a school not of 1,000, but of 700 or even 600. These are problems which require careful thought and planning. Those who were most resistant to the principle of comprehensive education would be reassured by this Amendment that they would not be forced to do it badly, and that would be helpful. It is also true, as can be seen if you examine some of the arrangements which have already been approved, that we are endangering the principle because of them being done badly and causing a good deal of reaction.
From the Government's point of view, there is no harm in this Amendment, since the noble Lord, Lord Donaldson, has virtually sought to give an assurance that no Secretary of State would be so unreasonable as to require an authority to carry out proposals, when, manifestly, they could not be carried our satisfactorily. If that is so, then I hope that this Amendment might be accepted.
Lord WOLVERTON: My Lords, I spoke in support of this Amendment at some length at the Report stage. I intend to speak only briefly tonight, but I do so because I believe that it is necessary to include this Amendment in the Bill and I hope that my noble friend will press it to a Division. Today I was handed a copy of a joint release by the Department of the Environment and the Ministry of Transport about the proposed bypass to the west of Cambridge which they have decided to go on with during the first half of 1977. However, they have qualified their decision by these words:
"… subject to the availability of funds at the time."
If the Department of the Environment and the Ministry of Transport can put in those words, surely something similar can be included in this Bill. The noble Lord said that it might not be possible to do all these things because they would
1404
cost a lot of money. I suggested that I had heard mentioned the figure of £70 million, and it was not refuted. However, the noble Lord said that we ought to get the plans ready. Plans alter as time goes on and it seems to me to be a waste of time to make plans if no funds are available to carry them out. Therefore, I strongly support the Amendment.
9.21 p.m.
Lord DONALDSON of KINGSBRIDGE: My Lords, as the noble Lord, Lord Alexander of Potterhill, has said, this is not a wrecking Amendment and I do not accuse the Opposition of putting one forward. However, we have discussed this point twice—and this is the Bellman's third. I mentioned it at Second Reading, in Committee and on Report and I made it absolutely clear that the existing law allows for such eventualities as the noble Lord has postulated. I explained the Secretary of State's discretionary powers under Section 99, which the noble Lord is not happy about, but my information is that he need not worry about them. In answer to the noble Lord, Lord Alexander of Potterhill, I gave an assurance that authorities would not be required to reorganise before resources were made available.
I do not know how often one has to repeat oneself to get a point into the heads of people who think differently. My previous Secretary of State said the same thing during the debate on the Queen's Speech on 24th November 1975, and again at Second Reading in another place on 4th February of this year. My honourable friend Mr. Fowler, then Minister of State, said it again in Committee in May. Finally, I say it once more. No authority or governing body of a voluntary school will be penalised by the Secretary of State for failing to implement its plans under Section 13 if it can convince the Secretary of State that the resources to do so are not available. I do not think that I can say more than that; nor do I think that it is necessary to put into the Bill an Amendment which assumes unreasonable behaviour by a Secretary of State. I hope very much that what I have said will satisfy noble Lords in all parts of the House.
Viscount ECCLES: My Lords, it is not only the Secretary of State who might

1405
want to carry through a scheme when the resources arc not there. What about some of the local authorities? For example, let us take the Inner London Education Authority. They may very well want to push on with one of their schemes for amalgamating a grammar school with another school of a different character and that scheme may be very poor unless money is spent upon it.
May I stress the point which was made by the noble Lord, Lord Alexander of Potterhill. If this reorganisation is done badly, it will reflect for ever on the comprehensive system. While these things are being thought about and while money is very short one must consider the attitude of the staff of the grammar schools. I know one or two grammar schools, and the senior staff in those schools either are already deciding to leave or arc very uncertain about their future. I know one girls' grammar school where the staff have domestic obligations. They are afraid that if they do not accept the comprehensive solution they may lose their jobs, but they all say the same. If the money is not forthcoming to make the job reasonably possible for them to do, then they will not stay.
What I think we want is a clear statement in the Bill which will mean that neither the Secretary of State nor a local authority can press on with one of these "botched-up" schemes, as they are usually called, unless there is adequate money for the minor works and the equipment. I venture to say to the noble Lord opposite that he will get a better reception from the staff of grammar schools if this is in the Bill than if he just says, "Oh, it need not be in the Bill; you can trust us". I am not sure that they do.
Lord BELSTEAD: My Lords, I am grateful to my noble friend Lord Eccles for explaining so clearly what our worries
are on this Amendment. I do not know whether any of your Lordships remember that at a previous stage of the Bill my noble friend Lady Brooke of Ystradfellte, explained how the school of which she is Chairman, the Godolphin and Latymer school, which was a girls' non-denominational school, at the instigation of the Inner London Education Authority was to be joined up with two other schools to form a mixed Church of England school on a separate site. When that met with united opposition, the next recommendation was that Godolphin and Latymer should be joined up with another school of totally different traditions and objectives, the two sites to be separated by well over a mile and by busy main roads. That is the sort of thing that we are worried about and to which my noble friend Lord Eccles was referring.
With respect to the noble Lord, Lord Donaldson of Kingsbridge, if I may say so his discretionary powers under Section 99 are really not good enough. We must try to see that something is written into the Bill and I think it would be right for another place to look at this, considering that the very situation which I warned about in my opening speech—the intervention of an economic blizzard—may be just the situation in which we find ourselves, so far as education is concerned, within the next six weeks or so.
For those reasons, I ask the House to agree with this Amendment, on the grounds that I believe that the elected Chamber ought to look at the problem of resources as they touch this Bill, before it becomes law.
9.28 p.m.
On Question, Whether the said Amendment (No. 7) shall be agreed to?
Their Lordships divided: Contents, 49; Not-contents, 35.

CONTENTS

Airedale, L.

Faithfull, B.

Mowbray and Stourton, L. [Teller.]

Alexander of Potterhill, L.

Falmouth, V.

Amherst of Hackney, L.

Gainford, L.

O'Hagan, L.

Auckland, L.

Gough, V.

O'Neill of the Maine, L.

Balerno, L.

Gray, L.

Rankeillour, L.

Beaumont of Whitley, L.

Greenway, L.

Rochdale, V.

Belstead, L.

Hampton, L.

St. Aldwyn, E. [Teller.]

Bridgeman, V.

Hanworth, V.

Sandford, L.

Broadbridge, L.

Hives, L.

Sandys, L.

Cork and Orrery, E.

Hornsby-Smith, B.

Selkirk, E.

Cullen of Ashbourne, L.

Inglewood, L.

Shuttleworth, L.

Denham, L.

Kemsley, V.

Strathclyde, L.

Drumalbyn, L.

Lauderdale, E.

Vickers, B.

Eccles, V.

Long, V.

Ward of North Tyneside, B

Elles, B.

Mansfield, E.

Wolverton, L.

Elliot of Harwood, B.

Massereene and Ferrard, V.

Young, B.

Elton, L.

Merrivale, L.

NOT-CONTENTS

Ardwick, L.

Hamnett, L.

Ritchie-Calder, L.

Birk, B.

Houghton of Sowerby, L.

Shackleton, L.

Blyton, L.

Kirkhill, L.

Stedman, B.

Champion, L.

Lee of Newton, L.

Stewart of Alvechurch, B

Collison, L.

Llewelyn-Davies of Hastoe, B.

Stone, L.

Davies of Leek, L.

McCluskey, L.

Strabolgi, L. [Teller.]

Davies of Penrhys, L.

Maelor, L.

Taylor of Mansfield, L.

Donaldson of Kingsbridge, L.

Murray of Gravesend, L.

Vaizey, L.

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

Oram, L.

Wallace of Coslany, L.

Fisher of Camden, L.

Peart, L. (L. Privy Seal.)

Wells-Pestell, L. [Teller.]

Greenwood of Rossendale, L.

Pitt of Hampstead, L.

Winterbottom, L.

Hacking, L.

Popplewell, L.

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
9.36 p.m.
Lord BELSTEAD Lord BELSTEAD I beg to move Amendment No. 8:
Page 5, line 24, at end insert—
("Provided that the necessary resources for building and equipment have been made available to give full effect to the Secretary of State's approval of the proposals.").
Lord BEAUMONT of WHITLEY Lord BEAUMONT of WHITLEY moved Amendment No. 10:
After Clause 11, insert the following new clause:
Effect of marital status on attendance at school
. Notwithstanding the provisions of section 35 of the Education Act 1944 as amended by section 1 of the Education (School-leaving Dates) Act 1976, a school child, having attained the age of 16 and who also achieves marital status, shall be permitted to leave school at his or her discretion on or after the date of the marriage.
The noble Lord said: My Lords, we come to the last of the Amendments at this stage of the Bill before it goes to another place. This raises a new matter but one which I think stems from the removal of the old Clause 10 at the last stage. I gave notice to noble Lords that I should be moving this Amendment. Noble Lords will remember that the old Clause 10 took away from the parents the responsibility for seeing that a married child of 16 went to school and gave that responsibility to the spouse. In the course of getting the clause right a terrific paraphernalia built up so that it took up a large proportion of the Bill. Noble Lords quite rightly took the view that this had become so complicated and complex that it should be done away with. All sorts of problems might have arisen which we did not get round to examining; for example, the suggestion
1408
made to me by the association for technical teachers that possibly it destroyed the whole of the in loco parentis situation for teachers in dealing with anything concerning that particular child. I think we were right to take that clause away but we did not solve the basic problem.
The basic problem is quite simple. It is that if a person is 16 and married it is ridiculous that there should be a legal obligation on that person's parents to see that he or she goes to school. It is not easy to see quite what to do about it. Of course the number of cases involved is small. I have no doubt about what is usually done about it. The fact is that the local education authority and the school turn a blind eye to the proceedings. That is a common sense solution, but I do not think it reflects very well on the law that we should have a situation w here it is clear that there is a bit of total non-sense to which everyone agrees to pay no attention. I do not like it wherever it happens, and I think that where it happens one ought to do one's best to put it right. If that is so—and I see several heads nodding—and it is agreed that what is done is one of the sensible things to do, perhaps we ought to regularise it and make it clear that if a person of 16 is married, frankly he or she is free to leave school. If the whole point about school leaving was a watertight barrier, and if you breached it in one place it would be tremendously important, I could see the argument; but I think more and more people are beginning to agree that there is a certain flexibility in the whole question of enforcing the school-leaving age to the last rigorous moment and in the last rigorous respect. I was particularly encouraged by the mild, but nevertheless it seemed to me thoughtful, answer by Miss Margaret Jackson yesterday in another place (at col.1180 of the Commons Official Report). I am not depending on

1409
this. I am merely saying there are signs that everyone is moving towards the idea that there should be a little more flexibility. This would seem to me the right place to apply flexibility.
It has been argued by an honourable friend of mine in another place that if you let children off school when they were married, if they were 16 they would all promptly go and get married in order to leave school. I do not think there is all that much in this; I do not think really there is anything in it at all. People get married for the silliest reasons, but I do not think they get married for anything quite as silly as that. If they do not want to attend school they will not attend school. We know from the truancy figures that a great many of them do not. They do not need to go as far as that. I am merely concerned that we should, if possible, tidy up the law, in order that it should be held in respect and actually apply to the cases to which it is meant to apply. I therefore beg leave to move this Amendment.
9.42 p.m.
Lord DONALDSON of KINGSBRIDGE: My Lords, flexibility is fine, provided it does not mean replacing order by chaos. Noble Lords will remember that many Amendments to the Education (School Leaving Dates) Bill were debated, all intended in one way or another to introduce flexibility into the matter of when children might be entitled legally to leave school. But in the event no exceptions were made. It is a principle now embodied in the 1976 Act that there should be only two leaving dates, one at Easter and one in May. There is nothing arbitrary about the thinking which led to that result. The Government are firmly committed to the principle that every child should have the benefit of a full five years of secondary education. To allow children to leave school piecemeal not only undermines that principle, it increases the impatience to be gone of those who feel that they are no longer deriving benefit from education and who are freed to enter into commitments which they may be too immature fully to understand; and it disrupts the life of those who remain.
The noble Lord, Lord Beaumont, would have us excuse those who marry at 16 from
1410
continuing their education until they attain school-leaving age. Marriage does not j release people from their obligation to observe the law. And it is not self-evident that those who are married have no further need of education. Experience has shown that many young people obliged by law to remain at school when they might have preferred to leave have gone on to take examinations and obtain qualifications, thereby enhancing their prospects of obtaining worthwhile employment. In these days when so many married women go out to work, girls as much as boys are well advised to get the maximum benefit from their time at school.
However, the requirements of the law can be met by provision of suitable and efficient education other than at schools. We hope that local education authorities will apply common sense in considering with the parents, on whom the law places responsibility for its observance, whether an acceptable alternative to school attendance may be practicable, particularly when the girl is pregnant or has given birth to a child. We think it is far better that difficult questions of this kind should be left to the people on the spot to deal with rather than to incorporate in a Bill of this kind an exception to the law. So, although we acknowledge the anomaly which the noble Lord has pointed out, and appreciate his effort to put up a solution, we do not feel inclined to accept this solution and we think that common sense will probably provide a better one.
Lord ELTON: My Lords, let us not protract unduly the proceedings. Sophisticated arguments have been advanced in favour and against this Amendment. I think that the arguments advanced by the noble Lord, Lord Donaldson, at the conclusion of his remarks coincide remarkably closely with my own instinctive feelings. Here is an occasion where it is up to the common sense of those handling the case to deal with it, because the cases will not be numerous but extremely different one from another. They will, what is more, be what I: think is now called distressful cases of people in a high state of emotion. Therefore, they should not be dealt with by an inflexible machine, or an inflexible rule. Inflexibility has been the noble Lord's cry throughout this stage.

1411
Furthermore, the interim between the earliest possible marriage and the earliest possible date of leaving school is sufficiently short to mean that even when it is not common sense there will be a very swift release from the problem. I therefore concur with the noble Lord, Lord Donaldson, and it gives me great pleasure to do so at this significantly final stage of the Bill.
Lord BEAUMONT of WHITLEY: My Lords, the way of a radical is a hard one in Britain. A typical English solution: close a blind eye, muddle through. Do not treat the law as if it were at all important. Do not try to get to the root of the trouble. In fact do not try to do anything which might be decisive and which might demand intellectual exercise. Lord Donaldson's brief on this particular matter—because I do him the credit of thinking that it was a brief—was as full of holes as a fish net, and I should be delighted at any time to take him aside and point out some of the problems. I shall not do it in your Lordships' House
1412
because it is getting late, and we all agree that we want to get to an end. As for the noble Lord, Lord Elton, who accuses me of inflexibility—
Lord ELTON: My Lords, to be fair, I do not think "accuse" is the right word. I congratulate him on his cry for flexibility throughout this stage and indeed the previous stages, but the solution he seeks to impose his flexibility with is itself inflexible.
Lord BEAUMONT of WHITLEY: My Lords, on the contrary, the solution is a flexible one, and what noble Lords on both Front Benches are defending is an inflexible law. That is the inflexible law; that is the inflexible machine; and the fact that no one pays any attention to it does not really make any difference. It is flexibility that I am trying to introduce. However, as I say, the way of a radical is a hard one, and I beg your Lordships' leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
9.50 p.m.
Lord DONALDSON of KINGSBRIDGE: My Lords, I beg to move that this Bill do now pass. The main purpose of the Bill is to give statutory effect to the comprehensive principle. As the noble Lord, Lord Alexander of Potterhill, said on Second Reading, there is now a consensus in the country ill favour of comprehensive education. Three-quarters of maintained secondary school pupils attend comprehensive schools. The great majority of local education authorities and voluntary school governors wish to complete the process as soon as possible and only in a few areas is there still resistance to the comprehensive principle.
The most charitable interpretation of the Opposition's views—and not everyone is as charitable as I am—is that they believe co-existence to he a viable option. We do not. I regret that we have not been able to convert noble Lords opposite to our point of view, but we stand where we began; we believe in comprehensive education and we believe that the retention of selective schools has an adverse effect on comprehensive education. This is why we have introduced this Bill; to ensure that reorganisation is completed as quickly and as efficiently as possible and that all children are given the best possible secondary education. However, I do not think our discussions have been entirely wasted. Major changes invariably throw up difficulties, to which the Opposition have drawn attention—some real, some imaginary. Some of the Amendments which their built-in majority has carried have been frankly undermining the whole approach to the achievement of comprehensive education; but some have been serious and worth discussion and more of this they will get in the other place.
On Second Reading I explained the function of each clause. Clause 1 spells out the comprehensive principle and admits of certain exceptions. Clauses 2 and 3 make provision for progress to he made to giving effect to the comprehensive principle where, in the opinion of the Secretary of State, such progress is desirable and possible. Here I would reply to a point raised by the noble Lord, Lord Elton, on Report which my noble friend Lady Stedman dealt with in correspondence. Subsection (5) of Clause 2
1414
states that proposals prepared and submitted under Clause 2 shall be in such form as the Secretary of State may direct and shall indicate the proposed timing of implementation. When the Secretary of State calls for these proposals she is asking authorities how they intend to complete reorganisation. She will ask that their replies distinguish between long-term and short-term proposals within the overall sketch plan for reorganisation. Where the proposals are short term, which means to be implemented within five years, she will expect sufficient details to be furnished to judge whether the proposals can subsequently undergo the full Section 13 procedure; where proposals are for the longer term, she will at this stage, after considering whether or not they are at first sight satisfactory, merely note them.
Looking at the miscellaneous section of the Bill, two clauses have been deleted and three added. We shall be seeking the restoration of the old Clause 5 in another place. We have given many assurances about the workings of this clause but they have not been accepted. I am content that time should prove us right. Old Clause 10, concerning married pupils of compulsory school age—which we have just been discussing—has been deleted in order that another place might have the opportunity to debate it. Clause 11 has been added at the Government's wish to meet the very real concern felt by noble Lords of every political persuasion that handicapped pupils be given every opportunity at school in order that they should find their place in society.
In conclusion I should like to refer to the excellent debate during Committee on the subject of banding. I said on that occasion that it was a good instance of how controversial Bills could occasionally become non-controversial. During that debate, however, Lord Elton seized on and has made altogether too much of one remark of mine. The noble Lord, Lord Beaumont of Whitley, said that comprehensive education could not solve the problems of inner urban deprivation. He supported comprehensive schools on their educational merits and not as a means of social engineering. I expressed myself in sympathy with those remarks. I, too, believe in comprehensive education for its educational merits and too, do

1415
not believe that the comprehensive schools can by themselves solve the complex problems of urban deprivation by social engineering. But my Government support comprehensive education not only for its educational merits but also for its social and psychological effects. If a desire to give children equal opportunity in education—and to avoid the social divisiveness of a fairly arbitrary system of segregation—is to be called "social engineering", then I am very happy to be a social engineer. And if this label is to be attached to those who believe, as I do, that it is morally wrong to condemn four-fifths of our children as failures at the age of 11, then I am proud to wear such a label.
My Lords, we have had quite a constructive debate on an issue which divides us deeply. I am grateful to noble Lords opposite for their moderation and for some of their purple passages and I am especially grateful to my noble friend Lady Stedman for spending so much time in the firing line on our behalf and carrying herself so bravely under fire. The issue is integration or segregation, equality of educational opportunity throughout a child's school education or only to the age of 11. I repeat, the comprehensive system is not compatible with the selective creaming off of the brightest children. It is one or the other. We choose unequivocally the one and this Bill is to put it into operation. It is on these issues that the Bill rests and I beg to move that it do now pass.
Moved, That the Bill do now pass—(Lord Donaldson of Kingsbridge.)
9.55 p.m.
Lord ELTON: My Lords, the noble Lord, Lord Donaldson of Kingsbridge, has seen his sorry work on this Bill through with his customary charm. We are grateful to him and to the noble Baroness, Lady Stedman, for the competent way in which they have performed their regrettable task and for the numerous letters that they have written to us to ease the communication between us. I am also deeply grateful to noble Lords in all quarters of the House who, with wisdom born of experience arid concern, have assisted us
1416
in trying to make the operation of the Bill perhaps less damaging than it might have been. Of course I am also deeply grateful to my noble friend, Lord Belstead, who will be seeking an opportunity to speak later.
I believe that we ought at this stage to look briefly at the work that we have done, and perhaps the masterly oversimplification of the purport of the Bill to which the noble Lord, Lord Donaldson, has treated us is a fitting introduction to it. It was in the otherwise agreeable month of July that the noble Lord laid this Bill before your Lordships. We received it with reluctance and examined it with distaste. It owed its birth to a union of dogma and fantasy. The dogma states that if one passes all children through the same educational process one will finish with a population without social division. The fantasy supposes that the resources exist in both cash and teachers to reconstruct our educational system on these lines and that this can be done without damage to either the process or the pupils.
The Bill's single and doubtful redeeming feature did not become more noticeable during the debates. This was that some of those who fathered it supposed it to be a means of achieving a very proper ideal—the ideal of a system that educates each to his full capacity and at the same time produces a cohesive society. How very greatly we now stand in need of a cohesive society! That is, therefore, an objective that we share, but it is increasingly clear to us that those opposite who seek to lead us to it not merely have very short sight but are also holding the map upside down.
In these circumstances, there was some temptation amongst those opposed to the Bill to throw it out altogether. It is, after all, expressly intended to enable Whitehall to overrule the wishes of democratically elected local authorities. If the local education authorities were all in agreement with the Labour Party there would be no need for the Bill, but the Party that controls Whitehall does not control all the local authorities. Hence the need for the Bill and, since the Government now begin to feel their grip on Whitehall slipping with the approach of the impending by-elections, hence also the need to get it on to the Statute Book before the Prorogation.

1417
However, two considerations weighed against our natural wish to throw out this misconceived Bill altogether. The first was that it was necessary not merely to say but also to demonstrate, since it was as difficult for us to impart to the noble Lord certain items of importance as it has appeared to be for him to impart them to us, that our Party is not opposed to the comprehensive system as such but only to its blind, doctrinaire and universal imposition, which can only be at the cost of a huge waste of talent in the rising generation.
The second consideration was a constitutional one: the constitutional theory is that the declared policy on which the ruling Party in the Commons is elected continues to carry the endorsement of the electorate until either the Government falls or Parliament is for some other reason dissolved. The theory may be shaky and the percentage of the electorate voting for the Party in power may have been derisory—and the noble Lord, Lord Beaumont of Whitley, will probably want to make something of that—but even that proportion may long since have realised that it was terribly misguided in its choice. No doubt the returning officers will have something to say about that tomorrow.
However, any Constitution must rest to some extent upon a fiction if it is to work for any length of time. The fiction that we observe is that what the' Government are doing in this Bill is the will of the people and not, as we know it to be, that of their own Party theoreticians and dogmatists. We therefore prepared to amend the worst features of the Bill rather than to reject it, and in so doing we took pains—in spite of what the noble Lord said—not unnecessarily to damage (if indeed we damaged it at all) its fundamental principle. We wished only to remove its more obviously unworkable or unjust features. Specifically we have, by two Amendments in Clause 1, made binding on the Government their undertaking that the Bill would not act to the detriment of the rights of parents set out in Section 76 of the Act of 1944 or the rights of children set out in Section 8 of that Act.
In the same clause we have stipulated that the principle of the Bill shall not be enforced in such a way as to prevent children profiting to the greatest possible
1418
extent from the talents of our diminishing numbers of qualified teachers of mathematics. We have protected in Clause 3 the continuity of education of children in voluntary schools which are forced to go independent under Section 13 of the Act of 1944 as a result of the passage of this Bill. We have required local education authorities to make details of the schools in their charge generally known particularly with a view to secure for the children in those schools the advantage of the protection of the informed interest of their parents.
We have required the Government to hold what in the person of the Prime Minister they loudly protest that they wish to hold, an independent inquiry into the performance of the secondary sector. We have removed from the Bill the retrospective and draconian powers which it would have given to the Secretary of State in old Clause 5—and I am sorry to hear that the noble Lord wishes to drag it back in again. We have also relieved him of the absurd and tempting duality of function originally in Clause 2, which had the effect of making him both judge and jury in his own cause in planning matters, and we have removed from the Bill entirely Clause 10, which we have already averted to, and which had not been discussed at all in the House of Commons.
We have prevented the Government inadvertently debarring local education authorities from placing next year the 11,500 boarders at present in nonmaintained schools supported by them and indeed other children supported by them for similar purposes, but not boarding. Finally, we have ensured that plans will not be embarked upon until the cash to complete them is to hand. It would I think be difficult for Her Majesty's Government to argue in either House with any conviction that any of these Amendments is in any way either an attack on the principle of the Bill or an affront to the other House. Our Amendments elucidate its meaning, inhibit its misuse, or enable the Commons to discuss matters they have not yet touched. Otherwise they merely enact the stated aims of the Prime Minister.
There are three possible exceptions to this rule. An Amendment on the publiccation of particulars was debated in

1419
another place, but it was defeated. But it was defeated by only one vote, and there should be an opportunity for the other place to consider anew an improved version of it, and that is not an affront or a challenge. The omission of the words, "or partly" from Clause 1 has been blackguarded frequently as a wrecking Amendment. I have said before that it is not intended so. I have also told your Lordships that we have invited noble Lords opposite to say what they meant and they have turned down the opportunity. They will have it in another place. The implications of Clause 5 were I think wider than has been recognised in another place and the hostility evinced for it in this House came from a much wider spectrum of your Lordships than I think the noble Lord probably in all conscience expected.
So much then for this miserable Bill. It is a partisan, undemocratic, untimely, and absurd little document. It is partisan because it seeks to enforce a universal principle for doctrinaire reasons. It is a Parthian and vindictive shot fired by a Government retiring, we hope, from Office. It is undemocratic because it seeks to crush the will of democratically elected local authorities from the centre. It is untimely because it will cost untold, literally untold, millions; we have asked frequently to be told them, but we have not been told; and it comes limping on to the Statute Book when our cash resources are at an historic low and may, as my noble friend Lord Belstead said, get lower very rapidly.
Above all, it is utterly and totally absurd that it should reach this stage in Parliament simultaneously with the Prime Minister's much publicised cry of joy and aspiration of at last seeing the last educational light. How, when he has trumpeted forth from the mother of universities his grave alarm that something is sadly wrong with our secondary education, his own Government can force through a Bill committing the whole secondary sector to one form of organisation which is widely suspected of being in part to blame for this decline, I cannot find it in me to explain.
If the future of all our children was not hound up with it, it would be a farce, but they are, and it is a tragedy. It is a tragedy that noble Lords opposite should
1420
allow their idealism to be so blinkered by the ideologues in their Party, and I earnestly hope that they will honestly endeavour to stop their friends in another place from rejecting all our Amendments in a mere blind and destructive jerk of political reflexes. Given cool heads and an honest appraisal they will find—and there was something of an intimation of this in what the noble Lord said, and I welcomed it—that they can accept much, if not all, of what we proposed without too much effort.
If they do not, then they will be very much lessened in my estimation and bear a grave and unwelcome responsibility towards the children who in the end will be the unwitting judges of their work. I hope that although heads are hot, as they always are at the end of a Parliament, it is not the intention of the friends of noble Lords and Baronesses at the other end of the corridor simply to say that these are Conservative Amendments and, therefore, they are bad. "Let us filibuster, let us harangue, let us guillotine but let us not accept." It is important that they should be accepted or rejected on their merits and then we shall see where each Party stands. With these acid words of farewell, I await the return of this Bill from another place.
Lord BEAUMONT of WHITLEY: My Lords, there are many frustrations in being the spokesman of a smaller Party, but there are some reliefs and one of the reliefs is that I feel under no obligation, your Lordships will be relieved to hear, to repeat as do spokesmen of the major Parties, all that we have heard over the last few months since July. It has been on the whole a fruitful and useful series of debates that we have had, marred I suppose by two minor things; first, that the Conservative Front Bench has never been quite clear whether or not its serried ranks behind it—when there have been serried ranks—really support them. Every time the noble Lord, Lord Elton, pledges his devotion to the comprehensive principle, there seems to be a sidling out towards refreshments from those behind him who do not want to hear quite so much about that.
Lord ELTON: Would the noble Lord substitute "toleration" for "devotion"?
Lord BEAUMONT of WHITLEY: To make up for that, the noble Lord, Lord Elton, makes "Worra-Worra" noises at the opposite Benches like Tigger, which is all very entertaining. On the other side the problem has been slightly more serious. We were met at the beginning of this Bill with a rigidity and an inability to accept, while all of us genuinely wanted to approve this Bill, which I know did not come from the heart or head of the noble Lord, Lord Donaldson of Kingsbridge, and later that of the noble Baroness, Lady Stedman, but came from the nature of the Secretary of State at the time, the fact that neither of the Ministers dealing with the matter were dealing with the Bill ab initio in their own Department. We have seen a very hopeful change of attitude just recently. Not quite hopeful enough so far, but with the new Secretary of State in whom we have, almost ad nauseum, said how much hope we have got with the very welcome interest of the Prime Minister in educational affairs; and with a certain amount of increased flexibility—if I am allowed to use that word—on the Government Front Benches we have moved a bit further towards making a better Bill of what was not completely satisfactory to start with.
I join with the noble Lord, Lord Elton, in saying that I hope the Government will not just reverse all the Amendments in another place and bang them back. There have been some Amendments which obviously I cannot accept, but there have been some very useful ones passed. I hope that the result of all of this labour on all our parts—and I, too, am grateful to noble Lords in all parts of the House for the constructiveness that has gone into our debates—will be met now with a certain understanding on the Government Benches. If so, then we will have done a very good job.
10.10. p.m.
Viscount ECCLES: My Lords, I agree with the noble Lord, Lord Beaumont of Whitley, that we have had some good debates. Personally, I have learned much in the course of these debates which I did not know before. Your Lordships have spoken from experience and with economy and have fully justified the time that has been taken. The Bill leaves us imperfect but better than it was. I
1422
imagine all on both sides of the House can now see more clearly what a tremendous amount of practical work remains to be done before the comprehensive system can be expected to operate reasonably well in the interests of the greatest number of our children.
In another place, the Bill was contested all the way to the very end and my honourable friends put up a notable, well-informed and stubborn resistance, led by the indefatigable Mr. Norman St. John-Stevas, but they were defeated. So we started our consideration of the Bill by accepting the basic principle of non-selection—not that we liked it but, speaking for myself, we thought it was the right thing to do when a principle of that kind has been endorsed by another place and sent to us to consider the practical methods of putting it into action. That is a consolation, because it has enabled our debates to concentrate on the application of the principle which we have made much more flexible, and much less likely to do harm to a great many children, I agree with the two noble Lords who have spoken from this side of the House, that if all our Amendments are removed as a matter of politics, that will be a great pity. Many of them make the Bill better for those who believe in a comprehensive principle.
I was interested in what the noble Lord, Lord Donaldson of Kingsbridge, said about the argument for comprehensive schools of social engineering. I am sure that he was wise not to shy away from that argument. Society shapes the system of education, and the system of education shapes society. That is true and always has been true. The things which politicians care about, the unity of the nation, how far people share a sane view of the world in which they live, how far they have learned to talk to and treat other people as equals—all those social objectives have their roots in education. On any side of the House we should he very foolish not to recognise that.
But it does not follow that the comprehensive system is a good instrument for bringing about this social cohesion which we all desire. On Second Reading, I tried to show that the effects of the Bill are more likely to be divisive than socially cohesive. I pointed out that a system

1423
of neighbourhood comprehensives means that the good schools will get better and the poor schools will get worse.
The Bill is going to create a new class system within secondary education. It is going to be one which will be even harder for the parents to understand than the division between grammar schools and non-selective schools. The Bill is also bound to widen the jealous gap between the maintained and independent schools. That is going to be divisive. It will be dangerous because, as it becomes starkly obvious to everybody that the education in the independent schools is superior to that in the decapitated comprehensives, the envious political Left will raise the cry: "We cannot match the independent schools, so let us go out and murder them". That is what is going to happen as a result of this Bill.
The Government made no answer either in another place or here to our doubts about the social benefits that they have advanced as part of the reasons for the Bill. I cannot understand why the Government dropped the argument of social engineering in between the Bill leaving the other place and coming here; it may be they saw the light in your Lordships' House. Having dropped it, we are left with only the educational argument; and that argument does not now stand up since so many non-selective schools will have to be too small to do justice to the able children. It may well be found that the strains of coping with mixed ability are too great to do the best by any category of children. That is something we need to know a great deal more about, and that is why we put down the Amendment concerning the independent inquiry.
These are doubts which are shared much more widely than many complacent authorities and Ministers realise. What should the Government have done to set these doubts at rest? Obviously, they should have considered more carefully and made public the experience to date in non-selective schools. Now, very late in the day, they are starting up all kinds of inquiries—almost, it seems, in a panic—but I suppose they want to get this Bill through first before the results of those inquiries are available. As the noble Lord, Lord Alexander of Potterhill, said last week:
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"Public anxiety has grown to such dimensions that only a politically independent inquiry will he accepted as satisfactory.".
Those misgivings about standards in secondary schools were brought to the surface by the Department's Yellow Book—that well-leaked trailer to the Prime Minister's speech at Ruskin College. That the Prime Minister himself should say what he did has changed the background to this Bill. Once the Downing Street cat had been set among the pigeons of Elizabeth House, our Amendments to this Bill, for which my honourable friends had argued in vain in another place, became not just worth reconsideration by the House of Commons, but plain Prime Ministerial common sense. The appointment of the new Secretary of State is another excellent thing that has happened since the Bill left another place and came to your Lordships' House. Mrs. Williams is bound to take a more thoughtful line than the uninspiring Mr. Mulley and his textbook colleagues, who appeared to believe that all would be well in all non-selective schools.
No one can be so complacent now. Fortunately, the Secretary of State and the Prime Minister are what the Americans call "very close"; and we take our cue from their recent speeches and are quite confident that they will not remove from Clause 1 the reference back to Section 76 of the 1944 Act. Not to accept that Amendment would, in the light of what they have both said about bringing parents into the picture, be an inconsistency too glaring ever to be forgotten by parents or by the public as a whole. Secondly, after the Prime Minister's strong and sensible words about the deficiencies in mathematics, the Government must welcome the Amendment made to allow the inadequate numbers of qualified teachers we have to be matched with the pupils best able to profit from their teaching. That is clearly in the national interest.
Thirdly, if the Prime Minister meant what he said—and I am sure he did—that an economy in as much trouble as ours and exposed to such fierce competition cannot afford an education system that sacrifices excellence to some notion of equality and new style methods of teaching, then his right honourable friend must welcome the Amendment to allow sixth-form colleges to select their entry

1425
on grounds of ability. If they are not allowed to do that, the standards of sixth-form work—already falling—will fall much faster.
Before I finish, I want to turn to two aspects of our debate which cause me great regret. The Bill compels sweeping changes in voluntary-aided secondary schools. Those of us who wish to safeguard the sixth-form standards of the grammar schools have received no help from the Church of England. On Second Reading, the right reverend Prelate the Bishop of Blackburn was obviously in a quandary, for he told us that the Church is so divided on the main issue of the Bill that his brethren had decided to do nothing about it. All through our debates we have hardly seen one Bishop. The Bishops' Bench is empty now, as it has been practically through all the stages of this Bill.
If the Church decides to abandon her interest in voluntary aided schools, that is her affair. Her leaders may think the financial problems too great a burden, or that the State will educate children equally well when denominational influence wanes, as it must do when aided schools are merged with controlled schools. Nevertheless, to keep silent about the destruction of sixth-form standards, and to give many devoted teachers the feeling that they are being let down by their Church, and to turn a deaf episcopal ear to the appeals of thousands of Christian parents, marks a definite retreat from a great position in secondary education held for so long with such distinction. Many famous aided grammar schools, which have served Church and State well, now go to the chopper without a single protest from the Bishops' Bench at any stage in this Bill.
If the attitude of the Church has been depressing, that of the universities has been inexplicable. The universities know very well that non-selection has been partly responsible for the decline in sixth-form standards. Yet I wonder how many vice-chancellors and principals have read this Bill, or even glanced at the first three clauses. Only last week, the noble Lord, Lord Todd—and he ought to know—told me of a university which is so dissatisfied with some of the new intake of science students, that they are talking about a year's remedial
1426
teaching to make up for the deficiencies in the secondary schools. That would mean lengthening the course from three years to four years.
In our debates, the noble Lord, Lord James of Rusholme, speaking as a schoolmaster rather than as a vice-chancellor, and the noble Lord, Lord Robbins, made notable speeches. But no other noble Lord with university experience has said one word. One might think that the quality of their raw material, the standard of their students when they arrived, was a matter of no consequence. This in-difference to a Bill which, for example, in the first clause lays down that there shall be no selection by ability for sixth-form colleges, I find inexplicable but not surprising.
Lord DONALDSON of KINGSBRIDGE: My Lords, just to put the record straight, the noble Lord, Lord Annan, and the noble Lord, Lord Vaizey, both spoke.
Viscount ECCLES: I am sorry that I omitted them, my Lords, I did not hear the noble Lord, Lord Annan. The noble Lord, Lord Vaizey, I know, was entirely behind the Government. In conclusion, I feel bound to say that for someone like myself who knew our system of public education in better days, and cared for it, and confidently expected it to make steady progress, what is happening now hurts very much. I can only hope that younger men and women will come forward to stop the rot, and return to that policy of raising standards throughout the maintained system which offered us so much hope and could do so again.
10.25 p.m.
Lord BELSTEAD: My Lords, I think that the speech of my noble friend Lord Eccles puts more clearly than I possibly can the fact that this Bill will not con-tribute to an improvement in educational standards in this country. Now that we have dealt with the Bill in all its stages, I think it is clear that it is very doubtful, to say the least, whether it is going to hope to carry out the Prime Minister's

1427
expressed wish for an improvement in standards, for a more practical approach to the responsibilities of education and for the objective which the Prime Minister expressed at Oxford in these words:
"What a wise parent would wish for their children, so the State must wish for all its children".
Those were the words of R. H. Tawnay. I wonder whether Professor Tawnay really would have approved of the whole-sale destruction of good schools in order to enforce a principle which is not based on any findings of fact whatsoever. Let us be clear that the objection to the Bill—an objection which has not come just from the Conservative Benches but from the Liberal and the Cross-Benches as well—in a free society is the insistence of the Government that comprehensive education must he served for breakfast, dinner, lunch and tea, with never any variation in the diet.
I wonder whether, before the Bill leaves us, I may digress for a moment to make this point. If the Government believe that I am merely being Party political, may I remind the two noble Lords on the Government Front Bench of views which were put forward in two articles in the Times Educational Supplement less than a year before the Bill was introduced. In April 1975 Mr. Stuart McClure wrote an article warning that in this country we would do well to learn from the experience in the United States of America. He pointed out that in America education for many people extends well into their twenties and that it is therefore an exceedingly costly service to provide.11 noble Lords recall that article, they will remember that Mr. McClure then professed his belief in the abolition of the 11-plus and in more post-school study but concluded that, with limited resources in this country, it would be a policy of disaster to forbid any selection whatsoever. He recommended as a solution a comprehensive middle school system from 11 to the age of 14 and then some choice of schools and courses for parents and pupils.
One month later, Dr. Harry Judge, one of the most successful of former comprehensive school headmasters, wrote another article in the TES which he claimed to be central and moderate. He gave credit where it was due, referring to
1428
the considerable progress in comprehensive reorganisation which has been made under various Governments and local authorities of various shades of opinion. Referring to comprehensive reorganisation, Dr. Judge said:
"It is idle to pretend that there survives in secondary schools, in colleges and departments of education, in local education authorities, even in the hearts of bruised sociologists, any powerful conviction that the present phase of comprehensive planning will bring great educational improvement or even be worth doing at all"
Dr. Judge explained that his misgivings stemmed from the Government's onward rush towards neighbourhood schools in towns and cities and, like Mr. McClure, he concluded that a transfer age of 14-plus could utilise the pattern of schools in this country for the benefit of more, not fewer, pupils.
I digress for this reason. The Government cannot say that they were not warned before the Bill was drafted, yet apparently, totally unheeding, they proceeded to draft a Bill which, as it was originally drafted, is, I think, a disaster. It is disastrous because it allows for no flexibility. Only this evening we have seen the Government resisting the idea of allowing any form of selection for sixth-form work in schools. It is also disastrous because it purports to make policy without providing the necessary resources, a subject which again we have been discussing this evening. I think it is a disaster because it dispenses with the idea of partnership which was so firmly based in the Education Act of 1944; partnership with parents, local authorities and the voluntary schools about which my noble friend Lord Eccles spoke so eloquently.
If the Government arc to have their way, then under this Bill parents will he treated as cyphers, local authorities as agents and the rights of voluntary schools provided by the 1944 Act as of very little account. In addition, when the original draft of the Bill reached the subject of independent schools, never was it more clear that this Government are willing to wound and yet afraid to strike. I should like to put seriously to the Government the desirability of keeping schools which can be looked upon as a yardstick for what is happening in the maintained system.
I have been referring to the draft of the Bill as we received it from another place,

1429
but of course during Committee, Report and Third Reading stages various improvements have been made to the Bill. May I add my voice to other noble Lords, including the noble Lord, Lord Beaumont of Whitley, from the Liberal Benches, that we hope the Amendments which have been made in this House will be looked at and seriously considered. The Secretary of State inherited this Bill, to which clearly the Government had intended to make no alterations except the extraordinary Amendment relating to banding which was inserted in another place, but the Secretary of State now has the opportunity to consider Amendments relating to such things as parental choice, the special case of mathematics teaching, a more equitable procedure for local authorities when they are being required to put forward comprehensive proposals. We have put forward what is a very modest protection for pupils of voluntary-aided schools which may be going independent, and there is a reasonable protection for the local authorities on the subject of availability of resources, which the House has agreed to this evening.
I concede at once that the Secretary of State is of course absolutely entitled to preserve the main principle of her Bill. But the point which it seems to me the Government have not taken on board during the successive stages of this Bill through your Lordships' House is that the principle of the Bill really is not going to be acceptable to those who work in and use the Education Service if the Bill is not a workable instrument, if the necessary resources are not provided, if parents are denied any choice of school, if members of staff find themselves working in schools which, because of the provisions of this Bill, have had to be very hastily reorganised.
I hope especially that the Government will take to heart that the case for total comprehensive reorganisation which should have underpinned this Bill is in no way proved. I found it extraordinary—and my noble friend Lord Eccles referred to this—that the reply to the Amendment for a committee of inquiry at the previous stage of the Bill was that a good deal of research in the Department of Education and Science is now being set in hand. To say the least, I really thought that was setting the cart before
1430
the horse and I hope very much that Clause 5 of the Bill, which provides for the independent committee of inquiry, is going to be allowed to stand.
I would not for one moment deny that there is a majority wish in the country today to do away with the selective examination at I-plus. Perhaps it is right for me to say this at the end of this Bill because it was one of the first things that my noble friend Lord Elton said when the Bill started its life in your Lordships' House. The reasons for the dislike of that examination are un-doubtedly there, and I think rightly so, because I-have always thought that II was a very early age for a child to he assessed.
But it is a very different story when specific proposals to reorganise schools are put forward, and particularly so if they are put forward with coercion by the Secretary of State. Once again, reasons are varied, but according to their point of view people do have reasons to object. For some it may be because there is the loss of a good school; for others, the removal of particular facilities. Re-organisation may provide no small school, no single-sex school, no easily accessible school. These objections which are going to be, I would almost say, overridden under Clauses 2 and 3 of this Bill have nothing whatsoever to do with Party politics. Recently in my local education authority a reorganisation scheme for a mixture of 11 to 16 and 11 to 18 schools has been approved by the Secretary of State, but in the teeth of opposition not least from the local Member of Parliament who was a supporter of the present Government, because the alternative which many in the area wanted was a sixth-form college, for which it so happened there was not the available resources. There-fore, it is not just a move by the Conservative Party to have urged an inquiry into the working of secondary schools within this Bill. It would be helpful to teachers, parents and local authorities and a very prudent step for a Government which has introduced a Bill of this kind.
My Lords, I noticed yesterday in the House of Commons that the Prime Minister criticised the Opposition for concentrating on the problems of structure rather than the content of education. I must confess I thought that criticism came

1431
a little strangely from a Prime Minister whose Government have introduced this Bill, but let us meet on common ground, and agree that both the structure and the content of education are in need of inquiry and assessment. We still have not really assessed the problems and opportunities of school size, the complex management structure needed in very large schools and the problems of personal identity in such institutions. It is over five years since Dr. Elizabeth Halsell of Hull University drew attention as she saw them to the advantages of the small school—better staying-on-rates, simpler communications, the possibility that smaller schools are more socially cohesive.
At a time when, encouraged by the drafting and the introduction of this Bill, the Inner London Education Authority has been professing its faith in mini-comprehensives so it could reorganise more quickly, we need to know more about the effects of school size, as we do about the problems of split sites, two-tier schools, the effect of removing sixth-form teaching to a totally different institution. We need to take the subject of guided choice for pupils at a certain age out of the arena of party politics into which this Bill has placed it, and look objectively at the proposals which, for instance, Mr. McClure and Dr. Judge made when this Bill was being planned. At the same time, I readily concede that the moment has come to look critically at some of the theories which seemed to take hold in the 'sixties and which one suspects have not been applied with much benefit to pupils.
In The Times of 22nd October, Lady Plowden wrote a letter in which she said that although many people, including herself, had for many years advocated informal teaching methods, she had always also given a warning, "Do not throw out the baby with the bathwater". In her letter she added that it had also been the practical problems of the very rapid expansion of teacher-training during the 'sixties, the increasingly rapid turnover of young women teachers, and the pressures of an increasing population which in reality had created the problems for the over-enthusiastic adherence to informal methods.
My Lords, this Bill which deals solely with the structure of secondary reorganisation
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has given your Lordships the opportunity to make some valuable Amendments dealing with the content of education, also. In his speech at Oxford the Prime Minister, referring to various aspects of the curriculum, said:
"These are proper subjects for discussion and debate and it should be a rational debate, based on facts".
If the right honourable gentleman really means what he says, I hope that new Clause 5, providing for the committee of inquiry, is to remain unamended in the Bill. I trust the Secretary of State will consider with great care the Amendments made in this House, many of which will make this Bill more acceptable to those who are working in the Education Service.
10.39 p.m.
Lord DONALDSON of KINGSBRIDGE: My Lords, I had not intended to exercise my right of reply, but I have listened to so much that I find it impossible not to say a word or two. I should like the three noble Lords who have spoken from the Conservative Benches to go home and, tomorrow, to read Hansard when it comes, and to remember that each of these noble Lords have said they are fully in favour of the comprehensive system. I think this will make them realise that they have given an impression which is wildly in the opposite direction.
Secondly, I always have to admit that the noble Viscount, Lord Eccles, speaks with great charm and great conviction, but quite honestly, it was almost a dirge tonight. Everything is wrong. We know that he has no time whatever for the Department which he presided over with such skill and distinction some years ago. It is new to us to know that he is now going for the Church and the universities. There is practically nothing left but a total depression. I assure the noble Viscount that if he will come with me to two or three comprehensive schools—I daresay he has been to them before—and talk to the staff he will find an energy and a dedication which is extremely exciting and which he ought to be proud to be helping instead of hindering in the way the speeches this evening have hindered.
My Lords, I do not want to end on too unhappy a note, but I could not sit and hear what I have heard without making

1433
it clear that two-thirds or three-quarters of the teaching staff in this country are teaching in comprehensive schools. Nearly all of them are dedicated to the work they are doing, think they are doing it in the right way, are excited about it and want help. I do not think they have had it tonight. On that note I should like to ask that this Bill do now pass.
On Question, Bill passed and returned to the Commons with the Amendments.

LONDON TRANSPORT BILL
Reported with Amendments.
WEIGHTS AND MEASURES (No. 2) BILL [H.L.]
Returned from the Commons agreed to with Amendments; the said Amendments to be printed.
BAIL BILL [H.L.]
Returned from the Commons with the Amendments to the Commons Amendments agreed to.
TEES TUNNEL BILL
Returned from the Commons with the Amendments agreed to.
NEW TOWNS AMENDMENT BILL
Returned from the Commons with certain of the Amendments agreed to; but with the remaining Amendments disagreed to with a Reason for such disagreements; the said Reason to be printed.
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