Sitting of 20 October 1976

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

    Brazil
    Mr. Whiteheadasked the Secretary of State for Foreign and Commonwealth Affairs if he has had any contact with the Brazilian Government since the State visit of President Geisel.
    The Minister of State, Foreign and Commonwealth Office (Mr. Edward Rowlands): There have been normal diplomatic contacts. In addition, the Brazilian Minister of State for Planning has visited Britain and my hon. Friends the Ministers of State for Industry, Agriculture and Energy have visited Brazil to discuss economic and technological co-operation.
    Mr. Whitehead: Does my hon. Friend recollect that while Her Majesty's Government were entertaining President Geisel recently in this country a deputation of hon. Members went to the Brazilian Embassy to protest about the lack of civil rights in that country? Will he ascertain at Government level whether representations passed to the Brazilian Ambassador were delivered to President Geisel and what response, if any, was made? Will he pass on the concern felt by this House over recent events in Brazil?
    Mr. Rowlands: I do not think that it is for the British Government to inquire about representations made by hon. Members or others. My right hon. Friend the Prime Minister informed the House recently that he made clear to President Geisel the strong feelings that exist in this country on the subject of human rights.
    Mr. Newens: Will my hon. Friend say whether a contract to supply arms to
    1418
    Brazil was signed, or is about to be signed, as a result of the visit of President Geisel? Will he bear in mind that many of us are concerned about the repressive nature of the Brazilian régime and strongly oppose the supply of arms to that country?
    Mr. Rowlands: During the State visit some £330 million worth of contracts were signed or agreed, chiefly in steel and rail products. I know of no agreement that has been signed concerning arms.

    Uganda
    Mr. Aitkenasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the future of British representation in Uganda.
    Mr. Rowlands: I have nothing to add to my right hon. Friend's statement to the House on 28th July.
    Mr. Aitken: Will the Minister comment on President Amin's recent statement, reported in the weekend Press, to the effect that he wishes to resume diplomatic relations with this country? Will the Minister assure the House that if any such request is formally received by Her Majesty's Government it will get a pretty dusty answer?
    Mr. Rowlands: We have not received such a request and we have no intention of seeking one.
    Mr. Townsend: Will the Minister confirm that the Russians still carry out an important rôle in Uganda and in part prop up the Amin régime, and that this gives them a strategic hold in Africa?
    Mr. Rowlands: I could not confirm that situation without prior notice of such a question.

    Community Work Programmes
    Mr. Steenasked the Secretary of State for Foreign and Commonwealth Affairs if he will arrange to meet Council of Europe Ministers, so as to establish with them a Community Chest to facilitate inter-European community work programmes.
    The Minister of State for Foreign and Commonwealth Affairs (Dr. David Owen): My right hon. Friend has no plans to do so.
    Mr. Steen: Is the Minister in favour of the scheme currently being canvassed in the Commission to enable young people within the Nine to spend up to one year's community service in another EEC country? What has he done to further that splendid idea, and what further does he propose to do?
    Dr. Owen: I am all in favour of cooperation among the Nine, and I shall examine the scheme mentioned by the hon. Gentleman. I believe that we also need to encourage community work programmes on a national basis, and I have always supported them.
    Mr. Sillars: Does my right hon. Friend recall that during the EEC campaign we were promised jobs for the boys in our own country? When will this happen?
    Dr. Owen: Many things were promised in the referendum campaign, on both sides of the argument. In my interventions in the campaign, I confined myself largely to arguing the political case rather than the economic one for entry.

    Cyprus
    Mr. Christopher Priceasked the Secretary of State for Foreign and Commonwealth Affairs when he expects to publish the Government's comments on the report of the Select Committee on Cyprus.
    Dr. Owen: Her Majesty's Government's observations on the report of the Select Committee on Cyprus were laid before Parliament on 3rd August 1976 and published the following day.
    Mr. Price: I thank my right hon. Friend for that reply. Although those comments on the report were little more than helpful in terms of the Government's initial reaction, does he not now agree that it is important to talk about new initiatives for the future mounted by the British Government to solve the problem, since it is making relations within both the Community and Europe as a whole more difficult? Will he say what initiative Her Majesty's Government now propose to take?
    Dr. Owen: I agree that we need a constructive contribution in finding a political solution. We remain ready to
    1420
    undertake any reasonable practical initiative. We fully support the initiative outlined in Dr. Kissinger's recent speech at the General Assembly, and on the basis of such concepts we are willing to act in concert with the United States Government and our European partners.
    Mr. Townsend: Now that the elections in Cyprus are out of the way, will the Minister bear in mind that a British Minister has not visited the island for a considerable time? Therefore, why does not the right hon. Gentleman go to Cyprus and conduct talks with the Government and President of that country? Could he not also take that opportunity to meet United Kingdom residents there and try to recover some of Britain's prestige?
    Dr. Owen: I should be ready to consider a visit if it was thought to be helpful at a particular time. I was intending to visit Turkey recently, but that visit had to be cancelled. I agree that there are occasions when visits on the ground are helpful. The matter needs careful judgment as to the right moment to make such a visit.
    Mr. Brittan: Does the right hon. Gentleman agree that in answering the hon. Member for Lewisham, West (Mr. Price) he indicated that the Government would be prepared to do this, that or the other but not that they would do anything specific? Are the Government going to do anything—and, if so, what—to deal with the Cyprus problem?
    Dr. Owen: We shall continue to be engaged in strenuous diplomatic activity over the Cyprus problem. I have given considerable attention to the area in the short time that I have been holding my present office. I share the hon. Gentleman's wish to do everything that is possible, but it is not always dramatic initiatives that are the way to achieve success. There is an area of quiet diplomacy that also needs to be undertaken.
    Sir John Rodgers: If the right hon. Gentleman visits Cyprus—and I hope he will—will he ensure that, in addition to having talks with Archbishop Makarios and his colleagues, he will have talks with the Turkish representatives?
    Dr. Owen: If I were to go, I should certainly wish to hear all shades of

    1421
    opinion and all people with interesting views on the matter.
    Miss Richardson: Has the Turkish occupation by force of a part of Cyprus been discussed by CENTO? If so, what view did the British Government put forward in those discussions?
    Dr. Owen: To the best of my knowledge, it has not been discussed by CENTO.
    Mr. Newensasked the Secretary of State for Foreign and Commonwealth Affairs what progress has been made during the course of the past three months towards a solution of the major problems which arose in Cyprus, following the Turkish invasion of the island in 1974.
    Dr. Owen: The Secretary-General of the United Nations held consultations between 16th and 21st September 1976 with the Greek Cypriot and Turkish Cypriot negotiators in an attempt to restart the intercommunal talks. Consultations are continuing in Nicosia with the Secretary-General's special representative in Cyprus.
    Mr. Newens: Will my right hon. Friend make it clear to the House that in the forthcoming debate at the United Nations General Assembly the British representative will take a much more forthright position on this issue than has been taken in the past, and that he will deplore the continued expulsion of Greek Cypriots from the northern part of the island and the harassment of those who remain? Will he make it clear that no solution can possibly be found which in any way accepts the partition of the island?
    Dr. Owen: I am naturally concerned, and so are the Government, about reports that the Greek Cypriots in the north of Cyprus have been forced against their wishes to leave their homes. If we are to make a success of the intercommunal talks, I must stress that it would not help in establishing a better atmosphere if at this stage I were to try to ascribe blame to either side.
    Mr. Jim Spicer: Does the right hon. Gentleman agree that, given the background against which the Turkish Cypriot community held its elections in June, followed by the Greek Cypriot community elections in September, we
    1422
    have separate States established on the island? Is it not appropriate to move towards a federal solution to the problem?
    Dr. Owen: That is one of the options that has been discussed over a period. I think that most people who have studied the Cyprus problem feel that it is possible to reach a solution. The trouble is that we have to reach agreement on a possible solution. It is no use merely having pacer plans. We have to bring the two sides to accept a solution.
    Mr. Brittanasked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement about the progress made to date in securing compensation for damage to British property in Cyprus.
    The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Evan Luard): Following my reply to a similar Question by the hon. Gentleman on 7th July, I asked the Turkish Ambassador to call on me. I told him of the intense public concern on this matter and urged him to press his Government to expedite the establishment of compensation procedures.
    As there has been little progress since that time, a senior official of the Foreign and Commonwealth Office is, at my request, at present visiting Nicosia and Ankara to pursue the question. I await his report.
    Mr. Brittan: I welcome the fact that the Government are taking that action. Will the Government bear in mind that urgency really is needed, as so many of the victims are elderly, and that if they are to get the benefit of any compensation they must get it quickly?
    Mr. Luard: I am very well aware of the need for urgency. That is one of the reasons for the two actions that I have taken. In addition, our High Commissioner in Nicosia has been pursuing this matter continually with the authorities there, including the Turkish authorities.
    We have heard from Mr. Denktash that he has undertaken that he will consider particularly urgent cases, and perhaps agree to settle these in advance of the establishment of a formal claims commission.
    Mr. Jim Spicer: Will the Minister elaborate on his last statement? Is it not true that a representative of the Turkish Cypriot community visited London 10 days ago and stated that the Turkish Cypriot community and their new federal form of Government accepted full responsibility for all damage after the ceasefire was agreed in Cyprus? If that is the case, will the Minister tell the House whether a central register is in existence in the Foreign and Commonwealth Office to which he can refer in drawing up a claim on behalf of British residents in Cyprus?
    Mr. Luard: Yes, I can confirm that. The position in general is that the Turkish Government have accepted responsibility for immediate claims as a result of hostilities, and the Denktash Administration have indicated that they will secure the protection of British property and undertake compensation for the remaining claims.
    I have asked for a register to be established of all claims by British citizens in Cyprus, whether they relate to the period of hostilities or the post-hostilities period.
    Mr. Woodall: Will my hon. Friend ask his right hon. Friend to bring pressure upon his right hon. Friend the Secretary of State for Defence with regard to the claim for compensation for the loss of personal belongings by Miss Olive Whitney, OBE, of the YMCA, who lost her personal belongings in Cyprus during the Turkish invasion while looking after the welfare of British Service men?
    Mr. Luard: I should require notice of an individual claim. If my hon. Friend will write to me I will take it up in the appropriate quarters.

    Rhodesia
    Mr. Luceasked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the latest developments in Rhodesia.
    The Secretary of State for Foreign and Commonwealth Affairs (Mr. Anthony Crosland): I would refer the hon. Member to my statement of 12th October. We shall no doubt be discussing this matter further in the debate later this afternoon.
    Mr. Luce: Does the Secretary of State accept that all those who want to see a
    1424
    peaceful solution in Rhodesia must express a profound hope that the Geneva Conference will succeed? Do the Government intend to allow observers from other countries to attend the conference, and, if so, on what basis?
    Mr. Crosland: I am grateful for the first part of the hon. Gentleman's supplementary question. I had hoped for more such statements in the discussions that we had on 12th October. As regards the second part of his question, we do not intend to have observers at the conference. However, any Government or group of Governments who wish to send someone to Geneva to keep in touch will be welcome to do so. We have no intention of having official observers present in the conference chamber.
    Several hon. Members rose—
    Mr. Speaker: We shall be spending all day on this subject.

    South Africa
    Mr. Thorneasked the Secretary of State for Foreign and Commonwealth Affairs whether he is satisfied with his Department's implementation of Her Majesty's Government's policies in respect of apartheid in South Africa.
    Mr. Rowlands: Yes, Sir.
    Mr. Thorne: Will my hon. Friend outline what steps he intends to take to curtail State and private investment in South Africa?
    Mr. Rowlands: I think that we have made it clear that it is the Government's view that normal civil trade and investment should carry on in South Africa in the British national interest.
    Mr. Thorpe: Since two distinguished African actors have been detained incommunicado in the Transkei for taking part in a play which when performed in London gained universal acclaim, and since the executives of the Opposition parties have likewise been detained under the South African Proclamation of 1960, does not this prove that the Government were right to refuse recognition for the Transkei, which purports to be independent on 26th October, and to continue with that posture, however much money may be spent by South Africa on advertising?
    Mr. Rowlands: Yes, we shall so continue because the Transkei does not meet our criteria. That view has been shared by the EEC as a whole.
    Mr. Maudling: In what way does the Transkei not meet the normal criteria?
    Mr. Rowlands: In our view, it is neither internally nor externally independent.
    Mr. Hooley: Is it the intention of Her Majesty's Government to cast another veto in the Security Council in defence of South Africa's occupation of Namibia?
    Mr. Rowlands: My hon. Friend knows that the language of a resolution would involve a Chapter VII determination. We should have to respond in that way. We have been pressing for and hoping for a resolution to emerge which will gain a consensus, but I fear that that is not likely.
    Rear-Admiral Morgan-Giles: Is it any part of the Government's policy on apartheid to withdraw co-operation and participation in maritime affairs with the South African Government? If so, how can that possibly make sense?
    Mr. Rowlands: We have made clear our relations with South Africa concerning military matters. It has been a strong part of our policy to embargo military equipment and the sale of it. If the hon. and gallant Member has a specific question about a specific matter, if he puts down a Question I shall be pleased to answer it.
    Mr. Robert Hughes: Is it not illogical for the Government to have a strict arms embargo themselves but to veto a resolution which would prevent other countries taking up the slack that our embargo makes available? If my hon. Friend is worried about the textual drafting of the resolution, will he sponsor a plain, straightforward resolution making an arms embargo mandatory?
    Mr. Rowlands: To make the arms embargo mandatory, one has to accept Chapter VII determinations.
    Mr. Hughes: Why not?
    Mr. Rowlands: That would involve many other consequences, including an embargo on trade. For the reasons I
    1426
    have given earlier, I do not think that that is in our interests.

    South America
    Mr. McCrindleasked the Secretary of State for Foreign and Commonwealth Affairs if he or any of his Department's Ministers plans to visit any of the countries of South America in the near future.
    Mr. Rowlands: There are no immediate plans for such visits.
    Mr. McCrindle: Although it is currently too much to expect a ministerial visit to Chile, what plans does the Minister have for at least appointing a new ambassador to Santiago? Why do the Government continue to apply a different yardstick to our relations with Chile from that which they appear to apply to other regimes of which they may disapprove?
    Mr. Rowlands: It is far too much to expect a ministerial visit to Chile in view of the strong feelings held by the Government and the great public feeling in Britain about the position in Chile. The hon. Gentleman will know why we withdrew our ambassador. We did so in the light of the deplorable treatment and torture of a British citizen. The situation has not changed.
    Mr. MacFarquhar: Have there been any ministerial contacts with Argentina in recent months? If not, what is the state of the discussions with that country on the future of the Falkland Islands since my hon. Friend last came before the House?
    Mr. Rowlands: As regards ministerial contacts with the Argentine Government, a number of Ministers have come to London. Indeed, there is a Minister present this week. They have been in touch with their respective opposite numbers. We shall continue to have consultations with the Argentinians about the Falklands. I have nothing further to add to what has been our position as regards the Falklands.

    Helsinki Agreement
    Mr. Sproatasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement

    1427
    on the implementation of the Helsinki Agreement.
    Mr. Youngerasked the Secretary of State for Foreign and Commonwealth Affairs what progress has been made up to the present time in implementing the detailed provisions of the Helsinki Agreement; and if he will make a statement.
    The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. John Tomlinson): As I said on 28th July, we believe that some progress is being achieved in bringing existing practices into line with the Final Act provisions, although a proper assessment must wait until the Belgrade Review Conference next year. The most recent developments have been the notification by Poland of a large military manoeuvre involving Soviet, East German and Czechoslovak as well as Polish forces, and by Her Majesty's Government of a military manoeuvre, Exercise Spearpoint, which is due to be held in the Federal Republic of Germany from 2nd to 11th November.
    Mr. Sproat: What is the state of British preparations and combined Western preparations for Belgrade? Will the Minister give us an assurance that this meeting will be at a political level and not merely a meeting of officials? What evaluation has the hon. Gentleman made of the charge that is increasingly heard that the transfer of Western technology to the Soviet Union under detente is enabling the Soviet Union to free resources which it can then spend on military and other purposes hostile to the West?
    Mr. Tomlinson: All these matters are far more appropriate to the review conference, and it is far too early for the Government to state what will be their negotiating position for the conference.
    Mr. Whitehead: When my hon. Friend and his colleagues at the Foreign Office had the task of entertaining the Czechoslovak Foreign Minister during the parliamentary recess, did the question of the Helsinki Agreement come up? What undertakings did Her Majesty's Government receive about the implementation of the agreement in Czechoslovakia, particularly concerning personal liberty and the freedom of the Press?
    Mr. Tomlinson: That matter occupied a substantial part of the discussions dur-
    1428
    ing the Foreign Minister's visit. Her Majesty's Government's view, particularly about 11 human rights cases, was put forcibly, and substantial progress was made in relation to those cases.
    Mr. Younger: Will the review conference cover the disappointing progress made towards the freer exchange of information to the public of the Soviet Union and the West? If the position is no better by the time of the Belgrade Conference, will the Government take a strong line and give no further concessions until real progress has been shown on this matter?
    Mr. Tomlinson: The conference will cover all aspects of the Final Act, and I repeat that Her Majesty's Government will not be satisfied until all the requirements of the Final Act have been put into operation by the signatory States. All these matters will be contained within the review conference.
    Mr. Frank Allaun: Did not the Helsinki Agreement aim to promote mutual disarmament? Will Her Majesty's Government respond favourably to the new Soviet proposal this year for a mutual reduction in forces and in missiles, which could, I think, break the two-year deadlock which is holding things up so badly?
    Mr. Tomlinson: The Government are willing to consider any proposals put to them, but this is obviously a matter of detailed negotiation, in which we have to be satisfied that there is a mutual reduction in forces and that it is not a one-sided package.
    Mr. Hurd: The Helsinki Agreement mentioned the notification of manoeuvres. Can the hon. Gentleman confirm that the Soviet Union announced on Monday that it proposes to hold an other series of missile tests in the Barents Sea, despite the fact that this is a zone disputed with Norway and despite the protests of our Norwegian ally? Were these tests notified in accordance with the Helsinki Agreement? If not, what are the Government going to do about it?
    Mr. Tomlinson: The detail of that supplementary question does not arise directly from the Question on the Order Paper, but notification is an obligation. I

    1429
    should require notice of the further details mentioned by the hon. Gentleman.

    Southern Africa
    Mr. Ioan Evansasked the Secretary of State for Foreign and Commonwealth Affairs what action is proposed in view of recent developments in Southern Africa; and if he will make a statement.
    Mr. Goodladasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the situation in Southern Africa.
    Mr. Crosland: I hope to make a statement on this subject in today's debate.
    Mr. Evans: While we welcome the progress that the Government have made in bringing about a peaceful solution and majority rule for Zimbabwe, may I ask what action they are taking in the United Nations to end the illegal occupation of Namibia and to ensure that it, too, moves towards majority rule? Will the Government continue their policy of not recognising the Bantustans, which are essentially a part of the anatomy of apartheid, which has been rejected by the United Nations?
    Mr. Crosland: The answer to the second part of my hon. Friend's supplementary question is "Yes". My answer to the first part is that very active discussions are going on at the moment about Namibia at the United Nations, as my hon. Friend knows, and it remains the objective of the Government to pursue precisely the aims he has described. I have no statement to make on Namibia at the moment, but, as my hon. Friend the Minister of State has said, we would like to see a unanimous resolution on it at the United Nations, just as there is unanimity amongst the nine member countries of the EEC on the subject. That is what we are seeking to achieve. I cannot say whether we shall be successful in achieving it.
    Mr. Goodlad: Will the right hon. Gentleman accept once again the strong hope on this side of the House that the forthcoming Geneva Conference will be a success? Can he tell us what has been said to him by the African Presidents about their ability or otherwise to control guerrilla activity within their frontiers before, during and after the conference, and what
    1430
    will be the Government's reaction if they are unable to do so?
    Mr. Crosland: I take it that the hon. Gentleman is referring to the Geneva Conference on Rhodesia and not the one which has also been discussed as a possibility on Namibia.
    Mr. Goodlad
    Mr. Crosland: The hon. Gentleman asked what the African Presidents have told me. I repeat what I said on Tuesday. I have many functions and responsibilities, but they do not include answering for what the Heads of other Governments have said.

    USSR
    Mr. Adleyasked the Secretary of State for Foreign and Commonwealth Affairs if he has any plans to pay an official visit to Moscow.
    Mr. Tomlinson: My right hon. Friend has at present no plans to do so.
    Mr. Adley: As this is the twentieth anniversary of the brutal Soviet oppression of Hungary, will the hon. Gentleman tell those apologists for Moscow in his party that they should cease their constant carping criticism of capitalism and that the unpleasant and unacceptable face of Soviet Socialism is represented by the tanks which rumbled into Budapest from Moscow 20 years ago?
    Mr. Tomlinson: No, Sir.
    Mr. Frank Allaun: If we want to avoid a third world war between East and West, which is the supreme task facing our generation, surely it would be folly to avoid talks at the top level and at every level with people with whom it is vital that we should enjoy peace and detente.
    Mr. Tomlinson: I would not dissent from that opinion.
    Mr. Blaker: Will the hon. Gentleman suggest to the Foreign Secretary that when he goes to Moscow he should ask the Russians for their estimate of the subsidy to the Soviet consumer which will be paid by the British taxpayer if the line of credit advanced by the right hon. Member for Huyton (Sir H. Wilson) is totally taken up by the Soviet Union? Is the hon. Gentleman aware that the Secretary of State for Trade is extremely

    1431
    evasive in answering my questions on the matter but that I am reliably informed that the figure will be over £200 million?
    Mr. Tomlinson: As my right hon. Friend has no immediate plans to visit Moscow, the hon. Gentleman's suggestion is hypothetical.
    Mr. Gwilym Roberts: Will my hon. Friend accept, however, that the terms of our trade with Eastern countries have improved considerably in recent months and years? Will he reaffirm that it is the policy of the Government to stimulate that trade in every way possible as well as stimulating peaceful relations?
    Mr. Tomlinson: I am sure the House will agree that it is in the interest of all to see widening free trade with Eastern countries.
    Mr. Maudling: But does widening free trade have to involve large subsidies from the British taxpayer?
    Mr. Tomlinson: No, it does not have to do so, and in this case I do not believe that it does.

    Middle East
    Mr. Hooleyasked the Secretary of State for Foreign and Commonwealth Affairs what recent discussions have been held with West European Governments about formulating a common policy towards the problem of Palestine.
    Dr. Owen: Middle East policy is frequently discussed among the Nine, but these discussions are and must remain confidential.
    Mr. Hooley: Is my right hon. Friend aware that the recent statement by the Foreign Secretary to the United Nations General Assembly expressing sympathy for the aspirations of the Palestinians towards nationhood is welcome on this side of the House? Can he explain, however, why the Foreign Secretary expressed reservations about the actual sovereignty of the Palestinian State?
    Dr. Owen: I am grateful to my hon. Friend for his welcome to my right hon. Friend's speech. In saying that it need not necessarily be a sovereign State, my right hon. Friend simply meant that it was premature at this stage to lay down a constitutional blueprint. There are obviously several possibilities, but he was
    1432
    not suggesting any preference for one as opposed to others.
    Mr. Aitken: Does the right hon. Gentleman agree that, as the Lebanese civil war rolls on, the Palestinian groups grow more and more fragmented and there is a growing danger that some of the fringe groups will turn once again to outrages of international terrorism, as happened in the past? Does he agree also that one way of avoiding this possible danger is for the Western European Governments to take a positive diplomatic initiative in order to find a solution to the Palestinian problem, a manoeuvre which is sadly lacking at the present time?
    Dr. Owen: In my right hon. Friend's speech to the United Nations his purpose was to restate the British view of the essential elements of any settlement for which Security Council Resolutions Nos. 242 and 338 remain the basis. But, in addition, he wished to underline our recognition, as the hon. Gentleman has recognised, of the central importance of the Palestinians and their aspirations towards nationhood.

    British Embassies and Posts (Commercial Departments)
    Mr. Gwilym Robertsasked the Secretary of State for Foreign and Commonwealth Affairs if he will initiate a study into the effectiveness of commercial departments in British embassies and posts overseas; what steps he is taking to increase their effectiveness; and if he will make a statement.
    Mr. Tomlinson: The Central Policy Review Staff is already conducting a review of our overseas representation. Part of its task will be to look at the question that my hon. Friend has raised. It would not be appropriate at this stage to anticipate its findings.
    Mr. Roberts: Will my hon. Friend accept that there is a widely held industrial view that although the commercial side of these departments has improved considerably in recent years, there is still room for strengthening them in special skill areas? Will the CPRS look at the possibility, in areas where special skills are involved, of borrowing people from industry on a temporary basis?
    Mr. Tomlinson: All sides of industry are represented in the British Overseas Trade Board, and this is responsible for the direction of the commercial work overseas. The Central Policy Review Staff will take into account the views of all the interested parties in considering our representation overseas.
    Mr. Marten: As it is the policy of the main parties in this House to move towards economic and monetary union and the full integration of our country into the European Community—[Interruption.] I meant the Front Benches—at what point will this reflect itself in a massive cut in the Foreign Service when Europe, speaking with one voice, as it is supposed to, can be represented by one voice overseas, enabling us thereby to cut out all British embassies?
    Mr. Tomlinson: As the hon. Gentleman's suggestion is based on such a false hypothesis, I do not think that this is the time at which to pursue it.
    Mr. McCrindle: But long before the idyllic circumstances arrive to which my hon. Friend the Member for Banbury (Mr. Marten) referred, does the Minister accept that there has indeed been a considerable improvement in the commercial departments of embassies abroad? May I echo the point made by the hon. Member for Cannock (Mr. Roberts) and suggest that we should be thinking about the secondment of someone experienced in marketing to embassies in the areas in which we expect and hope to increase our exports?
    Mr. Tomlinson: I am grateful to the hon. Gentleman for his comments. The whole House will echo the statement that there has been a remarkable improvement in this area. As for the other suggestion, this is exactly the kind of matter that will be considered by the CPRS during its study.

    Cambodia
    Mr. Goodhartasked the Secretary of State for Foreign and Commonwealth Affairs what further reports he has received from Her Majesty's representatives in South-East Asia about the situation in Cambodia.
    Mr. Luard: We have received a number of reports about the situation in Kampuchea, from Her Majesty's representatives in the area and other sources. In the absence of any British representation in that country, it is impossible to secure first-hand accounts of the situation there.
    Mr. Goodhart: As senior British diplomatic observers estimate that the Khmer Rouge Government have executed 100,000 Cambodians in the last 15 months, will the Minister say why the Government have offered no assistance at all to the United Nations programme for helping Cambodian refugees?
    Mr. Luard: We condemn any atrocities, wherever they occur. We have found a means of expressing the concern that has been shown in this House and elsewhere in this country to the Government of Kampuchea, despite the fact that we have no representation there.
    Concerning refugees, in the light of our economic situation we have had to say to the United Nations High Commissioner for Refugees that we cannot provide support for this category. I am sure that the hon. Gentleman knows that we have offered £1½ million for relief work in Indo-China since the end of the war there.
    Mr. Maudling: Have we not appointed a diplomatic representative to Cambodia? Where is he?
    Mr. Luard: Not yet.
    Sir Anthony Royle: How has the Minister expressed his concern, and what action will the Government take?
    Mr. Luard: I do not think that I can divulge the details of the methods we use. We do not have representation in Kampuchea itself. We found a means of expressing our concern through other diplomatic representatives to the Kampuchea Government.

    World Economic Situation
    Mr. Hugh Jenkinsasked the Secretary of State for Foreign and Commonwealth Affairs if Her Majesty's Government will reconsider their position on the new international economic order betwen the present and the meeting on the common fund next March, with a view to joining Canada as a member of the concerned countries.
    Dr. Owen: Her Majesty's Government have long recognised the need to achieve a more equitable world economic system. We accordingly intend to play a constructive role in the forthcoming preparatory meetings, both on individual commodities and on a common fund, which the UNCTAD Secretary-General is required to convene.
    Mr. Jenkins: I am very grateful to my right hon. Friend, but is he aware that there is considerable concern among the less developed Commonwealth countries, particularly those in the Caribbean, that in this matter Her Majesty's Government are not playing the full and co-operative rôle which is expected, and which is being carried out by the Canadian Government? Will my right hon. Friend have another look at this and see if he can put these fears at rest?
    Dr. Owen: I shall certainly look at this, but I do not think that my hon. Friend's concern is really justified. There are differences of view. It is true to say that there are some people who are taking a more sceptical look and others who are more enthusiastic. I would put the British position as being broadly in the middle of the spectrum. But we shall gladly look at it.
    Mr. Spearing: As the Government's performance at Nairobi was somewhat disappointing, although partly redeemed at the end, does my right hon. Friend agree that this country is in a good position to suggest alternative means of obtaining the things that the Third World wants, this being fully in accordance with the needs and obligations of Her Majesty's Government?
    Dr. Owen: Yes, I think we are in a good position. I do not want to exaggerate our position. It would be stronger if our national economy were stronger. But we still have an important rôle to play, and we must bear our own economic difficulties, in comparison with the great degree of poverty that still exists in large portions of the world.
    Mr. Forman: As the recent Club of Rome study, reported in the Press today, shows that the gap between the developed and developing countries, in terms of standard of life, has widened considerably over recent years, will the Minister
    1436
    undertake to encourage his colleagues in the Ministry of Overseas Development to be even more active in their sphere of responsibility than they already have been?
    Dr. Owen: The Ministry of Overseas Development is doing a very great deal. It is especially striving wherever possible to ensure that aid goes to the poorer countries and to the poorest in those countries. It is a very difficult and complex problem. It involves multilateral negotiations. I am sure that that is the right way to proceed, and progress is being made.

  EUROPEAN COMMUNITY

    Council of Ministers
    Mr. Martenasked the Secretary of State for Foreign and Commonwealth Affairs when he will next be attending an EEC Council of Ministers meeting.
    Dr. Owen: On 15th and 16th November.
    Mr. Marten: In view of the current Turkish displeasure with the EEC, which I think is fairly well established now, and in view of the obvious dangers inherent in that situation, will the Minister of State, the next time he visits the Council of Ministers, make it clear to the Council that Britain wishes to retain the most friendly relations with Turkey? Will the right hon. Gentleman ensure that nothing is done by the EEC which harms our alliance with Turkey?
    Dr. Owen: I attach a great deal of importance to good relations between Turkey and this country. It is obvious that our discussions previously on Cyprus underline the importance of our relations with that country. But there are many other countries in the Nine which also have traditional friendships and traditional involvements with Turkey both as NATO partners and in other areas of foreign policy. We are all concerned that there is at the moment some disagreement, but we hope to discuss this with the Turkish Government and reach agreement with them on what is for every member of the Nine a very difficult problem.
    Mr. Hooley: When shall we be informed of the business which is to come

    1437
    before the Council of Ministers, as has been customary in the past?
    Dr. Owen: It is normal to make a statement about it towards the end of the month, and I hope to do that.
    Mr. Dykes: When the Council of Ministers is legislating, as opposed to merely discussing policy, why cannot it legislate in public?
    Dr. Owen: I am sorry, I do not understand the hon. Gentleman's question. He speaks of "legislation in public". In terms of the Community, it is well known that the Community conducts a lot of its discussions in confidential sessions. I think that it has worked reasonably well in the past.
    Mr. Crawford: Will the right hon. Gentleman tell the German representative on the Council of Ministers that, in any negotiations between the Prime Minister and Chancellor Schmidt over the propping up of the pound, they cannot look upon Scottish oil as collateral for any bargaining which may be taking place?
    Dr. Owen: Again, I cannot see how that arises out of the original Question. However, I shall take note of the hon. Gentleman's point.
    Sir D. Walker-Smith: The right hon. Gentleman seemed a little surprised at the supplementary question asked by my hon. Friend the Member for Harrow, East (Mr. Dykes) about legislation in public by the Council of Ministers. Is he not aware that this matter has been canvassed over three or four years and pressed both in Strasbourg and upon his colleagues on the Treasury Bench? Will he in future read his brief more carefully before answering our questions?
    Dr. Owen: I am very conscious of having been away from European matters for some considerable time. I have, after all, been involved with the National Health Service for two and a half years. I shall look at this. There are problems about having completely open discussions until a state of agreement has been reached. I recognise that there is a problem of member nations' legislatures and the whole question of Community regulations. I recognise that that is a problem to which the right hon. and learned Gentleman attaches a great
    1438
    deal of importance. I shall do my utmost to ensure that this House is kept informed at all stages wherever possible of intended Community legislation. There are, however, formidable difficulties, as the right hon. and learned Gentleman himself pointed out well before we entered the Community.

    Direct Elections
    Mr. Spearingasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement concerning the draft instrument for direct elections to the EEC Assembly.
    Mr. Jayasked the Secretary of State for Foreign and Commonwealth Affairs by what procedure it is proposed to ask Parliament to ratify the legal instrument signed at Brussels on 20th September providing for direct elections to the Strasbourg Assembly; and when it is proposed to bring this before the House.
    Dr. Owen: The provisions of the Act signed on 20th September will come into force after all the member States have notified the completion of the procedures necessary in accordance with their respective constitutional requirements. In the case of the United Kingdom, such notification would not be made until after Parliament had both enacted the necessary implementing legislation and approved by affirmative resolution an Order in Council made under Section 1(3) of the European Communities Act.
    Mr. Spearing: I thank my right hon. Friend for that statement. Is he aware that, despite the provisions of Section 1(3) of the European Communities Act, it is a flimsy protection for this House? He will recall that the Prime Minister said that we might need to amend that part of the Act. Can my right hon. Friend confirm that Article 7 of Command 6623, to which he referred, requires uniform procedures at a subsequent date for these direct elections?
    Dr. Owen: Article 7 provides that the Assembly shall draw up a proposal for a uniform electoral procedure but that, pending the coming into force of such a procedure, the electoral procedure shall be governed in each member State by its national provisions. This was an issue

    1439
    which was commented on by the Select Committee in its report.
    Mrs. Winifred Ewing: Is the right hon. Gentleman aware that in the European Parliament there is a certain degree of suspicion that the United Kingdom Government do not seriously intend to introduce direct elections by 1978? Perhaps it would be helpful if the Minister of State could give a categorical assurance that there is no question of delay and that the United Kingdom Government will adhere to the 1978 target.
    Dr. Owen: There is a later Question about this on the Order Paper. However, I reiterate what was said by my right hon. Friend recently. We intend to introduce this as soon as practicable.
    Mr. Wigley: If the Government are still working towards 1978, by what date do they expect to have constituencies identified for these elections, by what procedure will constituencies be chosen, and what length of time is necessary for any Boundary Commission to consider those constituencies and give a fair time for debate before they are finalised?
    Dr. Owen: The Government are considering all these issues. They were all covered in the Select Committee's report. I am sure that the House will wish to study that report carefully, as the Government are doing currently.
    Mr. Gould: What obligation was imposed on this and other countries about the date of direct elections?
    Dr. Owen: We used the term "best endeavours procedure". There were practical difficulties in view of the timing of legislation in this House. We said that we would undertake to use our best endeavours, and that is our firm intention.
    Mr. Hurd: May I congratulate the Minister of State on his new appointment and on what is, I believe, his first appearance in it at the Dispatch Box? He referred to the report of the Select Committee. Is he aware that, in its Second Report, the Committee said that, if a Boundary Commission was to do a fair and proper job for direct elections within the timetable which the Secretary of State accepted, an Act of Parliament would need to reach our statute book by the
    1440
    end of February next year? Will he give an undertaking that the Government intend to introduce a Bill in the next Session early enough for Parliament, if it so wishes, to meet that timetable?
    Dr. Owen: I am grateful to the hon. Gentleman for his personal comments. Of course, I cannot prejudge the Queen's Speech. The House will have to consider the issues raised by the Select Committee, which also made recommendations about reducing the appeals procedure relating to the Boundary Commissions. The House will have to form a judgment. Everyone on both sides of the House is aware that to meet the February date will be extremely difficult.
    Mr. Moateasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the current position with regard to direct elections to the European Parliament.
    Mr. William Hamiltonasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement on progress made towards direct elections to the European Parliament.
    Mr. Padleyasked the Secretary of State for Foreign and Commonwealth Affairs what progress has been made towards finalising arrangements for direct elections to the European Parliament.
    Dr. Owen: The Government participated to the full in the negotiations which led to the agreement on direct elections reached at the European Council in July and to the decision of the Council and the annexed Act which, with the other Community Foreign Ministers, my right hon. Friend signed at the Council meeting in Brussels on 20th September. The Government will introduce the legislation needed to implement direct elections in the United Kingdom at the earliest practicable date.
    Mr. Moate: Is it still the position of the Government that a directly-elected Assembly would have no more powers than that of the present nominated Assembly?
    Dr. Owen: Yes, that is the situation.
    Mr. Jay: Do the Government propose to ask the House to approve the legal instrument before the end of the Session?
    Dr. Owen: We have made it clear that we see this matter in two parts. The first part is to have the direct elections. My right hon. Friend is an experienced parliamentarian and he must know that he is asking me to anticipate the Queen's Speech. As far as this Session is concerned, it would be impossible to carry through the legislation in the few remaining weeks that we have available, and it is not our intention to do so.
    Mr. Scott-Hopkins: In his answer to a previous question, the Minister said that February was out of the question for passing this legislation. Can he give an estimate of when he thinks the legislation will go through?
    Dr. Owen: The hon. Member has misheard me. I did not say that it was out of the question. I said that it would present very great difficulties. Clearly, the hon. Member must await the Queen's Speech.

    Foreign Policy
    Mr. Blakerasked the Secretary of State for Foreign and Commonwealth Affairs what progress has been made towards the co-ordination of foreign policy in the EEC.
    Mr. Crosland: A great deal, Sir. The Nine continuously work towards common positions on foreign policy matters. The speech made on 28th September at the thirty-first United Nations General Assembly by the Netherlands Foreign Minister in his capacity as President of the Council of the European Communities is encouraging evidence of progress. During the thirtieth General Assembly the Nine voted together on 83 per cent. of all United Nations resolutions and the country holding the presidency spoke on behalf of the Nine on 30 occasions. This represents a major move towards the co-ordination of foreign policy in the EEC.
    Mr. Blaker: Is the Secretary of State aware that I welcome that reply? May I draw his attention to the approach made some months ago by COMECON to the EEC for a commercial agreement? Does not that approach raise important
    1442
    political issues, including the question of what counter-proposals the EEC might want to make? Can the right hon. Gentleman assure the House that the political issues will be considered by Ministers along with the commercial ones?
    Mr. Crosland: I can give that assurance to the House. I agree that this is a matter of great importance. It was discussed during the past two days in Luxembourg. No final decision was taken about the nature of the reply to that proposal. When we come to take a final decision on it, however, there is no question but that we shall take seriously into account the political as well as the commercial considerations.
    Mr. Newens: What opportunities are taken to seek to persuade our partners in the EEC to co-ordinate policies, for example, to bring pressure to bear on Chile about its failure to observe proper standards of human rights and to seek co-ordination of our respective policies on the supply of arms to South Africa?
    Mr. Crosland: A great deal of pressure is brought to bear, but to be fair to our EEC partners I should say that they are extremely willing to do the things we ask them. The most recent example of this was yesterday, when the Nine were very willing to issue a very strong statement, to which I shall refer later in the day, supporting the British Government's initiative over Rhodesia.
    Mr. Scott-Hopkins: Does the Foreign Secretary agree, following his helpful answer, that the time has now come to have a secretariat dealing with these matters as the burden on the person in office will be very great?
    Mr. Skinner: What about public expenditure?
    Mr. Crosland: I have a great deal of sympathy with what the hon. Member for Derbyshire, West (Mr. Scott-Hopkins) has said, and at the end of the day I think it would save public expenditure, not increase it. I have found most disconcerting the extent to which there is more than one single decision-making centre within the Community. This was referred to in the Tindemans Report, and I have a lot of sympathy with what Mr. Tindemans said.

    Common Fisheries Policy
    Mr. Sillarsasked the Secretary of State for Foreign and Commonwealth Affairs when he next intends to discuss with the Council of Ministers the question of extended limits and amendments to the common fisheries policy.
    Mr. Hendersonasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on fishing limits in relation to the common fisheries policy.
    Mr. Tomlinson: The Commission's proposals of 23rd September contained, in addition to recommendations on the internal fisheries régime, a recommendation that member States should extend their fisheries limits in the North Sea and the North Atlantic to 200 miles on 1st January 1977. This subject was discussed in the Council on 18th and 19th October, and discussion will continue at a meeting of EEC Foreign Ministers on 29th and 30th October.
    There has been no specific discussion of or significant progress on the reform of the Community internal fisheries régime which will operate within the extended limits, and the British Government have described the coastal arrangements proposed by the Commission as wholly unacceptable. This remains our view.
    Mr. Sillars: Am I right in thinking that the briefing material that our negotiators and the Community negotiators have includes maps showing the authorised positions in respect of exclusive zones? Could maps with these markings be made available to us?
    Mr. Tomlinson: No, my hon. Friend is not right about that.
    Mr. Henderson: Is the hon. Gentleman aware of the report in The Times today on the position of the Irish Government? Will he say whether the British Government will align themselves with the Government of Ireland in insisting that there can be no external EEC zones until arrangements for our own internal zones have been completed with the fishing industry?
    Mr. Tomlinson: No. It is of fundamental importance to the British fishing industry that we should get a mandate for negotiations with third countries without delay.
    Several Hon. Members rose—
    Mr. Speaker: Order. There is to be a statement on this matter after Questions.

    EEC Commission
    Mr. Arnoldasked the Secretary of State for Foreign and Commonwealth Affairs what further progress has been made in setting up the review of the staffing, structure and political rôle of the EEC Commission.
    Dr. Owen: My right hon. Friend the Prime Minister undertook to propose to the European Council next month the terms of reference for a review which the new President of the Commission might be asked to undertake of the staffing, structure and organisation of the Commission. It will be for the European Council to decide on the next step.
    Mr. Arnold: Have the Government reached certain conclusions about the need to reform the central institutions of the Community?
    Dr. Owen: Obviously, the terms of reference have to be confidential to the European Council. If my right hon. Friend undertook to give it to the Heads of Government at the European Council, the right time to review it would be at that meeting. The Government's views are firming up and if Opposition Members have suggestions on the areas of reform we will be happy to look at them and take account of them in drawing up the final terms of reference.
    Mr. Marten: When will we know who will be the other Commissioner from Britain?
    Dr. Owen: Members of the Commission are appointed by common accord of member States. We all seek the appointment of persons whom we believe to be best qualified for the position.
    Mr. Spearing: I am grateful for my right hon. Friend's remarks concerning the terms of reference. If the political rôle of the EEC Commission is to be altered in any way, will this be a constitutional matter which will require a

    1445
    change in the treaties if any changes are adopted?
    Dr. Owen: That is an option. The majority of requests for changes in the terms in which the original proposal was put forward by the Prime Minister did not require either changes in the treaties or in the procedures. All the same, there might be some. There is a lot to be done in tightening up the administration and reducing bureaucracy.
    Mr. Thorpe: Will the right hon. Gentleman answer the question of the hon. Member for Banbury (Mr. Marten) and tell us when the second Commissioner will be appointed? Is there not an empty room waiting in the Cabinet Office which should be filled?
    Dr. Owen: As I told the hon. Member for Banbury, appointments are not made unilaterally but are made in accord by all member States. My right hon. Friend the Member for Birmingham, Stechford (Mr. Jenkins) has not been formally appointed, although everyone knows the situation. My right hon. Friend the Prime Minister said on 15th July that he would consider any suggestion in this respect that the Leader of the Opposition might put to him.

    PAROCHIAL FEES
    Mr. Whiteheadasked the hon. Member for Kingswood, representing the Church Commissioners, when a second Parochial Fees Order, outlining proposed changes in the calculations and sale of search fees for the parish registers, will be laid before the House.
    Mr. Terry Walker: The Commissioners have not taken any decision concerning the promotion of a further Parochial Fees Order dealing with fees for searches in church registers. Any such Order would have to be approved by the General Synod before it could be laid before Parliament, and any such move is likely to be related to the progress that is made with the Parochial Records and Registers Measure, currently under consideration by the General Synod.
    Mr. Whitehead: Has my hon. Friend seen the prolonged correspondence in The Times putting forward grave reservations about any increase in the scale of charges for parochial fees? Before any such scale
    1446
    went through the General Synod and was laid before this House as an Order—and it would be strongly opposed—would he receive a deputation of those concerned?
    Mr. Walker: I have had many representations from hon. Members with regard to the present Parochial Fees Order. If my hon. Friend put those who are most concerned in touch with me, I shall be pleased to receive a deputation and the Secretary-General of the General Synod will co-operate all he can.
    Mr. Wells: Will the hon. Member give a categorical assurance that county historical societies will be fully consulted before any measure is brought forward? The societies have very great fears.
    Mr. Walker: The stage for that consultation is before the actual decisions are made by the General Synod. I shall be pleased to receive those representations now in order that we may discuss the matter fully before it comes to the General Synod.
    Mr. Hugh Jenkins: Is my hon. Friend aware that the local historians in Putney and elsewhere in the country will be delighted with his answer?

PRIVILEGE (HONOURABLE MEMBERS AND THE LAW)
Mr. David Steel Mr. David Steel (by Private Notice) asked the Prime Minister whether, following the Written Answer of the Attorney-General yesterday, and in the unavoidable absence of the Leader of the House, he will make a statement about the steps that Her Majesty's Government will propose to clarify the position in law of Members of Parliament in relation to allegations of corruption.
The Prime Minister (Mr. James Callaghan): I am advised that the legal position is as follows. Any action of a Member which is not a "proceeding in Parliament" is subject to the ordinary law of the land. Like any other citizen, a Member may be criminally liable for corrupt activities which are not proceedings in Parliament.
A Member who accepts a bribe in return for some action which is a proceeding in Parliament cannot be the subject of crimina006C proceedings. That is

1447
so for two reasons. The first is the fundamental protection of the Bill of Rights which declares that
"the freedom of speech, and debates or proceedings in Parliament, ought not to be impeached or questioned in any court or place out of Parliament."
The second is that Members acting in their capacity as such are not within the ambit of the statutory provisions which make corrupt practices a criminal offence. It follows that only Parliament itself can punish a member for a corrupt action which is a proceeding in Parliament, as Parliament has the power to treat such action as a contempt and can deal with such a Member in a variety of ways, including expulsion and even imprisonment for the remainder of the Session.
The statement made yesterday by my right hon. and learned Friend the Attorney-General dealt with and only with the matters within his responsibility, that is, possible criminal proceedings.
But I recognise that the House is concerned about the general issues raised by this case. Whether the legal position which I have described should be changed is, of course, a matter for the House. The Government are studying the recommendation of the Royal Commission on Standards of Conduct in Public Life of July 1976 that:
"Parliament should consider bringing corruption, bribery and attempted bribery of a Member of Parliament acting in his Parliamentary capacity within the ambit of the criminal law."
As the Royal Commission recognised, the issue is by no means simple. It would be a major constitutional innovation to make the activities of Members of Parliament acting as such subject to judicial law. Far more than the question of bribery and corruption is involved, and even in that limited sphere the issue of principle and the problems of definition would need careful consideration. Nevertheless, an important issue of principle has been raised which the Government wish to consider and on which they will advise the House in due course. The Lord President will report to the House how he thinks we can best make progress in considering the matter.
Mr. Steel: I hope that the Prime Minister will convey to the Leader of the House our best wishes for a speedy recovery.
1448
Is not the difficulty here that it is now three days since the Observer alleged that three of our colleagues had been guilty of conduct which, had they been councillors, local authority officials or civil servants, would have rendered them liable to prosecution on charges of corruption? That assertion is either correct or incorrect, and nothing that the Attorney-General said yesterday in his Written Answer led one to believe that it was anything other than correct. [HON. MEMBERS: "No."] The right hon. And learned Gentleman used a phrase in his reply—and this demonstrates one of the problems of a Minister giving a Written Answer to the House and then going on television and answering questions, a course of which the House does not approve—concerning persons "within the jurisdiction". Unless that phrase is clarified it must be assumed to mean that as far as he is concerned, within his limited powers, which the Prime Minister described, there is no ground for further action.
If the assertion is correct the Government have fairly quickly to decide which initiative to take, either to recommend to the House that we alter the laws as recommended by the Royal Commission, or—and, preferably, in my view—that the House should take steps to investigate these allegations and clear them up one way or the other.
The Prime Minister: I am obliged to the hon. Member for his comments about my right hon. Friend the Leader of the House.
The answer by my right hon. and learned Friend the Attorney-General yesterday dealt with possible criminal offences, not with parliamentary misconduct. On the question of jurisdiction, I understand that the reference to "within the jurisdiction" was a reference to the territorial jurisdiction of our courts. In other words, it covered people in this country, and not people elsewhere. As I understand it, it does not confer any immunity from criminal proceedings if new evidence were to come to light, and the question of further action would be considered.
On the important point that the hon. Gentleman made, that by inference it must be assumed that the Attorney-General's answer meant that had these Members not been Members of Parliament they

1449
would have been liable to prosecution, allow me to read very carefully what I have here. The Attorney-General's answer must not be taken as meaning that if the law had been different Members of Parliament would have been prosecuted. The Attorney-General did not express and has not expressed an opinion either way on this matter.
We must not rush into conclusions on this. These are very important issues and certainly no vindictiveness against any individual Member should be allowed to influence our opinion. Alas, I have had only a couple of hours to go into this matter and I will not pretend that I am wholly informed about it. But I can see many thorny problems in the way of references of individual cases to the Committee of Privileges. Although I would not wholly rule that out, I suggest that one of the issues we shall have to consider is whether in cases which would not of themselves involve criminal proceedings it would be right to pursue one individual who has been named—I am not responsible for the Observer, and I understand that legal action is being taken in that case—or whether it would he better, and I am not pronouncing but asking questions, for the House to concern itself with this rather obscure recommendation by the Salmon Commission which does not recommend that hon. Members should be brought within the ambit of the criminal law but recommends that we should consider the whole matter. That seems to me to be right because of the difficulties that would arise out of this constitutional innovation.
Again I ask the House to accept that I do not pronounce on the matter, but it seems to me that in view of the obscurity of the position it may be as well to focus on the practice for the future rather than to re-run the past, about which so much has been said and on which on present evidence, as I understand it, no criminal proceedings would be taken.
Mrs. Thatcher: We are very sorry that the Lord President is ill. We know that he has a particularly painful illness and we hope that he will soon recover.
May I join the Prime Minister in saying that I believe that this matter raises very
1450
big and worrying issues which go beyond the immediate legal issues? At the end of his statement he said that the Government would consider these issues and would give their advice to the House. Could it not go wider than the Government? I believe that when such big issues of freedom of speech in this House are involved all parties in the House are affected, and I would be grateful if we, too, could be taken into the consultations.
I shall refrain from questioning the Prime Minister on the details of the statement because I notice that it is a very carefully drafted legal statement, and it would be unfair to cross-examine the right hon. Gentleman on the legalities.
The Prime Minister: In the time available to me, I have looked up a very good speech which I made in 1947 on the W. J. Brown case—the classic case in these matters. I do not subtract from anything I said then. I started by saying that although I was neither a constitutional historian nor a lawyer, I proposed, as a layman, to plunge in. I do not mind anyone reading that speech. It is a good thing to prepare oneself before coming to the House. Someone else might have read that speech before I got here.
The only reason I said that the Government would offer advice to the House is that the Salmon Commission has reported to the Government and it seemed appropriate, in the first place, that we should make our view known. But that is only a first step and I would envisage that the Government will then either make recommendations on the substantive nature of the report, which the House will have to consider and decide whether to accept, or recommend procedure for further consideration. The Lord President has not yet decided on these matters.
It is appropriate that the whole House should be involved in the consideration of a matter which springs from our protection under the Bill of Rights 1688. Not even this Government who, as the Opposition know, are wholly dictatorial and are leading us down the path of totalitarianism, intend to take this decision on their own. I can reassure the right hon. Lady that all hon. Members will be involved in this consideration.
Mr. Skinner: Does my right hon. Friend accept that while it might be important and necessary to preserve the fundamental freedom of speech of hon. Members, they should not be given the licence and freedom to line their pockets at the expense of the taxpayer and the public? Does he not also appreciate that when he talks about looking at the matter in general and not at specific matters in relation to the Poulson backhanders, millions of people outside this House will regard that statement as nothing short of a cover-up by Members of Parliament to safeguard other Members of Parliament?
Can the Prime Minister guarantee that the Committee of Privileges will look at this matter not merely in general terms but with a view to examining all the matters brought before the DPP relating to the Poulson affair so that we do not make only plans for the future but also decisions on what has already happened?
The Prime Minister: I accept the inference of my hon. Friend's question that the purpose of the freedom of hon. Members from arrest or proceedings in respect of their speeches was intended as a protection for the public interest and not against it. It was not intended to protect anyone who misuses his position.
I am sure that my hon. Friend has studied this matter and he will recognise that there is a difficult line to be drawn here. If he has studied the 1947 debate—the classic debate on this matter since the war—on W. J. Brown and his relationship with his trade union, which some hon. Members will remember, he will see that very difficult issues arise here and it would be unfortunate if some of his phrases such as "a cover-up" were accepted. That is too simplistic a view of the situation.
Mr. Skinner: It is my view.
The Prime Minister: I know that my hon. Friend holds his views very strongly, but some of us are also allowed to have our views on the matter.
I have made the general position clear and I do not think that hon. Members should misuse their position. There is a different contractual relationship between, for example, an hon. Member and a trade union and the position in
1452
some other circumstances, but it is not a clear and simple line.
I should not like to answer today my hon. Friend's question about a reference to the Committee of Privileges.
Mr. Hooson: Does the right hon. Gentleman not agree that it would be very bad for this House if the impression went abroad that we were concerned in any kind of cover-up? It is important to discuss other matters in the long term, but there is the shorter-term issue of the three people named by the Observer. Is it not right that the Government should take the initiative and have an inquiry into this matter? If these people are on the right side of the borderline, so be it. However, if they are not, should not the House take some action?
The Prime Minister: This is a matter to be decided by the House, although it is usual for the Lord President to put down such a reference. I am not able to give an answer to that question today. We must wait and see what further consideration is given to it.
Mr. John Mendelson: Is my right hon. Friend aware that there will be a welcome for his statement, as far as it went in clearing up the point which has done the most damage in the last three days when radio and television stations repeated false statements giving the impression that hon. Members cannot be charged with corruption, without the qualification that this is related to statements made in Parliament? Does my right hon. Friend realise that this statement has pre-occupied the public for three full days and that he must face up to that fact? I do not believe he did so sufficiently in his statement.
In the light of that, is it not essential that, as any inquiry which the House might undertake at the suggestion of the Lord President would take time, we should have a quick debate in which the Attorney-General would be able to speak as, through no fault of his own, he has not been able to speak so far, and in which a preliminary expression of the opinion of all sides of the House could be given to clear up this fundamental matter which has been occupying the minds of the public?
The Prime Minister: There can be no doubt about the fundamental matter.

1453
I made clear, and my hon. Friend has just repeated, that the Attorney-General's answer dealt with criminal offences and not alleged parliamentary misconduct. That was the purpose and basis of the answer.
I made clear either in my statement or in reply to a supplementary question that criminal offences committed outside the House can be and would have been the subject of proceedings. The Attorney-General's anwer yesterday made clear that, on the basis of the information so far available to him, there had been no such offences upon which further action should be taken. I hope that there will be no doubt about that.
The question on which attention is now focusing is whether we should look back over alleged parliamentary misconduct or look forward to the procedure to use in future. I am in no doubt that we should look at our procedure, but I am unable to express a view whether we should look back. Other hon. Members may express such a view. It is a matter for the whole House.
Several hon. Members rose—
Mr. Speaker: Order. I shall allow two more questions on this subject.
Sir D. Walker-Smith: May I first respectfully express my agreement with the legal position adumbrated by the Prime Minister and my satisfaction that the Government are to review this difficult, complex and important matter?
While it is clearly of paramount importance that any constitutional innovation must be jealously scrutinised by this House to see that there is no derogation of Parliament's exercise of its traditional functions, it is also important that there should not be or seem to be a void in which reprehensible conduct may be covered neither by the sanctions of criminal law nor by the sanctions of this House.
Will the Government in their review of this situation take into account that the Committee of Privileges is an imperfect forum for the ascertainment of difficult issues of disputed fact and that therefore, if the jurisdiction of Parliament, as exercised by the Committee of Privileges, is not to be supplemented from
1454
outside, it must be improved from within?
The Prime Minister: I agree with the right hon. and learned Gentleman that it is important to avoid a situation in which reprehensible conduct could not be covered by the sanctions of this House. My understanding is that it can be so covered.
The criticism made by the Salmon Commission was directed to a different matter—namely, how thorough such an investigation was and, indeed, whether the House should exercise it or hand it over.
Regarding the Committee of Privileges, again I express a preliminary view. I am inclined to agree with the right hon. and learned Gentleman that the Committee of Privileges would not be an appropriate body to consider some of these matters. There are one or two reasons for that, but I do not think that I need to be pressed to give them this afternoon. It may be that a new Committee of the House should be set up to consider this issue.
Mr. Abse: In view of the suggestion by my hon. Friend the Member for Bolsover (Mr. Skinner) of a cover up and consequently an opinion being formed outside of possible complicity on the part of the Government or Ministers, is it not important to stress that any immunity is confined to Back Benchers and that, as the Salmon Commission emphasised, Ministers of the Crown can be prosecuted and proceeded against for a common law offence on indictment for misbehaviour in public places—[Interruption]—in public office? It is important that the general community outside fully understands that there is no question of Ministers of the Crown having any immunity whatsoever from the criminal law of this country.
The Prime Minister: I think that it is accurate to say—I speak with deference in my hon. Friend's presence—that Ministers of the Crown enjoy the same immunity as other hon. Members regarding proceedings in Parliament but that they are not exempt from the law in relation to their ministerial office and their performance of it. That being the case, the great bulk of Ministers' activities, thank heavens, not being concerned

1455
with appearing only at the Dispatch Box, are therefore subject to the law of the land.
Mr. English: On a point of order, Mr. Speaker. It seems to me that either the Observer or Members of this House have committed a breach of privilege. I realise that that should be raised after ministerial statements. But may I have your advice as to when it should be raised?
Mr. Speaker: It is too late to raise the question of the Observer and privilege. That should have been done on Monday.

EUROPEAN COMMUNITY (FISHERIES POLICY)
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Anthony Crosland): I will, with permission, make a statement about a meeting of the EEC Council of Ministers which I attended on 18th and 19th October. I was accompanied by my right hon. Friend the Secretary of State for Scotland. A large number of separate items of business were discussed, and I will circulate a statement in the Official Report on them. I wish to report to the House today on the discussion of fisheries questions.
We had a full discussion on two matters of immediate concern to the United Kingdom—the date of the extension of fishing limits of member States to 200 miles, and the opening of negotiations with third countries with which the Community will require agreements on access. We were not aiming on this occasion to discuss the revision of the common fisheries policy.
There was very strong support in the Council for a collective extension of limits on 1st January 1977 and for the early opening of negotiations with third countries—above all, with Iceland. It was, however, argued as against this that final decisions should not be taken until the Council had dealt with certain aspects of the internal Community fisheries regime, especially with the width of the exclusive coastal belt, on which there are, of course, conflicting views.
As a result of this disagreement, it was not possible to take the decisions which we wanted. I made it clear that the
1456
opening of negotiations with Iceland was a matter of the greatest importance and urgency and that the proposed timetable, which envisages a first formal meeting early in November, must not be delayed. It was agreed that further work should be done by officials in the next 10 days and that Ministers would revert to the question when they met in The Hague on 29th and 30th October. It is my hope and expectation that we shall then be able to reach an understanding both on the extension of limits on 1st January and on the opening of negotiations with third countries.
Mr. Pym: Is the right hon. Gentleman aware that the Opposition are in agreement with the Government on both objectives—a collective extension of limits on 1st January next and the early opening of negotiations with third countries? We hope that his negotiations will reach a successful conclusion.
Does the right hon. Gentleman agree that the internal fisheries regime of the Community is an interest of overriding importance to Britain and our fishermen? I think that he will accept that the whole House shares a common anxiety on this score with the livelihoods of 23,000 families at risk and tens of thousands of others involved in the fishing industry.
I believe that the whole House is of the opinion that our case for a 50-mile wide exclusive belt is extremely strong. Does the right hon. Gentleman agree that the new Community fisheries regime must reflect the reality of the predominant interest of our industry in Community waters?
Mr. Crosland: I am obliged to the right hon. Gentleman for his opening remarks. I refrain from any over-controversial comment on his latter remarks and, indeed, on the attribution of blame for the situation in which we now find ourselves, which is an extremely interesting question.
Representing a Humberside fishing port, I am well aware of the considerations put forward by the right hon. Gentleman. The present CFP regime is wholly unacceptable to this country. I think that we were the victims—I shall put it as tactfully as I can—of an agreement which was drawn up to suit the original Six, not the present Nine. We

1457
are suffering from that agreement. It is our very determined intention, as the right hon. Gentleman knows, to seek a major revision of that agreement.
Mr. Jay: Does my right hon. Friend regard the common fisheries policy as one of the benefits to this country of Common Market entry?
Mr. Crosland: That is a very judicious question. The answer is that there are points to be made on both sides.
Mrs. Renée Short: What are they? No answer.
Mr. Grimond: Britain did not have a 50-mile limit before joining the Common Market. Is the right hon. Gentleman aware that, while there is wide sympathy with the view that we ought to go for a wider limit of 200 miles, if the Irish object on the ground that inshore fisheries would be neglected and they wish to draw attention to the importance of a 50-mile limit for their inshore fisheries, there will be widespread sympathy with their action?
Mr. Crosland: The position of the Irish is perfectly plain. Regarding coastal belts and priority for those with coastal fishing interests, we are completely at one with the Irish Government. My right hon. Friend the Secretary of State for Scotland made this point with great robustness when it was discussed during the last two days. Where we have a differing interest from the Irish is that, unlike them, we have not only an inshore but a distant-water fishing fleet. That makes it vital for us to get a 200-mile limit and to start negotiations with third countries. It was on the second, not the first, point that we were inevitably in disagreement with the Irish Government.
Mr. Powell: Does the right hon. Gentleman realise that if the member States of the Community extend their fishing limits to 200 miles before the internal fisheries regime of the Community has been modified in our favour as we require, the other States will be in exclusive possession of EEC rights to the very waters over which we are going to attempt, by negotiation, to obtain exclusive rights for ourselves?
Mr. Crosland: I appreciate that difficulty very well but, nevertheless, if I take the case of Iceland—the most urgent case facing us—the fact is that the present Oslo Agreement with Iceland runs out at the end of November. On 1st December, if no further agreement is reached between the Community and Iceland, we shall have no agreement of any kind with Iceland. I do not say that it is the most urgent long-term priority, but at the moment it is the most urgent priority for this country to get a new agreement with Iceland through the Community. It is for that reason that we have taken up such a strong position in Luxembourg.
Mr. James Johnson: As it was the Conservative Government who put us into this common fisheries policy, may I thank the Secretary of State and his team for their Herculean efforts at Luxembourg, despite the disappointing outcome due, we understand, to the attitude of the Irish delegation? Is my right hon. Friend aware that the EEC does not fully realise the intense depth of feeling shared by the whole industry as well as Members of Parliament on both sides of the House about the revision of the EEC fisheries policy? Many of us are against national catch quotas because of the evasion being practised not merely by our EEC partners but by Communist fleets, particularly off the south-west peninsula. On behalf of the industry, I would ask my right hon. Friend to stand firm on the 50-mile exclusive economic zone, allowing, of course, for licences for those nations which in the past have fished in these waters.
Mr. Crosland: I have every reason to be aware, and so has the Secretary of State for Scotland, of the depth of feeling about this matter in the industry. For me it is not only a ministerial but a constituency responsibility. We are gradually making the other members of the Community realise what the depth of this feeling is in this country, although they grossly underestimated it in the early days of the present negotiations. I accept a lot of what my hon. Friend has said about quotas. Clearly, quotas will have some part to play in any new régime, but if they are to have a part to play—which they must—they must be quotas properly

1459
enforced and not largely ignored, as are the present ones.
Mr. Speaker: Order. May I make an appeal to the House? I know that a number of hon. Members have important constituency interests in this matter and I shall try to call them. But it will help me if we could have questions which are as concise as possible.
Mr. Alexander Fletcher: Are the Government insisting on a 50-mile exclusive zone for Britain to protect her fishing industry?
Mr. Crosland: We cannot insist in the sense that we would send an army to The Hague in order to impose our will.
Mr. Fletcher: In negotiations.
Mr. Crosland: In the negotiations. As the hon. Gentleman knows, the position set out by my right hon. Friend who is now Secretary of State for Prices and Consumer Protection was for a variable band going up to 50 miles. My right hon. Friend laid down the conditions very clearly and they have been discussed in the House before by hon. Gentlemen who know something about this question. That remains our current full negotiating position.
Mr. Robert Hughes: If the negotiations on the 200-mile limit and on the exclusive zone limits are protracted, will the Government take unilateral action?
Mr. Crosland: I have already made it clear both in the House and in public statements in respect of a 200-mile limit that if the Community does not agree to go ahead collectively on 1st January 1977, we shall go ahead unilaterally.
Sir Frederic Bennett: To summarise the position, I understood from what the Minister said that we were standing firm on up to 50 miles. May I at least get the right hon. Gentleman's assurance that in no circumstances shall we accept 12 miles?
Mr. Crosland: I can conceive no circumstances in which this country—certainly under this Government—will accept 12 miles.
Mr. Sillars: Could it be that a lot of the difficulty arises out of misunderstanding, bearing in mind that in the answer
1460
to Question No. 33 this afternoon we were told that the negotiations on this extremely complex matter were being conducted without reference to maps? Am I still right in believing that there is no reference whatever to maps showing the British Government's proposals in relation to the exclusive zone? How can the right hon. Gentleman seriously conduct negotiations on that basis?
Mr. Crosland: What has happened so far in the negotiations about the exclusive coastal belt is that we have made our negotiating position clear. The Commission has put forward certain proposals which are wholly unacceptable to us, but the negotiations between us and the other member States of the Community have not got to the point yet where we are discussing a 50-mile approach, which is the British Government's approach. We are discussing precisely what the mileage should be here and there and in some other places around the coast. I repeat that the negotiations have not got to that point yet. [Interruption.] That has nothing to do with ohing and ahing; it is a fact of life. When we reach a position like that I am sure that we shall need maps to help us.
Mr. Wall: While the action of the Irish Government may be regrettable for the reason that the right hon. Gentleman has given, have they not set a good example by the use of the veto? Would the Secretary of State undertake to veto other Common Market legislation if the British fishing industry does not get an adequate exclusive zone?
Mr. Crosland: There is no sense in which this matter could be subject to the veto, using the word "veto" as a technical term in Community language. What the Irish have done is not to veto in that sense. They have simply refused to agree to a settlement which it is fair to say was acceptable to virtually everyone else in the Community. Whether we shall be in this position at a later stage when we come to coastal belts I do not know. I would think it foolish to speculate about that now.
Mr. Watt: Since half of Britain's fish is landed in Scottish ports by Scottish boats, surely the urgency is not the Icelandic question but the question of

1461
the extension of the limits? The Scottish fishermen are adamant that nothing less than 50 miles will do.
Mr. Crosland: I am fully aware of the attitude of the Scottish fishermen and I accept what the hon. Gentleman has said. If half the fish is landed by Scottish fisherment and Scottish boats, the other half of the catch is landed by Grimsby fishermen in Grimsby boats.
Mr. Brotherton: In the event of no agreement being reached within the Community by the end of November, will the Foreign Secretary assure the House that we shall reopen negotiations with Iceland ourselves so that we can resolve this most important pressing problem?
Mr. Crosland: Yes. I can absolutely assure the House of that, as I did the Council of Ministers. If there is no Community agreement with Iceland by 1st December, we shall have to seek a bilateral agreement. That is a fact of life.
Mr. Jim Spicer: The right hon. Gentleman has given us an assurance that with or without our partners in the Community we shall go out to 200 miles on 1st January. Can he give any indication how, once we have achieved that point, we shall police it against the marauding fleets from the Eastern Powers?
Mr. Crosland: That will obviously be essential. But the whole question of policing and enforcement is extremely complex. We think it would be easier if this were settled on a Community rather than on a national basis. I cannot give the hon. Gentleman details of what the actual policing arrangements will be, how many vessels will be involved and so on, because I still think it highly likely that this will be a collective operation on the part of the Community and not a unilateral operation on our part.
Mr. Brittan: Why are the Government taking an opening negotiating position for an exclusive zone of up to 50 miles when it is the united desire and request of the fishing industry that it should be 50 miles throughout?
Mr. Crosland: For the simple reason that there are some parts of the coast where 50 miles would make no sense whatever because there is no fish between 12 and 50 miles.
Mrs. Winifred Ewing: Was it not rather debonair of the Council of Ministers to set as their priority the date for the 200-mile limit and the issue of third countries when they knew very well that in the debate in the European Parliament last week a clear impression was given that the first subject at the Council of Ministers would be the question of the internal arrangements? Has this matter now been shelved? Is that not saying that the Council of Ministers has not got on with the job of working in our interest? Is the right hon. Gentleman aware that the resolution was lost by one vote and that the hon. Member for Fife, Central (Mr. Hamilton) and the hon. Member for West Lothian (Mr. Dalyell) were missing?
Mr. Crosland: I have heard the Council of Ministers described as many things, but never as debonair.
The fact is—I must insist on this—that it is of the highest urgency for the whole of this country not merely to get an agreement with Iceland before 1st December, as we all know, but also to get agreements with the United States, Canada, Norway, the Eastern European countries, and the rest. Therefore, I have no doubts that from the point of view of our national interests we were right to go for the 200-mile limit first, while at the same time maintaining our position fully on exclusive belts.
Mr. Younger: Does the Minister recognise that, rightly or wrongly, the Irish action yesterday has given the impression that the Irish care more about the 50-mile exclusive zone than Britain does? Will he assure the House and the fishing industry that that is not so?
Mr. Crosland: Yes, I assure the House and the fishing industry that that is not so. This was made clear both by myself and by my right hon. Friend the Secretary of State for Scotland in the discussions yesterday. We care equally with the Irish about this. The difference, solely, is that we care, but they do not, about agreements with third countries, because we have a distant water fishing fleet and the Irish do not.
Mr. Peter Mills: Will the Secretary of State bear in mind that if he wants an example to reinforce his determination to deal with the problems concerning inshore fishing, he could have no better example

1463
than the rape now taking place off the South-West of England where our mackerel stocks are being seriously depleted? Will he redouble his efforts to deal with the problem before it is too late?
Mr. Crosland: I entirely accept what the hon. Gentleman has said. I have made the mackerel argument to the Council, more than once by now, and I pointed out yesterday, for example, that the Russian catch of mackerel off our South-West Coast has risen in the last five years from about 6,000 tons a year to very nearly 300,000 tons a year. I use that as one of the most dramatic and vivid illustrations that I can give of how critical to us are these coastal waters.
Mr. Ronald Bell: Will the Secretary of State confirm that under the common fisheries policy as it now stands we shall have no exclusive zone and the other members of the Community will be entitled to fish right up to our shores, and that this arrangement can be changed only by unanimity in the Council of Ministers and that, to that extent, there is a reversed veto? What will the right hon. Gentleman do if he does not procure unanimity in the Council of Ministers or a modification of the common fisheries policy?
Mr. Crosland: I have no intention of announcing in advance to my partners what I would propose to do in those circumstances.
Following is the Secretary of State's statement about the meeting of the Council of Ministers:
Before the Council itself began, Foreign Ministers met briefly to discuss matters falling within the framework of European political co-operation. I am glad to say that our partners in the European Community felt able to give full support to Her Majesty's Government's policy on Rhodesia and, in particular, the decision to convene a conference. The text of the statement on Rhodesia issued by the Foreign Ministers of the Nine has been placed in the Library.
In addition to fisheries, on which I have reported separately to the House, discussion in the Council included aspects of the design to be adopted for the uniform passport and, briefly, the draft Council regulation on regulatory inspections by the International Atomic Energy Agency of the civil nuclear industries of the Euratom member States.
Current questions in the field of the Community's external relations were also discussed.
1464
The Council agreed on the response the Community should make on the two major trade issues raised by the African, Caribbean and Pacific countries at the first meeting of the Joint Ministerial Council held under the Lomé Convention in July. On aid to non-associates, the Council agreed that the 20 million units of account inscribed in the Community's budget by the Assembly should be committed during this year subject to certain conditions.
The Council also agreed in principle on a provision to be entered in the 1977 budget on aid to non-associates. Further progress was made towards agreement that the Community's external financial commitments should fall on the Community's budget rather than directly on the national budgets of member States.
The Council emphasised the importance of the Community's relations with Yugoslavia and discussed measures for improving co-operation between the EEC and that country. The Council also agreed to the release of funds to Yugoslavia under an EIB loan. The Council discussed the draft letter to the UNCTAD Secretary-General on the common fund and the stage so far reached in the CIEC. There was agreement on the importance of a satisfactory conclusion to the conference, and of close Community co-ordination to facilitate this,
A separate short EEC-Greece ministerial meeting was held and the procedure for the Greek accession negotiations was agreed. A commercial co-operation agreement with Bangladesh was signed, similar to those which the Community has already concluded with India, Sri Lanka and Pakistan.

QUESTION OF PRIVILEGE
Mr. Speaker: Mr. English—on a point of order.
Mr. English: With respect, Mr. Speaker, may I apologise to you for not giving you notice of this matter? I think that you will agree, though, that notice may not have been necessary in the circumstances.
I wish to raise the issue of a contempt of this House. I do not know by whom the contempt may have been committed. However, I submit to you, first, that, on your previous ruling given to me earlier this day, whereas it was once the case that a question of contempt had to be raised at the earliest possible opportunity, it is now the case that it has to be raised at the earliest reasonable opportunity. In the circumstances of yesterday, when originally most of us thought that the Leader of the House or some Minister of the Crown would be making an oral statement and subsequently discovered that, for various reasons that are quite understandable, that was not so, I submit that this is

1465
now the reasonable opportunity to submit this case to you.
I submit to you, therefore, Mr. Speaker, that either the Observer newspaper or certain Members of this House—in one case named and in two cases unnamed—must have committed a contempt of the House. It is not possible in law to believe that neither has the newspaper nor have Members of this House committed a contempt.
I also suggest that in his statement earlier, the Prime Minister had been misadvised when he said that the criminal law had no jurisdiction in this matter because the law of privilege in this House—well described in a report of a Joint Committee of both Houses some years ago, on which no action has ever been taken—was part of the criminal law of this country.
I suggest, Mr. Speaker, that you should consider whether it is a matter of privilege. Without myself wishing to name who has committed the contempt, it seems to me that someone, either a newspaper or Members of this House, has committed a contempt which this House should take into consideration. I further submit to you that this House would bring itself into contempt in another sense with the people of this country if it took no action.
Mr. Lee: Further to that point of order, Mr. Speaker—
Mr. Speaker: It was not a point of order. The hon. Member for Nottingham, West (Mr. English) has raised a matter of privilege with me. Obviously, the House will understand that I want time to consider what he has said. I shall reply to the House tomorrow.
Mr. Lee: On a point supplementary to that, Mr. Speaker—
Mr. Speaker: I think that we can leave the matter there now.

STATUTORY INSTRUMENTS &c.
Mr. Speaker: In order to save the time of the House, unless there is objection I propose to put together the Questions on the two motions relating to Statutory Instruments.
Ordered,
That the Offshore Installations (Emergency Procedures) Regulations 1976 (S.I., 1976, No. 1542) be referred to a Standing Committee on Statutory Instruments, &c.
That the Paraffin (Maximum Retail Prices) Order 1976 (S.I., 1976, No. 1204) be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Graham.]

EMPLOYMENT PROTECTION ACT (AMENDMENT) (NO. 2)
4.16 p.m.
Mr. Stan Thorne: I beg to move,
That leave be given to bring in a Bill to amend the Employment Protection Act 1975 with reference to the certification of trade unions; and for connected purposes.
I should like to make the point that this Bill is not the same, nor can it even be considered the same, as that introduced on 13th July, for obvious reasons. The Employment Protection Act, as hon. Members will recall, was introduced in an attempt to improve industrial relations. It is relevant to consider what has been done by the Certification Officer over the past months, following his appointment.
As at 10th September 1976, 168 certificates had been issued, of which 47 had no links with the Trade Union Congress or a TUC affiliate. Only seven applications had been refused. One of those applicants has subsequently reapplied and been awarded a certificate, and another is appealing under the Employment Appeals Tribunal procedure. At this date a further 52 applications from non-TUC affiliates are pending.
There has been a mushrooming of staff associations since the appointment of the Certification Officer. In aerospace alone there are now 16 separate staff associations, and in the finance sector of Britain 35 separate staff associations are listed as trade unions.
The basic problem is that the definition of "independent" under Section 30 of the Trade Union and Labour Relations Act is defective. Arising from those defects, which time does not permit me to spell out in detail, the Certification Officer has made decisions which could only be described as eccentric I propose to site three such examples.
Courtaulds Group 1 Staff Association has a total yearly income of £2,800. It pays no rent for offices, which were at Courtaulds but in the past year have been transferred to the house of one of its members. Only E1,000 was spent last year. Of that, £800 went to a part-time consultant—a university lecturer—in the form of a retainer and expenses. Postage, duplicating and telephone bills are met
1468
by using company facilities, as is all secretarial and clerical assistance. Subscriptions are a mere 30p a month, while the average subscription for trade unions affiliated to the TUC is about £1 a month.
This staff association has a certificate because at present it does virtually nothing and therefore saves over half of its income. It is thus independent because it is ineffective—a situation that must be of delight to the employer. The granting of a certificate runs counter to the code of industrial relations practice, which states that
"Two main themes underline the code. (i) The vital role of collective bargaining carried out… between employers and strong, representative trade unions."
How on earth the Courtaulds Group Staff Association came within that category beggars description.
The second example is the Association of Cambridge University Assistants. In 1974 it had a membership of 1,029 and a total income of £2,640. Its office is owned by Corpus Christi college and the rent is £80 a year. The telephone bill was only £52 and the total bill for stationery, postage and telephones for the whole of 1975 was £226. That could have paid for postage stamps on only four second-class letters to each member in the whole year. There could have been no envelopes or paper, yet the rules lay down stringent obligations about written communications to the membership. The figure is therefore implausible.
The rules also include the provision of a monthly news-sheet. How that could be done without the university heavily and clandestinely subsidising the associaions is a complete mystery.
The rules also state that the association shall employ its own officials. It has one such official, whose remuneration is about £16 a week. This not only shows that the definition is defective; it raises doubts whether in this case a serious investigation was carried out, especially in view of the industrial relations consequences.
The third example is that of the Imperial Supervisors' Association, connected with the Imperial Tobacco Company. The office of that association is the home of an official and there are no rent charges. There are no paid officials and no charges for the AGM, which is open to 450 members. The total income is about £2,800 and the total spent on

1469
stationery, printing, postage and telephones is £2.
It is not the responsibility of management to give practical assistance in the circumstances that we are discussing when the certification officer has certified an organisation as an independent trade union, yet Clause 7(ii) of the rule book of this independent trade union contains the words:
"It is the responsibility of management to give practical assistance and advice to supervisors' representatives to enable them to equip themselves to play a full and effective part in the work of the joint negotiating machinery."
I submit that in such circumstances it is incredible to conceive of such an organisation being certified as an independent trade union.
In a statement to the House the Secretary of State for Industry said:
"The existing provisions result in certificates being granted in circumstances where there is a risk of their being used to upset stable collective bargaining arrangements and to create damaging inter-union disputes."—[Official Report, 29th July 1976; Vol. 916, c. 985.]
When we have established, as I am sure we will, the new British Aerospace Board, those circumstances to which the Secretary of State referred will be created in that new industry by certifying additional staff associations.
In Preston a problem has already arisen between the National Union of Journalists and the Institute of Journalists. The local paper is in dispute with the management and that dispute has been affected by the breakdown of relationships on the Lancashire Evening Post. On that basis and against that background I urge the House to give me leave to bring in the Bill.
4.26 p.m.
Mr. Peter Viggers: I wish to oppose the Bill, because it will be most damaging. Although the hon. Member for Preston, South (Mr. Thorne) has set out the principles contained in the Bill he has told us little about the details. He has criticised the legislation of his own Government—in power for only nine months—without saying what he proposes to do.
The Employment Protection Act effectively came into force on 1st February 1976, when the certification officer assumed his duty. The rules by which the
1470
certification officer must operate are clearly laid down in the Act. His duty is to
"Determine whether the applicant trade union is independent"
and he grants a certificate if he is satisfied. The test of independence may not be simple and involves a number of points. The test is nevertheless clear and should be non-controversial. Section 30 of the Trade Union and Labour Relations Act 1974 narrowly defines an "independent trade union". The current legislation was extensively debated in both Houses and the view was frequently expressed from all sides that the certification officer should be independent and impartial.
It is not surprising that the hon. Member for Preston, South should seek to change the Act. He is reflecting the minority view that was expressed during the passing of the Employment Protection Act itself and which was debated during discussions on the Aircraft and Shipbuilding Industries Bill. On previous occasions Lord Briginshaw and the hon. Gentleman have both sought to amend the Act, and this Bill appears to be a similar attempt.
Until recently Labour Ministers have taken a firm and clear view on the issue. The Minister of State, Department of Industry—the hon. Member for Manchester, Ardwick (Mr. Kaufman)—clearly explained in Committee that the purpose of the present legislation is to set up the rights and privileges available to organisations which can satisfy tests of independence and suitability for recognition and that all organisations for representing employees should have an equal chance of meeting those criteria. Many people do not agree with the details of the legislation, but the overwhelming majority of workers and others throughout the country will accept that the principles of fairness and equality should be applied. The test in Section 8 subsection (5) of the Act is objective and impartial.
The name of the organisation obviously does not matter, and some important unions are called staff associations or staff federations. I remind the hon. Gentleman of the Inland Revenue Staff Federation and the Transport and Salaried Staffs Association. Political affiliation does not matter, either. The hon. Gentleman said that 168 unions

1471
have been given certificates, but in fact the figure is 180, 59 of which have no stated political affiliation.
It does not matter whether there is one employer or many. The Union of Post Office Workers, the National Union of Railwaymen and the National Union of Mineworkers are all one-employer unions. Any union which can satisfy the criteria of independence is eligible.
The rules have been laid down by Parliament, but it is the certification officer who must decide whether a trade union can be certified as independent. He has a degree of discretion—a matter that was widely discussed by hon. Members in all parts of the House. The exercise of his discretion is an important part of the function of the officer in question, but it is the impartial exercise of discretion that seems to upset the hon. Gentleman. It is clear from his comments that he does not trust any union unless it shares his own attitudes and views, but it has not been easy for him or his hon. Friends to prepare a form of words that bans the unions that he does not like. Hence the crafty drafting and dodgy logic of anyone who seeks to change the Employment Protection Act.
It cannot be logical by any test to say that affiliation with the TUC makes a union independent. The question is: independent of what? True independence need not rely upon affiliation with any other group.
I can understand the hon. Gentleman's concern that a union is less likely to be independent if the employer is closely involved with it, but this is 1976, and past affiliations do not matter. Moreover, what is the point of the recommendations by the Advisory, Conciliation and Arbitration Service that employers should provide facilities for unions and union members? That is a proposal that employers and unions should seek to work together. The hon. Gentleman seems to be legislating for confrontation. The fact that an employer is giving facilities to a union should be welcomed by him and not regarded as a hostile act.
The next point made by the hon. Gentleman is the most remarkable of all. He said that where employees are coerced or encouraged by an employer
1472
to join a union the union might be deemed not to be independent. Did not he have the opportunity yesterday to meet a large number of British Airways staff who came to the House of Commons? They said that the 16 unions representing British Airways staff were seeking to impose a closed shop. That means that in future all employees who join British Airways will have to be members of a union. That is the imposition of a closed shop. That imposition will have the effect that British Airways will cause future employees to be members of the union. That is nothing less than coercion by the employer. That test of independence does not stand up.
The other argument put forward by the hon. Gentleman that there should be a test as to the amount of money spent by the union seems not to require further comment.
It seems that the Government's own legislation may have backfired, because it sets up a certification procedure which itself has a degree of independence. The certification officer is independent of political and factional pressure and, as an independent agent, has certified some unions which are not affiliated to the TUC. Good luck to him. There are further applications in the pipeline—good luck to them, too.
The principle attacked in the Bill is the principle of independence. Where a trade union is fairly and properly certified as independent, it should have the benefits offered by the Employment Protection Act. The hon. Gentleman and the country should know that "independent" means independent, and that includes independence from the TUC if the members of the unions so choose.
The Bill threatens freedom of choice by unions and union members. As such, it attacks democracy itself. That is why the Bill should be opposed before it disappears into the Parliamentary void.
Question put pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nominations of Select Committees at commencement of Public Business):—
The House proceeded to a Division—
Mr. RON THOMAS and Mr. DOUG HOYLE were appointed Tellers for the Ayes, but no Member being willing to

1473
act as Teller for the Noes, Mr. SPEAKER declared that the Ayes had it.
Question accordingly agreed to.
Bill ordered to be brought in by Mr. Stan Thorne, Mr. Ron Thomas, Mr. Doug Hoyle, Mr. Ian Mikardo, Miss Jo Richardson, Mr. J. W. Rooker, Mr. Frederick Willey, Mr. James Lamond, Mr. Dennis Skinner, Mr. Bryan Gould, Mr. Russell Kerr and Dr. Oonagh McDonald.

EMPLOYMENT PROTECTION ACT (AMENDMENT) (NO. 2)
  EMPLOYMENT PROTECTION ACT (AMENDMENT) (No. 2)
  Mr. Stan Thorne accordingly presented a Bill to amend the Employment Protection Act 1975 with reference to the certification of trade unions; and for connected purposes: and the same was read the First time; and ordered to be read a Second time on Friday 29th October and to be printed. [Bill 237.]

SOUTHERN RHODESIA
Mr. Speaker: Before I call the Secretary of State to begin the debate, I seek the help of the House. A very large number of hon. and right hon. Members have signified to me their desire to participate in today's debate. A great proportion of these Members have recently visited Southern Africa and undoubtedly wish to give the House the benefit of their information. It is possible for me to call all who wish to speak but only if hon. Members impose a strict self-discipline on the length of their speeches.
I try to ensure that every point of view gets a chance to be heard, but I depend heavily in this matter on the cooperation of the House. I hope that those who are fortunate enough to be called will bear in mind the difficulty I have in getting in everyone who wants to speak.
4.39 p.m.
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Anthony Crosland): I beg to move,
That the Southern Rhodesia Act 1965 (Continuation) Order 1976, a draft of which was laid before this House on 14th October, be approved.
The Order extends for a further 12 months Section 2 of the Southern Rhodesia Act 1965. This is the eleventh time that successive Governments have asked the House to renew Section 2. I profoundly hope that it will be the last time that the Government have to ask hon. Members to maintain sanctions against an illegal regime in Rhodesia. For 11 years the House has been almost unanimous in maintaining an uncompromising attitude towards the Rhodesian regime. Both Labour and Conservative Governments have consistently refused to consider a negotiated settlement in Rhodesia until basic human rights and conditions of democracy were first established.
After the many disappointments and frustrations which successive Governments experienced in dealing with Mr. Smith since 1965, this Government thought it right to lay down specific preconditions for a negotiated settlement and the terms on which the British Government would be prepared to take part in any negotiations.

1475
My right hon. Friend the Prime Minister set out these preconditions on 22 March. He said:
"… there must be prior agreement by all the principal parties to a number of preconditions. These are as follows: first, acceptance of the principle of majority rule; secondly, elections for majority rule to take place in eighteen months to two years; thirdly, agreement that there will be no independence before majority rule; fourthly, the negotiations must not be long drawn out. There would also need to be assurances that the transition to majority rule and to an independent Rhodesia would not be thwarted and would be orderly.]—[Official Report, 22nd March 1976; Vol. 908, c. 30–s 31.]
All parties in the House—I think it is right to say—warmly endorsed these principles; so did the front-line African presidents, and they are still today the cornerstone of British policy.
On 24th September, as the House well knows, Mr. Smith announced that the illegal regime accepted the principle of majority rule within two years. This announcement, reflecting at long last a realistic understanding of Rhodesia's position in Southern Africa, opened the way for a negotiated settlement within the framework of these preconditions and, therefore, fulfilled the conditions which Her Majesty's Government had laid down for participating in any negotiations.
Since the statement of 22nd March it has not, therefore, been the position of the British Government that has changed but that of the illegal regime in Rhodesia. As Mr. Smith himself made very plain in his broadcast, no one has miraculously converted him to liberal views, but the acceptance of the principle of early majority rule was forced on him by a steady shift in the balance of power in Southern Africa. This reflects the collapse of Portuguese power in Angola and Mozambique; the growing pressure of the nationalist forces inside Rhodesia; and the slow but steady weakening of the Rhodesian economy brought about by sanctions.
Finally, Dr. Kissinger's intervention was decisive in persuading Mr. Smith to accept the principle of early majority rule. The writing was already on the wall for the rest of the world to read, but it needed American intervention to compel Mr. Smith and his colleagues to read it. Dr. Kissinger's shuttle diplomacy was based firmly on the principles
1476
laid down by the Prime Minister on 22nd March; and the visits to Southern Africa of my hon. Friend the Minister of State for Foreign and Commonwealth Office provided indispensable support for his efforts.
After Mr. Smith's broadcast, it was vital to mobilise as quickly as possible on the momentum created by this breakthrough. The African Presidents shared this sense of urgency. I accordingly decided, as the House knows, to convene a conference in Geneva under the chairmanship of Mr. Ivor Richard to discuss the formation of an interim administration. I invited Mr. Nkomo, Mr. Mugabe and Bishop Muzorewa, accompanied by their respective delegations, to attend on behalf of the nationalists, and sent a similar invitation to Mr. Smith.
Since my statement last week, there have been two further developments affecting the organisation of the conference. First, I have decided, after consultation with those concerned, to invite the Reverend Ndabaningi Sithole to attend with a delegation. Secondly, I decided to delay the formal opening of the conference until 28th October, although it is still my intention that delegates should assemble in Geneva from tomorrow onwards, and some of them are of course assembling now. The delay will give some of the delegations more time to make adequate preparations for the conference and will also usefully extend the period for preliminary talks between Mr. Richard and the delegations.
We have heard in recent days a great deal from both sides about further preconditions. Nevertheless, the Rhodesian nationalists and Mr. Smith have agreed to sit round a table in Geneva and to talk on the basis of a transfer of power to the majority within a period not exceeding two years.
In the Government's view this development, which when the House last debated Section 2 would have seemed to belong to the realms of fantasy, fulfils the only preconditions that can properly apply: namely, those laid down in the statement of 22nd March. I am sure that the House will agree that this is the main—the historic—achievement of the last few weeks, in comparison with which everything else pales into insignificance. It is in this perspective that

1477
we should view some of the other issues that have been recently raised.
This leads me to the status of the proposals put to Mr. Smith and announced by him on 24th September. This was the subject of heated exchanges in the House last Tuesday during which I was, in effect, accused of duplicity. Mr. Smith has apparently stated that any agreement on an interim government must correspond to the live points set out in his broadcast of 24th September, but both Dr. Kissinger and I had already gone on the record before Mr. Smith's broadcast as saying that the details of the interim arrangements were bound to be a matter for negotiation.
As to whether this difference of interpretation was or was not due to a misunderstanding I do not propose to speculate. In the course of five separate Anglo-American ministerial visits to six or seven separate countries in Southern Africa many people have given different accounts about what was said by whom to whom. I prefer to treat all these accounts as being given in good faith. I am not disposed to challenge in public all the current interpretations being given to these discussions, especially as for quite understandable reasons the parties directly concerned are taking up negotiating positions.
I make only one comment on this. When he made his broadcast, an assessment of the situation could not have left Mr. Smith in the slightest doubt that the five points could in no sense be pledges or promises or guarantees on the part of the British Government, for the simple reason that the British Government had no power, even it they had the wish, to impose such terms on the African nationalists or the front line Presidents. Indeed, Mr. Smith understands that probably better than anyone in the world.
We have consistently held that the five points are a reasonable basis for discussion and it was in this understanding that my hon. Friend the Minister of State held talks with Mr. Smith on his recent visit to Rhodesia. Beyond this, I am not prepared to go. As is normal in these matters, I cannot, without prejudging the success of the whole endeavour, reveal the details of what were confidential diplomatic exchanges, and still less speak on behalf of the American Secretary of State.
Sir John Eden: Will the Secretary of State clear up one point? In his broadcast, Mr. Smith said that he was quoting from paragraph 6 of the actual terms of the proposals put to him by Dr. Kissinger. Were those proposals then in a document which had previously been agreed to by the right hon. Gentleman?
Mr. Crosland: No, they were not. They appeared in a document which I believe was handed to Mr. Smith and, as far as the British Government were concerned, I made it clear before, and have made it clear again and again since, that those five proposals—in fact, one was added by Mr. Smith; I make no objection to that—did not represent an agreed final position on behalf of Her Majesty's Government but represented what we considered to be a fair and reasonable basis of discussion. It was absolutely understood by us—I shall choose my language very carefully this afternoon—and I imagine that it was understood by Mr. Smith, that there was no way in which these could have been sealed or signed by the British Government, because obviously the British Government had no power to impose these five or six points or any other proposals on the African nationalists or on the front line Presidents.
Mr. Ian Cow: In his broadcast on the 24th of last month Mr. Ian Smith said this.
"On this occasion the assurance is given not only on the authority of the United States Government, but of the British Government as well."
The Foreign Secretary heard that speech.
Is the Foreign Secretary saying that Mr. Smith failed to understand the position, or what is the Foreign Secretary telling the House?
Mr. Crosland: I am not going to comment on that statement. I can only comment—the House must accept this—in a way that would worsen the atmosphere still further at Geneva. Therefore, I prefer not to comment. I have said perfectly clearly that I prefer not to speculate about whether this was due to a misunderstanding. I should be mad to speculate in public whether it was.
In the view of the United Kingdom Government the position is quite clear

1479
—that the five points and the other proposals made in the course of the endless ministerial visits were a useful basis for discussion and were not something that had been signed, sealed or guaranteed by the British Government.
Mr. Patrick Cormack: During his broadcast Mr. Smith went on to say:
"The United Kingdom will enact enabling legislation for this process to majority rule."
That was in the alleged document from which he was reading. Was there a document or was there not? If there was, had Dr. Kissinger the right hon. Gentleman's authority to put that in the document?
Mr. Crosland: I have already said that as I understand the position Dr. Kissinger had handed the five proposals to Mr. Smith, so in that sense there was a document. I have also, I hope, made clear twice in the past eight days what the status of that document is in the eyes of the British Government. I can speak for no one except the British Government. There is no difference between me and Mr. Smith on the question of legislation. I shall come to that later in my speech.
Whilst in my statement of 24th September I warmly welcomed Mr. Smith's acceptance of Dr. Kissinger's proposals, I also made it clear that they stemmed from the statement by my right hon. Friend the Prime Minister on 22nd March and that they would now need further consultation with the United States Government and the African Presidents. No one could infer from that statement, to which the Leader of the Opposition referred last week, that the British Government were committed to the detail of those proposals, still less to the interpretation that Mr. Smith put on them. Our position has remained consistent throughout.
Beyond that, it would be inconsistent with Britain's rôle as chairman of the conference for me to comment on the many public statements which have been made by parties to the conference. These statements have raised issues which only the conference itself can resolve. The essential fact is that all those invited are now, or shortly will be, on their way to Geneva.
1480
The Government are well aware of their responsibilities towards the conference. All the parties are entitled to expect a high degree of fair-mindedness from the conference chairman. Yet we cannot be neutral towards the driving principle behind the conference, the commitment by all parties to achieve majority rule within two years. While it must be for the parties themselves to decide on the details of a transition to majority rule, we shall do everything in our power to see that the conference ends in agreement on the establishment of an interim Government.
The arrangements agreed at Geneva must be such as to ensure that the Rhodesian Front will no longer control the levers of power or be in a position to sabotage or delay the transfer to majority rule, and that this transfer should be both peaceful and orderly.
Mr. Ronald Bell: Is the right hon. Gentleman now saying that if the Rhodesian Front were to win a majority on the universal adult suffrage that would not be acceptable?
Mr. Crosland: I confess that that is not a hypothesis which has played a large part in my recent thinking on the subject, but now that the hon. and learned Gentleman has raised it, no doubt it will be a matter for endless speculation in the corridors of Geneva.
Rear-Admiral Morgan-Giles rose—
Mr. Crosland: I have given way four times in the past five minutes and do not propose to give way again now.
It will in the first instance be Mr. Richard's task, as the Special Representative of the Government who will chair the talks, to try to steer the conference towards these objectives. As our representative at the United Nations in New York, he has given ample demonstration of his skill as a negotiator and of his concern to uphold the principles enshrined in the United Nations Charter on fundamental human rights, including the right of peoples to self-determination. I have every confidence in his ability. But he will need the good will of all concerned. No agreement will be reached unless, despite the suspicions and the

1481
bitterness of the past, the parties are prepared to make an act of faith in the future.
Mr. Roderick MacFarquhar: Whilst I endorse everything my right hon. Friend has said about Ivor Richard, is it not possible for my right hon. Friend to reconsider his decision not to go to Geneva, as requested by some Rhodesian nationalist leaders, to chair at least the opening sessions of the conference, to underline the Government's determination that it should succeed?
Mr. Crosland: As my hon. Friend can imagine, I have considered this matter very recently. I considered it again in the past two days in the light of the representations to which he referred. But I have come down firmly against the prospect that I should open the conference. There are a number of reasons. It is partly that I have complete faith in Mr. Richard, who was chosen not as a career ambassador but as an ex-Member of this House, as a politician. Also I believe that if I were to open the conference that would only have the effect of devaluing Mr. Richard's role to it, and I am extremely anxious not to do that.
My next point is relevant to what some African leaders have been requesting or demanding of the United Kingdom Government. Here I want to clear up a misunderstanding. Some African leaders have proposed that Britain should resume "full colonial powers". In fact, as many hon. Members know, Britain has never exercised "colonial powers" in Rhodesia. Rhodesia did not become a British colony, even in law, until 1923, having been until then administered by the British South Africa Company. Neither under the constitution of 1923 nor under the 1961 constitution which replaced it did we ever administer the territory or directly exercise any power or authority there. The Rhodesian public service was never staffed by the British Colonial Service or other British officials. The situation, therefore, contrary to what has been said recently, is in no way the same as in other former British dependent terrories such as Kenya, Tanzania or Zambia.
I turn now to the question formally before the House, the renewal of Section 2 of the Southern Rhodesia Act 1965. We
1482
ask the House to approve this for two reasons. First, the continued validity of the Act may be of vital importance to arrangements to be made for the legalisation of the interim administration. Any hon. Member who votes against the motion will be voting to deny us this facility.
Secondly, it is absolutely necessary now, as in past years, to keep in force the sanctions legislation against Rhodesia. The Smith régime's acceptance of majority rule within two years has of course completely changed the situation. But until we can all be satisfied that majority rule is inevitable within two years Britain must give a lead to the international community in ensuring that sanctions are maintained.
Sir John Hall: While all of us on both sides of the House must devoutly hope that the conference will be successful, if by any chance it should fail through no fault of Mr. Smith or his delegation but perhaps through the activities or intransigence of the African leaders, would it not then be very unfair to continue sanctions? Should not they then be removed?
Mr. Crosland: I have no intention of answering that hypothetical question.
Rear-Admiral Morgan-Giles: The right hon. Gentleman is trying to take a reasonable perspective on this matter, and we want to see a peaceful solution. Therefore, can he say what efforts Her Majesty's Government have made to persuade frontline Presidents, in the run-up to the conference, to cease guerrilla activities inside Rhodesia from across the border?
Mr. Crosland: That is a very fair point. We have attempted to persuade the African Presidents that in the medium term, if the conference succeeds and there is an interim Government, we should use every endeavour to get them to cool off guerrilla activities altogether. In the meantime, in the run up to that situation, before an interim Government has been agreed, we think that it would be sensible from every point of view to de-escalate those activities as soon as that can be achieved. That line has been agreed with the Americans, who take the same stance.
Some hon. Members in past debates have derided the effect of sanctions. They have pointed out how the Rhodesian

1483
economy has thrived despite the sanctions and how Rhodesia's industries have prospered; although they have also argued—inconsistently—that the chief sufferers from their effects have been the Africans in Rhodesia. Yet few would now deny that sanctions have made a major contribution to the latest developments.
The decision of the Mozambique Government last March to close the border with Rhodesia, and the resultant congestion on the South African transport system, had a powerful impact. Without the sanctions, the guerrilla war would not have imposed such a growing strain on the Rhodesian economy. By the same token the premature removal of sanctions would lift from the régime one of the main pressures on them to agree finally to early majority rule. That would surely be folly. But once the introduction of early majority rule is certain beyond any shadow of doubt, the justification for sanctions will fade away. The situation in Rhodesia will then no longer constitute a threat to international peace and security which warrants the continuation of measures against the régime under Chapter 7 of the UN Charter.
In these circumstances it would be wrong to maintain sanctions in force when the overriding objective is the establishment of an independent Zimbabwe on the road to peace and prosperity. We have also to remember that Rhodesia's neighbours have suffered seriously from the sacrifices which they have made in applying sanctions. Therefore, we all look forward to the day when sanctions can be lifted. But when that day arrives will depend entirely on the final and irrevocable acceptance of early majority rule.
Mr. Gow rose—
Mr. Crosland: No; I have given way for the last time.
There could be no more opportune time for our debate than today provided that we conduct the debate with some degree of restraint.
First, I hope that the debate will not turn into a long wrangle about who said what to whom and when. I look forward in my retirement to reading every country's official diplomatic history of the recent diplomacy—and I dare say that it will hold surprises for every one of the participants, including myself. But it is
1484
not the past that matters. It is surely the future. We cannot afford to risk that future by raking over the ashes of all the events of the past three months.
Secondly, I have no doubt that the debate will point up some of the obstacles that lie in the way of a settlement. That is an inevitable fact of life. Living with the subject as I do from day to day, and even more constantly than that, I could make as good a speech as anyone in the House about the pitfalls. I see them all with a blinding clarity.
There is no certainty that the conference will succeed, but without it the only prospect would be one of disruption, chaos and bloodshed. That would be a disaster for Rhodesia, a tragedy for the States which surround her and a setback—perhaps an irretrievable setback—for the long-term prospects of peace in Southern Africa.
We have already come a long way towards success. Three months ago, it seemed inconceivable that Mr. Smith could be brought to recognise the inevitability of majority rule. Three months ago it seemed impossible that he would soon be sitting round the conference table with the African nationalists. Three months ago it seemed absurdly optimistic to suppose that Britain would have this early opportunity finally to discharge her responsibilities in Rhodesia. At every stage of this rapidly moving process, the voices of the Jeremiahs have been loudly raised—yet, despite them, we now have our conference.
The situation, in my view, can never be the same again. The Europeans in Rhodesia must realise that there can be no going back, for the notion of an independent Rhodesia under white minority rule has been shown to be illusory. For their part, the Zimbabwean nationalists must realise that, without the co-operation of the Europeans, majority rule would come in conditions which could worsen the sufferings of the African people.
If we fail, we fail. But let the message go out from this House that we believe that we shall not fail. Britain will do 'everything within the limits of her power to bring about a successful agreement. We are fully backed by all the members of the Nine. We must all seize this opportunity to work for a solution which

1485
brings to Zimbabwe a multi-racial solution firmly based on majority rule, and thus on justice and equality.
5.5 p.m.
Mr. Reginald Maudling: All sane people desperately want the conference to be held in Geneva to succeed, and of that there can be no doubt. But I hope that the Foreign Secretary will not assume that we take the opposite view if I venture to criticise some of the things that he said this afternoon.
We are discussing an immensely important British responsibility, and I do not think that the speech made by the Foreign Secretary measured up to what is expected of a British Foreign Secretary in these circumstances. I say that in all seriousness and after deliberation, and I believe that it is right to do so. It is right to enter the conference clear about the respective positions of the different parties. If we press Her Majesty's Government, it is because we believe that clarity is essential and that confusion will only undermine the prospects of success.
We understand that the proposals set out in Mr. Smith's broadcast, the actual terms of which he said came from Dr. Kissinger, were put to him as a package. We have not yet been able to discover whether that is true. It is important to know whether it is true. Nobody, as far as I know, apart from the Foreign Secretary, has denied it. Dr. Kissinger has not denied it, nor has Mr. Vorster, and the Foreign Office put out a statement that noted with satisfaction the announcement of acceptance of proposals put to Mr. Smith by Dr. Kissinger for a peaceful settlement. Those proposals were said to represent an elaboration of the plan advanced by the Prime Minister. Surely that was a clear acceptance that the package of proposals was put forward with the approval of the British Government, and was accepted in good faith by Mr. Smith.
If there is any confusion about this, if the facts are in dispute and if the Foreign Secretary does not know the truth, why was he not there himself? Why did he leave this matter to Dr. Kissinger? Why throughout, in dealing with this basic
1486
British problem, has the lead been given to the United States Secretary of State with the British tagging on behind.
The Foreign Secretary said that the proposals were only a basis for discussion. I do not believe that is true. I do not believe that is the view of the Americans or the South Africans. Of course an agreement can bind only those party to it, but in my judgment it binds the United States and Britain. It does not necessarily bind the African Presidents because what they said about the matter and what was said to them is still obscure. We have not heard from the British Government what was said to them or what they said. Of course, in the course of discussions and negotiations changes can be made, but they can be made only by agreement between those who are a party to the proposals. If we were a party to forcing Mr. Smith beyond the terms of what had been agreed, we would be going back and acting in ill faith. It is important that these things should be said.
In any case the major principle—and on this matter the Foreign Secretary was right—has been established, namely, the acceptance of majority rule within two years. That is an enormous step forward. What possible justification have the nationalists now for continuing the arms struggle? How many people must now die to reduce that period from two years to one year? There can be no possible justification for continuing the guerilla activity when there is the chance of a settlement. History will deal sternly with those who will not take "Yes" for an answer. Mr. Smith has made an enormous step forward, which we all welcome on both sides of the House, and surely it is now right to back him up. As my hon. Friend the Member for Wycombe (Sir J. Hall) said, if the conference collapses through no move back on the part of Mr. Smith but because others put forward extreme demands, there can be no doubt where the justice will lie. Her Majesty's Government should act on where the justice lies.
That brings me to the sanctions order that we are formally discussing and the position of the Opposition.
Mr. Andrew Faulds: Will the right hon. Gentleman explain what he means when he says that the Government should act where justice

1487
lies? What exactly does he mean by that?
Mr. Maudling: If the hon. Gentleman had given me time, I was proposing to do so.
Mr. Faulds: No, the right hon. Gentleman was moving to another subject.
Mr. Maudling: I intended to deal with the same subject but in different phrasing. If the hon. Gentleman contains himself, he will realise that that is so.
The Government are asking for a 12-month renewal of the sanctions Order. I agree with that, but I should have preferred a renewal of three months. I believe that that would cover the term of the conference. However, I am told that in practice it is not possible within the rules of order to make it three months instead of 12 months. Of course, 12 months is not immutable. What Parliament decides Parliament can always change. It would be possible for Parliament to undo such a proviso if it wanted to do so.
As the Foreign Secretary implied, if the conference succeeds the Government will immediately drop sanctions. I hope that we can have an assurance that all the necessary preparations are now being made with that idea in view. The Government want the conference to succeed and they must proceed on the assumption that it will succeed. They must act so that they are ready to remove sanctions the moment that the conference has succeeded.
What if the conference fails? Like the right hon. Gentleman, I am reluctant to contemplate failure. However, we must recognise that Her Majesty's Government want to keep their options as open as possible. The Government should take note that if the conference fails after Mr. Smith has accepted the Kissinger package because other elements at the conference want to go further, we would have no justification for continuing sanctions against him, or even less continuing to give aid to Mozambique. We should move to that effect.
Mr. Frank Hooley: The right hon. Gentleman is putting forward a most extraordinary proposition. He is giving every encouragement to Mr. Smith to make the conference fail,
1488
because in that event the right hon. Gentleman is proposing that no further sanctions will operate against the white régime.
Mr. Maudling: I was only suggesting that the British Government should keep faith. I do not regard that as an extraordinary proposition. The question now is whether all those taking part will keep faith. It will not help us if we go back in history and argue about who has kept faith with whom. What matters is how to make the conference succeed. It will succeed only if the position of each party is clear beforehand.
I turn to the conference itself. As the right hon. Gentleman rightly said, it is the last hope for a peaceful solution. For years it has been the approach of British policy to attain majority rule with proper safeguards for individuals and minorities. A guarantee of unimpeded progress to majority rule was the first of our five principles. The former Prime Minister added a sixth—namely, the need to ensure that regardless of race there is no oppression of the majority by the minority or the minority by the majority. Those are the principles on which we have operated on both sides of the House. It is now time to define majority rule and to establish safeguards. That is the job that must be done.
What is majority rule? What are the proper safeguards and how can they be guaranteed? It should be said that majority rule does not necessarily mean one man one vote. In other words, it does not mean immediate universal adult franchise. Decisions must be made about the voting age, property and educational qualifications within which the franchise can operate. It should provide that the majority of people qualified to vote reflect the majority of black people.
Second, we must consider safeguards. Safeguards against what? There must be safeguards against political oppression or victimisation. That means that the courts must have the power and ability to protect individuals against the arbitrary use of power and provide compensation if people are expropriated.
The trust fund seems to be an admirable idea. It is designed not to persuade people to leave Rhodesia but to persuade them to stay. It is the continuing presence of the white cadre on which the

1489
prosperity of the whole country will depend. The trust fund is of the greatest importance but it is no substitute for proper compensation if people are expropriated. It should not be a temptation to people to carry out acts of expropriation.
Probably the most difficult problem of all is how the safeguards can be maintained and guaranteed. What is the feeling of the ordinary European now living in Rhodesia about majority rule? I suggest that such a person thinks "We may have safeguards for the individual and courts of law, but how long will it take for a Rhodesian General Amin to turn up?" That is the real fear in people's minds. That fear must be dealt with if there is any chance of getting a settlement that will stick.
I hope that the House will forgive me if I draw on some personal experience of presiding over similar conferences. I have presided over a substantial number—for example, on Kenya, Trinidad and Uganda. They were different, but there are lessons to be learnt from them. The fundamental lesson to be learnt from all the conferences leading to the independence of many of our previous colonies is that the main problem is fear and suspicion. In Trinidad there was fear and suspicion between the Indian and African communities. In Kenya those feelings existed between the Kalenjins and the Kikuyus, with implied dangers for the white residents. Those were problems of the greatest danger, which were solved in different ways by the statesmanlike and reasonable action of the people concerned. The real answer lies not in the provisions of the constitution but in the general desire to ensure that the constitution will work.
We found at all the conferences that there were particular problems about framing a constitution that would protect individual rights. In any constitution there must be provision for emergency powers. How does one prevent a majority Government using emergency powers to impose their will, against the constitution, on the minority? That is a practical problem when dealing with any independent constitution. Those who have said that it is not a problem did not sit in Lancaster House in conference after conference on Kenya, Uganda, Trinidad and Jamaica.
1490
Another real problem is how to write into a constitution a guarantee that it will not be broken. It is no good having a Clause 7 that provides that it is against the law to break the constitution. There must be other practical means of ensuring that the rights given by a constitution are maintained.
Mr. Eric Ogden: The right hon. Gentleman's fears are absolutely correct. He expresses the fears of many people in Rhodesia. However, is he not doing a disservice to those he might wish to help by suggesting that we have the power to guarantee such matters in a country where we have little at all? Is he not raising hopes that we cannot possibly fulfil?
Mr. Maudling: I did not say that. I am saying that we must recognise that difficulty if the conference is to work. That is one of the key issues.
There are three approaches. The first is to go for the maximum amount of mutual trust between black and white and black and black. In the context of Rhodesia, alas, it will be a long difficult and arduous problem, but it is the first priority. Secondly, I believe that the trust fund will provide a safety net. That will help, but I hope that we shall be able to avoid using it.
Thirdly, I suggested a short time ago the possibility of a British presence during the transition period. I do not suggest that such a presence should involve the governing or administering of the country, but if a British Governor General could be installed with the agreement and support of the four Presidents, the United States and our European allies, he could act as a guarantor of the independence of the courts and the impartiality of the affairs of law and order. I believe that that is a possibility. I do not say that it would be easy. There would be many difficulties. However, I put it forward as a positive suggestion. I have not yet heard of another suggestion that is more likely to succeed but I hope that I shall. Above all, I wish to see something that will succeed.
The duty of the United Kingdom in this context is not confined merely to taking the chair. There must be a practical role. The chairman must, I am

1491
sure from experience, be prepared to listen almost interminably to argument after argument until the conflicting sides wear themselves out and then at the right moment, as I hope Mr. Richard will do, come forward with proposals that are acceptable and will lead to success.
There is too much concentration on the next two years and not on the next 200 years. What we really care about is a permanent solution and not the interim arrangements. If we spend all our time at the conference on the interim arrangements, it will not solve the problem of what is to be meant by majority rule. There are in the proposals some rather difficult things to follow. For example, what will be the position of Parliament? Will the Council of State and the interim Government be responsible to the Parliament of Rhodesia, or is that Parliament to be abolished? We should know about that.
Secondly, is the Council of State really the right body to draw up a constitution, a body which is to be divided 50–50 between black and white, with every decision subject to a two-thirds majority vote? Can one expect decisive agreement out of a body of that composition? I do not know, and the matter should be examined with care. One cannot yet be confident that it is the right mechanism by which to achieve majority rule and a constitution for independence which will guarantee the future prosperity of the Rhodesian people.
Mr. Ian Smith has said that it is time for the Rhodesians to work things out for themselves. That is the ideal, but they will need a great deal of help, and they must not look to us in vain, because this is a matter in which the British are involved to an immense extent. Military and strategic considerations, the importance of southern Africa, metals, the sea routes, the penetration of Soviet and Cuban activities there—all these are immensely important, and we must not overlook them. But more important still is the honour of this House and this country because we have a responsibility still to the peoples of Rhodesia. May be our power is, alas, very limited, but what we still have we must use.
5.22 p.m.
Mr. Arthur Bottomley: In 1965, when I first went to Rhodesia, the then Governor, Sir Humphrey Gibbs, and some business men said to me that they were against Mr. Smith and his party. They did not think that the country would be run well, in the best interests of all, if Mr. Smith's Government continued. I said to them, "Why don't you do something about it?" The Governor stood firm and loyally by Her Majesty the Queen. The business men said that they wanted economic sanctions applied and were not given the support by this House. I tried hard to get economic sanctions applied so that they would bite fully and effectively, but the House declined to give that support. Therefore, to some extent, the situation we meet today rebounds on all of us because we failed to take the right decision initially.
I join those who have some satisfaction in getting Mr. Smith at long last to accept majority rule, but that was inevitable. Anyone sitting on a time bomb must at some stage recognise that something must be done to defuse it. In addition, I think that we recognise that the five African Presidents are concerned about peace in the area. They do not want bloodshed to run in Southern Africa.
But I believe that Her Majesty's Government have been misled. I have never been a believer in instant diplomacy. I think that it was a mistake for Dr. Kissinger to go to Southern Africa at the time he did. If the atmosphere were right for a visit by anyone, it should have been a British Minister. A British Minister has much more knowledge and knows how to handle the situation better than United States or, for that matter, Soviet diplomats.
I had the opportunity a few weeks ago of meeting Dr. Kissinger's aide, Mr. Schaufele. I asked him "Did you see Robert Mugabe?" He replied "No". I asked "Did you find out who is responsible for the freedom fighters, because the man in the field, the one who has the gun, has the power?" He replied again "No".
I cannot believe that a British Minister would not have known that these two

1493
are probably the key figures in any settlement that is to be reached. It is true that Robert Mugabe is going to the conference. Did the African Presidents give an assurance that they were going to get a united team to represent the African interests? If not, they should have been asked to do so. A divided African representation spells doom for the conference
I cannot see any prospect of an agreement coming out of the conference, although, of course, I wish my right hon. Friend every success in his endeavours to bring about a successful result. But his aide, Mr. Ivor Richard, has more or less an impossible job. He goes with our good will, too. I think that my right hon. Friend is right not to go himself.
I also think that it is wrong that we should have got ourselves as involved as we have. But having said that, I ask one question of my right hon. Friend. If, as I think likely, the conference fails, Mr. Smith has made his views known, and Mr. Vorster has given him his backing, while the African nationalists have made it known that the freedom fighters will go on with the struggle. What thought have we given to the initiative we should take if the conference breaks down? We should be given some idea of what the Government will do to meet the situation if the conference fails. I sincerely hope that the conference will succeed, but I remain a pessimist.
5.28 p.m.
Mr. Jeremy Thorpe: I am sure that no one wishes more passionately than the right hon. Member for Middlesbrough (Mr. Bottomley) that his pessimism will be disproved. I am sure that Mr. Ivor Richard will find his good wishes of value if he accepts them but discounts some of his pessimism.
I start by summing up some of the hopeful signs that I think we can look at. It is against those hopeful signs that I wish to enter a word of caution on one or two points. Many of us have taken part in the series of unhappy debates on Rhodesia, usually on an Order such as this, which is the only opportunity we have for discussing the subject, apart from those occasions of a failed agreement such as those reached at the "Tiger" or "Fearless" talks. I think that the hopelessness of the situation has been
1494
felt in terms that when the sanctions Order has usually been introduced the Government, whether Tory or Labour, have had about three people defending it and the opposition has been found from hon. Members whether under a Tory or Labour Government, sitting below the Gangway opposing sanctions and indicating fulsome support for Mr. Smith.
But I think that this debate has real meaning because, as the Foreign Secretary said, one can hope that this is the last time we shall have to renew sanctions. I want to pay tribute to Dr. Kissinger. Whatever he may or may not have agreed—that is always one of the imponderables—he has at least achieved a general acceptance that there will be majority rule in two years and that there will be an interim Government, and many very representative people are going to Geneva to talk about it.
That is an enormous improvement on the situation which I found when I was in Rhodesia last year. I felt then that there was some movement towards liberalisation when I was told that I could enter the country, although I was reminded that I was still a prohibited immigrant so it was hoped that I would behave myself while I was there.
I think that I shall be acquitted of being an apologist for Mr. Ian Smith—indeed, I do not think that anyone would allege it. But whatever his interpretation, he has appeared on television and frankly, publicly and without equivocation, accepted the principle of majority rule and an interim Government within two years. That is an enormous improvement, an enormous advantage. It is, in fact, a revolution in his thinking and that of his Administration.
It is also immensely encouraging that such a variety of African opinion will be represented at the conference. Whether ZIPA, with Mr. Rex Nhongo, will continue to be absent I know not. I suspect that that is very much a matter which will be determined by the views of President Machel of Mozambique. I hope that ZIPA will be there, so that no one can say afterwards "We are not parties to any agreement and are not bound by it."
It is to the credit of both sides, African and European, that they are going to the

1495
conference to talk, and I think we should recognise that. It is an enormous advance.
It should also be realised—I am coming to the question whether there was a package and whether it is negotiable—that this is the very first time in the history of Rhodesia that the Africans will be negotiating on a basis of equality.
Even in the early 1950s, when Lord Gordon-Walker and the late Jim Griffiths went to negotiate Federation, at the Victoria Falls conference, there was no African representative present from the whole of Southern Rhodesia. At no stage when Federation was starting did a Labour or a Conservative Government say that African consent should be a condition precedent to the granting of Federation. That was a great mistake. There was a fundamental mistrust at that time.
This will be the first occasion on which African opinion will be represented on a totally equal basis in negotiations affecting the Africans' future. It is right, and it is an enormous advance. I also believe that it may be the last opportunity that Mr. Smith will have to meet such a wide spectrum of African opinion around a table. That is another reason that I fervently hope the negotiations may succeed.
It has been suggested that the difficulty is that we were not present at the talks and were not a party to the discussions, although we were fully informed of them. I somewhat disagree with the view that we should have been there. The one thing said to me by at least four of the front line Presidents—two of whom I have known and regarded as very close friends for about a quarter of a century—and by the African nationalists, the Rhodesia Front and every shade of opinion, is that whatever else the British Government can do to help, they should keep out and let those concerned try to settle these things themselves.
We have, unfortunately, made an almighty hash of affairs in Rhodesia ever since we started on the road to Federation. The conference has a chance of success which it might not have had if we had interfered too much in the beginning. I am very happy to leave it to Dr. Kissinger, just as many of us are very happy to leave the Middle East to him. We should be very grateful for that.
1496
But the fact remains, as the Secretary of State for Foreign and Commonwealth Affairs said in reply to the right hon. Member for Battersea, North (Mr. Jay) at the time of the last statement on Rhodesia, that there is no "precise document". As was also said by the Secretary of State to the Leader of the Opposition during the same exchanges, the six points mentioned in the broadcast
"offer a useful basis for discussion."—[Official Report, 12th October 1976; Vol. 916, c. 249–51.]
It is not for me to question the sincerity and the conviction with which Mr. Smith holds to the view that there is a package which is not negotiable. It is not for me to question the good faith of others who say that there is a package which is a useful basis for negotiation. I merely give my own experience. After the first Lusaka talks, when 10 points were agreed, I found that those 10 points were interpreted in one way by the African Nationalists with whom I spoke in the morning, and in another way by Mr. Smith, with whom I spoke in the afternoon, and both interpretations were perfectly reasonable.
I said to Mr. Smith "The great problem here is that there are people who genuinely differ in the interpretation of what was agreed in Lusaka." There was nothing in writing. I said "Surely the real problem now is one of interpretation." I believe, therefore, that this will be a great danger unless it is cleared up, and that it is one of the first matters with which Mr. Ivor Richard will have to deal. I echo the views of other right hon. and hon. Members in wishing him well in what will be an enormously important and significant conference.
I think it is right that we should start on this basis, and that if the Foreign Secretary is required to come in at a later stage that should be a matter for subsequent consideration.
Mr. Ronald Bell: The right hon. Gentleman will recognise that it is now conceded that there was an exact document. This was conceded this afternoon by the Foreign Secretary that when Mr. Smith read out the terms in his broadcast he was reading them from a document given to him by Dr. Kissinger, setting out the points one by one.
Mr. Thorpe: I am grateful to the hon. and learned Member for his intervention,

1497
but this does not solve anything. What was the document? Was it a basis for discussion and negotiation or was it a package deal? The existence of a piece of paper is not convincing in regard to any particular deduction.
I agree with the right hon. Member for Chipping Barnet (Mr. Maudling) that we have to try to allay the fear on both sides. I can understand why the African nationalists are anxious about which shall prevail, the Council of State or the Council of Ministers. I do not want to rake over the past, but the Africans remember the African Affairs Board. They remember how it was overruled, and how Chief Justice Tredgold resigned. They remember the situation in which the State of Emergency was signed in November 1965, when the Governor said to Mr. Smith "May I have your assurance personally that this is not a prelude to doing a UDI?", and Mr. Smith said "You have my assurance." With that background and experience, it is most likely that there will be negotiations on that aspect.
Likewise, concerning law and order, I can understand that both sides would have reservations. I believe that Mr. Smith would want to say that if there were to be any continuation of terrorism and guerrilla activities there should be a loyal force under the command of the elected or appointed interim Government. But again, the African community would want certain guarantees in that regard as well, because their experience has not been altogether happy at the hands of the security forces, particularly the police, in the last 10 or 11 years. I therefore believe that these, too, are matters that will have to be negotiated.
I believe that the proposed two-thirds majority vote is a very wise precaution. I remember the late Tom Mboya telling me that it was a great advantage in the 18 months transitional period before independence in Kenya that no African, European or Asian bloc could get its own way in Legco without being able to attract the support of the members of the other racial communities. It was in that way that people started to work together. That doctrine of collective responsibility meant that Africans would be defending a decision taken by a European Minister, and that a European
1498
Minister would be defending a decision taken by an African colleague. They were able to move forward on that very fragile basis, remembering that after Mau-Mau there was enormous bitterness and mistrust between the various communities which had to be cleared up. That concept of each relying on the other, in a sense of partnership, in making decisions has been one of the reasons for the success of Kenya. It is by no means a perfect situation, but certainly I would rather be a European living in Kenya than an African living in Rhodesia.
Mr. MacFarquhar: I am following the right hon. Gentleman's remarks with interest and sympathy, and his recounting of the history of the developments in both Kenya and Rhodesia. This exposes clearly the problems involved in the suggestions made by the right hon. Member for Chipping Barnet (Mr. Maudling) about having a British Governor installed at this stage, as though this could in any way guarantee a settlement. Will the right hon. Member for Devon, North (Mr. Thorpe) agree that what is necessary to guarantee a settlement is an interim period of working together by people of all races?
Mr. Thorpe: I am grateful to the hon. Gentleman. This is a point that we have to recognise—that we have authority without power. Rhodesia will succeed only on the basis of trust between the races, and there is a lot of mistrust to be overcome. The longer it takes to achieve a settlement, the more the mistrust will grow.
If we are to go to the United Nations and to recommend that the sanctions be lifted, we shall obviously have to show that there has been a return to legality. That would not mean necessarily that Rhodesia would have to revert to the pre-1965 constitution, or that she had yet achieved independence, but that she would be a Crown colony and have to revert to her former juridical status. We should therefore have to have some symbol of the Crown.
The right hon. Member for Chipping Barnet asked who should be put in. Should it be a Governor-General? What would be his position? I believe that probably we need a man who would be

1499
the trusted mediator between the two sides.
I well remember what to me was the most appalling example of the distance between the various parties in Rhodesia. It is better now than it was. But it occurred when I was at the first constitutional conference. I was talking to Joshua Nkomo, who was then one of the leaders of African opinion, and Roy Welensky came up. He was then Prime Minister. I said "There is no need for me to introduce you two". They replied "We have never met". That situation has changed dramatically today. If today Roy Welensky were 20 years younger, I believe that we might have had a very different situation.
The job of the British mediator will be that of a man who can be trusted by both sides and who can try to mediate, because very often the disagreements are not as basic as both sides think.
As I say, I am not wildly optimistic. We have to show all the flexibility politically of which this country and this House are capable. I believe, for example, that we may well get an agreement only to find it breached continuously by outbreaks of violence. When I was in Rhodesia, I suggested to Mr. Smith that if that was happening there was possibly a case for a mixed armistice commission composed of two members of the ANC and two members of the Rhodesian administration. It may be that that will have to be done again. It may even have to be under the auspices of the United Nations. I know not. But an enormous amount of flexibility will be needed.
I believe that it would be wrong if Mr. Smith went to the conference and said that the six matters were inviolate and were not subject to negotiation. That would be an unreasonable demand. I must also say to many of my African friends that I believe that they have the chance of an immense prize—that of African majority rule within two years. Everyone has to take risks. The only alternative is not to take them and face the certainty of bloodshed.
I also say to my African friends that, if they are successful in Rhodesia, there is another great prize which will be brought decades closer to achievement. It is the liberalisation and freedom of
1500
the whole of Southern Africa. That is an enormous prize. To avert the possibility of bloodshed along racial grounds and to have the southern part of Africa an area of genuine partnership between the faces showing that one of the most lethal cankers in politics, racialism, can be solved on a non-racial basis in Southern Africa would be the supreme prize.
I believe that there has to be great flexibility all round. I hope that this conference will succeed. The prospects if it does not succeed are too appalling to speculate. Mr. Richard has our very good wishes.
Let us hope that this is the last time that we have to debate this order.
5.43 p.m.
Mr. Eric Ogden: I hope that the right hon. Member for Devon, North (Mr. Thorpe) will not think me discourteous if I do not comment in detail on his speech, though I shall say a word or two about his closing sentences in a moment.
The House would be less than worthy of this occasion if we tried to emphasise the differences between us, instead of trying to emphasise the agreement that there is between us. So, on the Order before us, the formal reason for this debate, for the eleventh time I will support an order which I hope will not be necessary much longer. At least on this occasion we can all hope that, after the establishment of an interim government, in three or six months' time we can join togeher to revoke this order. This might be the only unanimous decision these orders ever receive, and that will be one difficulty out of the way.
At this stage, there are only two certainties about Southern Africa. One is that there is to be a conference in Geneva. It seems that those who are going there are going with different purposes, for different reasons, and by different persuasions. The invitations have been sent and, for whatever reason, they have been accepted. There remain some doubts in my mind about how this was achieved. Good causes can be advanced for a short time by getting understanding and agreement about different expediencies. I remain doubtful that the American Secretary of State said exactly the same to everyone to whom

1501
he spoke. That is a matter which could cause much disputation. It is a difference which is not as important as the fact that there is to be a conference. The conference will decide, among other matters, an interim form of government.
I wish to ask my hon. Friend the Minister of State three questions. Will he at least publish the terms of the invitation sent by Her Majesty's Government to those who are taking part in the conference? It may help in a little way to know them. Will he agree that any recognition by Her Majesty's Government of an interim government will be on the basis of the same six conditions which we insisted had to apply to a settlement with Smith régime of government? Will he agree that, if we in the United Kingdom are asked to work for and to accept a multi-racial society in the United Kingdom, we have the right to expect that there will be a multi-racial society in Rhodesia itself?
The second certainty is that the future development of Rhodesia will be decisive in what is to happen over the next 10 or 20 years for the future of all of Southern Africa. If Rhodesia becomes another Vietnam or another Angola, any hope of advance towards the kind of society that I should like to see in Southern Africa will be denied for many years.
The conference will be deciding not only the future of Rhodesia, important though it is. It will be setting out the terms for progress in Southern Africa, and about that I have great fears and doubts. There is no Mahatma. There is no Nehru. There are few Nyereres. There is certainly no Martin Luther King. There is a degree of hope, but I have more fears than hopes.
Certainly the House will be raising hopes that we have no chance of carrying through if we pretend that, whatever situation is agreed and accepted at Geneva and followed through with an interim government, we are in any position to guarantee the future developments in Rhodesia. We can hope and help, but we cannot guarantee. A long time ago this country decided that our effective power in Southern Africa was to be reduced. We cannot guarantee, and we
1502
do less than justice to people there if we pretend that we can.
Everyone concerned, not least Her Majesty's Government, deserves good fortune. Everyone will need it. Those taking part in the conference are deciding not only the future of Rhodesia but the future of millions of all races, creeds, colours and denominations in the whole of Southern Africa.
5.48 p.m.
Mr. J. Enoch Powell: I share the realism implicit in most of the words of the hon. Member for Liverpool, West Derby (Mr. Ogden). Today will be the eleventh occasion on which I shall have cast my vote against the 1965 Act and its renewal. I shall not have done so because of any approval which I feel for the state of affairs in Rhodesia in the past 11 years but because I regard that Act and its continuing renewal as an exercise in national hallucination whereby we have pretended to a sovereignty and an authority and asserted a responsibility which were all unreal because they were unaccompanied by power; indeed were unaccompanied by anything but the most vestigial influence. I noticed that the Foreign Secretary referred to our having no power in Rhodesia even if we had the wish to exercise it.
The events of the past few weeks have placed the unrealism of what we have been doing over the past eleven years in a new and menacing context. There is to be a conference at Geneva and the chair at that conference is to be taken by Her Majesty's Government in the United Kingdom. We are not taking the chair at that conference as neutrals. The chairman is not there to arrive if possible at a lowest common denominator between those present like a good arbitrator and if possible to register the result. We are not there as might be Switzerland or Sweden. The reason why the British Government are chairing that conference is that we still claim to be the only source of legitimate government and law in Rhodesia. We have asserted that claim in the face of the world for the last eleven years, and now the claim is being brought home to us and has seated us in the chair at Geneva.
It is worth looking more closely at what this conference is about. We have

1503
been too vague about its functions so far. I find it helpful, in answering that question, to look at what the Foreign Secretary said on 24th September immediately after Mr. Smith's acceptance—if he did accept anything—of the proposals. The Foreign Secretary said:
"Two constitutional acts are involved here. The first is to legalise the interim Government which will come—we hope—into being in a short space of time."
He went on:
"At the end of two years … we shall then need final legislation which will confer total independence."
At least one of the subjects which is before the conference in Geneva is the nature of the interim government. This nature was set out in some detail in the famous proposals, for which the only written authority is Mr. Smith's broadcast on 24th September. From those it is quite clear that it will not be an interim Government under the present illegal constitution of Rhodesia, but an interim set-up which would need to be provided for by specific and fairly detailed legislation. That legislation could only be legislation of this House, because from our point of view the present state of affairs in Rhodesia has no legal basis. If, in the Foreign Secretary's words, we are, to "legalise the interim Government", it must be an Act of this Parliament which will lay down the legal basis for that new government.
So presumably, whatever else happens in Geneva, there will be a settlement of the terms of an Act which this Parliament will be invited to pass. I am not sure that that has been sufficiently clearly stated today. But we have had the pleasure of reading the words of Dr. Kissinger who told us that
"the United Kingdom will enact enabling legislation for the process to majority rule".
He gave a whole series of details on what might go into such a Bill, though other passages of the famous proposals suggest that we might legislate for a blank cheque. There is the phrase:
"Upon enactment of that legislation, Rhodesia will also enact such legislation as is necessary to the process."
I do not regard that as satisfactory to this House and I would not support a proposal to enact a one-line Bill following the Geneva Conference which gave
1504
carte blanche to whatever authority it legalises in Rhodesia.
So the business of the conference at Geneva is, if nothing else, to arrive at an interim constitution which, with the general agreement of the parties present, will be sufficiently acceptable to the British Government and to us to be turned into an Act of Parliament and thus, after eleven years, to give, in our eyes, legality to the state of affairs in Rhodesia.
In doing that we shall, whether we like it or not, and in the eyes of all who are parties to the agreement, however temporary, be believed to be responsible for maintaining the constitution which this House sets up. Thus we shall, once again, and much more deeply, have committed ourselves to an act of responsibility without a vestige of power.
It may well be that agreemnt will be arrived at in Geneva for such and such provisions; but what if these provisions are overridden, and what if the expectations of those at Geneva are disappointed by actual events in Rhodesia in the next six or 12 months? What then is the position of the Government and this House? One thing is certain. We shall be believed to have accepted responsibility for what comes out of Geneva if, under our chairmanship, agreement is reached and we legalise the new state of affairs.
The right hon. Member for Chipping Barnet (Mr. Maudling) did in fact ask this question, although I found his conclusion very difficult to accept. He posed the question of the way in which the United Kingdom, having passed, as intended, such an Act, was to give effect to that Act and discharge the responsibility attached to such a piece of legislation. I thought that the right hon. Gentleman did a service to the House by producing a reductio ad absurdum. That reductio ad absurdum was a British governor and a "British presence", which is a euphemism for British forces. Thereby the right hon. Gentleman revealed an incompatibility between the stance we are taking up, not just by renewing the 1965 Act but by chairing this conference and entering upon a new train of events, and our total lack of power in Rhodesia.
The right hon. Member for Devon, North (Mr. Thorpe) put his finger on this when he said that of all the fateful

1505
factors in Rhodesia it had been the attempt of this country to exercise authority and responsibility there which had most impeded the natural development of events.
Mr. Hooley: The right hon. Gentleman is being more academic and abstruse than usual. The factors in this equation are not merely the legal constitutional rights of this House, which the whole world recognises, but the practical involvement on the ground of African States and the external pressures of the great powers such as the United States, which can be brought to bear in support of policies or enactments which we adopt. These are the power factors. The right hon. Gentleman's references to consittutional points ignore the realities of the situation.
Mr. Powell: The hon. Member has my arguments entirely upside down. I entirely agree that what happens in Rhodesia is decided by the parallelogram of forces there, including the actions of the United States Government. It will be something which we shall not have the power to control, to police or to influence. Yet here we are, putting ourselves in the position of chairing—and thereby of taking responsibility for the outcome of—a constitutional conference, and of inscribing upon the statute book a constitution which we have no power to maintain.
Mr. Thorpe: Will the right hon. Gentleman come to the logic of his argument? Is he saying therefore that we should not take the chair because we cannot enforce the outcome—
Mr. Powell: Yes!
Mr. Thorpe: —and that we should have recognised UDI because we could not prevent it?
Mr. Powell: Yes.
Mr. Thorpe: Does the right hon. Gentleman not agree that if we had recognised UDI we would not now be having a conference to discuss the possibility of a multi-racial Government in Rhodesia?
Mr. Powell: Yes. The right hon. Gentleman has followed me all through the last 11 years. Without variation I have said that we should have accepted de facto that we had no authority after 1965, and that thereafter we should have dealt with
1506
Rhodesia as a part of the world in which our writ did not run and in which we had minimal influence. That is why I regret that we shall be chairing the conference and why I am opposing that as a reversion in much more grotesque form to the pretence and hallucination in which we have been engaging in the last 11 years.
What harm can come of it? In practice I suppose that on the ground in Rhodesia it will make little difference. I agree with the hon. Member for Sheffield, Heeley (Mr. Hooley) that whatever happens in Rhodesia will be decided by forces over which we not only have no control but of which we can make no projections even for a year or two, let alone over the 200 years that the right hon. Member for Chipping Barnet aspired to survey.
But there is still a result for us which I believe will almost certainly be disastrous. It is that the difference between the outcome and what we purport to enact in this House will be regarded for ever by many, including many in Rhodesia—not necessarily all of them white people—as the evidence of a breach of faith and a dishonour on the part of this country. We shall be understood as having undertaken that which we cannot and certainly shall not perform. As for ourselves, we shall have contrived another humiliation on top of all the rest that our blindness and our unwillingness to face reality have loaded upon us.
That is the reason why tonight, and with a heavier heart than ever for the future, I shall once again cast my vote against the renewal of the 1965 Act.
6.4 p.m.
Mr. Bruce Grocott: Once again the right hon. Member for Down, South (Mr. Powell) has been in one of those moods of his in which he applies strictly legal and logical arguments to a situation. At other times he thinks it right to apply largely emotional arguments to a situation. As a politician I suppose it is his right to mix the two.
Anyone who looks at the situation in Rhodesia must admit, which so far as I can see the right hon. Gentleman did not admit, that there is a profoundly important and significant emotional element to be catered for there apart from the question of legality which must be dealt with

1507
I do not think that anyone is in any doubt that to restore Rhodesia to her legal position in the international community will involve an Act of this Parliament. I recognise, and I think that we would all have to recognise, that any interim Government that was sanctioned by an Act of this Parliament would run precisely the risks that the right hon. Gentleman said we would have to face, with a situation of responsibility without power. But, as he rightly said, that has been the situation for much of the last 11 years.
The situation in Rhodesia, and in the whole of southern Africa, is by no means simply a legal situation and the subject of legal argument. If it were, the lawyers would now be clamouring for, above all else, the extradition of Mr. Smith upon his arrival at Geneva to bring him to trial before a British court for the various crimes which under British law he has presumably committed over the past 10 or 11 years. I do not think that anyone would suggest that in the immediate situation that would be a useful way to proceed.
We are debating whether the sanctions should be renewed for another 12 months. The circumstances in which we debate that issue are very different from those which obtained a year ago, when a far smaller number of hon. Members were here to consider that same question.
I say this much of sanctions, in disagreement with my right hon. Friend the Foreign Secretary. They have not been a significant factor, or even a factor in bringing Smith to the conference table, if he comes. The factors which have done that are, above all, the military situation in and around Rhodesia, the situation which has resulted from the collapse of the Portuguese empire, and, as I said last year, overwhelmingly and crucially the relationship which exists, or which does not exist, between Rhodesia and South Africa.
It is this relationship with South Africa which has always made an absurdity of sanctions in terms of bringing Rhodesia down. For as long as South Africa is there—and it is breaking sanctions, particularly in the construction of a new rail route, and so on
1508
—it is clear that Rhodesia can survive sanctions. But, as South Africa has slowly come to realise the inevitability of the situation in that part of the world, that relationship has been crucial in bringing Smith to the conference table.
I agree with those who say that sanctions are irrelevant when it comes to forcing Smith to the conference table. But they are not irrelevant in one crucial respect in the South African situation, which the right hon. Member for Down, South overlooked. That is the importance of emotion and symbolism in that part of the world. Britain has come to this last spasm of empire. By and large we have discharged our imperial responsibilities far more satisfactorily than most imperial powers, certainly more so than the Portuguese, the Belgians or the French. Throughout these last 11 years the one thing we could always turn to has been the symbol of our good intent and our commitment to the side of right and the side of democracy. That has been symbolised by our willingness to continue with sanctions. It has been profoundly important in the understanding of Britain's responsibilities and the respect with which Britain is held by African countries and by the African groups in Rhodesia.
Those hon. Members who think that sanctions are irrelevant must answer that point. If they think that symbolism and emotion are unimportant in politics, they fail completely to understand the political process. We profoundly hope that Britain will discharge its final imperial responsibility with honour. My submission is that sanctions have made it much more likely that we shall be able to do that, and it would be disastrous if we did not renew sanctions for the next 12 months.
What are Britain's remaining responsibilities? They are legal and political. The legal responsibilities are that we shall have to pass an Act to give legality to the interim government and, finally, to the independent State of Zimbabwe.
The political responsibilities are that, as with all other de-colonisations by previous governments, we shall at least have to see that when independence is granted its structure and constitution conform to the aspirations and values by which we

1509
live and try to run our affairs. But there can be no guarantee that this will continue after independence.
Many countries to whom we have given independence have been successful in maintaining those values, but there is no way to guarantee that. The right hon. Member for Chipping Barnet (Mr. Maudling) spent some time discussing how to achieve precise safeguards for communities. His attitude could be summed up by saying that he profoundly hopes, as do we all, that the majority in Rhodesia will treat the minority a damned sight better in future that the minority has treated the majority in the past. However, there is no way of guaranteeing that.
British Governments tried for almost a century to guarantee that the rights of the coloured community in the Cape would be maintained by entrenched clauses in the South Africa constitution, but, if the political will in South Africa is that they should be denied those rights, nothing can alter that situation.
We all hope that the transition in Zimbabwe will be peaceful. We all put on our cathedral faces and nod solemnly when an hon. Member says we abhor bloodshed. We abhor bloodshed, not only because we do not like people being killed, but because whether Zimbabwe achieves independence through bloodshed or by a peaceful transition will be an overwhelming determinant of the new régime.
African countries which have had to achieve independence by force of arms have had régimes after independence of a kind with which we would not be happy to be associated and of a kind different from those countries where there has been a peaceful transition. This is a crucial factor for us to bear in mind.
I must add a word of warning about Britain's position at the conference and during its immediate aftermath. There are a number of issues about which we should be profoundly concerned.
We are concerned here, not just with Rhodesia, but with the whole of southern Africa and South Africa. Although it may be convenient to use Mr. Vorster as a means of putting pressure on Mr. Smith, there must be no compromise in our past attitude of profound and equal condemnation of what goes on in South
1510
Africa. Tactically it may be convenient to have Vorster helping to isolate Rhodesia. That may be one of those parts of politics which is inevitable, but about which we prefer not to talk too much. However, we must not compromise the stand, perhaps symbolic, that we shall take on South Africa in future.
Let us also remember, in considering how to deal with the various groups in Rhodesia after independence, that during the past 11 years there have been rebels and there have been those who have lived under an oppressive régime. Clearly we want safeguards and wish to do all we can to see a peaceful transition, but let us do nothing to compromise our stand on this issue either.
I hope that we shall act with honour in this last spasm of Empire, as we have done by the use of sanctions in the past. I profoundly hope that we shall continue their use for the next 12 months.
6.16 p.m.
Sir Frederic Bennett: I agree with a number of the conclusions of the hon. Member for Lichfield and Tamworth (Mr. Grocott) though not necessarily with the reasoning which led him to reach them. I correct only one of his descriptions. The only way in which Rhodesia differs from any other part of the Empire that we dissolved after the war is that it is not a last spasm of Empire. Rhodesia has never been a British possession administered by this country and we have not had power over it.
Other than in name, Rhodesia has been an independent country since 1923 and this has been the primary cause of the difficulties which did not arise in other colonies where the administrations owed their allegiance directly to this country.
It would be strange if anyone did not wish the conference success. Yet I cannot but share the pessimism of those who have already expressed it, but it is better to concentrate on at least hoping that it will succeed because the alternatives appear so frightening.
The Foreign Secretary said that he recognised that a number of pitfalls lie ahead, but that he would not enumerate them. It is up to some of us to spell out some of these pitfalls. If there were more time, I should like to discuss them

1511
in greater detail, but we have all promised to be brief.
It is particularly up to those of us who have had something to do with similar conferences in the past to point out the possible pitfalls. I have been constitutional adviser to a number of African parties and was present on at least one occasion when my right hon. Friend the Member for Chipping Barnet (Mr. Maudling) was in charge of the conference.
There will be great internal nationalist dissensions in Rhodesia. This is inevitable as the moment for taking power comes closer. There will be jockeying between the forces and there are deep-seated tribal, as well as other, differences. It will be a miracle if the conference does not founder, quite apart from any actions by the Europeans or the British chairman, on the strife between the various nationalist forces which is temporarily under cover because of the desire to get to the conference table but which will, I suspect, emerge rapidly as the moment of decision approaches.
I recollect the present President of Tanzania telling me at his country's independence celebrations that he had asked Britain for independence after 12 years. He said that immediately that concession was made—that there would be independence in principle—the momentum grew so rapidly that it took place within a couple of years.
We have started with two years for Rhodesia. I find it impossible to believe that there will not be strong pressures from the rival nationalist groups in competition, aided by people outside who have not had genuine good will for the people of Rhodesia, to try to speed up the two years with all that that will entail. I do not think that many hon. Members would differ from what I think will take place.
I turn now to the interpretation of majority rule. It would be a tragedy if we were to back the principle, at a single stroke, of one man, one vote in Rhodesia when the conference takes place. In my view, majority rule means that African voters will be in the majority at the election that sets up the Government to take the country into independence. We shall not reach a solution merely by adding numbers.
1512
Almost without exception, every African country that achieved independence on the principle of one man, one vote went on to one election and an authoritarian rule afterwards. We should be deluding ourselves if we did not think that would be the likely pattern in Rhodesia. We talk in terms of setting up a parliamentary democracy on the principle of one man, one vote. If that takes place in Rhodesia, it will be a shining example which the rest of Africa has not followed.
I make no complaint. I do not believe that when we give up an imperialist rôle we can dictate the form of government that should be set up by those who follow. I believe that it would lead to humiliation for us if we tied ourselves to some kind of glorious Westminster-type constitution, which we all know in our hearts and minds would be in ruins within months.
Turning to minority rights, I think that everybody agrees that for economic, social and political reasons European co-operation is essential in building the new Rhodesia, Zimbabwe, or whatever it is to be called. Many hon. Members who have visited that part of the world many times and know it have seen what has happened to paper safeguards elsewhere in Africa. It is all very well to write down a whole series of regulations, but we all know that in fact 70 per cent. vote for one thing, 60 per cent. for another and 40 per cent. for yet something else, and they all go into the wastepaper basket. This is not the form of government that the Africans want or propose to adopt.
The Europeans know that we cannot give them guarantees by providing them with a magnificent Magna Carta giving them rights of appeal to the courts and to the Judicial Committee of the Privy Council. We must not allow ourselves to be deluded into that dream world. If we are to get the help of the Europeans—this is not defeatist—we must provide a safety net for them to get out of Rhodesia if things become untenable for them. If we want their co-operation, we must provide them with that safety net. That is what we did, in effect, in Kenya. Quite early in the negotiations for Kenya's independence we accepted that some Europeans would want to leave that country. Therefore, we bought their farms with money which was provided by way of aid to get them out. We must do

1513
something along those lines in Rhodesia if we are to get European co-operation. Paper safeguards with red ribbons around them will not convince cynical Europeans in Rhodesia that majority rule will ensure that they continue to play a significant political rôle in that country.
Mr. Ronald Bell: I think that the situation in Kenya was different. There are over 250,000 Europeans in Rhodesia. Is it not a highly developed, civilised country, with industries, and so on, which could not possibly continue, except as a total shambles, without the European population?
Sir F. Bennett: I do not argue with that. We would have to provide a different and bigger safety net. The shambles would be there. If we are to get the Europeans to try to prevent that shambles by working with the Africans, then, apart from paper safeguards, we must give them the opportunity to get out under reasonable conditions if things become untenable for them. If not, at the end of the day there will be a mass exodus of white Rhodesians. If all they have is a bit of paper, they will leave, and the shambles to which my hon. and learned Friend referred will come about.
Regarding sanctions, the hon. Member for Lichfield and Tamworth was right when he said that we delude ourselves if we think that sanctions orders made here have brought about this situation. I am not admiring or condemning the pressures that have been used. We have to deal with de facto politics.
When we passed the first order 11 years ago, the then Prime Minister said that the purpose of sanctions was to bring down Mr. Smith's Government. It certainly did not do that. As it became evident over the years that sanctions would not bring down Mr. Smith's Government, we said that their purpose was to bring him to the negotiating table. They did not do that either. Anybody can check this by looking through Hansard for the last 11 years.
Three things have brought Mr. Smith to the negotiating table: the collapse of the Portuguese empire, the events in Angola, and the decision by Mr. Vorster that in the climate of world opinion it was becoming too expensive to sustain Rhodesia as well as South Africa. That,
1514
if we are telling the truth, is what it is all about.
For reasons of time, I shall not talk about symbolism, but factually Mr. Vorster ought to be nominated for the Nobel Peace Prize by the Foreign Secretary, not those who have been responsible for bringing in sanctions orders.
Mr. Ioan Evans: Does the hon. Gentleman agree that, whereas the United Nations has sought international sanctions, South Africa has over the years blatantly not carried out those sanctions? If, in 1965, South Africa, together with the rest of the world, had observed the sanctions, we would have had these talks much earlier.
Sir F. Bennett: That is hypothetical. At least 100 speeches have been made in which that point has been stressed with complete truth during the last 10 years. It is like saying what might have been and that wishing will make it so. The fact is that South Africa and Portugal did not impose sanctions. Whether they should have done would necessitate far too long a discourse in what is meant to be a brief speech.
I have no wish to vote against the order. We are talking about a package deal. Mr. Smith has not asked for the removal of sanctions before the formation of an interim Government. Therefore, it would be illogical to break the package deal tonight. But it carries with it a certain responsibility. If an interim Government is formed and Mr. Smith plays his part in the package deal, I expect the Government to take certain action. It is no use saying that the lifting of sanctions was part of the basis of Dr. Kissinger's negotiations. To say "I shall lift sanctions when there is an interim Government" is not capable of being a negotiation. It is a stated fact. There is no possibility of wriggling round that.
I hope that the Minister, in winding up the debate, will make it clear that, as we expect Mr. Smith to live up to his side of the bargain, we shall live up to ours if an interim Government is formed on the lines that have been agreed.
I hope that the Minister will also make it clear that if, due to deliberate wrecking tactics by those who do not want the conference to succeed at any cost, all our best efforts are in vain, this House

1515
will not be asked to continue to pursue a vendetta against Rhodesia. That would be immoral.
We brought in sanctions to bring Mr. Smith to the negotiating table. Whether or not they brought him to the table. he is there. We have achieved what we have been told for years was the purpose of sanctions. If, now that Mr. Smith has come to the table, the terrorists and others make a successful outcome to the conference impossible. I should regard it as entirely unethical if we still continued with sanctions because agreement was not possible.
6.30 p.m.
Mr. Frank Hooley: We should remind ourselves that the purpose of the order that we are now debating is to honour an international obligation. By this order we are continuing sanctions which were imposed at our request by the Security Council of the United Nations. We have a clear international obligation to honour that decision of the Security Council and to continue sanctions until such time as there is a return to legality in Rhodesia.
In case people imagine that the Security Council is no longer interested in this matter, I remind the House that a further resolution was passed by the Council in April of this year reaffirming sanctions and, indeed, extending their scope.
There has been some discussion about how effective this technique is in settling this problem. The relative effect is that the Western world has defaulted on its international obligations to a large extent by not bringing pressure to bear on those who broke sanctions. That is a disagreeable thing to have to say, but it is a fact. I believe that the action of the American Congress in passing the Third Amendment and deliberately importing raw materials from Rhodesia was a disgraceful flouting of the authority of the United Nations which does no credit to the United States Administration.
It is equally true that when sanctions have been imposed, as, for example, by the closing of the Mozambique border, they have intensified the problem and had an important effect. I draw the attention of those who do not believe this to a report in The Guardian a short time ago about what has recently been hap-
1516
pening to the Rhodesian economy. It stated:
"Foreign exchange is desperately short, new investment low, manufacturing production fell …
Investor confidence in Rhodesia's future was indicated by the fall in the Salisbury stock exchange index this month to 230, against the high point of 490 in July 1974.
Most worrying for the regime is the high white emigration rate, a factor likely to accelerate if African opposition detroys the basis for the present agreement. Emigration has averaged 1,200 for the first seven months of this year, a high proportion of the total white population of 278,000. The effect on the construction sector can be seen now construction plans for the first five months of 1976 are 25 per cent. lower than in the same period last year.
The drain of skilled labour by emigration has been exacerbated by increasing demands of the security forces on the time of young white males which in turn has accelerated emigration."
Those were some of the effects of the closure of one of the gaps in the sanctions ring, namely, the Mozambique area.
Mr. Eldon Griffiths: Will the hon. Gentleman give way?
Mr. Hooley: No, I have only just begun my speech. There is no doubt at all that had the Western world effectively intended to deploy sanctions, as it had the authority to do under the Security Council Resolution, it could have had a rapid and tremendous impact on the Smith régime.
Those who deride the application of economic sanctions as a result of an international dispute had better reflect that we would have been left with no interval between agreement and war. If we say that the two parties concerned must get an agreement, but we do not bring to bear any kind of sanction or pressure of an economic or diplomatic nature, we must face the fact that the other end of the scale is war. In fact, this has happened in Rhodesia. Although sanctions have had some effect, they could have had a total effect had they been fully applied. But because they were not fully applied we have drifted into a situation where there is now war.
We need to remind ourselves of the nature of the Rhodesian society at the moment. It is simply not good enough to expect to understand the attitude of the African nationalists who are coming

1517
to negotiate in Geneva unless we attempt to understand what they have had to put up with in the past 11 years. The idea of UDI being a decent and civilised interval in the development of Rhodesia may be all right for some people in this House, and it may be all right for the white racist community which imposed it and administered it, but what it has meant for the Africans needs to be spelled out, at least a little, in this debate.
I quote from a document published by the International Defence and Aid Fund in London concerning the Law and Order (Maintenance) Act. It states:
"The Law and Order (Maintenance) Act, in particular, substituted for the rule of law the rule of force, and evoked a storm of protest in liberal circles, the press, churches, the legal profession and the academic community. The 'savage' and 'primitive' character of the Bill, coming as it did on top of a whole series of 'drastic curtailments of ordinary liberties', prompted Sir Robert Tredgold, then Chief Justice of the Federation, to hand in his resignation. He later wrote about the Act in his autobiography: 'An eminent lawyer described the proposals as vicious and a leading newspaper as hysterical and neither epithet was unjustified. It almost appeared as though someone had sat down with the Declaration of Human Rights and deliberately scrubbed out each in turn. … At the time I described it as an anthology of horrors—and it was not an inept description'."
That is the kind of society from which the Africans are now coming to negotiate with Mr. Smith—the author and administrator of that Act. This has been carried further still in a report on emergency courts which have been set up this year. I quote:
"The rapid breakdown of standards of law in white Rhodesia has been dramatically illustrated in recent weeks through the setting up of special 'mobile courts' in the operational areas to try offences under the Law and Order (Maintenance) Act. The Emergency Powers (Criminal Trials) Regulations 1976"—
note the year—1976—
"provide for impromptu trials to be convened in which the right to legal defence has been virtually extinguished and the rules of procedure reveal some drastic departures from accepted legal conventions.
In the space of a week at the end of May, eight people are known to have been sentenced to death by special courts. Although provision is made for appeals against conviction and sentence 'the execution of any sentence of imprisonment or a fine shall not', under Section 12, 'be suspended by the noting of an appeal'."
That is the kind of legislation and the
1518
kind of society under which the Africans in Rhodesia have had to live for the past 11 years. Of course, it does not cover the fact that over and above this Draconian legislation we have had the imprisonment without trial of a great many of the leaders who are coming to Geneva—among them Mr. Nkomo, Mr. Mugabe and Mr. Sithole—and many of their friends have been hanged illegally by the régime. That is the kind of background, from the African side, that we have to take into consideration when looking at what will come out of Geneva and what is the basis of the facts.
My right hon. Friend said that the most important development in 1976 was the speech of the Prime Minister on 22nd March. What he spelled out then is, I understand, the basis of the British position. It was not the diplomatic details negotiated by Dr. Kissinger, although they could have had a value in setting in motion the possibility of convening a conference. The basis of the British position, as I understand it, was the statement made by the Prime Minister in his capacity as Foreign Secretary on 22nd March. It is worth quoting once again what this position is—
"First, there must be prior agreement by all the principal parties to a number of pre-conditions. These are as follows: first, acceptance of the principle of majority rule; secondly elections for majority to take place in eighteen months to two years; thirdly, agreement that there will be no independence before majority rule; fourthly, the negotiations must not be long drawn out."—[Official Report, 22nd March 1976; Vol. 908, c. 30–31.]
Any idea that Mr. Smith can evade or get out of those conditions on the basis of some document, the existence of which nobody seems to be certain of, is nonsense. The British Government's position is clear, and it is important that the House should understand it.
Over and above that htere was the important speech by the American Secretary of State in Lusaka, in April of this year. That was before he undertook his shuttle diplomacy. I think that there he spelled out the principles of American policy in Southern Africa, which are in many ways more important than the technicalities of his diplomatic mission in recent weeks. What he said was that American policy centres on America's

1519
"unrelenting opposition" to the Rhodesian regime. He said that the policy also called for swift constitutional changes to bring majority rule in Namibia and an end to apartheid in South Africa.
Those principles were spelled out in a considered and deliberate speech in Africa way back in April this year. They seem to me to be far more important than the bits and pieces of the so-called package, about which we have heard so much from the Opposition today. Nevertheless, I think that there was a considerable psychological importance in Smith's acceptance of the principle of majority rule. It would be very difficult for him to go back on that acceptance and it makes his position quite untenable if the Geneva Conference breaks down.
There are a number of background points that we might consider in relation to the Geneva Conference. Its success or otherwise will clearly depend on the Africans, on Smith and, I hope, on Mr. Richards, too, as they sit around the table. But the influence of the rest of the world will play some part as well in the background to the conference and what the British Government may do.
I think that the important points are as follows: first, I agree entirely with my right hon. Friend that all aspects of the proposals that Mr. Smith read out have to be negotiable. We must make it quite clear that Smith is not going to Geneva to be crowned king of Rhodesia. He is going there to capitulate. That must be clear.
Secondly, we must hammer home to Smith, in one way or another, that in the event of this conference failing, he is not going back to a comfortable, white-controlled UDI Rhodesia but to a guerrilla war, and that he can expect no help, comfort or defence from the Western world if he goes back in failure from Geneva.
Thirdly—and this is equally important—America and this country, and indeed, the Western world generally, must hammer home to Mr. Vorster that if he tries to interfere again in Rhodesia in support of Smith, he will not be protected from pressures from the rest of the world by any further vetoes by France, the United States or Britain in the Security Council, and that so far from being so protected, any attempt by
1520
the South African Government once more, by economic help or even by overt military help—as has happened in the past—to sustain the Smith régime will provoke strong and powerful countermeasures by the Western world.
I take the point made by the right hon. Member for Down, South (Mr. Powell) that there are limitations to such measures as this country alone can take, but I think that he is quite wrong in supposing that the Western world at large is impotent to deal with Mr. Vorster or with Smith if it summons up the political will.
On the more positive side, I believe that it will be necessary for the British Government to take some steps to indicate to the participants in the Geneva Conference that if they can come to a reasonable agreement, reasonable interim arrangements which are generally acceptable to all the persons there, we for our part will be prepared to seek to organise an international force of some kind, as I would hope, on the ground, to supervise the transition period. This is a matter of practical common sense. I do not see how men such as Muzorewa, Mugabe and Nkomo, who have been imprisoned by Smith, can possibly trust a régime such as his in control of the armed forces of Rhodesia. However, equally, I accept that many white Rhodesians, white families living on the frontier, are terrified that if that control is released they will be murdered, tortured or killed by guerrilla activity. That is a fear that I would certainly have if I were in their situation.
Mr. Peter Temple-Morris: I should like to put to the hon. Gentleman a point about a British intervention. We have heard a large number of contributions in that direction. Does the hon. Gentleman agree that if there is to be any British presence, that presence must be by the invitation of all parties and by guerrilla leaders in the field? If it is not so, we shall put ourselves, if we go there in any form at all, in the position of being branded as colonial oppressors and we shall contribute nothing to a solution in Rhodesia.
Mr. Hooley: Either the hon. Gentleman did not hear what I said or I must have expressed myself badly. I did not suggest a British presence. I said that there

1521
should be some form of international force. That could be organised by the OAU, the United Nations or the Commonwealth. My own inclination would be very much in favour of some kind of Commonwealth force, in which countries such as Nigeria and Ghana could play a useful part. I certainly agree that the suggestion of putting a British Army there would be nonsense, from any point of view. However, I would not rule out the possibility, with some diplomatic effort and private discussions in the background while the conference is going on, of making some arrangements for a force on the ground that was regarded as sufficiently effective and sufficiently impartial to be accepted by all concerned during the transfer of power.
It is also absolutely essential that whatever comes out of Geneva must include a provision for free elections on the basis of one man, one vote. I do not share the rather weird exegesis of what is majority rule, as put forward by some Opposition Members. It would also help make for a greater possibility of agreement at Geneva if the political detainees still held by the Smith régime were released forthwith—and, of course, there must be an absolute end to hangings by that régime, otherwise the atmosphere for talks cannot possibly be propitious from the African side.
I must admit that I am not wholly optimistic that this exercise will succeed, but in some ways I would be prepared to adopt a phrase that Vorster himself used—the alternaive is too ghastly to contemplate. Certainly, failure at Geneva would mean a continuation of a very savage racial war. That would probably spill over from Rhodesia into South Africa and link up with the war that is already going on in Namibia.
I believe that all civilised men hope that we can get a peaceful transition to legal, constitutional majority rule in Rhodesia and that the Geneva Conference will prove to be the vehicle for doing this.
6.48 p.m.
Mr. Julian Amery: The hon. Member for Sheffield, Heeley (Mr. Hooley) opened his remarks by describing the slide on the Stock Exchange and the brain drain that has been taking place in Rhodesia. The idea that the policies of the Labour Government in London and of the Rhodesia
1522
Front in Salisbury should lead to the same result may cause hon. Members either to laugh or cry, according to their persuasion.
I should preface my remarks by reminding the House that I have business interests in South Africa, though not, of course, in Rhodesia. Thanks to those interests, I spent the best part of a month in those two countries this summer and had the opportunity of speaking with leading people of all persuasions and parties in both countries.
The Foreign Secretary began his speech with an historical retrospect of the situation in Rhodesia. I shall briefly follow his example, though perhaps in a rather broader context than that which he chose to use.
In the spring, in the debates that took place in the House on defence and foreign affairs, a number of us argued that the main thrust of Soviet imperialism was increasingly being directed against the raw materials on which Western industry depends and the supply routes by which they come.
Since then, the momentum behind the thrust has increased. I will not weary the House by rehearsing the details. I will merely give one example. If we suddenly learned that the Prime Minister had made himself an Admiral of the Fleet, that would mean a field day for the cartoonists. But when Mr. Brezhnev—whose military experience is about the same as mine—makes himself a Marshal of the Red Army, we may think that it is a joke, but it is in fact a recognition of the importance of the military establishment in his country.
It is now becoming clear that a main theatre—perhaps the main theatre—of the Soviet imperialist thrust is central and southern Africa. It advances under the banner of the national liberation of the African. No doubt it does its best to exploit local discontents, genuine as some of them undoubtedly are. But its real objective is control of the Cape route, upon which not only our oil supplies but our trade with Australia and the whole Indian Ocean depends, and also control of the mineral resources of central and southern Africa, upon which our industries and the jobs of our people depend.
I recently made a speech in Wales and travelled on the railway line from Newport to Swansea. That route covers a solid

1523
steel industry band where, without the alloys that Southern Africa provides, there would be massive unemployment. If the Soviet Union, whether through puppet Governments or surrogates, put their hands on those supplies and either denied them to us or controlled their prices, the consequences could be catastrophic. [Interruption.] I am merely stating the facts.
Up to this point we have seen the Soviets establish a colony in Angola garrisoned by Cubans, who are the Gurkhas of the Soviet Empire. I am glad to see that the Cubans are having a difficult time suppressing the freedom fighters of UNITA, although they nevertheless supply bases for the SWAPO Communist-directed movement which is operating against South-West Africa. Mozambique is a protectorate rather than a colony, but it is interesting to see that the Soviets have acquired a 20-year lease of an island off the coast of Mozambique and are expanding the harbour of Nacala and the airfield adjoining it.
The main threat to Rhodesia is directed from Mozambique. Several thosands of trained guerrillas—estimates range from 7,000 to 10,000—are in Mozambique, near the Rhodesian border. They are being trained by Soviet instructors or Soviet-trained instructors and are well equipped with Soviet material. Their fighting capacity is not great, but it is improving. Those captured and interrogated have proved to be well-indoctrinated in fairly rudimentary Marxist ideology. More guerrillas are in primary training in Tanzania. The prospect is grim. About 1,000 of the guerrillas are operating inside Rhodesia, and go back and forward as circumstances allow.
Dr. Kissinger appears to have convinced Mr. Vorster and Mr. Smith that such operations would be greatly increased after this winter and that there was a real danger that Cubans and others would come in and help the attack against Rhodesia. I see from the Press that the Foreign Secretary has endorsed that view. We are therefore faced with the prospect of a possible Soviet-inspired takeover of Rhodesia. We can hardly be indifferent to that if we
1524
take account of the importance to us in Britain and to Western Europe, Japan and the United States of the minerals of Southern Africa and the importance of the Cape route and all that is bound up with it.
There are limits to what we can do. There are "pathetically narrow" limits if I may quote General George Brown—and I agree with him—to what we in Britain can do alone, but still, as a member of the European Community we could give a lead which we have been unable, incapable or unwilling to give. As allies of the United States we could co-operate with them; and, with our experience of that part of the world, we should surely exercise some influence. The problem is how best to resist what is already a Soviet attack on Southern Africa.
When the attack began in Angola the Government were singularly supine in their efforts Dr. Kissinger, by contrast, understood, and as is now well known, encouraged the South Africans to intervene in Angloa to counteract the Cuban invaders, and squared Zambia and UNITA to accept co-operation with a country with which they had not previously envisaged working. Dr. Kissinger was right, but he was frustrated by Congress. He was frustrated to the extent that in the United Nations he had to condemn the very South African action that he had himself encouraged.
The reasons are many. There was the hangover of the Vietnam war, which still deeply affects the American public. There was the feeling, common in the United States and here, that we would not be morally justified in siding with the white Governments of Southern Africa. There was a total lack of any leadership from the European Community. I cite a Press conference by Mr. Houphouët-Boigny, the President of the Ivory Coast, who said that the failure of the Europeans to react over Angola was worse than the failure of the Americans, because Europe's interests were so much more bound up with the stabilisation of Africa than those of the United States. So, we suffered a major defeat because we were not prepared to defend our own vital interests against external aggression.
Realising that he could get no support from America or Europe, Dr. Kissinger

1525
adopted a more indirect strategy. We do not know if it will work. But I think that Mr. Smith quoted Dr. Kissinger correctly when he said:
"Dr. Kissinger assured me that we shared a common aim and a common purpose, namely to keep Rhodesia in the free world and keep it free from Communist penetration."
They have the same objective but have been unable to give direct support. Dr. Kissinger proposed instead that they embark together, with South African support, in a bid to set up a moderate Government which would keep Rhodesia broadly on the side of the West and with adequate safeguards for the European community in Rhodesia. That was the package deal expressed in Mr. Smith's speech to which many hon. Members have referred. It was the subject of mutual congratulations on a fine back-scratching scale between the Prime Minister—who, after all, had been Foreign Secretary in the early stages—and Dr. Kissinger.
The Foreign Secretary now tells us that all this is of no real account. The only thing that really matters is the commitment to majority rule in two years' time. All the details are negotiable and are not concrete proposals. The Foreign Secretary said that they were welcomed because there was urgent need to capitalise upon the change in the situation.
The Foreign Secretary, in a rather surprising statement, went on to say that the five Presidents shared his view. But only a couple of days after Mr. Smith's speech the five Presidents issued their communiqué, which ended with that gallant Portuguese phrase A luta continua—"The struggle continues." So far as I can see, at any rate in words, they totally rejected everything that Dr. Kissinger and Mr. Smith—and, according to the Foreign Office statement, the Prime Minister and Foreign Secretary—had agreed. The African nationalist leaders, with some variations, all followed suit—some were more extreme than others—in their rejection of the package deal.
What are we to conclude? Could not we get a little more clarity? Was the deal described in the American paper read by Mr. Smith an agreed Anglo-American position? The Foreign Secretary has still not made that clear. That is what Mr. Smith and Mr. Vorster were
1526
told, and I ask the Foreign Secretary to confirm or deny it or to get his representative, when making his winding-up speech, to clarify that point. Did Mr. Smith report accurately what he described as "the actual terms of the proposals put to me by Dr. Kissinger"? Was this genuinely an American paper? Did Mr. Smith, in his comments on it, in any way misrepresent Dr. Kissinger, the right hon. Gentleman or the Prime Minister? If he did, why was no comment or denial made?
Last Tuesday the Foreign Secretary said that he could not speak for Dr. Kissinger, and I perfectly well understand that. But my understanding also is that there was an official from his office with Dr. Kissinger in the aeroplane, travelling with him all the way, and that our Ambassador in Pretoria, Sir David Scott, was kept continually briefed and was fully up to date about everything that transpired at the various meetings between Dr. Kissinger and Mr. Smith. As two days elapsed before Mr. Smith made his broadcast, there must have been plenty of time for the right hon. Gentleman to see whether there was any discrepancy between what Dr. Kissinger had discussed with Mr. Smith and told Sir David Scott, and what he and Dr. Kissinger had previously agreed.
Mr. Vorster, who was present at any rate at the second part of the conversation, has, according to the Press, apparently confirmed Mr. Smith's account. Does the Foreign Secretary agree or disagree with those Press reports?
Mr. Eldon Griffiths: I understand that in the United States this matter was put to Dr. Kissinger, who was asked precisely whether Mr. Smith had or had not properly represented the agreement in his broadcast. I understand that Dr. Kissinger's reply was "Yes"—that he thought that Mr. Smith had accurately described their agreement.
Mr. Amery: I am grateful to my hon. Friend but, while appreciating his intervention, I think that we should all like to have the same confirmation from the Foreign Secretary.
Mr. Crosland: I am grateful to the right hon. Member for Brighton, Pavilion (Mr. Amery) who is putting his questions

1527
and criticism sternly but fairly. On the point raised by the hon. Member for Bury St. Edmunds (Mr. Griffiths), the position was made absolutely clear by Dr. Kissinger himself, apart from what I have said twice in the House. The question of ministerial portfolios and other questions of that sort are still subject to negotiation. That is a statement which can be repeated if necessary—I have it here in my file—by my hon. Friend the Minister of State when he concludes the debate. That statement was made firmly by Dr. Kissinger at a public Press conference which was reported on television and the radio.
Mr. Peter Blaker: Will the right hon. Gentleman give us the date?
Mr. Amery: If I understand aright the Foreign Secretary's intervention, he confirmed what my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) said about what Dr. Kissinger said in his Press conference, but added that there were certain details, like the distribution of portfolios, which were not yet firm. Except for the one reference to the two portfolios—law and order, and security—which is contained in the agreed statement, the document that Mr. Smith read out is only an outline, and there is a lot of detail to fill in. Presumably, if there were not, we should not have the Geneva Conference. It is to fill in the detail that the conference is being held.
Does the right hon. Gentleman accept that what has been agreed, what was read out by Mr. Smith, what was confirmed at the Press conference by Dr. Kissinger and is now reconfirmed by the Foreign Secretary, is that this document constitutes heads of agreement of a firm package deal agreed by Britain and the United States and imposed or persuaded upon Mr. Smith with Dr. Vorster's help? It is not a basis for negotiation; it is the basis for negotiation. I should like the Minister, when he concludes, to confirm that that is also the Government's view.
Mr. Hooley: I find it difficult to follow the right hon. Gentleman's arguments. The negotiations in Geneva are not between Dr. Kissinger and Mr. Smith; they are between Mr. Smith and the African national leaders, and the
1528
African national leaders are in no way committed to or parties to what he is saying.
Mr. Amery: The hon. Gentleman is completely right. All I am arguing is that the British and American Governments are committed to the agreement which they reached with Mr. Vorster and Mr. Smith on the basis of the package deal and that they are committed to the heads of agreement contained in the paper. It is perfectly true that in his speech Mr. Smith did not claim that the African Presidents or the African nationalist leaders had accepted these commitments; but there was one interesting suggestion that they had, and that is the undertaking given by Dr. Kissinger, who said, on the subject of the cessation of terrorism:
"But on this occasion the assurance is given not only on the authority of the United States Government but of the British Government as well that terrorism would cease."
The Foreign Secretary spoke very wisely, in much the same vein as did the right hon. Member for Down, South (Mr. Powell), about the limits of our power. Did we give an assurance that terrorism would cease? Did Dr. Kissinger give such an assurance? How did we do that? If MI6 or the CIA controlled the terrorists I can see that it would be possible. Has the right hon. Gentleman received bankable assurances from Mozambique or Moscow to this effect? How did we come to give such assurances? The implications of these assurances are far-reaching, and that is why I said at Question Time the other day that the honour of the British Government was at stake. Suppose that terrorism does not cease. Suppose that external aggression develops, either because an interim Government is not formed or because the interim Government that is formed does not please the terrorists. Is not there then a clear obligation upon the West—Britain and America, in particular—to help Rhodesia to defend itself against terrorism? Does the right hon. Gentleman accept that obligation? Do the United States accept that obligation? That is the crux of our debate today. If we are prepared to stand by the deal which we and the Americans with South African help have persuaded Mr. Smith to accept, and, if need be, to defend it against external aggression, there is a

1529
good chance that Rhodesia could develop into a prosperous multi-racial society. But if we are not prepared to stand by the deal it will be not a settlement but a sell-out.
Mr. Crosland: The right hon. Gentleman talks about the honour of the British Government in a way that touches me very strongly. I think that I have as much respect for the honour of the British Government as he does, and that he would not seek to deny it on an occasion like this.
I want to make two points in answer to the right non. Gentleman's question. First, there was not a deal with Mr. Smith's Government. I tried to make that plain on Tuesday of last week and again this afternoon. I repeat that there was no deal with the Smith Government. What there was was a series of proposals which we thought, as I confirmed this again this afternoon, constituted a useful—I go further, and say "equitable"—basis for further discussion and negotiation.
Secondly, I answered a question about guerrilla activities this afternoon. It is clear what our position is here. We have no power to enforce the cessation of guerrilla activities. The right hon. Gentleman, particularly with his background, knows that as well as I do. What I have said and repeated and what the American Government have said and repeated in all the discussions is, first, that we think that while negotiations are continuing it would be highly desirable for those activities to be de-escalated; secondly, that all the influence we have to bring to bear when the interim Government are announced and agreed—this goes for the American Government as well—would be to seek an end to guerrilla warfare. I do not think that I can put it more fairly than that.
Mr. Amery: The right hon. Gentleman's statement must be deeply disturbing to the whole House. There is no sign of bad faith in what Mr. Smith said in his speech, because he was saying that he did not like the proposals. He described them as proposals put to him by Dr. Kissinger and said earlier that they were proposals which he accepted very reluctantly and which were, as he understood it, backed by the British Government as well as the American Govern-
1530
ment. When it came to the question of terrorism he was, like me—and, it appears, like the right hon. Gentleman—sceptical. He said:
"Dr. Kissinger has given me a categorical assurance to this effect. My acceptance of the proposals is conditional upon the implementation of both these undertakings"
terrorism and sanctions.
"In the light of previous experience there will be some understandable scepticism regarding the undertaking that terrorism will cease, but on this occasion the assurance is given not only on the authority of the United States Government but of the British Government as well."
The right hon. Gentleman is now telling me that no such assurance was given. [Interruption.] Hon. Members should have been listening to what I said earlier. It seems to me about as dubious an undertaking as Mr. Neville Chamberlain's guarantee to Poland.
Several Hon. Members rose—
Mr. Amery: The Government are in much the same position. This is very like that agreement. Mr. Smith was given to understand that we were looking after the cessation of terrorism; that Dr. Kissinger had received assurances from the front line Presidents and nationalist African leaders in his talks, and from other talks conducted by his officials and the Minister of State, that we could deliver.
Suppose we cannot deliver. Are the Government then prepared to give the Rhodesians at any rate the means of defending themselves? If we are not prepared to stand by the agreement reached with Mr. Smith, it is not a settlement but a sell-out. Dr. Kissinger will have committed a second Vietnam, but without the excuse of having to bring the boys back home, and the British Government will be dishonoured.
Mr. Crosland: Mr. Chamberlain's negotions with Poland in 1939 are a matter for Conservative Members to answer for, not this side of the House. Poland's present position, which has come under criticism, is a matter for the grandfather of the hon. Member for Stretford (Mr. Churchill) to answer for, not for me.
I have made absolutely plain the commitment of the British Government on the question of guerrilla warfare. It is within their power to do the two things that I have now mentioned twice today.

1531
It is no good the right hon. Gentleman, who is very experienced in these matters, talking about our capacity to enforce all these things on a great number of independent Governments. The hon. Member for Haltemprice (Mr. Wall) smiles. He knows that we do not have this capacity. For all his efforts, we could not even win the Icelandic cod war. The hon. Gentleman has become rather more realistic about defence matters than he was six months ago.
But I give the assurance that the best influence that the British Government can exercise will be exercised in this respect. I have given assurances about this twice now. The right hon. Gentleman should know that to talk of Poland and 1939 is a nonsensical historical analogy.
Mr. Amery: The Foreign and Commonwealth Secretary has kindly intervened again to try to clear the matter up, and he has helped us a little. He accepts that we were not able to give the assurance that Dr. Kissinger appears to have given in categorical terms on our behalf. He has now back-tracked on that assurance. I can well understand that he does not feel able to give it categorically. I could not do so myself if I were in his shoes. All that I am asking is that he or the Minister of State should tell the House that if we cannot deliver the goods over terrorism we shall at least help the Rhodesians, within the limits of our power and the Americans' power, to resist external aggression against the settlement which we have persuaded Mr. Smith to accept.
Several Hon. Members rose—
Mr. Deputy Speaker: Order. Many right hon. and hon. Members wish to take part in the debate. Constant interventions make it unlikely that they will have the chance.
Mr. Amery: I shall leave that point by simply saying that the settlement, unless we are prepared to stand by it and defend it, is not a settlement but a sell-out.
My last point relates to the order. The Government are asking a great deal in asking us to renew sanctions tonight, nearly a month ahead of the last date by which they have to be renewed. Suc-
1532
cessive Governments have stated that the argument with Rhodesia should be resolved by negotiation, backed by economic pressure. But all of them—Labour and Conservative—have specifically and explicitly ruled out the use of force. We tried first to get agreement between the British Government and the Rhodesian régime. Then we hoped to encourage agreement between the Rhodesian régime and the African nationalists. Since the order was made last year the issue has shifted from the political arena to the battlefield.
The right hon. Gentleman has made it a major point in his speeches on this subject that we risk a major conflagration in Southern Africa and a confrontation with the Soviets over what will happen there. Therefore, we must ask ourselves in this confrontation which is already developing—it has already gone well beyond the Mau-Mau activity or what we knew in Cyprus with EOKA—whose side we are on. By giving aid to Mozambique the Government are indirectly helping the guerrilla operations against Rhodesia. By renewing sanctions, we are making it more difficult for the Rhodesians to defend themselves against an attempt to solve the matter not by negotiation but by force.
If we accept this order tonight we shall become accomplices and accessaries in the campaign of murder, mutilation and bombing that is being indiscriminately aimed by the guerrillas at Africans and Europeans, regardless of age, sex or occupation.
Mr. John Mendelson: What about the terrorism directed at youngsters in Rhodesia?
Mr. Amery: The hon. Gentleman knows—and I did not want to spell out these matters—that there have been incidents involving people whose lips have been cut off and where wives have been made to eat them. That has happened in the presence of witnesses. However, I do not want to go into that kind of horror politics.
Mr. Mendelson: The right hon. Gentleman asked for it.
Mr. Amery: The Foreign Secretary has asked us to accept the renewal of sanctions. I understand the argument

1533
that if we are to pick out a vital element from the package, namely, sanctions, and lift them today, it could prejudice the negotiations in Geneva, and that we should therefore maintain sanctions until the negotiations have begun. I would raise no objection to that course, much as I dislike being an accomplice to what is going on in terms of terrorist activity, but provided we are given certain assurances. One of them is the assurance that, if an interim Government is formed, sanctions will be lifted automatically. The argument of the legal arm of the Foreign Office that they could not be lifted without the consent of the United Nations should not inhibit us from taking that course. But there is another issue.
Suppose the Africans reject the package deal and that no interim Government is formed, will sanctions then be lifted? Suppose Mr. Nkomo accepts the package but others—Mr. Mugabe or Bishop Muzorewa—do not, will sanctions be lifted? The Foreign Secretary told my hon. Friend the Member for Wycombe (Sir J. Hall), that that was a hypothetical point. But it is not hypothetical, because all the African nationalist leaders have publicly declared their rejection of the package deal, as have the five Presidents. I hope that that information was for domestic consumption, but we in this House have to make our judgments on the basis of public statements from responsible leaders. I do not have such a contempt for African leaders as to believe that they do not mean what they say.
We need a clear statement that the Foreign Secretary will lift the sanctions—we cannot stop terrorism but we can lift the sanctions—if an interim Government is formed, or indeed if an interim Government is not formed through no fault of Mr. Smith.
I was worried by the Foreign Secretary's statement that the Rhodesia Front cannot be left in control of the levers of power. That seems to be retreating from one of the central conditions of the package deal, and we shall require a reply on that point in the House tonight.
In an admirable speech my right hon. Friend the Member for Chipping Barnet (Mr. Maudling) demolished much of the logic of the Foreign Secretary, but he then seemed to assume that the Government would stand by what we thought
1534
they were committed to. I do not think that he listened as attentively to the Foreign Secretary's speech as he should have done, or perhaps his easy-going and generous nature led him to give the right hon. Gentleman the benefit of the doubt. I suggest that we need much firmer assurances before we let this order go through the House. It is not only the honour of the Government and the House of Commons that is at stake, but also the honour of the Tory Party.
7.26 p.m.
Mr. James Johnson: I have no intention of following the geopolitical hallucinations displayed in the speech of the right hon. Member for Brighton, Pavilion (Mr. Amery). To do so would be a waste of time and, in the interests of other possible contributors to the debate, I wish to make a short speech.
It might have been noted that not one African diplomat has been present for this debate. That may give some indication of the value placed on the importance of this debate either by representatives from Salisbury or by the black leaders fighting in the bush in and about the borders of Mozambique and Tanzania.
I do not wish to appear Cassandra-like, but this is a delicate and difficult debate in which to take part. We have embarked on difficult and dangerous discussions in the past—we have only to think of the debates about the Mau Mau in Kenya, the Nigerian civil war and other occasions—but we must not shirk this kind of discussion, because this is probably the last territory in the African Continent in respect of which we have obligations We certainly must not shirk our obligations to the African peoples on this occasion, any more than we did in Kenya, Ghana, Nigeria or elsewhere.
We must all thank Dr. Kissinger for initiating the beginning of these debates, because it was he who unlocked the logjam. We were not able to do so. Therefore, we must thank him for exposing the dangers in the situation.
There are big dangers for us, but even bigger dangers for the African peoples. We were recently urged by Julius Nyerere to take the "hot seat". We are no longer the hosts to African peoples, nor are we any longer the umpire in this situation. We are being

1535
asked to act, first because of our imperial past, and the Africans, since they got to know us, have faith in us, and believe that we shall give them a square deal. It is argued by some people that if there is difficulty inside this territory we should send out a governor general and a couple of battalions to keep order. Does this mean that we are contemplating an African Ulster where we shall have to hold the ring? I hope that that will not be the case, and I support the suggestion made earlier in the debate that if any forces have to go in they are not battalions from Yorkshire but are sponsored and fully backed to the hilt by the OAU, the Commonwealth or the United Nations, if they must go there to keep law and order.
I am not usually pessimistic about Africa because I have much faith in the black peoples, but we must be realistic about the situation. I believe that we should and could have settled the situation in 1964. On that occasion my hon. Friend the Member for Warley, East (Mr. Faulds) and I thought that we should have sent forces to Rhodesia, but we did not, and it is no good going back over old ground. As a former imperial Power we cannot now go in alone in 1976.
I should like to ask the Minister to tell the House, when he replies to the debate, whether there has been any agreement about an agenda for the Geneva conference. What are the opposing parties to talk about? I do not see how there was not some form of agreement between Smith, Vorster and Kissinger and others involved. I believe that Ian Smith has been guilty of some large prevarications, or let me bluntly call them lies. He has behaved in a most dishonest fashion in the past decade. I cannot see how he can have changed courses so quickly, unless he has been given some hope or encouragement to do so.
There is a morass of ambiguity about the situation. The black participants are saying that anything is negotiable at Geneva. May we be told whether that is so? Can anything be discussed? Can anything there be settled?
I believe that Mr. Smith has signed his own death warrant as a white leader in the last but one enclave in Africa that is controlled by white men. There is no
1536
future for any white man, whether it is Mr. Smith or anyone else, in Africa who has the white settler mentality. These men left Kenya and they left Tanganyika, and Mr. Smith and other white men must accept that their day in the old-fashioned sense has now gone for ever. Africa is a black continent and any Government, whether in Kenya, Tanzania or Rhodesia, must accept that the black people are the majority and are the indigenous people. They were born there, whereas 60 per cent. to 70 per cent. of the whites in Rhodesia have gone there since 1948. In that year the white population of Rhodesia was only 80,000, whereas it is now about 270,000. What claim do they have, our own so-called kith and kin, to hang on and dominate a territory where millions of black men were born? What right do they have to impose conditions upon them.
We heard a moving speech by my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley). He told us of some of the happenings that have taken place over the years under Mr. Smith's régime. Those things have happened, and it is no good anyone on the Opposition benches shutting his eyes to such behaviour. My hon. Friend described what has been happening, and it has been condoned by other Europeans. We must finally accept that in black Africa the white settler mentality has gone for good.
In future what is to be the position of these white men and women and their families? What is to be the attitude of ourselves in the House of Commons? No one can know with certainty.
Far too much dogmatism is displayed in this place by those who have paid a few visits to Africa and who now talk about black men. I listened to the speech of the former leader of the Liberal Party, the right hon. Member for Devon, North (Mr. Thorpe). He mentioned Sir Roy Welensky. It seems that Opposition Members keep in touch with white men in Africa, including Smith and many others But some of us also keep in touch with them. I am not only talking about Sir Garfield Todd, who was incarcerated for so many years in house detention, but Sir Roy Welensky, who for many years has opposed UDI. Indeed, he lost his seat at Dupont at a by-election because he opposed the Rhodesian Front and Smith. He has been a life-long opponent of

1537
Smith. Sir Roy has been in Africa for 70 years, and said to me a few days ago, that he has never known the country to be so confused and concerned as Rhodesia is at this moment. He does not know what is for the best in that country.
When—as in the last speech—political hallucinations are inflicted on me relating to what the Soviet Union wishes to do, I must compare them with the testimony that I receive from other people in other quarters, people who have spent their lives in Africa.
I have spent one or two years going in and out of Africa since 1952 but I do not profess to know black men. I should be the last man to dogmatise about that. However, I believe that the men in the bush know exactly what they want. Power is in the bush. Men like Robert Mugabe have been mentioned this evening. The question has been asked, "Why were not people like Robert Mugabe taking part in all the negotiations?" Mugabe is the man whose name was mentioned to some of us in the House by the High Commissioner of Tanzania many months ago. He informed us that we should not look in Salisbury or Bulawayo for leaders of the black African, but to those people who are in the bush. Those are the men with whom we now have to talk and must take into account. They are the men who at Geneva will be saying what they feel about the situation.
Mr. Teddy Taylor: If the hon. Gentleman had not been making his speech he would have been able to see on the tape a few minutes ago the report that Mr. Mugabe has been calling for the intensification of the war on the pattern of that in Vietnam.
Mr. Johnson: I note what the hon. Gentleman has said but I make no comment about it.
Mr. Cormack: Why not?
Mr. Johnson: Because what I am saying is that Robert Mugabe and others like him will speak for themselves when they get to Geneva. What they say will be on the record when they come face to face with our own Ministers and with others. They will then say what they think.
1538
Geneva will be a difficult conference. Unless we visualise the Africans in Rhodesia taking over power and unless we not merely expect but actually see the white man accepting that, as in Kenya and elsewhere, it is inevitable that some white men will have to leave. Unless we see the white man working his land or standing for parliament, as the white man has done in other territories that were once under our jurisdiction, some will have to leave. They may wish to go to South Africa or New Zealand, or a scheme might be put forward by some omnipotent Western sponsor such as Rockefeller or Carnegie in order to compensate them. However, no white man should stay in any State in Africa if he is not prepared to accept laws that are made by a parliament in which there is an overwhelming majority of black men. It must be recognised, if that is the ethnic composition of the population. If we look back at history, that is what has been happening in the 1950s, 1960s and 1970s.
As we go into the 1980s, Ian Smith and men like him will be seen to be fighting against the tide of history. That is something that they should acknowledge. At Geneva they should be sufficiently big to look at history and to recognise that the black man should come into his own and that black and white must work together in Rhodesia. That is not impossible. If it is found to be impossible, I can only contemplate a holocaust. No one can even contemplate the situation that will come about in Southern Africa if we do not achieve some mutual accommodation and understanding between races. I speak of a situation that could arise between the quarter of a million whites who are now there, but mainly having gone there since the war; and black men who were born there and who belong there.
7.38 p.m.
Mr. Victor Goodhew (St. Albans): I am sure that there is no one here who does not have at heart the interests of Rhodesians both black and white. We have at heart the interests of the blacks as we realise that they have been dying in greater numbers than others at the hands of the terrorists. Everyone in the Chamber has their interests at heart and wishes the conference to succeed.

1539
When we are trying to achieve some sort of consensus I am disturbed that Labour Members insist upon trying to make out that it is the white settler attitude alone that has kept back the black African. Those who follow these affairs will remember that in 1961 Sir Edgar Whitehead introduced a constitution which gave a great political advance to the African. Mr. Joshua Nkomo accepted it as the head of ZAPU, but when he went to the OAU Conference he was sent back with instructions to reject it and to demand one man one vote. If he had not done that and if that constitution had been accepted in 1961, there is no doubt that by now there would have been many Africans taking part in the governing of their country. However, that was prevented by outside black leaders. That is why I am pleased to see that they are not being brought in as observers at the conference.
It is high time that the Government learnt not to give in to pressures from outside Rhodesia. The state of Rhodesia is a matter for the Rhodesians, both black and white.
Mr. James Johnson: I accept what has happened in the past but the past has gone. Let us talk about now and let us not go back and dwell on what the black man did or did not do 20 years ago.
Mr. Goodhew: The hon. Member for Sheffield, Heeley (Mr. Hooley) has spent much of his time doing just that, and it is a pity at a time like this. He has talked about a brain drain in Rhodesia. I remind him that the Rhodesian dollar was originally two to the pound but that only a couple of weeks ago its value had risen to one to the pound. That is an example of the stupidity of hon. Members opposite in making general attacks on the running of Rhodesia.
What worries me is the report in to day's Daily Telegraph saying that Mr. Richard, in his preliminary talks with Mr. Smith,
"… will try to budge him from his stand that the only thing to be discussed at the conference is the implementation of the 'package deal' he claims was offered by Dr. Kissinger."
Why did the Government start on this business of trying to budge Mr. Smith
1540
from the package deal? It took us half an hour last week to get the Foreign Secretary to say that the proposals that were accepted were what Mr. Smith had set out in his proposals. We all know that.
Mr. Smith told me only 11 days ago that this was a package deal put to him by the Government. He still believes so. Dr. Muller, the South African Foreign Minister, whom I saw two weeks ago, was also convinced that this was a package deal agreed by the British Government. So were a number of other people, including British officials, whom the Minister of State was seeing at the same time in South Africa. They were all convinced that there was a package deal which the British Government had agreed.
It is disastrous for the Foreign Secretary now to be quietly back-tracking on the package deal when it is essential to try to encourage Mr. Smith in his belief that there is a chance of success and when he is going to the conference determined to make it a success. We have talked enough about these six proposals, but it is worth reminding the House that if one goes into a conference saying "We no longer regard these points as a package but as a basis for negotiation, and we do not hold them as sacrosanct", one must expect the other parties to say, as Mr. Smith might say now, "Two years is now negotiable". He can do that if all the other five points are negotiable.
It is all very well for hon. Members opposite to treat me so lightly, but this is a serious matter. Mr. Smith has achieved what has been acknowledged by hon. Members opposite as a complete revolution in the ideas of his party in accepting majority rule in two years, which most people here would not have thought possible and believed incredible when the Prime Minister suggested it in this House. It is monstrous that anything should be said that would discourage Mr. Smith from going ahead.
There is no doubt that these proposals were precisely stated, and the Foreign Secretary agreed last week that they had been accepted by Mr. Smith as put to him by Dr. Kissinger, with whom the Foreign Secretary had been in touch throughout the negotiations. When I saw him 11 days ago, Mr. Smith was in no

1541
doubt of this being a package deal; nor was Dr. Muller in any doubt, and he firmly believes, as we do, that the British Government were a party to the agreement. Therefore, we hope that the Foreign Secretary will try to do something to put right the damage which has been done in some of the speeches and interventions that he has made during this past week.
In particular, there is the question of law and order and defence. It is not only the whites who are worried about terrorism and its containment. Africans also will lose confidence if responsible Ministers are not in charge of these portfolios. What about those serving in the Army and the police? What about the black African civilians who have been supporting their country against terrorism directed from outside? What is to happen to them? These are the people we are concerned about. It is for the protection of these people that the portfolios of law and order and defence should be kept in responsible hands.
Mr. Smith has never said that he would never have multi-racial government. He always said that he wants responsible government. It is a great misfortune that the 1961 constitution was rejected by people outside Rhodesia who wanted to see not evolution but revolution.
I hope that we can get something more encouraging from the Foreign Secretary. I am not too depressed about some of the things said by such people as Mr. Mugabe. Anyone who has talked to Africans in such situations in the past knows very well that they say one thing in private and something quite different outside on the hustings. It becomes a party political battle, with each trying to outdo the other to become the leader of the country. But it may well be that once they are in conference they will say much less violent and extreme things and that some agreement will be reached.
I remain convinced that Mr. Smith believes that there is a package deal on which the basis of the new interim Government can be discussed and formed. He believes that there can be a successful outcome to the conference. What is more, he is determined to do nothing that will prevent the success of the conference, and he has been very careful to say nothing in the interim which would
1542
damage the chances of success. If all the other parties to the conference would go into it with the same feelings, we would have a good chance of a successful outcome.
7.48 p.m.
Mr. Ioan Evans: The hon. Member for St. Albans (Mr. Goodhew) and the right hon. Member for Brighton, Pavilion (Mr. Amery) have made great play of the suggestion that someone is going back on a package deal. I cannot see that there could be a package deal. Discussions have taken place and proposals have been made. Are they suggesting that there must be an imposed settlement which the African leaders must accept? In his broadcast to Rhodesia, Mr. Smith said that these proposals had been made. If one is to accept what hon. Members opposite say, they are suggesting that Mr. Mugabe, Mr. Nkomo, Bishop Muzerewa, and Mr. Sithole should have been told "Here it is and you must accept it." But there are talks and negotiations, and we should understand that people are taking up negotiating positions.
I regret that in these negotiations there are some hon. Members opposite who almost seem to want to sabotage the talks, to give Mr. Smith yet again an excuse to back-track on a commitment he has made.
Mr. Ken Weetch: He is a traitor, and a rebel against the Crown.
Mr. Evans: My hon. Friend says that Mr. Smith is a traitor. What we have in Rhodesia is an illegal regime which has brought down the Union Jack in Salisbury and has gone against this country. Yet the hon. Member for St. Albans seems almost proud that he has met Mr. Smith. I do not know under what auspices he met Smith, who is in rebellion against this country.
Mr. Goodhew: I went to Rhodesia privately on the way back from a visit to South Africa. I thought that in the prevailing circumstances I should try to inform myself about the situation in Rhodesia. Had I not been called back for a vote in this House I should have seen some other leaders there as well.
Mr. Faulds: Quite simply, the hon. Gentleman was consorting with a rebel.
Mr. Evans: I believe that there are those of us on the Government side who have visited the illegal regime. The hon. Member for St. Albans could have gone to the concentration camps where the future leaders of Africa are to be found. He could have asked to visit Bishop Lamont, a Catholic, in prison. [Hon. Members: "He is not in prison."] He has been threatened with imprisonment. [Interruption.]
Mr. Deputy Speaker: Order. Sedentary interventions are of no assistance.
Mr. Evans: Bishop Lamont is a Catholic missionary who went out to Rhodesia to try to bring about reconciliation between black and white. He has been tried by the Smith regime and found guilty of consorting with terrorists. People talk about terrorists, but what is meant by this term? I presume that the American colonists, when wanting their independence, were termed terrorists. The African leaders who will be involved in the coming negotiations have been imprisoned because they were fighting for their freedom, and they, no doubt, have been called terrorists.
Certainly we know that if any group of people has risen against this House of Commons it is the white settlers who have formed the illegal regime in Rhodesia and who have tried to obtain a type of independence which is not recognised by this House or, indeed, by any country in the world. Even Fascist Portugal was not prepared to recognise the Smith regime. Even the racialist Vorster in South Africa would not recognise the Smith regime. Yet there are spokesmen of the Conservative Party who are prepared to get up in this House and speak on behalf of the Smith regime.
I read in the newspapers recently that the right hon. Member for Pavilion has been put forward by the Selsdon group as the future Foreign Secretary in a Tory Government. That is another good reason for making sure that the Tories are not returned to office. I see that Conservative Members are smiling, and I take some hope from that. But the right hon. Gentleman is talked of as a future Foreign Secretary if the Leader of the Opposition or the hon. Member for Henley (Mr. Heseltine) were ever to be asked to form a Government.
1544
There have been many debates on Rhodesia in this House since 1965, and the Conservative Party will not come out very well when the history of these debates is written. In the early debates there was division in the ranks of the Conservative Party. There were some who were prepared to go along with Smith. There were others who were more realistic, more far-sighted and who realised the inevitability of majority rule in Rhodesia. The Conservative Members who have blatantly supported the Smith regime have done a disservice to the white community in Rhodesia in encouraging them not to come to the negotiating table much earlier.
We have gone through the various stages, with different Governments in power. There were the "Fearless" and "Tiger" talks. When Lord Home was Prime Minister a group of people was sent to Rhodesia to find out the wishes of the African people. We know the history of that period.
Mr. Cormack: Everything the hon. Member is saying is totally inaccurate.
Mr. Evans: It can all be read in the Official Report. In the early stages when the then Leader of the Opposition, the right hon. Member for Sidcup (Mr. Heath), advised Members of his party to abstain, the hard Right-wing element in the Conservative Party, who supported Smith, went into the Lobby against the Government. There were other Conservative Members who came into the Lobby with the Government. But this is all in the Official Report.
Mr. Cormack: This hysterical rhetoric does no good to anybody or to any cause. Lord Home went out as Foreign Secretary to meet Mr. Smith at a time when my right hon. Friend the Member for Sidcup (Mr. Heath) was Prime Minister. That meeting was followed by the Pearce Commission. If the hon. Member would get his facts right we might listen with more attention to what he is saying.
Mr. Evans: I am familiar with the fact that the Pearce Commission went to Rhodesia, and found, from the talks held with the black majority, that the Smith regime at that time did not represent the wishes of the Africans.
Now we have a position in which the illegal regime has accepted majority rule

1545
within two years, and that is a major step forward. In a sense one wishes to keep the atmosphere cool, but one is provoked by Conservative Members who are still to this day almost encouraging the Smith regime not to come to a settlement.
Mr. Cormack: Rubbish.
Mr. Evans: Perhaps the hon. Gentleman will get up later and encourage Smith to come to a settlement. But discussions will no doubt take place with the Rhodesian nationalist leaders concerning the formation of an interim Government, and at least the illegal regime has shown its willingness to enter the twentieth century. Just as the Fascist regime has gone in Portugal, and colonialism has now ended in Angola and Mozambique, so too, inevitably, one hopes that soon Zimbabwe—as the Africans call Rhodesia—will achieve independence, and one hopes that before long also Namibia will achieve independence.
The tides of history are with the desires of these people to govern themselves. We on the Government side reject the paternalistic attitude of Conservatives who ask why the Africans do not accept what Smith says, as if they can be persuaded to accept any proposals put forward under some old boys' act. The fact is that the Africans are fighting for their inalienable human rights. They are fighting for the right to determine their own political future.
An important rôle has been played by the five African Presidents, Kenneth Kaunda, Seretse Khama, Julius Nyerere, Samora Machel and Agostinho Neto. They have been brought into consultation and have accepted the principles of a transition to independence on the basis of majority rule and the need for early discussions to establish an interim transsitional Government. We should welcome their co-operation. They can have an important part to play in bringing the African leaders together in the period of transition to democratic majority rule in Rhodesia.
Some play has been made by Conservative Members about the differences between the various Zimbabwe leaders. They make these points as though in this House of Commons we were all agreed on everything. I am sure that Conserva-
1546
tive Members will agree that they have vast differences in their party on a number of issues. Certainly, speaking for my party, I can say, thank goodness, that we have many differences among ourselves. Yet it is suggested that Joshua Nkomo, the Rev. Ndabaingi Sithole and Bishop Muzorewa should immediately come to an agreement. Of course there will be differences, but one hopes that they will now concentrate on the essential task facing them—the achievement of a settlement enabling them to move rapidly towards majority rule.
Mr. Vorster—give the devil his due—has played his part in this. But if we had had co-operation from South Africa in the very early stages, the Smith regime would have ended in weeks and not in years. The Smith regime was sustained not only by Mozambique and Angola when they were under Fascist Portugal but also by the South African regime.
However, there has now been a political assessment in South Africa. There is no thought of absorbing Rhodesia, because the blacks outnumber the whites by 20 to 1 or more. So it is not a practical possibility to think of the Voortrekkers moving up to the north and absorbing Rhodesia. Now the South African regimes hope that there will be a government in Rhodesia which, like some of the other African countires, will enter into a dialogue with South Africa. I believe that South Africa has written off the Smith regime and that that is why we have come to the end of the road for the illegal Rhodesian régime.
We have now to work for an independent government which will be truly representative of the people of Zimbabwe. We hope that, in building a new economy and a new society in Zimbabwe, there will be some white settlers who are prepared to work with the newly-emerging democratic government and who will stay.
We have only to consider the statements of the majority of the African leaders. I have met some of them. They do not make the kind of racialist pronouncements that are to be heard from any Rhodesian settlers. They are prepared to have white settlers working alongside them to build up a new Rhodesia. In other African countries, white settlers are working alongside black Africans. When

1547
I went to Salisbury, I stayed on a farm where there was an attempt to run a co-operative community with white and black people working together to make a living for themselves. It was a farm which was previously owned by Lord Acton. The experiment lasted a very short time. Just as would have happened in South Africa, the Rhodesian régime would not allow those black and white people to work together.
We hear talk suggesting that it is Smith who wants white people to work with black people and that it is the black people who do not want to work with the whites. However, in recent years, Rhodesia has been moving steadily along similar lines to that of the apartheid policy in South Africa. I do not say that there is the same oppression in Rhodesia. But there are concentration camps there. It is no use right hon. and hon. Members condemning people for fighting for elementary human rights as though they have said everything when they describe such people as "terrorists". They are fighting for what we in this country take for granted. We hope that the fighting will come to an end, but that will happen only when the people are given the kind of rights that we take for granted.
In this debate, we are discussing the maintenance of sanctions. As was to be expected, we have had from the Conservative Party a demand for sanctions to end. However, in my view, while these talks are taking place, it would be quite wrong to end sanctions. They have played a part in bringing about a situation in which no one in the world has recognised the Rhodesian regime. There has been no international recognition of the régime. The lifting of sanctions will be important for the future progress of Zimbabwe, but it can come only after the setting up of a provisional government and a demand from the majority of the people in Zimbabwe for the sanctions to be lifted.
The talks will be important, and it is not for various groups to insist upon preconditions. The African leaders should not insist upon preconditions before getting down to negotiating. In the same way, nor should Mr. Smith. He cannot say "These are the six conditions on which I intend to accept the new régime." These are proopsals for negotiation. The
1548
outcome of negotiations is a negotiated settlement.
One problem which will arise is this vexed question of who, during the transition, is to be responsible for defence and law and order. As I see it, it is an impossible situation for the black majority to accept. I do not want to add difficulties to the discussions, but clearly it is impossible for the black majority to accept that an illegal régime not recognised by anyone should be given the responsibility for the maintenance of law and order.
It will be difficult for this country to play a part. We have all the complexities of kith and kin, and it will not be easy for us to assume responsibility for law and order. In the circumstances, we have to go to the United Nations. In the transition, there needs to be a United Nations presence in Zimbabwe while the black majority move towards their full freedom.
I have spoken at some length, and I apologise, because I am aware that other hon. Members wish to take part in the debate. However, I believe that it is important from the Government Benches to put on record the fact that we have been consistent in demanding that certain conditions should be met. They are minimal conditions. They were mentioned in the statement made by my right hon. Friend the Prime Minister when he was Foreign Secretary. On that occasion, I asked him whether he would point out to the white population that they were facing a choice of settling for majority rule quickly or opting for civil war and bloodshed. My right hon. Friend replied that he feared that that was the choice before them and that that was the reason why he hoped that there could be negotiations with responsible African leaders who represented their people.
I hope that these talks will succeed. If the negotiations are not successful, there will be civil war and there will be bloodshed. That blood will be on the hands of those who support the Smith regime.
8.8 p.m.
Sir John Eden: As we have just witnessed, in a debate of this kind it is perfectly possible to make long and inflammatory speeches. However, I hope that I shall be able to

1549
resist the temptation to take up some of the observations of the hon. Member for Aberdare (Mr. Evans). I hope even more that this House will somehow find a collective voice to give heart and encouragement to people of moderate persuasion in Rhodesia, black and white, who represent the true majority in that country and whose real aspirations and future must be so closely associated with the outcome of the conference.
Over the past 10 to 15 years, the record of our relationship with Rhodesia has been marked by mistakes, mismanagement and mistrust. There would be little purpose in going back over the past other than to confirm that there has been no monopoly of error or misjudgment on the part of any of the elements involved in the many talks which have been held.
Increasingly in recent months, the full horrors of a major international and racial conflict have seemed to me to be scarcely avoidable. The inevitability of escalating violence seemed all the more real because of the reluctance of Her Majesty's Government and of European Governments to stand firm at any point against the advance of terrorism in Africa. Therefore, it was with an enormous sense of relief and with a renewal of hope that I listened closely to the momentous broadcast of Mr. Smith to his people in Rhodesia. Everyone now must be deeply anxious for the success of the conference.
By "success", I mean that the conference should lead to the orderly establishment of a multi-racial Government in Rhodesia, providing security for minority and majority alike and holding out for Rhodesia as a whole the promise of a stable and prosperous future.
I was interested to read in a book which Lord Home has just published that he quoted from a letter which he had written in 1961. Because it is relevant, I give the quotation now:
"Anyone can give a country independence without worrying about the result; but if the aim is to launch a nation in which there is law and order, tolerance and justice, a nation which is capable of surviving economically and conducting its foreign relations according to the code of the good neighbour, it all becomes much more complicated. I confess I am not satisfied that freedom is everything and the rest nothing. If, therefore, we are to fulfil our trust to these people, we must try to give them an independence
1550
where they have a chance, at any rate, of making it work to their profit and credit".
That is not an easy task, but it is a great objective. In this case it is not just a question of bringing together black and white. There is not only a history of tension between some elements in the two races; there is also tribal and factional strife, in which black is set against black.
Perhaps the new sense of realism which has affected the attitude of Mr. Smith, his colleagues and his party will spread from their ranks throughout Rhodesia to those who speak for the varying interests in the black communities. Perhaps we shall see coming from them as a whole as great an act of statesmanship as Mr. Smith displayed recently. If that happens, the prospects for Rhodesians are bright.
However, we should recognise that there are many who want to ensure that the conference does not succeed. There are those to whom success will be marked by the collapse of the conference. These are the people who brought tyranny to Mozambique and Angola—the agents of Communism, engaged in a merciless campaign of terror. It is odd that we are still subsiding them to the tune of £15 million. It would be an enormous help if there were a little less secrecy about the extent of Communist agitation and penetration through out the African sub-continent. I am not an alarmist, but I would be more of a realist if the Foreign Office disclosed more openly to the people the effects of Communist penetration.
I am not pessimistic about the outcome of this conference. There is a real hope that it can succeed and it is a hope derived directly from the nature of the proposals that were brought to Mr. Smith by Dr. Kissinger and which form a basis on which he accepts that majority rule can be achieved within two years. It is this realism and restraint that Mr. Smith has shown which offers the best hope for the successful outcome of the conference, whether this be derived from a package in the form of a fixed series of agreed points or a package in the form of a broad understanding between two leading political and international figures. What matters here is that it does form the basis for a real settlement in Rhodesia, so long as it is contained within the framework

1551
suggested by Dr. Kissinger and accepted by Mr. Smith.
This is a package which envisages the continuation of sanctions, and therefore it is right for us to allow this order to proceed tonight. However, it does also embrace a categorical assurance of the future removal of sanctions, and those categorical assurances which are binding on Dr. Kissinger also commit the honour of the British Government. If there is one message which has come from this debate tonight it is that we in Britain must not run out on those assurances.
When we talk about majority rule we should not think solely in terms of a black dominated Government. This is not, alas, an automatic talisman to freedom from oppression and tyranny. What we are groping for here is the hope that people of moderate persuasion—both black and white, whom I genuinely believe are in the majority in Rhodesia—should have a chance to practise in government what they have practised in countless areas of life in Rhodesia—in daily business, commerce and private dealings. Harmonious relationships do exist in many sectors of the Rhodesian community. On that foundation, I believe the conference will be able to build so that people of common sense, moderation and restraint in Rhodesia can form a multi-racial government for the future. The extent to which that is achieved by this conference will be the measure of its success.
8.17 p.m.
Mr. Robert Hughes: I wish to take up one point made by the right hon. Member for Bournemouth, West (Sir J. Eden), who said that he was concerned about Communist penetration in Africa. I think that he is a victim of the capability that we in this country have of creating self-fulfilling prophecies.
When the Portuguese were engaged in colonial wars in Angola and Mozambique, using NATO weapons and equipment against the Africans, we refused to do anything about it. We refused to compel Portugal not to use those weapons, and we would not provide assistance for the MPLA or Frelimo. When they had no one else to turn to, they sought assistance from Warsaw Pact countries. We then pointed the finger at them and said that we were right not to help because they
1552
were Communists. Having refused assistance, we drove them into the arms of the Communist bloc and then used that as an excuse to condemn them. To do that is to misread the whole history of Southern Africa, and that is why Tory policy in relation to Southern Africa has failed.
It is often very difficult to maintain one's optimism that there can be a peaceful transfer of power in countries where there is domination by one side of another. But we must ask ourselves whether we want this conference to succeed. I want it to succeed, and I want to see a peaceful transition of power if that is at all possible. If it fails it will because we have made the same mistake as we made in the past—we did not consult the African leaders in Zimbabwe at the right time.
The Central African Federation was imposed on the Africans without their consent and it had to be broken up. It broke up because it could not succeed against the wishes of the African population. Some criticism was made of Joshua Nkomo for not accepting the 1961 proposed constitution, but with the Central African Federation disbanded, Zambia got independence on the basis of majority rule, as did Malawi. What was so different about Southern Rhodesia that it had to have an especially long transitional period, a weighted constitution, weighted representation and qualifications? If Joshua Nkomo had a fault in 1961 it was that he was too moderate in his dealings with the Government then in power. In reality the Africans of Southern Rhodesia have been extremely moderate and patient over the years, and I am not surprised that their patience has run out.
Much has been said in the House about the Smith proposals. It is not surprising that there are difficulties of interpretation because the Kissinger method of shuttle diplomacy seems to be to fly all over the place, back and forth, throwing out suggestions here and there. I believe that he once described this process as "constructive ambiguity". There is certainly ambiguity, and that kind of ambiguity is inevitable in the circumstances. So perhaps Smith is genuine in his belief that there is a concrete set of proposals which form an agreement which is binding on all the

1553
parties. He might be acting in good faith, but all the reports from the United States suggest that a number of things were suggested as a basis for negotiation, and that proposals which might lead to a settlement were put forward, but that this was in no way a hard and fast bargain.
One can therefore criticise Dr. Kissinger for not being firm enough and not proceeding in such a way as to leave no room for argument about what was arranged and what meant. However, we owe Kissinger one thing, and that is the public acceptance by Smith of the principle of majority rule in two years. As little as three months ago Smith was saying that there would be no majority rule in his lifetime and never for a thousand years. He was arguing that the Rhodesian economy was strong and that sanctions had failed. Increasingly he referred to the Communist threat in the hope of deeply embroiling the Americans on his side with perhaps a physical military presence on the ground.
He already had the involvement of South Africa whose troops and paramilitary police had been operating inside Rhodesia on behalf of the white régime. But now he and the white Rhodesians have to face the stark reality of isolation. They do not have friends outside in the world who would help them. Ultimately even the white South African Government abandoned them. I believe that that has been a psychological blow for the white Rhodesians from which they will never recover. Irrespective of whether the conference goes sour or not, I believe that in a very short time there will be majority rule in Rhodesia, either by peaceful means or by a struggle.
Some hon. Members have said tonight that we have no role to play, that the Government have no role to play. That view has been expressed even by some of my hon. Friends. I do not accept it. I say to those who believe that we should abrogate our responsibilities, particularly those on the Opposition Benches, that if we do that we must accept the consequences of our actions. It is no use saying that this has nothing to do with us and then complaining at the way in which events transpire. The consequences of abandoning our rôle completely are not pleasant to contemplate, because that goes
1554
beyond those who will be killed in the actual physical conflict. Sadly the casualties of war go beyond those who are directly involved and affect those who are not troops on either side.
We have seen blacks killed for no other reason than that they were in the area in which guerillas were believed by the so-called security forces to be operating. We have seen Africans killed because they were on the move after curfew time, and for no other reason. That kind of conduct is hardly conducive to good relations. If the war escalates, innocents on both sides of the colour line would be killed. In the continuing escalation of violence there is the possibility that outside forces would be brought in. The South Africans might be tempted to come in as they were in Angola. That might provoke the intervention of forces from outside Africa, and that could lead to an escalation on the scale of Vietnam. No one would wish that on the Africans.
I therefore hope that the negotiations will succeed although to some extent I am pessimistic that Smith will come to the conference and will not negotiate away some of the things he says are not negotiable.
Another aspect of the Kissinger mission has not had much coverage. Perhaps the Minister who is to wind up the debate can be asked to tell us what South Africa was offered for putting the pressure on Smith. I do not believe that Prime Minister Vorster agreed to put pressure on the white Rhodesians out of a sense of altruism. I believe that some advantage was offered to him. It has been suggested that there was the offer of economic assistance—the South African economy is under great strain. Some Press reports have suggested that an easing of the arms embargo was offered. If that is so, it is a very sinister move. Or was the price for Vorster's involvement demonstrated in the veto in the United Nations yesterday? Perhaps that is too simple an equation to make, but it illustrates to us that a bargain was struck somewhere. We are entitled to know whether Dr. Kissinger or anyone else is trying to bargain on our behalf, and we are entitled to know what that bargain is to be.
If the conference is to succeed and if there is to be a peaceful transition to majority rule, there must be a concession

1555
that those people who are at present detained in Rhodesia are freed to carry on normal political activities through the period of the interim Government and the constitutional events which will take place. We must demand clearly that those under sentence of death by the illegal regime should receive an amnesty, and there must be no more hangings.
Anyone who believes that there can be an interim Government with control of the Army and the police left in white hands is living in cloud-cuckoo-land. I was interested in a racial slip by the hon. Member for St. Albans (Mr. Goodhew) who said that there had to be responsible control of the Army and police, and that in his view was equated to white control. He could not conceive that there would be responsible black people in charge of the Army and the police. That comment illustrates the difference between the two sides of the House.
I hope that my right hon. Friend the Foreign Secretary will make clear, as he made clear at the Labour Party Conference, that there can be no question of sanctions being lifted until majority rule has been achieved, not just until the interim Government is set up. A lot could go wrong after the establishment of the interim Government. Lifting sanctions too soon could be a bad thing. In a brief clip on the television I saw my right hon. Friend the Foreign Secretary at the United Nations. I got the impression—and I will gladly withdraw this comment if my impression was wrong—that my right hon. Friend was a little less firm at the United Nations than he was at the Labour Party Conference.
Dr. Kissinger should have been told from the beginning that he had no mandate to try to bargain away the rights of the black people of Zimbabwe. The British Government do not have that right. The right to freedom, a democratically-elected government and the opportunity to build a society in which people can provide the sort of future for their families which we take for granted cannot be bargained away.
We have one last chance to solve the dilemma of Rhodesia and to achieve majority rule by a peaceful transition.
1556
If it fails, we cannot pretend that we had nothing to do with it. If we had shown the resolve and will, we could have solved this problem long ago.
If the white Rhodesians feel let down by successive British Governments, perhaps it is our fault because we encouraged them to think that we were turning a blind eye by letting them carry on. If this attempt to find a solution fails, it is our responsibility to support the African guerrilla movements and all that entails because we must take the side of those people who have been demanding their freedom for so long.
8.32 p.m.
Mr. Michael Brotherton: I hope that the hon. Member for Aberdeen, North (Mr. Hughes) will forgive me if I do not follow his arguments directly. In a quiet way, the hon. Gentleman showed what some of his hon. Friends have showed more loudly—an extraordinary hatred of the white man in Africa. It is incredible that not a single speaker on the Government side has condemned the activities of the guerrillas operating against all the people of Rhodesia.
This debate takes place against a very different background than that of the past 10 years. There is a very much stronger Marxist and Communist influence in South Africa. Again, it is regrettable that no one on the Government side has mentioned this fact and that, as evinced by the abrogation of the Simonstown Agreement, no one in the Government realises what has been happening.
I do not believe that any nation, apart from Great Britain and Rhodesia, is involved in this problem. It was a pity that Dr. Kissinger rather than a British Minister got involved in the negotiations, but as he did, we must accept that situation.
The Foreign Secretary said that he hoped our debate would not revolve round the semantics of whether there was a package presented to Mr. Smith. He was tied in knots by my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery). As an hon. Member representing a Humberside constituency, I hope that the Foreign Secretary gets in less of a muddle in the fishery negotiations with the EEC.

1557
The conference in Geneva is due to start in a few days. The Foreign Secretary should at least open that conference. He said that he would rather not go because he thought his appearance would diminish the influence of Mr. Ivor Richard as chairman, but surely if the right hon. Gentleman went to Geneva it would show how much importance the Government attach to the conference.
I should like the Foreign Secretary to go to Geneva and tell Mr. Smith that we welcome his change of attitude on the possibility of a settlement in Rhodesia and to tell the black African factions—ZANU, ZAPU and the ANC—that Mr. Smith has gone a long way on the road to a settlement and it is up to them to concede a few points as well.
If the conference fails and it is not the fault of Mr. Smith, we should give him considerably more support than we have in the past. He has shown that he is willing to concede quite a lot to the black Africans. It was a massive concession for him to say that he would accept majority rule within two years.
We have seen recently the emergence of the five front-line Presidents. The front-line five—they sound like a pop group or a crazy gang. It has been decided that those Who have no concern in the problems of Rhodesia should be brought into the negotiations. The Foreign Secretary refused to say that he would ask the Government of Mozambique not to give support to the guerrillas operating against the people of Rhodesia. The right hon. Gentleman talked about de-escalating the violence. That massacre of the English language presumably meant that he was asking President Machel to see that the guerrillas kill only 50 per cent. of the number of people they have killed in the past. This is not good enough. We require from the Government and the Foreign Secretary a demand that President Machel should call off the guerrillas. We have some power over Mozambique. If President Machel continues to support the guerrillas we should say that not a penny piece of British taxpayers' money will be paid into his country.
Mr. Robert Hughes: Would the hon. Gentleman take the same attitude towards the South African Government for its support of the Smith regime?
Mr. Brotherton: No. The de facto Government of Rhodesia asked for help to maintain law and order in their land. Guerrillas were murdering black and white Rhodesians alike.
What will happen if there is no settlement and a major civil war breaks out? What will happen to the black Rhodesians who support their own country? Those in the police, the army and positions of authority in the civil service will suffer more than any others if the guerrillas take control.
Mr. Jerry Wiggin (Weston-super-Mare): That does not bother hon. Members on the Government Benches.
Mr. Brotherton: Of course not. My hon. Friend is right.
I said last year that Mr. Smith had made three mistakes in life. He was born white, he fought for us in the last war, and we have never put him in prison. If he had been black, he would be the leader of a black African State and an honoured folk hero on the Government Benches.
I have always been opposed to sanctions. I thought in 1965 that we were wrong to take this matter to the United Nations. It had nothing to do with them then and has nothing to do with them now. For the Foreign Secretary to talk about Rhodesia being a threat to world peace is utter nonsense and shows that he totally fails to understand the problem.
Some of my hon. Friends have said that they do not believe that it would be right to oppose the renewal of sanctions in present circumstances. I believed sanctions to be wrong 11 years ago when they were introduced and wrong two years ago, when I made my maiden speech. I believe them still to be wrong now. I shall vote against their renewal.
8.39 p.m.
Miss Joan Lestor: The right hon. Member for Brighton, Pavilion (Mr. Amery) asked: whose side would we be on if external help were sought for Southern Rhodesia in the event of the talks breaking down?
The hon. Member for Louth (Mr. Brotherton) has given the game away. External help for whites in Southern Rhodesia has been given since UDI was

1559
declared. The Opposition have not complained about that. The hon. Gentleman said that it depended on which side got the external help. The external help which has been coming from South Africa for so long has been exclusively on the side of Ian Smith.
The Opposition may believe that they are helping Ian Smith tonight by giving the impression that they will be able to get him off the hook because he believes that he is committed and has agreed to a settlement deal which Labour Members do not seem to be aware has been made. But the Opposition may not be helping Ian Smith. The external help which kept him in control in Southern Rhodesia has now been withdrawn. If the Opposition's intention is to get him off the hook by suggesting that a deal has been done between Ian Smith and Dr. Kissinger, they may force Ian Smith to fall through his own trap door, unless they know that external help will come from somewhere or other to support Smith if he is able to wriggle out of or to destroy the negotiations which we hope will be successful. I do not believe that there is any evidence to support the allegation that a deal has been made. It could not have been made.
Mr. Cyril D. Townsend: Will the hon. Lady give way?
Miss Lestor: No. I promised Mr. Deputy Speaker that I would be brief. That is why he allowed me to intervene at this juncture.
I do not believe that a deal has been made. I hope that we have all learned the history of the years since UDI. Deals cooked up between parties excluding the most important ingredient in the deal do not come off at all. That is the history that we have learned.
I have followed this matter with interest and observed how people have rewritten history. The central event in the whole situation seems to have been rewritten before it has taken place, because people are already talking of something which does not yet exist.
The right hon. Member for Pavilion asked: whose side are we going to be on? That is the crucial question. Unfortunately, we have always been on the
1560
wrong side. It is not a question of black against white. The hon. Member for Louth should be aware that many black Rhodesians also fought on the side of Britain during the last war. This is a question not of black against white but of democracy. The question is whether we believe in minority or majority rights and extending opportunities to the majority.
Lookin at the history of Central and Southern Africa, we have been on the wrong side when it came to democracy. We gave white supremacy to South Africa in 1910 and to Southern Rhodesia in 1923. We admitted South Africa to the Commonwealth in 1931. As my hon. Friend the Member for Aberdeen, North (Mr. Hughes) said, we imposed the Central African Federation on the peoples of Central Africa in 1953. We presented to Southern Rhodesia the Federation Armed Forces. These forces have been used over the years since UDI to help keep Ian Smith in power over the majority. Looking at it from the point of view of the minority, of the majority or of democracy, we have been on the wrong side. We have appeased Ian Smith both before and since UDI. I am convinced—I hope that I am right in my conviction—that we have now ceased any appeasement of Ian Smith.
Our whole history—we have all been guilty—shows that we have been on the side of the minority against the majority. It is true that the majority has been black and the minority in these instances has been white. This is a democracy argument. It is no other kind of argument.
The question of freedom fighters, guerrillas and terrorists—it depends on one's point of view—has always been a bone of contention between both sides of the House in this argument.
The Opposition have again asked "What are we to do? The Communist influence is so great. This is a terrible situation." They are inspired by the Communists. Looking at the history of Africa, I am not surprised that, when we abandoned our responsibilities, the people there should turn to others who were prepared to intervene on their behalf. I am not saying that that is right, but it does not surprise me. It also begs the question, which has still to be answered: why is it that hon. Gentlemen who are

1561
apologists for Smith, and usually for South Africa, too, are always prepared to condemn interference when it is on the side of the majority but never when it is on the side of the minority?
Those bolstering up the Smith régime say that it does not matter—that South Africa was there to keep law and order in Southern Rhodesia. But the prospect of law and order breaking down in Southern Rhodesia would not have arisen if the conditions whereby Zambia and Malawi and the other countries gained independence had been accepted by Ian Smith at the time. That is why I am not surprised that the Communist influence is becoming a self-fulfilling prophecy. In the same way, when we refused to finance the Tanzam Railway, as soon as the Chinese stepped in we said it was a Communist influence. What do we expect? It is a lesson that we have not yet learned.
I hope that these negotiations succeed because I do not want to see an intensification of violence in Southern Rhodesia. I do not want to see a Soweto in Southern Rhodesia. I do not want to see that whole history repeated. But I do know that if we consistently deny to people, as South Africa has done, the legitimate means of economic, social and political change, then violence is the only way out. We rewrite history and turn things upside down when we criticise those people who have been condemned to take the only road open to them—as terrorists.
The genesis of violence in South Africa and Southern Rhodesia cannot be laid at the feet of the freedom fighters. It must be laid at the feet of those people who have consistently denied those rights to the majority.
If people here favour democracy and complain about some of the oppressive regimes in parts of Africa and other parts of the world, they cannot hold that view and at the same time deny that the argument in respect of Southern Rhodesia is about democracy. They cannot say that external forces such as South Africa have been right to bolster up Ian Smith and at the same time say that other external forces have been wrong to support the majority of people.
I want the talks to succeed. I do not want to see any extension of violence
1562
in Southern Rhodesia because I do not believe it will end in Southern Rhodesia. It will go on in our lifetime and in the lifetime of our children. I believe that certain hon. Members, from what they have said, bear a very grave responsibility for what will take place when we get to the negotiating table. If they are trying to help Ian Smith, they should not destroy for all of us the very basis whereby we may have a settlement in Southern Rhodesia.
8.48 p.m.
Mr. Patrick Wall: The hon. Member for Eton and Slough (Miss Lestor) made a great appeal for democracy. I would ask her how she explains the fact that out of the 47 members of the OAU only three have Governments that we would call democracies. There have been 98 coups d'état or attempted coups d'état in independent African States since 1965. It may well be that either Africans do not want democracy or are not ready for democracy. Perhaps the hon. Lady will think about that. They are the facts and she must accept them.
In the past I have told the House that I first visited Rhodesia in 1957, when I was on a parliamentary mission, and I purchased a rocky outcrop on which one day I hoped to build a holiday home. For obvious reasons this has not been done, and so far it has not been an asset, it has been a liability. That is the only pecuniary interest that I have in that country. But I still believe that it is one of the finest countries in the world. I believed then that its race relations were the best in Africa and I believe that they have only really started to deteriorate within the past year or 18 months. With the scale of guerilla warfare that we have in Rhodesia today we are bound to get a polarisation between white and black. I very much regret that, because Rhodesia could have been an example to the rest of Africa.
The word "break-through" has been used—and I think rightly used—on both sides of the House. There has been a break-through in Rhodesia because Mr. Smith has indicated that majority rule can take place in his counrty within two years. Once any Government admit that they are prepared to surrender power, they cannot go back on that admission,

1563
whatever happens. Power is bound to be transferred. I shall not go into the question whether that concession is right or wrong, but nothing can stop it.
I want to deal with the reasons why Mr. Smith has taken this line, why there has been this break-through, and why he has given in. There are certain reasons for this, and they do not include sanctions. Sanctions have had nothing to do with it. One reason that has been advanced is the guerrilla warfare. I want to spend some time on that matter, although I shall not be too long. I spent three days recently with the Rhodesian Army in the three operational areas. The first phase of the guerrilla war took place between 1966 and 1970 and ended with a complete victory for the Rhodesian security forces. The second phase started in 1972 and increased in violence and strength after the capitulation of the Portuguese and the closure of the Mozambique frontier, and the assistance given by Tanzania and Mozambique to the guerrilla forces.
There are three operational areas in Rhodesia. There is Hurricane, which started in 1973. That is in the north and east. A new one, Thrasher, was started in January 1976. It is on the Mozambique frontier, near Umtali. Finally, there is Repulse, started in May this year, which is in the east and south of Rhodesia. They are all more or less bordering on the Mozambique frontier, where the guerrilla camps are located.
I have visited all of these areas and I believe that the figures I am about to give are correct. They are smaller than those that have already been given to the House, so they may be an under-estimate, but I believe that they are about right. I am told on good authority that there are about 1,000 guerrillas in Rhodesia at any given time, with a back-up force of at least 1,000 in Mozambique and probably another 2,000 in Tanzania or Mozambique who are under training. That sounds an awful lot, but with 781,000 square miles and 1,000 guerrillas one gets the balance of the problem—one guerrilla to 781 square miles.
It is not fair to say that the Rhodesians are being beaten on the field. In fact, the boot is on the other foot. The
1564
Rhodesian Army is doing very well. With the possible exception of the Israeli Army, I believe that it is the best anti-guerrilla force in the world today. The real danger to Rhodesia, as I see it, comes from roughly the Umtali area.
I believe that Samora Machel, the President of Mozambique, and an admitted Communist, is assisted in all ways by the Soviet Union, and that his motivation is that he wants to take over a good chunk of Rhodesia. He is assisting the ZANU guerrilla fighters in these three operational areas and there is assistance at the frontier by regular units of the Tanzanian and Zambian armies. The Rhodesians can hold this guerrilla warfare as it stands for some time, but in the long run the danger is the possibility of an OAU army being formed in Mozambique to assist Machel to take over Rhodesia and impose his Marxist régime on that country.
If sanctions or the guerrilla war have not forced the break-through, what has? I believe that it is pressure applied by the United States on South Africa, and pressure applied by South Africa on Rhodesia. If anyone should have the thanks of the British Government, it is the South African Prime Minister, but I notice that the British Government have carefully omitted to recognise this fact. The broad view of South Africa on the Rhodesian situation is that in the long term—not in the short term—it is untenable because of the disparity in the numbers of both races and the fact that the guerrillas are being assisted by the Communist Powers, as we are also assisting Mozambique by subventions from the British Government, as my hon. Friend the Member for Louth (Mr. Brotherton) has pointed out. The real answer on the break-through is the pressure on Rhodesia from South Africa, because the South Africans have thought that in the long term it was not worth sacrificing South African interests.
I should like to deal briefly with the Geneva Conference. I am worried about the representation at that conference. We have, for example, ZAPU, under Mr. Nkomo, who represents 18 per cent. of the population—the strength of the Matabele tribe of which he is a member. He has earned the respect of many white Rhodesians and although he has made some immoderate speeches recently I regard him as a moderate. We have

1565
Bishop Muzorewa, who is also a moderate. He is the figurehead of the African National Council and one might say that he is not prepared to make up his mind one way or the other.
The people who really matter are those in Zanu, because they have the largest guerrilla army. I do not want to exaggerate the size of that army, and I have already described it. They have the Rev. Ndabaningi Sithole—whom I hope is on the way out, because I believe him to be an evil and dangerous man—and also Robert Mugabe, who is extreme in his views. I know him fairly well. He is a person with whom one can negotiate. He has the support of younger Africans in Rhodesia. He is a man of high intelligence; he gained two or three degrees whilst in detention. In many ways he is a moderate man and is not a Communist, though he is under the thumb of Samora Machel, and we will have to deal with him.
Having dealt with the three guerrilla forces that are represented at the conference, I am worried about the absence of other more moderate Africans. Where are the representatives of the two-thirds of the army and the police who are black Africans who have fought with great gallantry and success against guerrilla forces? Who will represent them? Who will represent the African farmers, particularly those in the border regions? Who will represent the African business men, the elected African Members of Parliament and the tribal chiefs? Surely they must count. I hope that the Minister will say who will represent these Africans, who are basically opposed to the violence of the guerrillas. They are, of course, nationalists. They want to run their own country, but they are opposed to many of the actions that have been taken by guerrillas. I want to know why they are not represented at the conference.
I was in Pretoria when the talks with Dr. Kissinger were progressing—in fact, I was staying in the same hotel as Dr. Kissinger. The belief there was that there was a package deal with Mr. Smith, who was presented with certain terms and told to accept or reject them. The understanding was that Dr. Kissinger had already visited the front-line Presidents and had gone there with their agreement. They were speaking on behalf of the three
1566
nationalist organisations to which I have referred. That was the impression in Pretoria at the time. Dr. Kissinger went back to talk to some of the front line Presidents after his talks with Mr. Smith. The majority view was that this was a package deal. The Rhodesians did not like it. They felt the time was too short, but they felt that theer was a chance of a transfer of power to moderate hands—and I include some of the guerrillas in that, because they must be included in the negotiations. The Rhodesian Ministers believed that there would be a transfer of power to a combination of guerrillas and African moderates, and that if that was so the responsibility for security forces must be in white hands during the transition period. In whose hands would it otherwise be put? If responsibility were put in the hands of ZAPU the security forces would be used against ZANU, and if put in the hands of ZANU would be used against ZAPU.
Surely it is worthwhile for the African nationalists to work together for two years and try to understand the problems before the country is handed over in working order. I suggest they take the example of the "Turnhalle" talks in Namibia where all ethnic groups have been working closely together for over a year and now understand one another.
Because there was a package deal which was accepted by Mr. Smith—and part of that deal was that sanctions would not be lifted until after the transitional period—I shall not vote against this motion, provided I get a clear statement from the leaders of my party that if the conference does not succeed—of course we hope that it will succeed—my party will raise the whole question of sanctions within the next three months. If I have that categorical assurance, I shall not vote tonight.
The Government have made three basic mistakes. The first was when the Prime Minister said that power would be transferred in two years. I met no one in Rhodesia—other than the nationalists, who wanted two months—who believed that there could be a successful transfer of power in Rhodesia, with its sophisticated economy, in less than five years. Perhaps two years would see the beginning, but a period of five years needs to be allowed before the final transfer of power. I am surprised that the

1567
Prime Minister made this mistake, because he knows a lot about this part of the world. Two years is too short a period, and that could be dangerous.
Secondly, there should be representation of moderate Africans at the conference.
Thirdly—I hope that I am wrong here—there appear to be no plans in the event of the failure of the conference. We hope that it will succeed, but if it does not there should be contingency plans and both sides should know them, otherwise there will be a period of complete chaos.
I believe that Mr. Smith will stick solidly to the package that he maintains he agreed to. He maintains, rightly or wrongly, that he has an undertaking, backed by the British and American Governments, that he accepted in good faith. The nationalists will be in conflict with each other, each becoming more extreme. Mr. Mugabe did not help matters with his demand for the transfer of power within the next few weeks. Of course, that is out of the question. Therefore, the conference will have a difficult time.
What happens if there is a breakdown? There will be severe danger. There will be a continuation of guerrilla warfare and, more serious, a breakdown of law and order. Once power has been surrendered the security forces cannot be expected to go on fighting with much enthusiasm. Morale will be affected. There is a serious danger of the breakdown of law and order, which will do no good to the blacks or whites in Rhodesia. What will happen if the squabbling goes on between the nationalists, as has happened over the last 20 years? Every attempt that has been made to bring them together failed, except on one occasion, for a few months.
My real fear, and that of many people in Rhodesia, is of civil war between the Matabele and the Shona. That would cause an exodus of the whites. There would be no alternative if law and order broke down. Eighty thousand whites in Rhodesia are patrials and have every right to come to the United Kingdom. I hope that we are making the necessary arrangements should this calamity occur.
1568
Another 80,000 may have a right to come here. Their fate, in the possibly not too distant future, is very serious. The effect on South Africa could be disastrous. The transfer of power in Rhodesia to moderate hands would have a good effect on South Africa, but if things did not go well in Rhodesia the effect on South Africa would be disastrous.
All the Government can now do is to say that they stand by the package duly presented to Mr. Smith by Dr. Kissinger and will see that it is enforced. That will not be easy, but that is what they should be saying to the Africans, and that is what they must do if the conference fails.
The Secretary of State did not mention this, but my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) forcefully pointed out the danger of Soviet penetration. I believe that the whole Soviet strategy in the world is now directed at detaching Southern Africa from the Western orbit—Angola, Mozambique, Rhodesia, Namibia, and then the final attack on South Africa. The comparison is Austria, Czechslovakia and Poland in the 1930s. The reason is the same.
I remind the House that the top Soviet expert on Africa, a man who has been Chairman of the African Institute in Moscow for 10 years—Vasili Solodovnikov—is now Soviet Ambassador in Lusaka, a comparatively minor post for a man of his stature. The reason for his being there is to orchestrate the Soviet strategy. They do not want to take over in South Africa; their aim is not to colonise. It is to install a Government like that in Angola, or in Mozambique, which is anti-West and which will make it difficult for the West to maintain control of the vital Cape route and above all the mineral resources of Southern Africa.
I believe that, if we should be deprived, as we would be in those circumstances, of chrome, manganese, vanadium, gold, industrial diamonds, uranium, lithium, and all the minerals vital to an industrial society of which South Africa is the first or second major exporter in the whole world—the Soviet Union being the other—it would mean utter disaster for the West.
I believe that tonight the Government may be opening the door for the final

1569
defeat of the West. It is a matter that we must seriously consider. I hope that the Government spokesman will refer to the Soviet threat, which I cannot believe they do not recognise or understand. I believe that, thanks to stupidity and subversion, the Soviet Union now seems to be winning all round the world.
9.7 p.m.
Mr. Neil Kinnock: The analogy between the situation in Europe in 1939 and that in South Africa now has been used on at least three occasions since I have been listening to the debate. Although I was not even born in 1939, my reading of history and my conversations with people who were mature adults at that time lead me to believe that there were few in Poland, Czechoslovakia, Austria, Belgium and Holland who actually welcomed the Nazi armies.
Although I would not even claim that the majority of the people in Zimbabwe would welcome the Soviet support or even that the majority of the people of Angola would welcome the Soviet support, I do not think that by any stretch of the imagination could one conceive of the popular attitude in either of those countries to the Soviet support being similar to the attitude of the people in Poland, Czechoslovakia, France, Belgium and Holland in 1941. The result is also entirely different, but that is a matter for academic debate.
The question that the hon. Member for Haltemprice (Mr. Wall) asked, as indeed do all hon. Members who agree with his general assessment of the situation—including the right hon. Member for Brighton, Pavilion (Mr. Amery) and the hon. Member for St. Albans (Mr. Goodhew), to whom I listened with fascination—was: why is it, even accepting that it is entirely true, that the Soviet Union can exercise in 1976 such enormous influence in the general internal and external relationships and in the promotion of particular groups of power in South Africa when we and, indeed, many European nations which have had a strong presence in those areas, not merely for the 50 years that the Soviet Union has existed but for many years before that, are unable to do so? It is because we did not try with sufficient effort or sincerity or funds to emancipate the people from their conditions. Now
1570
they are offered the chance, albeit an authoritarian chance, to be emancipated from their difficulties.
We were told that this is not a time for recrimination, and I have no interest in going in for recriminations. But I cannot listen quietly to hon. Members who support the idea that the whole Western Alliance is threatened and that the Cape route will be destroyed and denied to the Allies in the Alliance because for a spontaneous reason the peoples of Southern Africa welcome Soviet support with open arms. They see the Soviet Union as a decolonising Power, a freeing Power. I agree that we cannot, on the basis of our criteria, see it as a democratising Power, but when they compare it with the regimes of Vorster and Smith and the colonial regimes of Portugal, people have the general conception that things will be better in Southern Africa with its assistance. Whose fault is that? If Southern Africa is not gained for democracy in the way that we should like, we must investigate the historical reasons.
The prospects in Southern Africa have been brought about most obviously and spectacularly by the direct intervention on the side of the MPLA in Angola of what the newscasters call, with their superficial shorthand, Soviet-backed forces against Western-backed forces. The fact is that the other forces, UNITA and the FNLA, were not Western-backed at all. If they were, the West made an incredibly incompetent business of backing them. They were backed by South Africa.
It is because of the failure of South Africa's backing that we have been precipitated into a situation in which we are contemplating the clear possibility of the negotiation of a settlement in Rhodesia which will bring majority rule, at least in a few years. I do not accept that the prospects for majority rule in two years can be regarded with sanguinity.
Today we have heard the arguments that I have heard every year in the six years that I have been a Member, and I suppose that they were rehearsed before that. Generally speaking, they flowed back and forth from the same mouths, though they were none the worse for that. What we on the Labour Benches have been seeking to do for the past 11 years in Rhodesia, South Africa and other

1571
countries which are now gradually securing their freedom is to make the inevitable peaceful, to secure it by bloodless means. The conquest of the tyranny that controls Southern Africa is inevitable. We seek to make it possible by the smoothest, least bloody, most peaceful means.
The right hon. Member for Pavilion said that we must take the responsibility of being the accomplices of terrorists who kill women and children and in the foulest possible way abuse and torture people. But Conservative Members have special contacts with the Smith regime and the Vorster regime. By not trying enthusiastically to promote the cause of racial equality in Southern Africa, they are just as much the source of the present violence in Southern Africa, which will continue because of the political, social and democratic immobility of the occupying forces of the dominating white minority cliques that rule there.
Mr. Wall: By what right does the hon. Gentleman suggest that Conservative Members have not promoted the cause of racial equality?
Mr. Kinnock: The hon. Gentleman comes to the House every October and November and makes speeches justifying the perpetuation of the status quo as it existed in 1965. He cannot do that without taking some of the blame for sustaining the philosophy, politics and discipline that exist under the Smith régime and all the prejudice that goes with it.
I would be the last to accuse the hon. Member for Haltemprice of being spurred by racialism. I do not think that is any part of his political philosophy, but he must recognise the consequences of the fact that he is seen here and in Southern Africa as an apologist for the Smith régime.
It is no good our simply indulging in an annual exchange of insults, and I would not have become involved in the argument had it not been for the uniquely superficial and prejudicial points advanced by the right hon. Member for Pavilion. I thought that his remarks required a direct answer.
The right hon. Member for Pavilion spoke about the only leg that Ian Smith had left to stand on, and many Conservative Members spoke of a package deal.
1572
Do they think that the African Heads of Government are stupid, or that Dr. Kissinger is stupid, or that Ian Smith is stupid—or indeed that we are stupid? Anybody with a modicum of intelligence will accept that Mr. Smith has been left by Dr. Vorster with no options. The consequence of that situation is that Mr. Smith has to make the best of a bad job—and the best of that bad job is the present idea that Ian Smith has been presented with a sealed and honour-bound package by the American Secretary of State, and that it is not just a basis for negotiation but a concluded negotiation. That is absolute nonsense.
What African Head of Government, or indeed what American Secretary of State, would give an undertaking—and indeed who would accept it—that the state of terrorism was to be ended? Anybody who takes that view is an idiot. I do not think that Mr. Smith is an idiot, nor do I think that the right hon. Member for Pavilion is an idiot. However, he does himself, and indeed the House, a great disservice by presenting a tissue-thin argument in seeking to uphold the Smith régime.
Surely Ian Smith cannot think that we are stupid, although he might think that his party members are stupid and might be excused for so doing if he takes that view of their average intelligence. Ian Smith had to put the best face on the idea—namely, that he and his party and the whole Smith regime are so important that they require the direct participation of the United States Secretary of State. That, in their view, puts Rhodesia in the epicentre of world political events.
In the event of the other parties to the general negotiations not accepting what Mr. Smith would accept—which is a strong likelihood, as we must acknowledge—Mr. Smith has a convenient way out. It could then be said that those who have ruined the negotiations and spoiled the chances of an interim government were not Mr. Smith but the naughty blacks out in the bush who ruined the whole business by not accepting the package which Dr. Kissinger allegedly offered to Mr. Smith. That is not a tortuous construction to put on affairs. That is a fairly straightforward piece of diplomacy as we have learnt it from Tory diplomats year in and year out. That is to be the art of it.

1573
The fact is that in the package there are undeliverable undertakings—as the package has been reported by Mr. Smith. No one but a total political virgin or a moron would regard them as being in any way acceptable, well-founded or agreed. If the right hon. Member for Pavilion accepts them, I trust his word as a man of honour. He has told us that he believes that Mr. Smith genuinely believes that that is the package. As I say, either Mr. Smith has a hypnotic effect on the right hon. Gentleman, whereby I excuse him for coming to those conclusions, or the right hon. Gentleman deliberately wants to provide an alibi or way out for Mr. Smith.
I give the right hon. Gentleman credit for showing consistency. He is prepared to stand by his friends. I do not go in for all this talk about rebels. The right hon. Gentleman knows where he is, we know where he is and Mr. Smith knows where he is. I hope that the electors of Britain and those of Rhodesia, when they eventually get a vote, will put matters into their correct perspective.
I think that my hon. Friend the Minister of State has found Africa even more difficult to manage than Merthyr Tydfil. That would have come as something of a suprise to me, as I suppose it did to my hon. Friend. I think that my right hon. Friend the Secretary of State and my hon. Friend have made progressive steps in the right direction. As we frequently enough criticise the machinations of Dr. Kissinger, I think we should welcome his participation in these matters, whatever the motivation behind them. I think that we are on the way to some sort of progress.
In all the debates one acknowledgement cannot be removed—namely, that Mr. Smith has had to make a realistic acknowledgement that there is no permanent white rule in Southern Rhodesia. He has had to do so with more than the lip service that he has paid in the past. He has had to do so without accompanying phrases such as "Over my dead body" or "About 50 years, perhaps". That is the sort of comment that we have heard in the past. The whole business is irreversibly on the slide. It is in the interests of the House and of the black and white in Rhodesia to try to make it
1574
a peaceful slide if we can, an arrangement that will assist them.
I take up one of the points made by my right hon. Friend. Although it must be for the parties to decide on the details of the transfer to majority rule, we shall do everything in our power to see that the conference ends in agreement on the establishment of an interim government. Within the terms that he has set himself, my right hon. Friend has done everything in the power of the British Government to secure that desirable end. If we are to have any real measure of guarantee that the transition can be accomplished peacefully, and if we are to do everything in our power towards that end, there are a couple more steps that have to be taken, with all the attendent risks.
The first step is that my right hon. Friend, or at the very least my hon. Friend the Minister of State, should be in attendance at Geneva. That is not a vote of no confidence in Mr. Ivor Richard, who is a man of some accomplishment. He is also Welsh, which is of great good fortune. The fact is that we need that presence in Geneva to convince Mr. Smith that he is in a position where there can be no further concession, that there is a man in Geneva who is prepared to say a final "Yes" or "No". Such a presence would be a direct assertion to Smith of our position in a way that he could not forget, surmount or avoid. Secondly, it would be the most positive reassurance to those who represent the majority of people who live in Rhodesia—namely, the black leaders—that we mean business and that there is the most direct commitment.
I recognise the realistic difficulty which the right hon. Member for Down, South (Mr. Powell) pointed out during Question Time last week. A constant difficulty faced by Britain more and more as the years pass is having responsibilities without the power to enforce them. But the responsibility here is unquestionable. We have direct responsibility. Whether Rhodesia is de facto independent or not, the relationship is still there, the resolutions of the United Nations are at our instigation, and no one can deny that there is a political connection which, until true independence is reached, is immovable.
But we have no power. We are not the power which has brought Smith to

1575
the negotiating table, or which will force the interim Government there to fulfil the transition to majority rule. Such power exists elsewhere. Some of it is held by those who hold the machineguns in the bush. The Americans have commercial power. Most important of all, Mr. Vorster has a sensitive regard to the best interests of the Republic of South Africa and will constantly exercise his power. I do not think that we should infringe these possibilities if we attended the conference.
Then there is the question of who has the law and order powers and control of the armed forces during the transitional period. Some hon. Members say that it is justifiable to retain these powers in the hands of the white Rhodesians because of the threat that would otherwise be posed to black policemen, black soldiers, black officials, and black Members of Parliament. It is a respectable point to make, but I do not think that it is sustainable. I do not think that, if we secure a multinational force in Rhodesia during the transitional period, anyone of them need even lose his job let alone his life or have his life threatened. I have no interest in these people being frightened and threatened and bullied and possibly killed because of their association with the white regime, and the transitional period provides an opportunity for them to be the leaders of the infrastructure of law and order when majority rule comes and not to be jeopardised in the process of transition.
This is why I make a plea for the transfer both of law and order powers and of the control of the Armed Forces to a Commonwealth multinational force so that the transition can take place without being rotted away and undermined from the start by leaving all the muscles and the mailed fist in the hand of Smith and his associates. In this way we can provide the black Africans who have been part of the regime, for reasons we can understand, with the only guarantee that we can conceivably offer to them of some protection and means of assurance.
Hon. Members are justifiably worried about these people, but the fact that Smith retains law and order powers and control of the armed services will not
1576
save the life of a single black soldier or black Member of Parliament. The only thing which will safeguard their position, their lives and their families, and their professional standing and importance is the recognition by the people of Zimbabwe that they have a real rôle in the multi-racial society of the future.
But if they have to sustain Smith over the next two years, if they have to be a band of security between Smith and his people, their rights really will be in danger. We shall not then be talking about 80,000 patrials who are white. If we mishandle the situation we shall be asked to take in black refugees who are in fear of their lives. As I argue for refuge and asylum for political refugees of all kinds in this terrorised world—terrorised far more by legitimate Governments than by terrorist groups—so I shall argue for the entry of these people because I do not think that they should be left in danger of being killed or that anyone's life should be jeopardised. I hope that my right hon. Friend the Secretary of State will think again about the whole prospect of a ministerial presence at Geneva.
Without recrimination, I say to Conservative Members that everybody must understand two features. If there is not a sufficiently large and sophisticated African electorate to satisfy their criteria for the election of a majority of black Members of Parliament, the reason is that as long as the system exists as it does in Rhodesia, there will never be enough literate, numerate and sophisticated black constituents, because the system is not even intended to make that kind of provision. If it ever comes within danger of being a reality, the rules will be changed, as indeed they have been changed on so many occasions in the past, by a totally arbitrary government. No black in Rhodesia can trust that kind of Government. There are many whites, too, who cannot trust it.
If the response of black Zimbabweans in the next two years to the prospect of majority rule is impatience and also been taught that their patience brings no rewards. They have been well tutored in violence by Government and by the order of affairs. The whites have brutalised, subordinated and exploited them over very many years.

1577
While we ask Conservative Members and white Rhodesians to approach the modern world with open minds and with hope, we ask, too, that the blacks in Rhodesia will exercise that patience and will be willing to forget the lessons of violence. We are asking a great deal of both groups, but the alternative, as the hon. Member for Haltemprice said, is the bloodiest possible conflict for a generation. It is not easy for us to talk here and it is not so easy for them to act there, but I hope that in this House we shall make every effort we can to persuade those with whom we may have some influence, both white and black in Rhodesia, of the way in which we regard the situation, and the hopes we have for Zimbabwe.
I hope that we shall ask our Government to make the most direct and strongest possible contribution to a peaceful settlement. That contribution, as far as I am concerned, must include a ministerial presence.
Mr. Speaker: I make one more appeal to the House. I appealed earlier today for hon. Members to exercise self-discipline. A number of hon. Members are still hoping to be called.
9.33 p.m.
Mr. Cyril D. Townsend: Bearing in mind your comments, Mr. Speaker, I hope that the hon. Member for Bedwellty (Mr. Kinnock) will excuse me if I do not follow him in detail.
No chapter in our history gives me more satisfaction than that which records the granting of freedom to over 600 million people of all races and creeds throughout the world. It is a chapter which surpasses others recording astonishing feats of daring and organisation in the arts of war. It is a chapter which must not be further blotched by events in Rhodesia—a country for which we are still responsible in the eyes of the world, morally and legally.
Historically, Britain has had far more experience of Central and Southern Africa than has the United States. All the more credit, then, to Dr. Kissinger for the frankly surprising success of his mission.
Mr. Smith's speech on 24th September appeared to mark a watershed in
1578
the affairs of Southern Africa. For 11 years the world has attempted to persuade Mr. Smith to accept the principle that no minority is entitled to dictate to a majority—a view shared by all parties in this House. But it seems to me that over the last month we have been sliding down the wrong side of the watershed. Members on the Government side may not like to be reminded of this, but following Mr. Smith's speech a statement was produced by the Foreign Office, apparently with the approval of the Prime Minister and the Foreign Secretary. The statement read:
"Her Majesty's Government have noted with satisfaction Mr. Ian Smith's announcement in Salisbury tonight accepting the proposals put to him by Dr. Kissinger … These proposals represented an elaboration of the plan originally advanced by the Prime Minister in March of this year."
From that it is perfectly clear in my own mind that there was a package deal. I draw the attention of right hon. and hon. Members to the speech of my hon. Friend the Member for St. Albans (Mr. Goodhew) which gave a lot of evidence on that point.
It may be said that the Foreign Office was wrong to make such a statement, that in any negotiations there is an element of uncertainty, and that there must be if they are to be successful. It may be said that the Foreign Secretary is trying desperately to get the Geneva Conference off the ground. In my view, the Foreign Office blundered over the handling of that statement.
I do not underestimate the problems posed for our Government by the situation in Rhodesia. I trust that I do not overestimate our diplomatic strength. But I fear that the Government have failed to match the hour. I believe that a senior member of the Government, not just the bloke in the baggage train, should have accompanied Dr. Kissinger on his mission to Africa. All too clearly the Americans were given the impression that Britain was dragging her feet.
After Mr. Smith's historic speech, it should have been the Foreign Secretary and not one of his Ministers of State who went round Central and Southern Africa trying to tie up the loose ends and trying to get this vital conference off the ground. I quote from a letter which

1579
Lord Caradon wrote to The Times recently:
"All the complicated political and economic questions now to be settled will need positive leadership and clear determination to carry out urgent decisions. There can be little or no likelihood that the Smith ministers and the African nationalists will agree on all these issues merely by putting both sides together—any more than agreement can be secured merely by putting Greek and Turkish Cypriots together in Cyprus or by putting Israelis and Arabs together in the Middle East. There must be independent initiative."
I regret that the Foreign Secretary is not to open the conference. I believe that he should. I regret that a Cabinet Minister is not chairing the conference. I believe that one should. I remember how Harold Macmillan employed R. A. Butler to try to bring a measure of responsibility and pressure into the affairs of Central Africa in his time. I regret that the conference has been postponed. Surely speed is the essence of success. Mr. Ivor Richard may be a distinguished ambassador, but we would do much better to have a Cabinet Minister chairing this conference. Mr. Richard, after all, is not even a member of the British Government. I also agree entirely with my hon. Friend the Member for Haltemprice (Mr. Wall) that the composition of the conference is a cause for concern. Who is to represent the moderate Africans? I hope that the Minister will pick up that point in his reply.
It has become painfully clear that only by Britain pulling out all the diplomatic stops can disaster be avoided. I find it rather humiliating that today it is the African Presidents who are demanding that Britain should perform her traditional duties.
If a proper agreement is achieved at Geneva, the Government must not pretend that they have discharged all their responsibilities. A constitutional conference must be called, and it should take place in London. I support the idea that a Queen's representative should be appointed, and what about a Chief Justice being nominated? Does Rhodesia have a legal judiciary at present? What is the present position of the Chief Justice in Rhodesia following the passage of the Southern Rhodesia Act 1965? I hope that the Minister will give us some guidance.
1580
I do not doubt for a moment the scale of the military problems which will face all the nations concerned if the conference is a success. Clearly a military vacuum will be created. Britain is in no position to take unilateral action. I add to the suggestions which have been made from both sides of the House today merely that we should face the reality of the situation. There may be a role for either a Commonwealth force or a United Nations force, provided that the frontline Presidents can guarantee some sort of co-operation from the guerrilla leaders. Surely the United Nations has a role to play in such a desperate situation when Britain, the responsible Power, lacks power, and when NATO and Europe are not in a position to influence events.
I welcome the clear statement by the Foreign Secretary that sanctions will be removed if a settlement is reached. Have the Government set in motion the process for lifting sanctions? I gather they have not. Surely this would be a gesture of encouragement to moderate whites in Rhodesia, and they are entitled to such a gesture. I believe that a sanctions Order for three or six months would have been a better proposition for the Foreign Secretary to bring to the House today. It would have better met the feelings of many Members on this issue. I do not believe that my hon. Friend the Member for Louth (Mr. Brotherton) has any need to be holier than the Pope. I do not believe that Mr. Smith expects an immediate lifting of sanctions. I hope that my hon. Friend will refrain from voting against the Government.
The Foreign Secretary said he hoped that guerrilla activity would be deescalated now that the conference had been called. Heavens above, why should it not stop altogether? There should be an immediate ceasefire. Why should the conference take place against a background of such brutality?
I do not doubt that a long and tortuous road lies ahead. I do not doubt that missed openings and opportunities could condemn a generation, not just in Rhodesia but in the whole of Southern Africa, to bitterness and bloodshed. I do not doubt that there is a high risk of a full-scale war between black and white, possibly involving the great Powers. But I do not doubt that a magnanimous and

1581
lasting settlement can be achieved along the lines of the Anglo-American proposal put by Dr. Kissinger and accepted by Mr. Smith. My message is that the Government should and must do more than any other party to ensure the success of the conference.
9.43 p.m.
Mr. Bruce George: One of the previous Opposition speakers—the right hon. Member for Brighton, Pavilion (Mr. Amery)—asked whose side we were on. There may be a crisis of orientation on the part of some hon. Members opposite, but we on this side are in no doubt whose side we are on. We know whose side we are not on—we are not on the side of the white racialist régimes in Southern Africa. We are on the side of the black majority and, thankfully, most members of the Conservative Party agree with us, as do the American Government.
The American Government have almost reversed what has virtually become the iron law of foreign policy for that country, in not backing—as they have done almost without exception hitherto—the corrupt minority régimes wherever they may have been in Asia, Africa and America. On this occasion the American Government have backed the progressive forces, the movements in society fighting against a minority holding on to power and exploiting its position. We know where we stand and obviously the vote at 11.30 p.m. will reveal where other hon. Members stand.
Some Conservatives and, indeed, some hon. Members on the Government Benches seem to be obsessed with the arguments surrounding the circumstances of the setting up of this conference. I am delighted that a conference has been set up at all. It is naïve to assume that diplomacy in the modern world is anything but secret. Maybe Woodrow Wilson desired to see covenants openly arrived at, but that situation does not exist in the real world. Diplomacy, by its very nature, is secret. Whether any nefarious deals were done I know not, but the fact remains that the conference has been convened, and I am delighted about that. It is a remarkable achievement that the participants will include people with so many diverse views. We should be looking forward, not back-
1582
wards, and asking how the conference came about and who is telling lies. Some Conservatives appear to be obsessed with trying to accuse Dr. Kissinger and my right hon. Friend the Secretary of State of double dealing, and have almost been calling them liars.
There are diverse views on how to deal with the threat of Communism in Southern Africa. According to some Conservatives it is best done by allying with minority white racist régimes. The Americans, however, fully realise that the way to beat Communism in Southern Africa is not to ally with corrupt régimes but to identify with other forces combating them.
This is the twelfth such order to come before the House. In bygone years there was perhaps little prospect that the debate than being held would be the last. Events are now building up to a climax in Rhodesia, with the undeniable movement towards majority rule. People have doubts whether the process will be achieved by diplomacy or violence, however.
The events of the next few days and weeks will be crucial. The situation will Southern Africa is one of unprecedented fluidity and is fraught with danger. The price of failure, however, will be high, and everyone, both black and white, will pay it.
We must show the participants in Geneva how earnestly we desire a peaceful transition to majority rule. We recognise the myriad problems that these people are facing in Switzerland, and we wish them success. Even six months ago we could not have been blamed for predicting that the prospects for conventional diplomacy were slight, but it is a remarkable achievement that conventional diplomacy is now taking place.
We appear to be facing the last opportunity for solving the problem by peaceful means. If the negotiations fail there may be no alternative to bloody conflict. Almost every day we are told in the Press that the conference will collapse. There are those who report such a possible break-up, and others who are actively working towards such an end.
We must praise all sorts of people for bringing the conference about. First, the front-line Presidents must be acknowledged for their diplomacy and sense of

1583
moderation in influencing the black participants in Rhodesia. One must compliment the nationalists for coming to the conference. We should also praise the British Government, but we should not delude ourselves into thinking that because we are chairing the meeting and because we have historical and legal obligations we hold the centre of the stage.
There is the great prospect that things could go wrong, and if that happens our representatives could end up with egg on their faces, hurled at them from so many different directions. We must congratulate the Ministers who have been negotiating over the last two months for their success so far. We should also praise Dr. Kissinger for helping to create the conference.
America recently discovered Africa. It appeared slow to appreciate the strategic importance of the continent and it realised fairly recently the consequences of opting out of a foreign policy of which a dominant theme was relations with Africa. Obviously the Angolan adventure showed the Americans the dangers of their policy in Southern Africa, and they realised their past failures not a moment too soon.
Dr. Kissinger said:
"I do not want to pretend that the realisation of the significance of Africa has come easily to American policy. It grew out of painful experience. But whatever the past omissions, the lessons have been learned."
The Americans appear to have broken their iron law of diplomacy and, remarkably, are backing the right horse in this race. I regard that with some satisfaction. If they had followed the well-trodden path of previous Administrations, we could have expected them to be allied with South Africa and Southern Rhodesia, but they are now supporting the nationalists.
This policy, ushered in by Dr. Kissinger's historic speech at Lusaka, represents an enormous change. Although Dr. Kissinger will not be in Geneva, his presence will be felt.
The options for South Africa and Rhodesia have diminished dramatically in the last 12 months. There has been a dramatic shift, resulting from the removal of the physical and psychological protection of the Portuguese empire, and the dramatic unrest within their own countries has added a new dimension. The
1584
Portuguese and American pillars have been removed from South African and Rhodesian policy. The Americans have made it abundantly clear that they will not support South Africa or Rhodesia in any conflict. Indeed, they will offer assistance to those seeking to oppose the regime in Rhodesia.
Last year, in the debate on sanctions, we were told how strong the Rhodesian economy was, and any suggestion that sanctions were having some success was vilified by hon. Members opposite. We have our own economic problems, but in Southern Rhodesia foreign exchange is desperately short, new investment is low, and tourism is at less than half the level of 1972 because the prospect of a tourist getting killed is quite high. The economic situation is disastrous and this has combined with the political and military crisis to propel Mr. Smith into a conference chamber which he will not enter with any degree of hope.
The conference will be a big step towards majority rule. The interim Government must obviously reflect the realities of the new situation in Southern Africa. It will reflect the fact that there will be a fundamental shift in the balance of power in that country, away from racist minority rule to a form of majority rule with, we hope, some form of democracy—though with the bad training the Africans have had from Britain and the Southern Rhodesians, democracy is by no means assured.
The Rhodesians will not be negotiating from a position of strength; quite the reverse. I hope that the Africans, who have been shabbily treated over the last eight decades, during which they have been conquered, subordinated and exploited, and seen their leaders gaoled, will be more magnanimous towards the whites than the whites have been towards them.
Some hon. Members have mentioned with distaste a statement appearing on the Press Association tapes tonight by Mr. Mugabe, but if I had been in gaol for 10 years, I would not be entering these negotiations in a spirit of great affection for my adversaries. The Rhodesians are getting it back in their faces in the same way that they have delivered it to the Africans.

1585
Perhaps they do not deserve it, but I hope that the white Rhodesians will be presented with an alternative to a last-ditch stand. They cannot, however, expect to dominate the interim Government or retain their economic domination. For the sake of a peaceful transition to majority rule, I hope that some of the understandable anxieties of the European population relating to pensions, homes and jobs, will be allayed. If they are, the prospects for a speedy transfer of power will be much more attractive.
We must hope that the conference will be a success. We must reaffirm in some cases and affirm in others our dedication to the ideal of creating within Rhodesia a country in which all, regardless of race or colour, can live, work and prosper together. Those are not my words. Those are the words of Prime Minister Ian Smith.
The obstacles to success are formidable and have been reiterated many times tonight. We hope that the nationalists will remain a viable united force throughout the negotiations.
Rhodesia watchers can hardly be optimistic. Many times we have reached the stage where we felt that the situation would be sorted out, only to be disappointed.
I hope that in two years, when the Rhodesian flag is lowered and the flag of the new Republic of Zimbabwe is unfurled in its place, it will have been achieved by a bloodless process of transition.
We wish our representatives in Geneva the best of good fortune in the weeks or months—probably weeks—which lie ahead because, should the conference fail, the future for Africa will be desperate. I am sure that everyone in this House is anxious to avoid failure.
9.57 p.m.
Mr. Malcolm Rifkind: I think that the hon. Member for Walsall, South (Mr. George) made a foolish mistake in suggesting that one side of the House wishes to support the cause of the whites while the other side supports the cause of the blacks.
Mr. George: No.
Mr. Rifkind: That was the implication of the hon. Gentleman's speech. The emphasis that we wish to get over is that all hon. Members wish to ensure a long-term future for both the white and black communities in Rhodesia in whatever form of Government applies.
I am delighted to have this opportunity of speaking shortly in the debate. I had the privilege of living and working in Rhodesia for two years. I worked in the University of Rhodesia, which is one of the few multi-racial establishments in that unhappy country. In that capacity I met many African students who will undoubtedly play a major rôle in the future government of their country.
For the first time in 11 long years I have a slight feeling of optimism. It is not a substantial degree of optimism. It is similar perhaps to that of the gentleman who defined a pessimist as a person who believes that things could not be worse and an optimist as someone who believes they could be.
Nevertheless, even within those substantial reservations, Mr. Smith's statement, when he accepted majority rule within two years, was perhaps the first time that we were able to envisage a peaceful resolution to this serious problem.
The statement was dramatic for two reasons. First, without it, bloodshed in Southern Africa would have been inevitable. Secondly, but equally important, without it there could have been no long-term future for the white community there. I believe that, both in their own interests and in the interests of the black majority, a permanent white settled and confident presence in Rhodesia—or Zimbabwe—is vital to the economic growth and prosperity of that country.
Clearly, the statement, coming from a man whose whole life has been dedicated to the cause of white supremacy, must have been enormously difficult for Mr. Smith to make. We should pay tribute to the fact that, even if he has not been convinced of the desirability of majority rule for its own sake, he has nevertheless had the realism to accept that the future of the community which he wishes to promote depends on an acceptance of the facts of life and that majority rule therefore is a necessity.

1587
Given that we have had a substantial degree of generosity on his part and on the part of the white community, we must now look to the West and to the African nationalists to respond in a similar way. The African nationalists must appreciate the great difficulty for any community to surrender a monopoly power which it has exercised for over 80 years. This is a major change, and not an easy one, irrespective of the rights and wrongs of the situation. A similar sprit of generosity and co-operation from the African nationalists would possibly make the whole experiment a success.
With regard to the attitude of the British Government, I am sorry that the Foreign Secretary has refused to accept that there was not a package deal. I accepted that there was such a package, not because I have great faith in Ian Smith's words but for one simple reason—that shortly after Ian Smith gave his broadcast, the Foreign Office issued a statement welcoming that statement. If Mr. Smith's claim that there had been an agreement along the lines he indicated was a sham and a fabrication, that was the time for the Foreign Office to indicate its disagreement with Mr. Smith's interpretation of what had occurred. To wait for several days or weeks and then claim that there had been such a misunderstanding gives no credit to the Foreign Secretary. I believe it would have been more sensible for him simply to say, "There was such an agreement but, unfortunately, the African nationalists do not feel able to go along with the details of it". That would have been a more sensible and realistic approach, and I am sorry that the Foreign Secretary was not able to respond in that way.
I listened with great interest to the speech of my right hon. Friend the Member for Chipping Barnet (Mr. Maudling) and I agreed with virtually everything he said. However, I want to comment on his suggestion that if, unfortunately, the conference were to fail we should consider dropping sanctions immediately if the failure of the conference was due not to Mr. Smith but to the African nationalists. If that situation were to develop, and Mr. Smith was not at fault, our course of action would depend on Mr. Smith's reaction subsequent to that failure. If he nevertheless sought to implement the
1588
spirit of his announcement of some weeks ago, to seek a majority rule system within two years with those Africans who were prepared to co-operate, then undoubtedly there would be an overwhelming case for the dropping of sanctions. If, however, he sought to use the failure of the conference as a justification for returning to square one, clearly no such justification would exist.
The important issue will be the deliberations at the conference in Geneva. The one point that I would stress is that it would be wrong for this House, or the public, to look to the conference to settle all the long-term problems of Rhodesia. That is not the purpose of Geneva. Its purpose is to set up an interim Government. During the two years that that Government will serve, its whole purpose will be to work out the details of the long-term future. The purpose of Geneva is a modest objective and we should remember that when considering its likelihood of success.
One of the fundamental differences of view is who should hold the vital posts of law and order and defence. On the one hand Mr. Smith maintains that they should be in white hands and, no doubt, the African nationalists will maintain that they should be in black hands. Perhaps there is a compromise, and I hope that Mr. Richard, as chairman of the conference, will consider putting forward such a compromise. The third possibility is that these two sensitive posts should be held not by the Rhodesian Front or the African nationalists but by white Rhodesians who have been opposed to Mr. Smith over these 11 long years. I believe that they would be persons who would be acceptable to the bulk of the white community and also to the African nationalists because they would not be tainted with membership of the regime against whom the African nationalists have been fighting for many long years. There are several individuals who could hold such an office, such as Mr. Garfield Todd, Dr. Ahrn Palley and Sir Robert Tredgold, who made their opposition to the Smith regime well known over the years.
We must remember that 20 per cent. of the electorate voted for parties other than the Rhodesian Front at the last general election in Rhodesia. There is the Rhodesia Party, the Centre Party,

1589
which I understand is pressing for representation in Geneva. I hope that the Foreign Office will give consideration to inviting them to participate so that a white point of view contrary to that of Mr. Smith will be able to make its presence felt. The Foreign Office has extended an invitation to include Mr. Sithole. Perhaps it should also consider a similar extension to ensure that the totality of opinion is represented at the conference.
I am optimistic and I would give the House my fundamental reason why that optimism exists. For the first time perhaps, certainly since the advent of power by the Rhodesia Front, there is an identity of objective existing in Rhodesia between Mr. Smith, on the one hand, and Mr. Nkomo, on the other hand. Mr. Smith has now accepted, perhaps sadly and reluctantly, the necessity of majority rule within two years and that the interim Government during that period should be headed by an African Chief Minister or Prime Minister. Clearly, Mr. Smith's hope is that Mr. Nkomo will emerge as the chief spokesman of moderate African opinion. Undoubtedly, Mr. Nkomo hopes that he will emerge in that rôle.
That is an identity of interest that has never previously existed. Mr. Nkomo
1590
knows that this is his last chance to lead African moderate opinion and to aspire to his objective of leading a Rhodesia under majority rule. Mr. Smith knows that if the moderate Africans represented by Mr. Nkomo are alienated by this conference, there will be no further opportunity for the whites and the blacks to resolve their difficulties and to provide a future to which they can look forward.
Given that identity of interest and given that the Geneva Conference has a limited objective of establishing an interim Government, given the British Government's rôle in chairing that conference and ensuring that all the potential possibilities are considered and discussed, I hope that the British Government will realise that only by facilitating an opportunity for Mr. Smith and Mr. Nkomo to meet and by promoting those areas of policy in which they actually agree and have a common interest can Rhodesia now move forward, with the dropping of sanctions, to establishing an economic potential that may be the envy of the rest of Africa. That would ensure that that country, which many of us have believed has long had the opportunity to be the jewel of Africa, should be the jewel of Africa in practice as well as in aspiration.
10.7 p.m.
Mr. Churchill: There has been one very clear theme running through the debate. It has been evident on both sides of the House. That is the recognition of the gravity of the present situation and what is at stake, as well as the price of failure. It is not the price of failure for Britain. That would be limited, as was suggested earlier, to egg on the face of Mr. Ivor Richard. What is of much more concern is what could be the fate not only of the Europeans and Asians but of the great majority of the African community of Rhodesia if things do not work out as we all hope they will.
Right hon. and hon. Members on the Labour Benches, in their keenness—indeed, their passion—to bury the old colonialism are in danger of failing to see the rise of a new imperialism in Africa today. That was not the case with the speech of the hon. Member for Bedwellty (Mr. Kinnock), who spoke with great clarity and an admirable lack of cant or humbug. He recognised the Soviet threat, what the Russians are involved in and what is at the back of their minds in involving themselves in support of the cause of African nationalism.
In recent weeks we have seen some very dramatic and far-reaching developments on the African scene, the principal of which has been Mr. Smith's acceptance of majority rule and the fact that the conference is to take place in Geneva next week. We must all hope that it will be successful. However, there can be no illusions about the background against which this conference has been convened.
Two factors have brought this situation about. Sanctions is not one of them; nor are the forces of the African nationalists, of themselves, another. The two factors have been, first and foremost, Soviet imperialism and Soviet direct intervention in Southern Africa, and the unwillingness or inability of the Western nations, even in the context of detente, to persuade the Soviet Union to move away from the path of military interventionism and neo-colonialism in Africa which represents a threat to every independent country and is directly counter to the spirit of Helsinki.
1592
One must ask why, in opening the debate and referring to the various factors in shifting the balance of power in Central and Southern Africa in recent months, the Foreign Secretary studiously avoided making any reference to the Soviet Union, to its intervention in Angola with an invading Army of 8,000 Cubans. [Interruption.] That was the figure that I mentioned the last time I spoke on the subject and I am not aware that the figures have changed in the past four months. One must ask why the Foreign Secretary, in the context of Mr. Smith's acceptance of the principle of majority rule within two years and the agreement to come to Geneva, made no call on behalf of the British Government for an end to terrorism.
No one has suggested that the Soviet Union's involvement in Africa today is motivated by a love of the African people. What faces us is a brazen struggle for power in Africa, the like of which we have not seen for more than 100 years. The independence of the present independent States of Africa and the future of all the peoples of Central and Southern Africa are at stake. Our prosperity and our independence are also at stake. I am not just referring to the Cape route, which is vital, but also, as other hon. Members have mentioned, to our substantial dependence in terms of jobs and prosperity on the products of the South African economy. If those were to fall into hostile hands it would have adverse effects on our domestic, social and defensive interests.
The question before us today and before the Geneva Conference next week is not whether there should be majority rule or when it should be. That has been agreed, and even Mr. Smith has accepted it. The question to which we must address ourselves today and above all at the conference next week is whether a moderate African majority Government can be established. We must ask whether a tolerant African majority Government can emerge which will uphold order and justice, and respect the rights of its own peoples and of the racial minorities in the new Zimbabwe, or whether a Soviet-backed Fascist dictatorship will come to power—as in

1593
Angola and certain other countries in Africa—where bloodshed, racial strife and hatred would reign in the future.
There is no justification for imagining that the terrorists trained in the Patrice Lumumba University and armed with Kalashnikov machine-guns supplied by the Soviet Union represent the majority African opinion in Rhodesia. The hon. Member for Bedwelty made that point. These men are not the liberators of the African majority. They are the potential enslavers on behalf of those to whom they have sold themselves out and to whom some at least are prepared to sell their country. It is vital to differentiate between the forces of African nationalism that are at play here and the forces of Soviet imperialism.
As a country with direct responsibility, our role must be to back the forces of moderation. It is regrettable that invitations have not been issued to the moderate elements of the Europeans in Rhodesia. Why has the invitation been given only to Smith? Do the British Government believe that Smith represents the whole of the European community? Surely that cannot be their position. If not, let them even at this late date issue invitations to the minority parties.
What can we in Britain do? Where does the responsibility rest? We have the prime responsibility. It is not for the Americans or the Soviets, it is not even for the four front-line Presidents, to decide the fate and future of Rhodesia. Above all, it is our responsibility. We owe it to all the peoples of Rhodesia to produce a satisfactory outcome. We all want the conference to succeed and we must work actively to achieve that success. I re-echo the words of hon. Members on both sides of the House who entered a plea to the Foreign Secretary that he should chair, or at least open, the conference next week, so that people will realise that they are talking not to the office boy but to someone who bears full responsibility in the name of the British Government and is a member of the British Cabinet.
I look forward to the establishment of an independent, non-racial Zimbabwe which cherishes and respects the rights of all its peoples, but, looking elsewhere on the African continent, I cannot be over-optimistic of the chances. The
1594
Soviets were certainly taken by surprise at the speed of Mr. Smith's acceptance of the Crosland-Kissinger package deal, for such it undoubtedly was. Dr. Kissinger made it abundantly clear before he embarked on his travels, with a representative of the British Government from the British Embassy in Washington travelling with him in his entourage, that the plan he was putting to the African Presidents, Dr. Vorster and Mr. Smith was in essence the former Foreign Secretary's plan. It was the British plan that Dr. Kissinger was pushing. It would have been wholly inappropriate for him to push any other plan.
Therefore, it is clear that the document—the existence of which the Foreign Secretary this afternoon admitted—which was handed by Dr. Kissinger to Mr. Smith contained the Anglo-American proposal for the basis of the settlement. It does great disservice to the hopes of success next week in Geneva for the Foreign Secretary and Government Ministers to seek to backpedal on what clearly was an Anglo-American initiative which should be recognised as such. We are in the intolerable situation of having responsibility without power, but we must work for the success of the Geneva talks in the short term and for the success of the interim Government.
The right hon. Member for Devon, North (Mr. Thorpe) referred to Kenya. There is no doubt that the transfer of power in Kenya has been one of our more successful efforts in handing over power to African majority rule. There are two keys to the success of that transfer. The first is that the British Government held the ring for several years. I fear that two years is a very short period in terms of the advance that needs to be made in Rhodesia. The Africans and the Europeans in Kenya were able to work alongside each other, building up understanding and trust.
Secondly, there was what the right hon. Member for Devon, North referred to as a mediator, in the form of Mr. Malcolm MacDonald, who was trusted by Europeans and Africans alike. I hope that we can find somebody to fill that role during the interim period. The ultimate character of an independent Zimbabwe will depend, above all, on the interim period and whether sufficient

1595
trust and understanding can be built up on both sides.
The House is being asked tonight to renew the sanctions Order for a whole year. But why should it be for a whole year? We are in a fluid and fast-moving situation. The Minister who is to wind up does not know what the situation will be this Christmas, let alone next Christmas. What the Foreign Secretary is asking of us is a one-year's blank cheque to take him on trust on the question of sanctions. The performances we have seen today and last week from the Foreign Office Ministers do not inspire sufficient confidence to enable one to take on trust for a whole year a matter of such gravity.
The Secretary of State rightly says that sanctions will be lifted in the event of the establishment of an interim Government. But what is to happen in the event of a failure to establish an interim Government? This is the question that the right hon. Gentleman does not answer. What if the Crosland-Kissinger proposals accepted by Mr. Smith are rejected by the African nationalists?
The situation has changed today out of all recognition from the time that the House last debated the sanctions Order. Not only is there today a Soviet-Cuban army of occupation in Angola, but there is a terrorist war of great viciousness being waged, not just against the Europeans but, above all, against the Africans. It is, above all, the Africans who have been bearing, and who are today still bearing, the brunt of this hateful war. The terrorist campaign is to a great degree based on placing small mines in the middle of roads which naturally succeed in blowing up buses carrying Africans rather than in blowing up Army Land Rovers.
It is against this background that we are being asked to renew the sanctions Order. By continuing to enforce sanctions Britain would be exerting economic pressures which would tend towards exactly the same direction that the Soviet-backed terrorists operating out of Mozambique would be seeking to do and we would be making ourselves the accomplices of terrorism, as the Government have already done by giving £15 million in aid to Mozambique knowing full well
1596
that this was the principal base from which the terrorists operate.
In the absence of an undertaking, which I greatly hope that the Minister will be able to give us, that the Government will come before the House again within three months and place this sanctions Order once again before the House for it to be voted upon, I shall feel unable to support this measure at this time. Obviously, we must all vote according to our consciences. Having seen the situation on the ground for myself only a few months ago, I do not believe that in all conscience I could support the renewal of sanctions for a whole year on the basis of a blank cheque. I greatly hope that the Minister will be able to give some reassurance.
10.24 p.m.
Mr. John Mendelson: The hon. Member for Edinburgh, Pentlands (Mr. Rifkind) spoke in a spirit which I very much hope to follow. Like him, I have some acquaintance with the university college in Salisbury. I share his view about the atmosphere and spirit in that institution. I take some encouragement from my experience that it is by no means the only place in which there are feelings of mutual respect among the different groups in Rhodesia, not least some of what are called the old African families among the white population that the hon. Gentleman will probably know. I met some of them and enjoyed their hospitality in years gone by. Some have, unfortunately, left in the years since the Smith regime took power, because they could not stomach living under it, but many are still there in the business and professional communities and among working people. They are people whose families have been there for generations and who, one can reasonably hope, will be able to make a positive contribution in the white population in a new independent country.
I very much welcome the spirit in which the hon. Gentleman approached the debate. To approach it in that way is probably the best contribution we can make on the eve of the important conference in Geneva. I take all the less kindly to the way in which, for example, the right hon. Member for Brighton, Pavilion (Mr. Amery) spoke. The right hon. Gentleman is not here. I make no

1597
complaint of that, because he attended most of the debate and listened to most of the speeches. One cannot be here all the time. But I must mention the right hon. Gentleman because I want to spend much of my time criticising what he said.
I do not believe that anything is gained at this stage, on the eve of the conference, by producing the fantastic kind of analysis that the right hon. Gentleman attempted in trying to trap the Government or my right hon. Friend the Foreign and Commonwealth Secretary into artificial formulations. They might serve his propagandist purpose but have no relationship to the situation in Rhodesia as all of us who have been there must know it to be, no matter what view we take of the kind of solution that should be attempted there or in Southern Africa generally.
It should be common ground, at least among realistic right hon. and hon. Members, that the historic change which has made Mr. Smith agree is the break-up of the Portuguese colonial empire. One does not have to say nasty things about him in order to come to that conclusion, but need only make a realistic assessment. As a result of that break-up, which is the great historic fact of the past five years, it was incumbent on the Government of South Africa to tell Mr. Smith certain facts. It was not that they would coerce him to do anything. There has not been a great liberal regeneration in the mind of Mr. Vorster or the South African Government. It would be equally unrealistic to assume that. The basic philosophy of the South African Government has not changed. But that Government was obviously compelled to tell Mr. Smith that from now on they could not guarantee the continuation of the Smith regime because they, in Pretoria, were not sure that they could guarantee the continuation of their own regime. That is the decisive new historic fact that has made Mr. Smith change his mind.
The right hon. Gentleman tried to concoct a theory, based upon no American sources whatsoever, that Dr. Kissinger promised Mr. Smith the earth and more, and that that created Mr. Smith's willingness to change his mind, to undo and unsay what he had believed in ever since UDI—to him, for good reason. To concoct that theory and not mention the
1598
attitude of the South African Government is such nonsense that it is wholly unworthy of the right hon. Gentleman's normal level of debate.
Mr. Eldon Griffiths: It is no part of my responsibilities to try to describe my right hon. Friend's comments, but I believe that the hon. Gentleman, for whom I have some respect, will accept that the historical changes are not only the end of the Portuguese empire but the arrival of the Soviet Union as well as the changes in South Africa. Will the hon. Gentleman address himself to the issue, which is that Dr. Kisinger believed that he had obtained from the four Presidents, including President Machel, undertakings that they would support the kind of settlement that he suggested to Mr. Smith? What appears to have happened is that at least some of those Presidents have gone back on the undertakings Dr. Kissinger thought he had obtained from them.
Mr. Mendelson: That is precisely what I have characterised as the concoction of which the right hon. Member for Pavilion is guilty. He is now joined by the hon. Member for Bury St. Edmunds (Mr. Griffiths); he is committing the same error, based upon no American evidence of any kind. My right hon. Friend the Secretary of State and my hon. Friend the Minister of State speak for the Government.
I can only speak for myself when I address myself to the same point. There is no evidence of such a plan having had the approval of the Presidents, or any one of them. It was not any promise of Dr. Kissinger—he was not in any position to make promises—and it was not the assurance of having persuaded the African Presidents that changed Mr. Smith's mind; it was pressure from the South African Government. That was not because the South Africans had changed their philosophy but because they told Mr. Smith that they could not continue to guarantee the security of his regime. That changed Mr. Smith's mind. That is the new factor in history that we must accept as governing the present situation.
It is wrong to charge my right hon. Friend and hon. Friends with having moved away from any prior agreement or deal. The Government have no mandate and never pretended to engage in a preconference deal. They have said that they are organising a conference. That is all

1599
that they have done and that is all that they have asked the House to give them authority to undertake. As for other matters, they speak for themselves.
The other historic factor is what has happened in Angola. Of course that is relevant. It is far less important than the break-up of the Portuguese empire in changing the mind of Mr. Smith but it is certainly relevant. We have only ourselves to blame if the Soviet Union has any entry in Africa. If we are on the wrong racial side, if we support a racialist regime, we allow a country inspired by a dictatorial anti-democratic philosophy like that possessed by the Soviet regime to gain entry without having to show its credentials. The only lesson for us is to support human rights and to be seen to be on the right side wherever there is a great and historic conflict involving human rights and the oppression of human rights. Any moving away from that position, any frittering away of our chances even at this late stage, and our not being seen to he in support of human rights and the equality of human rights—as we all know, most of the black people of Rhodesia have been oppressed in that context—will increase the chances of the Soviet Union and destroy all the chances of the Western Powers to have influence in Africa.
The right hon. Member for Pavilion knows that that is the situation. He has been in politics for far too long to need me to tell him about these matters. If that is the second relevant factor, the essential thing for us is to go to the conference with clean hands. I welcome the fact that the Government are conducting themselves in a way that will allow them to appear not only in the chair but as members and participants of the conference. I hope that the Government will firmly reject any propagandist demands by Opposition Members to try to move the Government little by little into a one-sided position. On the eve of the conference, when the Government, above all, must show complete impartiality towards the procedures of the conference, it is nonsense to give assurances tonight as to what military action might be contemplated if the conference broke down. I did not believe my ears when I heard the right hon. Gentleman asking for such ridiculous assurances. No Gov-
1600
ernment worth their salt would begin to consider such nonsense on the eve of the debate.
The task of Her Majesty's Government at the Geneva Conference is to bring the two sides together to reach agreement and not to talk about military provision when the conference breaks down. It is pure nonsense for the Opposition to ask for such an assurance, and they know it. Their irresponsibility was shown up by that approach, if by nothing else, during the debate.
There is involved in this conference the important historic fact that among the white population in Rhodesia are a number of people who have been longing for the opportunity that is now occurring. No one can assess the absolute figure, but the situation is far from hopeless. Quite a number of white Rhodesians have realised that the Smith regime cannot go on, and they will now look to the British Government to see to it that the conference is a success.
But it must be equally admitted that there are a number of people there who have no future in Rhodesia if their colour superiority is once removed, who have, indeed, not got the qualifications for some of the positions they hold, which are entirely based on the inferior place of the black in the organisation of Rhodesia so far—and the same applies to South Africa.
Such people will have to make up their own minds as to their future, and we cannot hide from the fact that they mean difficulty. It is no good being falsely sentimental about it, it is a development of history. It has nothing to do with injustice and unfairness. These people felt that they were going there with certain advantages and they now have to face the future. At the same time, there are the African people who, in their own country, have been denied so far the educational and other opportunities which are theirs as of right. They, too, are looking to the British Government to help in liberating them from the oppressive regime from which they suffer. That is all one has to say in indicating the obligations of honour of the British Government.
To talk as the right hon. Member for Pavilion did about the duty of honour

1601
upon the shoulders of the British Government and to bring in the name of Mr. Neville Chamberlain in such a context was near to historic lunacy. The right hon. Gentleman really did not know what he was talking about when he made that reference to Mr. Chamberlain. But we had better move away from Mr. Chamberlain and leave him in peace. These present matters in Rhodesia have their difficulties but they are not on that sort of scale.
What is involved here is the task that the British Government will have at Geneva. The difficulties are not the dangers which have been falsely described. I know that my right hon. Friend does not want to commit himself before the conference or to hold the conference on the Floor of the House first, but we are not so limited. One of the difficulties is the account that Mr. Smith has given to the white population. I am profoundly convinced that Mr. Smith has given a rosy account of the position to his own people and that ways will have to be found for him to move away from some of that account. I hope that he will be helped in that direction at the conference. If not, he will be in great political difficulty, and I suspect that some of his political friends on the Benches opposite expect that he will be. They are already preparing a position for him to make it easier for him when these difficulties arise. That is why these propaganda barrages were opened up this afternoon.
Difficulties will arise, because I do not believe that it can be acceptable either to us or to the majority of the African people in Rhodesia that the conditions of security should remain as they are throughout the two-year transition period. The Africans will have a right to insist on political freedom, free political organization, the right of association, the right of publication, and the right of assembly, which they do not possess now.
On one occasion when I was in Rhodesia, Mr. Joshua Nkomo—now regarded as the acme of moderation by hon. Members, and even getting some good references from Mr. Smith—was being visited by some friends. He was taken by some friends to visit one of his supporters whose daughter was celebrating her birthday. I happened to be in the same township outside Salisbury. Within
1602
20 minutes, 16,000 people assembled to cheer him. But what did the police do? They set police dogs on the crowd to disperse it. That is how Mr. Joshua Nkomo has been treated in the past by the regime which two hours ago was described as so benign by Conservative Members.
When the conference is being held and the African delegates demand these freedoms, they will also be perfectly entitled to ask for a return of the exiles. They will be entitled to make the condition of success of the conference a guarantee that these exiles will be welcomed in their own country.
We have heard a lot in the debate about the cessation of activities from across the border, from Mozambique, but there has been no reference by Conservative Members to the return of the exiles to their own country. Surely an agreement on a cessation of activities will have to include a full guarantee as to their rights as citizens in their own land.
These are real difficulties, and in the Labour Party, in this House and in the country we shall watch with keen interest that the interests of the vast majority of the people of Rhodesia are fully safeguarded. We must not only ensure that there is fair play. We must interpret the point of view of those Members of the House of Commons who have a direct interest in seeing that the majority of the citizens of Rhodesia get fair play at the conference. This is especially important after the propaganda and poppycock that we have heard from Conservative Members in the debate.
The right hon. Member for Pavilion referred four times to the need to co-operate in every possible way—possibly even in security matters—with the other Common Market countries. He seemed to have in mind an initiative by the Nine which might include at some stage, if the conference did not go too well—and particularly if the responsibility for this could be thrown on the Africans—some joint military initiative. I remind the right hon. Gentleman that the Federal Republic of Germany is a full member of the Nine and has a very powerful army. Does the right hon. Gentleman have in mind that in any such initiative the West German army should be associated with military operations in Africa? When he suggested

1603
that the Nine could do this together, I wonder whether he had in mind some new adventurous ideas as to the way in which the Common Market could be used. This was a new tone that we heard when these suggestions were made in the debate. Any ideas of adventurism of that kind should be knocked on the head as soon as they are advanced in this House of Commons.
The Government have a clear task to limit their responsibilities in Africa to the co-operation in which they are engaged at present, and the co-operation with the United States of America is effective to the extent that, as Dr. Kissinger pointed out, he is following agreed policies in the interests of the furtherance of United Nations policy. We have heard very little from Opposition Members about the United Nations—[Interruption.] Yes. The right hon. Member for Pavilion mentioned my right hon. Friend the Prime Minister and the policy of the British Cabinet. One of the merits of Dr. Kissinger's conduct in these affairs is that he co-operates closely with the British Government, and I value that greatly. But Dr. Kissinger has also stressed prominently that what he is doing is based upon the decisions of the Security Council of the United Nations—[Interruption.] The right hon. Gentleman may laugh at the mention of the United Nations, but Dr. Kissinger did not, and that gave added strength to his policy.
Therefore, the mandate of Her Majesty's Government is clear. The policy on South-West Africa, the policy on Rhodesia and the policy on sanctions are all based upon clear United Nations decisions, and not Common Market decisions. Any suggestion that this should be turned into a policy of the Nine with the possible use of the military forces of the Nine countries is dangerous nonsense and should be rejected as such.
But we know that for a few hours, in listening to the speeches of Opposition Members, we have been living in the land of fantasy. Against that, we have the quiet realistic approach of my right hon. Friend the Foreign Secretary and his Minister of State. We know that they have been conducting the country's business responsibly and that if there was any additional evidence needed to show why the country would be ill-advised even
1604
to consider entrusting any of our affairs to right hon. and hon. Members on the Conservative Benches, we have the example of the great disservice that they have done to the right hon. Member for Finchley (Mrs. Thatcher) today.
Anyone who reads a report of this debate tomorrow will realise that the right hon. and hon. Members who spoke in these nonsensical terms are adventurers to whom our foreign policy should not be entrusted. The policy of wisdom and safety is to leave these matters in the hands of my right hon. Friend the Foreign Secretary, who deserves well of this House and the country for his conduct of the affairs which have led to the setting up of this conference. It has been a major success of Her Majesty's Government, and I wish to put on record the profound approval of it which is felt by Government supporters in this House, of all members of the party and of many other people up and down the country. [Interruption.] The Opposition do not like that, of course. I put it on record knowing that they will not like it.
I wish all success to the conference. I hope that my right hon. and hon. Friends will be able to report agreement at the conference, and that agreement will be followed by a peaceful future for all the people of Rhodesia.
10.49 p.m.
Mr. Peter Blaker: I make no apology for returning to the subject of the package, because it has been the central feature of the debate. I do so not because the Opposition wish to get Mr. Smith off the hook, as one Government supporter suggested, but because I believe that, before the conference begins, it is necessary to know the truth.
In an intervention earlier today, I asked the Foreign Secretary on what date Dr. Kissinger had made his statement that nothing had been settled about the composition of the interim government. I think that is relevant for reasons I shall explain. On 12th October—Official Report, column 242—the Foreign Secretary said that Dr. Kissinger had made that statement at a Press conference on 22nd September. According to The Times Dr. Kissinger was then in Kenya. In answer to a later question—column 250—the Foreign Secretary said that he had made it at the end of September in New

1605
York. There seems to be a contradiction here. Maybe the Foreign Secretary could clear up the date on which Dr. Kissinger's statement was made.
There is no doubt that there was a package. It was proposed by Dr. Kissinger to Mr. Smith, and it contained the six points which Mr. Smith listed in his speech on 24th September. The authority for this is contained in the Foreign Office statement of 24th September and in the Foreign Secretary's answer to questions on 12th October when he said:
"The proposals that were accepted were what Mr. Smith set out in his six proposals." [Official Report, 12th October 1976; Vol. 917, c. 251.]
The package was an Anglo-American one. This is confirmed by the Foreign Office statement, by Dr. Kissinger's statement as reported in The Times on 20th September, and by President Ford's statement reported in The Times on 25th September. Therefore, Britain is bound by it.
What is significant is that at no time until late in September, some time after the statement by the five presidents on 26th September can I find any mention of the package being put forward as a basis for discussion. As far as I can discover that line was only adopted later, after the statement by the five presidents in which they dissented from the package and called for an entirely different approach. If this is true, it is clear why the Government line changed. It was because the five presidents took a line which was inconsistent with the one which Mr. Smith took on 24th September, which the Government had instantly approved at the time.
We do not know whether the package was agreed with the African leaders and therefore we cannot assert that it is binding on them. But it is binding on us and on America. Therefore, as my right hon. Friend the Member for Chipping Barnet (Mr. Maudling) said, any changes to it can be made only by the agreement of those who were a party to it.
My right hon. Friend said that we wanted the conference to succeed. That has been the view expressed by almost every hon. Member who has spoken from this side of the House. We want it to succeed because we believe that it
1606
presents a unique opportunity—perhaps the last—for a peaceful settlement, and the alternative to such a settlement is more killing, more chaos, and probably a totalitarian regime in Rhodesia. It is unique because I believe that Mr. Smith has genuinely changed his mind. He has made a mental leap of seismic dimensions. [Interruption.] It would be a great help if hon. Members opposite did not sneer whenever Mr. Smith's name is mentioned. If they genuinely want to promote a peaceful settlement, they will try to understand the anxieties of the moderate population in Rhodesia, including the white people.
The Foreign Secretary said that a year ago, when we last debated this Order, it would have been in the realms of fantasy to imagine the situation we are now in. That confirms the dimensions of the change in Mr. Smith's outlook. My right hon. Friend the Member for Bournemouth, West (Sir J. Eden) described his broadcast as a momentous one. I entirely endorse that adjective. Upon hearing the broadcast I said that if the African leaders did not grasp the proposal put out by Mr. Smith, they would be making a catastrophic mistake. Nothing I have heard or seen since has changed that view.
Some of the African leaders are saying that two years is too long. That is ironic when we hear from Labour Members anxieties over our ability to move in two years to direct elections to the European Parliament. I hope that we shall not find any support for that view from the Government Benches. Rhodesia has been under white rule for 90 years. We are talking now about the next 1,000 years. Is it sense, therefore, to say that two years is too long? Sir Roy Welensky thinks that five years is the minimum period, yet Mr. Smith and his Cabinet and party are, as I understand it, unanimously prepared to accept two years. Let us not underestimate the importance of the fact that Mr. Smith has carried his Cabinet and his party with him.
I hope that when they get to the table the African leaders will give Mr. Smith the chance to show that he is sincere and that their suspicions are ill-founded. I hope also that the African leaders who genuinely want peace will put aside their rivalries. It has been clear that in the past these rivalries have been one of the

1607
factors delaying progress. If they do so, history will deal harshly with them.
The Foreign Secretary made an inadequate speech this evening. His performance in this whole matter has been inadequate in recent months. His attitude was described by The Guardian some weeks ago as one of "supercilious distaste". When he has stirred himself to action it has taken the form of an undignified reaction to pressures. I am not prejudicing the chances of a successful conference by criticising the Foreign Secretary, because what I am saying is very much what the people of Africa, including the leaders there, have been saying. They have been urging him to action.
He allowed Dr. Kissinger to take up the British plan and by himself to sell it in Africa. I do not complain that Dr. Kissinger took it up. The movement we have seen has been largely due to his vigorous diplomacy. But do we not possess as much knowledge of southern Africa and its problems as do the Americans? Might it not have helped to avoid misunderstanding if the Foreign Secretary had pursued a more vigorous role and had not come out of purdah only to attend the Press conference in London which Dr. Kissinger held on return from his apparently successful African tour?
Let us follow through this saga of vigorous activity and careful planning by the Foreign Secretary. After Mr. Smith's speech the Foreign Office issued a statement approving what he had said. Two days later the African Presidents issued their statement calling on Britain to call a conference on a different basis. The Government's reaction was to say "Why not?". They went on to ask how and where the conference could be arranged and who should attend. That does not seem to be a very striking example of forward planning.
The African presidents have played a useful role from time to time, but it seems odd that Britain should have handed over its responsibilities to them in such an obvious way. The vacillation does not end there. The Foreign Secretary issued an invitation to three African leaders, presumably chosen after careful consideration of their claims, and when
1608
another vociferously staked his claim, the Foreign Secretary asked him along, too. We do not know the reaction of the other three leaders, but we can make a good guess.
It is well known that Talleyrand's advice to aspiring diplomats was:
"Above all, not too much zeal"
but the Foreign Secretary is going too far. If I were preparing a report on his first six months' work, I should say "This student appears to think that diplomacy is played like water polo, with himself in the role of the ball."
A number of important questions have been raised in the debate and I hope that we shall have some answers from the Minister of State. My right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) asked whether sanctions would be lifted immediately and automatically when the interim government was formed. My right hon. Friend the Member for Chipping Barnet asked what will happen to the Rhodesian Parliament. There has been no mention of this in any of the statements I have read. My right hon. Friend also asked whether preparations were now being made for the lifting of sanctions without delay if the conference succeeded.
The Foreign Secretary said that it was necessary to renew Section 2 of the Act in order to allow the Government to pass the necessary legislation giving affect to the interim government. Does this mean that the legislation will be in the form of an Order in Council? Shall we be able to amend it?
I hope that my hon. Friends will not allow themselves to be provoked by the speech of the Foreign Secretary and some of his answers [Interruption.] It is interesting to note the levity with which hon. Members opposite treat this matter. We are dealing with the future safety of Rhodesia, the prosperity of its people and the interests of Britain in that part of the world, I should have thought that Labour Members would devote more serious attention to the matter.
It is right for us not to oppose the Order. Mr. Smith has made clear that he is prepared for sanctions to be lifted only after the interim government is set up. I do not believe that we can put ourselves in advance of him. Secondly, there is a package and if we voted against

1609
sanctions, we should be untying the package. Others might also start to untie it in ways which my hon. Friends would not welcome.
Thirdly, it is doubtful whether a vote against sanctions by the Opposition would help the moderate African leaders who will have to sell the settlement to their followers. Fourthly, without doubt there will be other debates on this subject in the near future and, as my right hon. Friend the Member for Chipping Barnet made clear, our hands will be entirely free in the event of the conference breaking down.
Those who have visited Rhodesia, as I have had the good fortune to do, understand why those of all races who live there feel so strongly about it. It is a magnificent country. It has a beautiful climate. It has a fertile land which is capable of producing two crops a year. It is an exporter of food in a continent which badly needs it. It is rich in minerals. It is developing a broad industrial base. The relations between the races, despite everything, are relatively relaxed. [Interruption.] I do not think that any Labour Members can have ever have been to Rhodesia. By their laughter they betray their ignorance of the facts.
The conference is about whether the people of Rhodesia of all races will have the chance to develop that potentially rich country in peace. It is about whether the Europeans will still be able to have a role, or whether there will be a worse and more serious guerrilla war, which would lead to death for many people, to scorched earth, and to more Russian penetration. But the conference concerns more than that. It concerns also the question whether, by creating a true multiracial society in Rhodesia, encouragement can be given to more liberal trends in South Africa itself.
In the past 11 years many opportunities have been missed to find a solution to Rhodesia's problems round the table instead of at the end of a gun. This time, too, I think that we have to admit that the talks will not be easy. But there are two encouraging facts. First, this is the first time that talks have begun with a clear statement by Mr. Smith and his whole Cabinet that they accept majority rule within two years. Secondly, this is the first time that all three groups—the
1610
British Government, Mr. Smith's Government and the African leaders—will be taking part in talks round the same table. It is evident that there is a general desire that Britain should not be just a spectator, not only the chairman, but should play an active role in getting agreement.
Therefore, it is right that, from the Opposition side of the House, I should say to the Government that they will have our support in doing whatever Britain can do to ensure success, within the limits of the obligations which Britain has accepted and provided that we keep our word.
11.7 p.m.
The Minister of State, Foreign and Commonwealth Office (Mr. Edward Rowlands): This is a very important debate at a crucial moment in the problems of Rhodesia. It has been a pleasure to listen to many of the speeches today, particularly the speech made by the right hon. Member for Devon, North (Mr. Thorpe) who spoke with great authority. For me it was a very important contribution to the debate.
We are on the eve of a conference which will have to grapple with the task of achieving an orderly transition to majority rule. I do not think that any right hon. or hon. Members have at any stage under-estimated either the importance or the crucial nature of this conference. The House has generally agreed that the conference is vital and has been unanimous in wishing its success.
There is no doubt that the next few weeks will have a profound significance for the future of Rhodesia. Contrary to what was said by the hon. Member for Blackpool, South (Mr. Blaker) in the earlier part of his speech, the Government responded very quickly to the request by the African Presidents to hold the conference. It is no exaggeration to say—I doubt whether there has been any serious contention about this point—that, had we not taken this action of calling the conference as an indispensable next step, the initiative begun over the last few weeks would have foundered. That is a matter of basic agreement in the House as a whole.
Equally, many hon. Members have said that this is probably the most hopeful initiative for 11 years—the right hon. Member for Devon, North said so—for

1611
the basic reason of Mr. Smith's acceptance of the fundamental conditions put forward in the statement of 22nd March by the Prime Minister. At least we are starting on this initiative from a basic common principle that there should be majority rule within two years. That is encouraging, despite the alarm bells which have occurred almost daily.
If hon. Members had been as totally, almost hourly, involved as I have been and had sat down at home after a pretty arduous week and heard the Saturday night new broadcasts, which seemed to dash all our hopes and on Monday had discovered that the interpretation of Mr. X or Mr. Y was not so pessimistic, they would realise the difficulties of getting a conference and reaching the point that we have reached.
The House has generally accepted that the delegations, particularly the African delegations, are representative of Rhodesian opinion. I take the point made by the hon. Member for Haltemprice (Mr. Wall). We have had a difficult job trying to get a true representation at the conference. We make no apology at ail for adding the additional delegation in the case of Mr. Sithole. Our sole desire had been to try to get a conference which is representative. That has been the sole basis upon which we have tried to work.
The hon. Member for Haltemprice made a valid comment about the large number of moderate Africans in Rhodesia. We have had to try to choose just who represents effective political power in Rhodesia. That is why we invited Mr. Smith and the Rhodesian Front. They represent de facto political power for those people who have been part and parcel of his regime. Equally, we have endeavoured to get a cross-section of political opinion and representative opinion from the Rhodesian nationalist movement.
Mr. Rifkind: The Minister has sought to get a cross-section of African opinion to participate in the conference. Why has he not tried to get a similar cross-section of white opinion to include representatives of the 20 per cent. of the white electorate who have never voted for the Rhodesian Front?
Mr. Rowlands: I think we have already explained that Mr. Smith represents
1612
de facto power. He has 50 out of 50 seats in the existing Rhodesian Parliament and we recognise that he represents that section of Rhodesian opinion. Although some hon. Members have complained, I think that generally speaking the House has not complained about the representative nature of the conference itself.
Several hon. Members asked what the agenda at the conference would be. It is not an agenda. The conference has an objective and that is to discuss the formation of and to reach agreement about an interim government. That is its purpose. That is what we have set out as its sole objective. Many other important issues raised in the debate go beyond the role and function of the conference. Its single basic objective is to discuss the formation of and to reach agreement on an interim government, and no one has challenged that in the debate.
Many hon. Members discussed the role of the United Kingdom at the conference. It has been gratifying that most hon. Members, with a few exceptions, have welcomed Mr. Ivor Richard as chairman. In our view he has the right qualities for this task and he will be combining a certain independence with the knowledge and encouragement that he has our full support.
Let me make a general comment about our role at the conference. We believe that the only effective and lasting solution, both of an interim government and for the achievement of majority rule, is a solution agreed by the Rhodesians themselves. It is wrong to assert that Britain could, in some traditional colonial fashion, impose a solution. We cannot. That is why we have called a conference, and that is why the settlement must be negotiated by the Rhodesians themselves at the conference.
However, we acknowledge that we have a responsibility to play a vital role at the conference, though hon. Members have argued profoundly about the extent of this responsibility. We shall not shirk the task of working, through our chairmanship of the conference, for a settlement that meets the basic criteria laid down by my right hon. Friend the Prime Minister on 22nd March. We are not neutral on the essential principles of the settlement. We are committed to a successful outcome of the conference. We are committed to the

1613
principle of majority rule. We are committed to the establishment of an effective, stable interim government, and we hope to ensure a rapid and orderly transition to majority rule.
Those are our commitments. We are not neutral on this. We shall continue, therefore, to strive to achieve the objective that we have described with all the energy at our disposal, both during and after the conference.
The right hon. Member for Chipping Barnet (Mr. Mauldling) and other hon. Members have said that somehow we should take some dramatic, direct responsibility for Rhodesia. My right hon. Friend has agreed with the right hon. Member for Down, South (Mr. Powell) that we have a direct responsibility for Rhodesia but one which we have never exercised internally there in practical terms.
I have been asked about Britain's role once the conference has produced results and in interim government has been established. This will depend on the kind of arrangements agreed at Geneva. We must await the outsome of the conference. We are clearly giving a great deal of thought to what should follow if an agreement is reached.
I emphasise, however—and I listened to the suggestion of a direct role in affairs after the interim government has been established or after the conference—that Britain can provide no substitute. There can be no substitute for the essential requirement, which is an agreement reached between Africans and Europeans in Rhodesia and their mutual co-operation in giving effect to that agreement. But any such agreement would be an excellent augury for the future.
The best safeguard for the European minority in Rhodesia lies not in internal or external paper formulae or constitutional proposals. It lies in the growth of mutual trust among peoples of all races and in their working together.
Mr. Kinnock: Will my hon. Friend give way?
Mr. Rowlands: I have a great deal to get through. I am trying to sum up a debate of nearly seven hours. I do not wish to shirk my hon. Friend's comment, but
1614
I want to go through the issues raised in the debtate.
It is very heartening that there are, even now, movements in being within Rhodesia dedicated to the purpose of and giving support to a multi-racial society by a settlement and an interim government, and these movements are building up. Mr. Smith's statement of 24th September has encouraged these movements and those people to redouble their efforts. It is clear, none the less, that once an interim government has been formed, it will have to be endowed with legality. As my right hon. Friend has explained, it will be for the Government, with the support of the House, to take the necessary steps to endow that interim government with legality.
Similarly, we shall be doing everything in our power to secure the cessation of the guerrilla war, which would have then lost its justification in African eyes.
Rear-Admiral Morgan-Giles: Will the Minister give way?
Mr. Rowlands: It has lost its justification in the eyes of the majority of Africans. We would seek the lifting of economic sanctions. Hon. Members have asked me for that assurance. I can give another assurance. Detailed contingency planning is already under way. However, as my right hon. Friend said earlier, there can be no question of lifting sanctions until and unless a satisfactory interim government is installed in Rhodesia and is irrevocably on the path to early majority rule.
Mr. Amery: Will the hon. Gentleman consider lifting sanctions if no interim Government can be formed through no fault of Mr. Smith, if it is simply the rejection of the package by the African nationalist leaders?
Mr. Rowlands: I have said clearly that there can be no question of our seeking to lift sanctions until and unless a satisfactory interim government is installed in Rhodesia and is irrevocably on the path to early majority rule.
I turn again to the so-called package. A great deal has been said about the status of Mr. Smith's broadcast on the proposals. My right hon. Friend made plain the status of the proposals in his opening speech and in interventions in the speech of the right hon. Member for

1615
Brighton, Pavilion (Mr. Amery). He made it plain that in citing the five points Mr. Smith was quoting from a document and that they were proposals. I have little to add to that.
In my own meetings with Mr. Smith I made it clear to him that in our view the proposals could provide a reasonable basis for negotiation. No-one can challenge that I made that clear to him. I was candid and straight forward in saying that alternatives would be put forward. I got the impression that Mr. Smith accepted that this was a realistic approach. No one can fairly accuse the British Government of bad faith on that issue. We did not sign or seal a package deal of any kind.
When speaking to Mr. Smith I reflected on the Press conference given by my right hon. Friend and Dr. Kissinger on 24th September, before Mr. Smith's speech, in which he made clear that there were a number of possibilities that could form part of a plan which could be put to both sides. He said that a certain number of possibilities had been put to both sides. He said:
"It is not for the United Kingdom Government to say in advance that they want this or that they do not want that. This is for the whites and the blacks in Africa to agree amongst themselves."
There can be nothing clearer than that and it has been our position ever since.
At no stage in close association with American colleagues was there any question of our imposing any detailed plan on anyone. It would have been presumptious of us to think in such terms—that point was almost given by the right hon. Member for Pavilion, who talked of the problems of the package deal and the issues arising from the council and Rhodesian Parliament, in other words, the issues that could be and should be discussed at the conference. They are understandable and reasonable matters. I hope, therefore, that hon. Members opposite will not continue to spread the suggestion of a perversity or of gross breach of faith on our part.
I cannot wind up the debate without some reference to the many aspects of the remarks of the right hon. Member for Pavilion and others who have interpreted the whole of the Rhodesian problem in terms of some strategic chess board on
1616
which the pawns of the cold war come into play. The right hon. Member was the cold war warrior on his charger.
I was shocked that the right hon. Member for Pavilion did not once talk of the wishes and aspirations of the majority of Rhodesians. What astonishes me about such speeches is that they talk about both extremes as if both extremes speak the same language, and they forget the fundamental wishes of the people.
Whose side are we on? We are on the side of over 6 million Rhodesians—not just 270,000 whites, but the 6 million blacks as well. That is the side for which we shall fight.
In the course of the travels that I had to undertake during recent weeks I had the privilege of spending a few days in Botswana. It is a small country and a poor one. The great thing about Botswana, and what moved me greatly in celebrating the tenth anniversary of its independence, was that its people did not talk about whose side they were on, whether it was the West or the East—they belonged to themselves. They had established their own identity. It was a small but very important country. This is what we are supposed to be fighting for and aiming to try to establish in Rhodesia, not the power politics of the East or the West.
Mr. John Page rose—
Mr. Rowlands: The hon. Member has scarcely been in the House during the day, so he is not entitled to intervene. We want to try to ensure that all Rhodesians can make up their own minds by democratic means about what type of society they want and on whose side they wish to be—not by guns imported from outside, nor, indeed, by virtue of the prerogative of a small minority of whites within Rhodesia who have decided what type of society Rhodesia should have for the past 10 to 12 years. Let them make up their own minds. That is why as soon as possible we want to devise a peaceful settlement.
It has been rightly said from this side of the House that the trouble with force is not that we just get independence, even if it is an imposed solution which is alien to the wish of the majority of the people. We want to create a peaceful means of

1617
achieving a settlement so that Rhodesians can decide on whose side they are on.
Mr. Ogden rose—
Mr. Rowlands: No. I will not give way.
Mr. Ogden: It is on a subject I raised.
Mr. Rowlands: No, I must reply to the debate.
In the meantime, while the search for a peaceful settlement takes place in Geneva, we must ask the House for the
renewal of the 1965 Act through this Order. As my right hon. Friend said, while we search for peace, sanctions must remain. He also said that the continued validity of the Southern Rhodesia Act may be important to enable arrangements to be made for the legalisation of the interim government. He said that hon. Members who voted against the Order would be seeking to deny us this facility. I therefore ask the House to support the motion.
Question put:—
The House divided: Ayes, 191, Noes, 20.

Division No. 337.]

AYES

[11.29 p.m.

Abse, Leo

Flannery, Martin

Miller, Dr M. S. (E Kilbride)

Anderson, Donald

Fletcher, L. R. (Ilkeston)

Morris, Alfred (Wylhenshawe)

Armstrong, Ernest

Fletcher, Ted (Darlington)

Morris, Rt Hon J. (Aberavon)

Ashton, Joe

Forrester, John

Moyle, Roland

Atkins, Ronald (Preston N)

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

Mulley, Rt Hon Frederick

Atkinson, Norman

Freud, Clement

Murray, Rt Hon Ronald King

Bain, Mrs Margaret

George, Bruce

Noble, Mike

Bates, Alf

Gilbert, Dr John

Oakes, Gordon

Benn, Rt Hon Anthony Wedgwood

Golding, John

Ogden, Eric

Bennett, Andrew (Stockport N)

Gourlay, Harry

Owen, Rt Hon Dr David

Blenkinsop, Arthur

Grant, George (Morpeth)

Padley, Walter

Boardman, H.

Grant, John (Islington C)

Palmer, Arthur

Booth, Rt Hon Albert

Grocott, Bruce

Pavitt, Laurie

Bottomley, Rt Hon Arthur

Hamilton, James (Bothwell)

Perry, Ernest

Boyden, James (Bish Auck)

Harrison, Walter (Wakefield)

Price, William (Rugby)

Bray, Dr Jeremy

Hattersley, Rt Hon Roy

Radice, Giles

Brown, Hugh D. (Provan)

Hatton, Frank

Richardson, Miss Jo

Brown, Robert C. (Newcastle W)

Heffer, Eric S.

Robinson, Geoffrey

Brawn, Ronald (Hackney S)

Henderson, Douglas

Roderick, Caerwyn

Buchan, Norman

Hooley, Frank

Rodgers George (Chorley)

Buchanan, Richard

Hooson, Emlyn

Rodgers, Rt Hon William (Stockton)

Butler, Mrs Joyce (Wood Green)

Horam, John

Rose, Paul B.

Caliaghan, Jim (Middleton & P)

Howells, Geraint (Cardigan)

Ross, Stephen (Isle of Wight)

Campbell, Ian

Hughes, Robert (Aberdeen N)

Ross, Rt Hon W. (Kilmarnock)

Cant, R. B.

Hughes, Roy (Newport)

Rowlands, Ted

Carmichael, Neil

Hunter, Adam

Ryman, John

Cartwright, John

Irving, Rt Hon S. (Dartford)

Sedgemore, Brian

Castle, Rt Hon Barbara

Jay, Rt Hon Douglas

Shaw, Arnold (Ilford South)

Clemitson, Ivor

Jenkins, Hugh (Putney)

Shore, Rt Hon Peter

Cocks, Rt Hon Michael (Bristol S)

John, Brynmor

Silkln, Rt Hon John (Deptford)

Cohen, Stanley

Johnson, James (Hull West)

Silkin, Rt Hon S. C. (Dulwich)

Coleman, Donald

Jones, Barry (East Flint)

Skinner, Dennis

Conlan, Bernard

Jones, Dan (Burnley)

Small, William

Cook, Robin F. (Edin C)

Kilroy-Silk, Robert

Smith, Cyril (Rochdale)

Cox, Thomas (Tooting)

Kinnock, Neil

Smith, John (N Lanarkshire)

Craigen, J. M. (Maryhill)

Lambie, David

Spearing, Nigel

Crawshaw, Richard

Lamborn, Harry

Spriggs, Leslie

Crosland, Rt Hon Anthony

Lamond, James

Stallard, A. W.

Crowther, Stan (Rotherham)

Latham, Arthur (Paddington)

Stewart, Rt Hon M. (Fulham)

Cryer, Bob

Lestor, Miss Joan (Eton & Slough)

Stoddart, David

Cunningham, Dr J. (Whiteh)

Loyden, Eddie

Strang, Gavin

Davidson, Arthur

Luard, Evan

Taylor, Mrs Ann (Bolton W)

Davies, Denzll (Llanelli)

MacCormick, Iain

Temple-Morris, Peter

Davles, Ifor (Gower)

McDonald, Dr Oonagh

Thomas, Ron (Bristol NW)

Davis, Clinton (Hackney C)

McElhone, Frank

Thompson, George

Deakins, Eric

MacFarquhar, Roderick

Thorne, Stan (Preston South)

Doig, Peter

McGuire, Michael (Ince)

Thorpe, Rt Hon Jeremy (N Devon)

Dormand, J. D.

Maclennan, Robert

Tinn, James

Douglas-Mann, Bruce

McMillan, Tom (Glasgow C)

Tomlinson, John

Duffy, A. E. P.

McNamara, Kevin

Varley, Rt Hon Eric G.

Dunnett, Jack

Madden, Max

Wainwright, Edwin (Dearne V)

Edge, Geoff

Mallalieu, J. P. W.

Walker, Harold (Doncaster)

Edwards, Robert (Wolv SE)

Marks, Kenneth

Walker, Terry (Kingswood)

Ellis, John (Brigg & Scun)

Marquand, David

Ward, Michael

English, Michael

Marshall, Dr Edmund (Goole)

Watkins, David

Ennals, David

Marshall, Jim (Leicester S)

Watt, Hamlsh

Evans, Ioan (Aberdare)

Maynard, Miss Joan

Weetch, Ken

Ewing, Harry (Stirling)

Mendelson, John

Weitzman, David

Ewing, Mrs Winifred (Moray)

Mikardo, Ian

Wellbeloved, James

Fernyhough, Rt Hon E.

Millan, Rt Hon Bruce

Welsh, Andrew

White, James (Pollock)

Wilson, Gordon (Dundee E)

Young, David (Bolton E)

Whitehead, Phillip

Wise, Mrs Audrey

Williams, Alan Lee (Hornch'ch)

Woodall, Alec

TELLERS FOR THE AYES:

Williams, Rt Hon Shirley (Hertford)

Woof, Robert

Mr. Joseph Harper and

Wilson Alexander (Hamilton)

Wrigglesworth, Ian

Mr. Frank R. White.

NOES

Amery, Rt Hon Julian

Lloyd, Ian

Skeet, T. H. H.

Boyson, Dr Rhodes (Brent)

Meyer, Sir Anthony

Taylor, R. (Croydon NW)

Brotherton, Michael

Molyneaux, James

Wakeham, John

Churchill, W. S.

Normanton, Tom

Winterton, Nicholas

Clark, Alan (Plymouth, Sutton)

Page, John (Harrow West)

Dodsworth, Geoffrey

Powell, Rt Hon J. Enoch

TELLERS FOR THE NOES:

Dunlop, John

Rees, Peter (Dover & Deal)

Rear Admiral Morgan-Giles

Fell, Anthony

Ross, William (Londonderry)

and Mr. Stephen Hastings.

Fletcher, Alex (Edinburgh N)

Question accordingly agreed to.
Resolved:
That the Southern Rhodesia Act 1965 (Continuation) Order 1976, a draft of which was laid before this House on 14th October, be approved.

SOUTHERN RHODESIA

  PROCEDURE
  Ordered,
  That the matters of the rules governing the tabling of Questions and access to the Table Office, and of Motions relating to the Business of the House which direct the Chair to bring specified business to a conclusion at certain times, be referred to the Sessional Committee on Procedure.—[Mr. Bates.]

POLICE (LONDON)
Motion made, and Question proposed, That this House do now adjorn.—[Mr. Bates.]
11.38 p.m.
Mr. Neil Macfarlane: I am grateful to have this opportunity of raising, under the Adjournment procedure, the problems facing the police in Greater London. I am also grateful to the Under-Secretary of State for being here this evening to answer this brief debate.
I suppose it is true to say that the problems facing the police of London are not so different from those facing the police of any other city in the United Kingdom. All of us in this establishment and elsewhere in London have good reason to be grateful for the magnificent police work in keeping the bombers at bay in the early and mid-'seventies—the long months of death and destruction in 1974, 1975 and 1976.
1620
Obviously, in this brief debate it will be impossible for me to cover all the problems facing the police of Greater London, but I feel that it is a worthwhile debate, despite its brevity. I should tell the Minister that over the past six months I have had several meetings with the senior police officers in my constituency and in the division that covers my constituency. I have also spent the late hours and early hours with a panda patrol. I do not suggest that that makes me an expert an all police matters, but I hope it serves to provide a modest understanding of the problems facing police in Greater London and in my constituency, the outer London borough of Sutton.
I am sure that the Minister will be well aware that there are many fears in London. Londoners are fearful of the growth of muggings and the new ferocity of so-called football fans. Both these more recent aspects of crime throw greater burdens on the police force in Greater London and are predominently the product of our society in the 1960s and 1970s.
I am certain that the Home Secretary will view with concern the contents of an article by Peter Gladstone-Smith that appeared in last week's edition of the Sunday Telegraph. The article referred, among other things, to a massive rise in muggings extending throughout inner London. But the problem is present not only in Inner London. In Sutton there has been a steadily rising crime rate in recent years. That has not been more graphically illustrated than in the two newspapers in my constituency, the Sutton and Cheam Advertiser and the Sutton and Cheam Herald. They underline the fact that violent crime in on the increase not only in the inner city area but throughout other parts of the city.

1621
I shall quote briefly from reports which I have seen in one or two editions of the local newspapers this year. One states:
"Four men, one armed with a shotgun, clubbed a Royal Marsden Hospital porter, Bill Fisher, and escaped with £6,500 in wages."
Another states:
"An armed man got away with £1,400 from a newsagent and tobacconist in Sutton High Street."
Another states:
"One of them fired a shot at one of the guards. Both guards were forced to lie face down. And the raiders got away with £16,500."
A fourth states:
"The muggers who kicked and punched Mr. Jones stole £3·10 and his cheque book."
Finally, there has been a brutal slaying at a sweet shop.
It is becoming increasingly clear that police forces, both uniformed and CID, are stretched. The size of the Metropolitan Police Force is the first matter I wish to raise. At present we know that police force strength in the metropolitan area is 22,000. The establishment is set at 26,000. Although recruitment, in the word of one senior police officer I met a few weeks ago, is "booming", I am concerned that it is inadequate to achieve the twin number one objectives of successful detection and effective prevention.
It is a sad commentary on our society that lawlessness has virtually reached a stage where persons and property can no longer be protected. In many respects the mugger, burglar and armed robber can reckon that crime pays.
I urge the hon. Lady to tell her right hon. Friend the Home Secretary that one way of reducing the problems of the police in Greater London, Sutton and elsewhere, is by encouraging a massive recruitment to our Metropolitan force. It should be aimed at reaching a strength—not an establishment—of 28,000 policemen and women by mid way through 1977.
The relationship between strength and establishment is anomalous.
I quote a detective chief inspector who said in January, when the local newspaper ran a feature on the violence in the streets of Sutton,
"The shortage of police officers was a terrible thing."
1622
The journalist continues:
"When I spoke to him last week the officer said that the situation was even worse but that apart from the murders there have not been so many violent crimes in the area. But we are a lot better off than many places. Croydon and Brixton have been having a terrible time recently."
A letter reached my desk on Saturday morning two days after I had applied successfully for this debate. It is from a police officer residing in my constituency. It reads:
"I am writing to you as a serving policeman in the Metropolitan police force. Our force is many thousands of men under strength. Crime figures and other statistics show that the police have never been under such pressure and the demand for their services has never been greater."
I leave that thought with the hon. Lady.
Another problem facing the police in Greater London is the major events in central London itself, be they demonstrations or major sporting events. These are becoming too much a regular feature in the lives of the police. In recent years, we have witnessed the violence in Red Lion Square, soon after which a Sutton resident, Inspector David Gisborne, died. This year we have seen the spectacle of the bloody clash in Notting Hill Gate when four young policemen who had been drafted in from my constituency to help were severely injured.
Extra police are required to assist at football rituals such as those at Wembley, Tottenham, West Ham and elsewhere. Police from my constituency are drafted into inner London to help at Crystal Palace, which decreases the strength of the force in Sutton, as it does that of other areas similarly affected. It would be interesting to analyse the dates and times when so many crimes take place—perhaps when these outer areas are weakened while their policemen are working in central London. My hon. Friend the Member for Ealing, Acton (Sir G. Young) would confirm that in his constituency the police have to assist frequently at Heathrow to augment the force there when there is a major demonstration.
It must follow, therefore, that the shortage of police in central London creates a serious deficiency in outer London and elsewhere when any major event takes place in central London. The outer areas are seriously undermanned in crime prevention duties. It is also a

1623
niggling matter in the lives of police families when an expected day off has to be cancelled at the last moment. The routine of police officers, with long hours and snatched meals, would be recognisable to many of us in this House, but there is no respite for the policeman when crime takes place, and the job of a panda car officer, for example, is a lonely one.
Another limitation is imposed by the Criminal Justice Act 1971 and earlier Acts. People electing to go for trial create a vast amount of documentation for police officers. It can often take months to prepare for a rather small trial. I am told that the amount of paper work involved in such cases is a disincentive.
I urge that the 1971 Act be reviewed urgently. If the hon. Lady has any influence over what is to go into the Queen's Speech for the next Session of Parliament, I suggest that the maximum fine in the Act of £400 is seriously low and should be reviewed. The residents of London and my constituency, and the police, would pour scorn on some of the absurdly light sentences passed by judges and magistrates in recent months.
There is a dual responsibility between the Lord Chancellor and the Home Secretary, but my constituents would, I am sure, like the Home Secretary to take the lead in updating certain features of our legislation so as to hit our thugs and hooligans as hard as they are hitting society. There is little doubt that the police are baffled by the leniency shown in many courts, and this is seriously undermining the morale of the force.
I turn now to the question of pay. I am aware of the difficulties currently existing between the Home Office and the Police Council as a result of phase 1 of the Government's and TUC's incomes policy, but I support the view of my right hon. Friend the Member for Penrith and The Border (Mr. Whitelaw) in urging the Government to consider as a very special case the claim made by the police force. Recruitment would undoubtedly be much more attractive if the rates of pay were to be increased.
We expect more and more each year from our police in London. Each year, the crime rate increases and the strength of the force remains relatively small. In
1624
recent years, the House of Commons and the Greater London Council have added to the burdens of the police with increased legislation. For example, last year the GLC sought the assistance of the police in manning the bus routes to make certain that they were used solely by buses.
There is the likelihood of the House retrieving in the next Session the legislation concerning the compulsory wearing of seat belts—again further legislation which will place an extra burden on the police force. Then there are the problems which society has created—the major sporting events, the pop concerts and out-door festivals. All these provide an extra burden for the police force.
Finally, there exists at present an excessive list of mischievous complaints against the police. At Notting Hill Gate recently it was our police force who were kicked, punched and beaten, then criticised, and finally complained against. It seems to be a farcical situation when we subject our police to this kind of indignity.
I close by urging on the Under-Secretary of State that the battle against inflation and the fight to save the pound are critical for our nation, but the maintenance of law and order in our society is of paramount importance.
11.51 p.m.
The Under-Secretary of State for the Home Department (Dr. Shirley Summer-skill): The hon. Member for Sutton and Cheam (Mr. Macfarlane) has raised the most important subject of the problems facing the police in Greater London. He has presented a picture of an embattled police force, to some extent neglected by the Government, and of a city about to be engulfed by a flood of crime. I certainly would not wish to under-estimate the problems facing the Metropolitan Police, but I am glad to have this opportunity to set these problems in perspective and to say what the Government are doing to assist the Metropolitan force in its task.
The task is undoubtedly a difficult one. The fact that London is our capital city itself imposes special burdens, as the hon. Member recognises. Ceremonial occasions, public demonstrations, the targets afforded terrorists—in addition to the wider opportunities for crime provided by the fact that London is a world centre for financial, commercial and social activities—are just some of them.

1625
However, what is impressive about the policing of London is not so much the scope of the problems but the effective way they are handled. To take only one example, we had the effective outcome, without injury or loss of life, of the sieges at the Spaghetti House in Knightsbridge and at Balcombe Street last year. It would be right for me to take this opportunity to express the thanks of the whole House, and of the public as well, to the Commissioner and the members of his force for the professional skill which they devote to dealing with the many difficult situations which they face.
The main problem with which the Metropolitan Police, as other forces in the United Kingdom, are confronted is the increase in crime. In 1975, the total number of indictable offences known to the police in the Metropolitan Police District was 486,669—an increase of 8.8 per cent. over 1974. That was in fact a lower percentage increase than in the preceding year, when the increase was 16.9 per cent., although it is still clearly extremely disturbing.
The latest information available relates to the first six months of this year when, compared with the same period last year, total indictable crime rose by some 7 per cent. The Government share the hon. Member's concern that crime is increasing, and we have consistently sought to strengthen and assist the police service to deal with it, as I shall demonstrate in a moment.
Before doing so, I shall deal briefly with a particular point which I know is worrying the hon. Member—his belief that crime is moving out of the inner London boroughs into those, like his constituency, in outer London. The Metropolitan Police tell me that there is no evidence of this.
Taking the figures for the first six months of this year, compared with the first six months of 1975, total indictable crimes known rose by 8 per cent. in the inner London Metropolitan Police divisions, as against 6 per cent. in the outer London divisions. For crimes of violence the figures were 20 per cent. and 19 per cent. respectively, for burglary 14 per cent. and 7 per cent., and for other theft, handling and autocrime 6 per cent. and 3 per cent. The outer London boroughs do not seem to be suffering disproportion-
1626
ately from the overall increase in crime levels.
Nevertheless, I accept that the hon. Member is rightly concerned about the general increase in crime. We share this concern and have taken positive steps to support the police service in dealing with it, in spite of the present difficult economic situation. First, almost alone among the public services the police have remained free—so far as the Government are concerned—to recruit up to authorised establishments. An additional £11 million has been provided to cover the cost of the growth in the number of police officers up to 31st March 1978. This relates to all police forces in England and Wales, but the Metropolitan Police Force has been among those to benefit most.
Mr. Macfarlane: Can the hon. Lady clarify the relationship between the recognised strength at the moment and the establishment, which was fixed in 1965 and which never has been reached? If she can assure the House that the establishment figure will be reached by mid-1977, that will go a long way towards alleviating the genuine concern and—confirmed by the statistics which she has quoted—some of the growing fears amongst many inner and outer London residents. I should like some clarification of the link between current strength and present establishment.
Dr. SummerskillI do not pretend that the Metropolitan Police force is up to establishment. The current authorised establishment is 26,628. The strength of the force is now 22,032. That means that on 31st August there was a deficiency of 4,596. I do not attempt to conceal that fact, and obviously everything is being done to recruit to the force. However, at 22,032 the strength of the force is higher than it has ever been and I think that we should remember that it is increasing all the time. It continues to increase at the rate of about 100 a month.
Mr. Macfarlane: So does the population of London.
Dr. Summerskill: And so is crime increasing. It is a very serious situation when, as fast as the strength increases, the crime rate increases and, therefore, a greater establishment is needed, and so on.

1627
The force is now taking in as many recruits as it can safely absorb on operational duties. To do this the arrangements for selection have been augmented, and initial training arrangements have been expanded, with Home Office encouragement. As new officers complete their initial training and gain operational experience, I am confident that the full effect of these recent gains will become more apparent.
The hon. Member mentioned the current dispute over police pay. I must make it clear that the Government are not complacent about the present dispute. My right hon. Friend the Home Secretary recently met representatives of the Police Federation and had a frank exchange of views about the problems of the police service at the present time, including the way police pay is negotiated. Further talks will be held both with the federation and with the other interested parties.
As far as the current establishment of the Metropolitan Police is concerned this was last increased, in November 1974, to 26,628 in recognition of the additional work resulting from the transfer of responsibility for policing Heathrow Airport to the force. The first priority, however, must be to fill as many as possible of the existing 4,500 vacancies, and there is the closest co-operation between the Home Office and the force to that end.
The hon. Member also raised the question of how the Commissioner deploys his men. This is entirely a matter for the Commissioner's professional judgment. I understand the hon. Member is concerned about the situation in his own constituency. East station has a target level at which its strength should ideally be maintained. This is calculated on the basis of all the relevant policing factors. In the case of Sutton the force is above its target strength. My noble Friend will be writing further to the hon. Member on this point. The Commissioner assures me that the deployment of manpower and the crime situation in each area covered by his force are kept under review so that the best use is made of the available personnel and resources. There are standing arrangements for police forces to seek assistance from one another. Assistance may be given to the Metropolitan Police from provincial forces. The decision
1628
whether to seek such assistance is for the Commissioner's professional judgment.
Apart from assistance with recruiting, another way in which the Government are seeking to increase resources is by developing scientific and technological aids. The Government have in fact, given priority to maintaining technical support for the police. Apart from improvements in the well-established fields such as forensic science and police radio schemes, the police are increasingly taking advantage of the benefits obtainable from systems which use computers, with proper safeguards for privacy. The police national computer now provides all police forces—including the Metropolitan Police—with essential information faster than ever before. Its first use, on stolen vehicles, has been an immediate success. Forces now also consider the help which computers can give to the police officers in control rooms who despatch operational policemen to deal with incidents and crime, and there are many other ways in which equipment of various kinds can help the policeman on the ground to be more effective.
The Metropolitan Police are well aware of all these developments. They give priority to technical support for police operations, and are constantly looking for new ways of providing it. Of course these efforts will not provide an instant solution to the problems of crime and disorder, but they undoubtedly help to make the best possible use of police manpower.
I turn now to deal with some of the other points raised by the hon. Member. First, he expressed concern about the increase in crimes of violence, particularly mugging. Crimes of violence in the Metropolitan Police district have risen at an extremely worrying rate. For the Metropolitan Police district as a whole the increase in the first six months of this year over the first six months of 1975 was 19 per cent. In the Sutton sub-division the number of these crimes increased from 56 in the first six months of 1975 to 70 during the same period this year. Within the category of crimes of violence some idea of the extent of the commission of offences described colloquially as "mugging" can be gained from Appendix 18 to the Commissioner's Report for 1975. That is the last full year for which figures are available.
Mr. Macfarlane: Will the Minister inquire whether the surveys have been conducted at about the time of these events and whether they might have occurred when the police have been sapped of their strength through transfers to work in other areas?
Dr. Summerskill: I intended to refer to that. There is no easy explanation of this increase in muggings in London and there is no simple solution. The Metropolitan Police are, however, very much alive to the situation and have taken special measures to deal with it, mainly by identifying the areas of greatest risk and concentrating manpower and effort on those areas at such times. Their first task is to find out when and where these offences are going on. I cannot give the hon. Member exact details of the times and areas, but this point is obviously being examined. The forces are being concentrated in these areas.
Special squads have been formed in a number of divisions and have been increased in strength in areas of particular difficulty. Steps have been taken to give appropriate advice to the public and to local authorities. I can assure the hon. Member that the Home Office is in close touch with the police on this serious problem. My right hon. Friend the Home Secretary discussed this very issue at a special meeting with the Commissioner, Sir Robert Mark, this afternoon.
I am afraid that I cannot accept the hon. Member's arguments that penalties
1630
for offences are inadequate at present. The maximum penalties for violent offenders are already very considerable, ranging up to life imprisonment for the worst offences. Life imprisonment is also the maximum penalty for robbery and assualts with intent to rob, or mugging as it has become known. Never-the less the sentencing powers of the courts are kept under constant review, and were they to be proved inadequate, we would of course seek an appropriate opportunity to revise them. As I have said before, it is for the courts to determine the sentence to be imposed in the light of all the circumstances of the offence and the offender.
The hon. Member has dwelt on the problems facing the Metropolitan Police. Their range exceeds even the breadth of those mentioned this evening. In tackling them the Commissioner and his force have the full support of my right hon. Friend and his colleagues.
We have mentioned the problems facing the Metropolitan force at length, but let us not forget its successes. Whether it has been in handling terrorist incidents, in dealing with seiges, kidnappings or bank robberies—to mention only a few examples—the force has continually shown that it is at least among the best in the world. At a time when as a nation we have much to concern us, we can be rightly proud of the police and the work that they do.
Question put and agreed to.
Adjourned accordingly at eight minutes past Twelve o'clock.

CIVIL SERVICE
  Civil Servants (Deployment)
  Civil Servants (Deployment)
  Staff
  Staff
  CHANCELLOR OF THE DUCHY OF LANCASTER (APPOINTMENTS)
  CHANCELLOR OF THE DUCHY OF LANCASTER (APPOINTMENTS)
  Power Stations
  Power Stations
ENERGY
  Opencast Working (Northumberland)
  Opencast Working (Northumberland)
  Nuclear Reactors
  Nuclear Reactors
  LORD CHANCELLOR (APPOINTMENTS)
  LORD CHANCELLOR (APPOINTMENTS)
  LAW COURT STAFFS (WALES)
  LAW COURT STAFFS (WALES)
HOME DEPARTMENT
  Easter Act 1928
  Easter Act 1928
  Unification Church
  Unification Church
  Immigrants
  Immigrants
  Interpol
  Interpol
  Criminal Injuries Compensation
  Criminal Injuries Compensation
  Prisoners
  Prisoners
  Suicides
  Suicides
  Immigration Advisory Service
  Immigration Advisory Service
DEFENCE
  Vehicle Purchases (Outside Bodies)
  Vehicle Purchases (Outside Bodies)
  Personnel
  Personnel
  Ulster Defence Regiment
  Ulster Defence Regiment
  Interrogation in Depth
  Interrogation in Depth
SCOTLAND
  Ministerial Appointments
  Ministerial Appointments
  Job Creation
  Job Creation
  Teachers
  Teachers
  M90
  M90
  DEPARTMENT OF TRADE
  DEPARTMENT OF TRADE
  IMPORT CONTROLS
  IMPORT CONTROLS
  ITALY (PRESIDENT)
  ITALY (PRESIDENT)
  ECONOMIC AFFAIRS (TUC/CBI MEMORANDUM)
  ECONOMIC AFFAIRS (TUC/CBI MEMORANDUM)
TRANSPORT
  Motor Vehicles (Child Passengers)
  Motor Vehicles (Child Passengers)
  Braunstone, Leicester (Pelican Crossing)
  Braunstone, Leicester (Pelican Crossing)
  Car Registration (Cherished Numbers)
  Car Registration (Cherished Numbers)
ENVIRONMENT
  Rag Flock and Other Filling Materials Act 1951
  Rag Flock and Other Filling Materials Act 1951
  Local Government
  Local Government
  Motor-rail Service
  Motor-rail Service
  Whales' Teeth
  Whales' Teeth
  Sub-standard Housing
  Sub-standard Housing
  Town and Country Planning
  Town and Country Planning
  Departmental Surveys
  Departmental Surveys
  Housing Conditions (Survey)
  Housing Conditions (Survey)
  Local Government Staff (Devon)
  Local Government Staff (Devon)
  Water (Restrictions)
  Water (Restrictions)
  Water Stocks
  Water Stocks
  Water Authorities (Staffs)
  Water Authorities (Staffs)
  Water Conservation
  Water Conservation
  Energy Conservation
  Energy Conservation
NORTHERN IRELAND
  Civil Service
  Civil Service
OVERSEAS DEVELOPMENT
  Poliomyelitis
  Poliomyelitis
  Disabled Persons
  Disabled Persons
  Mozambique
  Mozambique
NATIONAL FINANCE
  Tobacco Tax
  Tobacco Tax
  Government Loans and Debtors
  Government Loans and Debtors
  Value Added Tax (Prosecutions)
  Value Added Tax (Prosecutions)
  Mortgages (Tax Relief)
  Mortgages (Tax Relief)
  North Sea Oil and Gas
  North Sea Oil and Gas
  Oil Prices
  Oil Prices
  Sterling
  Sterling
EDUCATION AND SCIENCE
  School Meals
  School Meals
  Discretionary Awards
  Discretionary Awards
  Student Grants (Parental Contribution)
  Student Grants (Parental Contribution)
EMPLOYMENT
  Collective Bargaining (Information Disclosure)
  Collective Bargaining (Information Disclosure)
  Unfair Dismissal
  Unfair Dismissal
WALES
  Ministerial Appointments
  Ministerial Appointments
  Unemployment (Building and Engineering Workers)
  Unemployment (Building and Engineering Workers)
  Schoolchildren
  Schoolchildren
FOREIGN AND COMMONWEALTH AFFAIRS
  Hong Kong
  Hong Kong
  China
  China
  India
  India
  Southern Africa
  Southern Africa
  Cyprus
  Cyprus
  Rhodesia
  Rhodesia
  Italy (Sappada Fire Tragedy)
  Italy (Sappada Fire Tragedy)
  Passports
  Passports
  Diplomatic Immunity (Car Parking)
  Diplomatic Immunity (Car Parking)
  Katyn Memorial
  Katyn Memorial
  Falkland Islands (Queen's Silver Jubilee)
  Falkland Islands (Queen's Silver Jubilee)
SOCIAL SERVICES
  Doctor-Patient Ratios
  Doctor-Patient Ratios
  Cults
  Cults
  Fraudulent Claims
  Fraudulent Claims
  Holidays (Needy People)
  Holidays (Needy People)
  Fluoridation
  Fluoridation
  Giro Payments
  Giro Payments
  Sheltered Workers
  Sheltered Workers
  Immigrants (Repatriation)
  Immigrants (Repatriation)
  Departmental Investigators
  Departmental Investigators
  Unemployment Benefit
  Unemployment Benefit
  Hospital Consultants
  Hospital Consultants
  Disabled Persons
  Disabled Persons
  Eraldin
  Eraldin
  Retinitis Pigmentosa
  Retinitis Pigmentosa
  Supplementary Benefit
  Supplementary Benefit
  Occupational Pensioners
  Occupational Pensioners
INDUSTRY
  Steel
  Steel
  Co-operative Enterprises
  Co-operative Enterprises
PRICES AND CONSUMER PROTECTION
  Estate Agencies
  Estate Agencies
  Electrical Appliances
  Electrical Appliances
  Price Check Scheme (Results)
  Price Check Scheme (Results)
TRADE
  Companies (South African Workers)
  Companies (South African Workers)
  Ministerial Appointments
  Ministerial Appointments
  Cars
  Cars
  Company Returns
  Company Returns
  Balance of Trade
  Balance of Trade
  Airlines (Profits)
  Airlines (Profits)
AGRICULTURE, FISHERIES AND FOOD
  Feeding-Stuffs
  Feeding-Stuffs
  Departmental Staff
  Departmental Staff
  Poultry Hygiene
  Poultry Hygiene
  Vegetables
  Vegetables
  Ellbridge Horticultural Sub-Station
  Ellbridge Horticultural Sub-Station
  Monosodium Glutamate
  Monosodium Glutamate
  Perishable Foods (Date Marking)
  Perishable Foods (Date Marking)
  Ministerial Appointments
  Ministerial Appointments

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

MEMORANDUM OF UNDERSTANDING
Lord ORR-EWING: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what progress has been made in promulgating the Memorandum of Understanding signed on 25th September 1975 by the USA and the United Kingdom, covering the mutual interchange of armament sales.
Lord WINTERBOTTOM: My Lords, British industry has been made fully aware of the provisions of the Memorandum of Understanding, and arrangements exist for advising United Kingdom companies of how they may take advantage of it in seeking to secure orders in the United States of America. For its part, the United States Government has taken steps both to ensure that the provisions of the Memorandum of Understanding are known throughout the Department of Defense and to bring them to the notice of major United States defence contractors.
Lord ORR-EWING: My Lords, is the noble Lord aware that in the five-year period up to 1970 we purchased £1,000 million worth of arms from the United States, and in the last five years, £500 million, and the reverse purchases have been marginal, although the sale of the Harrier has improved them more recently? Is it not true to say that whereas at the top level there is a sincere desire to buy armaments from this country, this may not have worked down to the working level where the decisions are actually made? Is the Minister aware that after a year we very much hope that the working level there will know fully and will honour the terms of this agreement?
Lord WINTERBOTTOM: My Lords, I am aware, as is my right honourable friend, of the imbalance. The United States Department of Defense and a number of major United States defence contractors have been encouragingly helpful in assisting us in our attempts to ensure that United Kingdom companies are able to compete. A particularly welcome initiative from the United States is a visit by a team of high level United States procurement officials at the end of this month, during which they will have detailed discussions as to how the Memorandum of Understanding can be most effectively implemented from now on.
Lord DUNCAN-SANDYS: My Lords, in view of the existence of this Memorandum of Understanding, will the Minister consider publishing at intervals particulars of the sales which have taken place in both directions?
Lord WINTERBOTTOM: My Lords, this is difficult because many such sales are confidential. The Memorandum of Understanding can be seen in the House of Commons Library, and I am certain a copy could be obtained for your Lordships' House. I should imagine that the annual debate on the Defence Estimates might be of advantage for asking questions on the subject. Collaboration is very close to the heart of Her Majesty's Government.
Lord DUNCAN-SANDYS: My Lords, I realise that the exact particulars cannot necessarily be published, but could a broad indication be given of the value of the orders in both directions?
Lord WINTERBOTTOM: My Lords, I will pass that comment on to my right honourable friend, and, as I would say that this is a very important part of British defence policy, I will see whether it can be reported upon annually in broad terms.
Lord SHINWELL: My Lords, in view of the report in The Times newspaper this morning, and the news that has been current elsewhere, that our Centurion tanks have now been outmoded by the production of a new device by the American Pentagon, shall we be compelled now to buy even more from the United States?
Lord WINTERBOTTOM: My Lords, I am not aware of the point made by my noble friend. I will let him know, if he will put down a Question later.
Lord SHINWELL: My Lords, does not my noble friend read The Times newspaper?
Lord WINTERBOTTOM: My Lords, when I have time in the early morning, yes.
Lord BOWDEN: My Lords, may I ask my noble friend whether, when considering the question of the sale of armaments, he could link with it the sales of ordinary commercial goods which have hitherto been barred from the United States on the pretext that they may in some way be concerned with the Armed Services? An enormous number of perfectly ordinary conventional goods have been refused admission to the States for this totally specious reason, which has been used to great effect to protect American industry by a process which we have so far been unable to overcome. Even such things as ordinary diesel engines, for example, have been refused admission. Can this also be taken into account when we consider this question of the sale of armaments, to which it is inextricably linked?
Lord WINTERBOTTOM: My Lords, I am grateful to my noble friend for his helpful comment. I will bring it to the notice of my right honourable friend.
Lord PAGET of NORTHAMPTON: My Lords, is not the essential difficulty in implementing this agreement the fact that the Americans produce much better arms at a much more competitive price?
Lord WINTERBOTTOM: No, my Lords.
Lord ORR-EWING: My Lords, when the visiting team arrives—and perhaps even before they arrive—would the noble Lord stress that it is important that the instructions from the top in the Pentagon should filter down, and should be issued down, to the working level? Up till now, even though over a year has elapsed, this has not come about. We very much hope that these instructions will be issued before the team arrive here, so that we can get on and progress this effort.

THE MALTON BY-PASS
2.43 p.m.
Lord TRANMIRE: 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 when it is proposed to construct the Malton by-pass on the A64.
Baroness STEDMAN: My Lords, as soon as resource constraints on road expenditure permit.
Lord TRANMIRE: My Lords, has the noble Baroness taken into account the fact that the three projected by-passes on the A64 are really one scheme? To go ahead with the York and Tadcaster by-passes and postpone the Malton one is going to make traffic congestion in Malton quite unmanageable and frustrate the Government's own policy of encouraging industrial development in the Scarborough, Whitby, Malton area.
Baroness STEDMAN: My Lords, I accept what the noble Lord says, that the Malton by-pass is in effect part of one continuous scheme and that there will be problems and congestion; but because of the limited funds available other schemes in the national network have an even greater priority.
Lord POPPLEWELL: My Lords, would my noble friend be able to give an assurance that when finance is again available this Malton by-pass will go ahead before expenditure on further motorways is embarked upon? Is my noble friend aware that this is a scheme that has been pressed for very many years? The traffic from the West Riding and the industrial traffic going to Whitby and Scarborough via this old market town, with its narrow streets, its crossroads in the centre where there are traffic lights, and then over the railway and river bridge, creates very difficult congestion, and there is a case for a first priority to be given as soon as finance is available.
Baroness STEDMAN: My Lords, I thought I had made it clear in my original Answer that as soon as the resource constraints on road expenditure permit, this will be one of the schemes that will be carried out.
Lord MOWBRAY and STOURTON: My Lords, has the Minister considered that one of the things that the country is being asked to do is to economise in fuel? If the Minister could see the build-up of traffic coming from the Leeds, Bradford, York area into Malton, especially during the summer months, she would see that the expenditure on the road might well be offset by the economy in fuel.
Baroness STEDMAN: My Lords, my Department has looked at all the schemes. This scheme will cost about £6½ million. It was formerly due to start this month, and tenders had been invited when the July cuts came. Since the announcement of the deferment we have had made very plain to us by the local action groups, and all other people, the difficulties that will prevail if this part of the scheme is not able to be carried out. In the announcement of the deferment of the schemes my right honourable friend in another place said that this one was included, which meant that it was set back by one to two years, with an approximate starting date of 1978. But that, we hope, is a pessimistic date, and as the resources become available we hope to be able to speed up the start.
Lord DERWENT: My Lords, may I say that if I ask any of your Lordships next year to come up and stay for a weekend, if you come by road you will not arrive until Monday morning?
Lady KINLOSS: My Lords, could the Minister say whether the Government considered applying to the Regional Fund of the EEC for help on this by-pass?
Baroness STEDMAN: My Lords, I have no information on that score. If the noble Lady would like to put down a Question I will get the information and let her know.
Lord GISBOROUGH: My Lords, could the noble Baroness say in what year this Malton by-pass was first conceived?
Baroness STEDMAN: My Lords, a long time ago.
Lord MOWBRAY and STOURTON: 1929.
Baroness STEDMAN: My Lords, it went into the trunk road preparation pool in February 1967. Presumably a lot of protest has been made from all sides since then, but it did go in the trunk road preparation pool in February 1967. We appreciate that there is a bottleneck, we appreciate all the problems to the commercial and holiday people, and we will do our best; but we must have the money first.
Lord BLYTON: My Lords, is the Minister aware that the Conservative Party are always shouting for cuts in expenditure by the Government, yet they are now pleading for extra money to be spent. This is while they are shouting outside that the Labour Party are not making sufficient cuts in capital expenditure.
Baroness STEDMAN: My Lords, I am grateful to my noble friend for his support. We have had to look at our priorities. Malton, regrettably, is not one of the highest priorities. We will do the job as soon as possible.
Viscount ST. DAVIDS: My Lords, is the noble Baroness aware that my head is positively stuffed with good ideas, all of which would greatly improve the country but many of which would cost a great deal of money? Is she also aware that I shall inflict none of them on her or any of her friends while the country is in its present state?
Baroness STEDMAN: My Lords, a very laudable statement.
Lord TRANMIRE: My Lords, will the noble Baroness realise that this scheme started 47 years ago, when it was costed at £100,000? Forty years ago it was accepted by the local highway authority at a cost of £200,000. It is really false economy to put off what must be done in a very short period of time.
Baroness STEDMAN: My Lords, I cannot be held responsible for something which Governments before the one of which I am a member had an opportunity of doing.
Lord MOWBRAY and STOURTON: My Lords, will the Minister take note of

1275
the fact and assure me that the Government are aware that a world shattering event has happened today? When the noble Lord, Lord Popplewell, has to ask the Government to do something like this about roads around Malton, matters must be very bad indeed.

SOVIET FREIGHT CHARGES
2.50 p.m.
Baroness WARD of NORTH TYNESIDE: 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 can report on the representations made unanimously by interested European countries, including Great Britain, to the Soviet Union on their unrealistic freight charges for shipping.
Lord ORAM: My Lords, the United Kingdom has taken this matter up with the Soviet Union in the Anglo-Soviet Joint Maritime Commission and I understand that a number of other European countries have done likewise in bilateral discussion. My Ministerial colleagues have discussed the issue with a number of Ministers abroad, and official multilateral consideration of the question is continuing in Western international shipping fora. At the same time there have been contacts at commercial level.
Baroness WARD of NORTH TYNESIDE: My Lords, while thanking the noble Lord for at any rate quite a lot of information, may I ask him when he thinks it likely that we will really hear that something has happened?
Lord ORAM: My Lords, this is a long-term question of negotiation. The noble Baroness will recall, because she asked a Question about it, that in July there was a conference in Leningrad, at the commercial level. At that conference the Soviet shipowners expressed their desire in principle to work within shipping conferences. We believe this to be a helpful approach and we have noticed some recent evidence of apparent Soviet
1276
willingness to reach a commercial settlement in some areas; an example is the negotiation last month by the Russian Baltatlantic Line of membership of the shipping conferences on the North Atlantic.
Baroness WARD of NORTH TYNESIDE: My Lords, again I thank the Minister for that information. May I ask him to say when he thinks it would be suitable for me to table another Question, bearing in mind that unless one keeps on putting down Questions things fail to proceed?
Lord ORAM: My Lords, I assure the noble Baroness that her Questions are welcome. I suggest that, as two important meetings in this connection are to be held in November—I think on the 2nd—some point after that date might be an appropriate time for her to ask another Question.

OIL EXPLORATION: LICENCE APPLICATIONS
2.52 p.m.
The Earl of LAUDERDALE: 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 how many of the 53 applications for offshore exploration licences under the fifth round were received by 15th September, and how many of those received by 5th October are from groups depending mainly on foreign finance; and when the allocations will be made public.
Lord STRABOLGI: My Lords, no applications were received by 15th September. It is customary in the industry for companies to withhold their applications until just before the deadline. The response has been encouraging and shows that the United Kingdom Continental Shelf continues to be an attractive oil province. The applications are now the subject of commercially confidential discussions, and I am therefore not able to comment on the applicants or their financial resources. A further statement about the round will be made when the applications have been examined and decisions taken on the award of licences.
The Earl of LAUDERDALE: My Lords, in thanking the noble Lord for that Answer, may I also, through him, thank the Secretary of State for a letter which he was good enough to write to me on the matter when my Question went down? Would not the noble Lord agree that the round threatened to be a complete flop until BNOC made it known that, in exercising its 51 per cent. share, it would also undertake a 51 per cent. share of exploration costs from the beginning? Was not that the hump which had to be got over and which resulted in a goodly flow of applications afterwards?
Lord STRABOLGI: My Lords, I cannot of course answer for the companies, but I think it more than likely, in view of the preparatory work required prior to applications, that decisions to apply were taken more than three weeks before the deadline. The Government have throughout been confident of a satisfactory response to the round.
Lord ORR-EWING: My Lords, are the Government still pushing all applicants retrospectively to accept BNOC's 51 per cent. share in previous licences as a condition for favourable treatment on this occasion? Is Esso holding out against this condition and, if so, will this not cause delay in making the final allocations?
Lord STRABOLGI: My Lords, I am afraid that I cannot answer for Esso at the moment, or indeed comment on any individual company's application during this confidential period. Her Majesty's Government will assess applications by taking into account all the published criteria.
The Earl of LAUDERDALE: My Lords, would the Minister admit that the confidential discussions that have already taken place have included pressure amounting virtually to threats on applicant companies to accept retrospective participation, including in at least one case a suggestion that senior executives of the companies might have their residents permits withdrawn?
Lord STRABOLGI: My Lords, that is quite a different question.
Lord ORR-EWING: My Lords, would the noble Lord agree that, if pressure is
1278
being put on these applicants in this manner, it is totally out of accord with every assurance that was given at the time of the debate on the nationalisation of North Sea oil? Will the noble Lord look into this as a matter of urgency and with great seriousness?—because, if it is true, it needs to be known, and if it is not true, it needs to be announced that it is untrue.
Lord STRABOLGI: My Lords, we treat this matter with particular seriousness. If the noble Lord would like to put down a Question, I will of course answer it.
Lord SLATER: My Lords, since my noble friend said that on this issue it would be wrong for the Government to give details of confidential decisions, is it not right that the Government are unable to break that confidentiality at this stage?
Lord STRABOLGI: My noble friend is absolutely right, my Lords, as he often is. These matters are now the subject of commercially confidential discussions with individual applicants, as I said. There are competing applications for many blocks and it would not be appropriate to comment at this stage.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, would the noble Lord agree that, while respecting commercial confidentiality, to use confidentiality as an excuse for the kind of pressure to which my noble friend referred would he totally improper?
The Earl of LAUDERDALE: My Lords, may I ask the noble Lord to confirm or deny that on about 12th October—namely, a week after the deadline closed—a letter was sent to certain applicants asking what was their attitude to retrospective acceptance of BNOC's share in existing licences?
Lord STRABOLGI: My Lords, following the invitation to apply, the Government reviewed the optional arrangements for BNOC making its contributions and concluded that, as expenditure on development under fifth round licences was unlikely to arise until the early 'eighties, BNOC should by then be favourably placed to finance its share as expenses were incurred.
Lord BLYTON: My Lords, may I ask my noble friend for an assurance that we will not shift from the 51 per cent. control of all licences for North Sea oil? Is he aware that I want to see the British people controlling North Sea oil and not private enterprise making a haul out of the whole job?
Lord STRABOLGI: Yes, my Lords I am sure that there is a great deal in what my noble friend says. The Government, through BNOC, will get all the profits from its 51 per cent. share. If the companies pay on average 70 per cent. of their profits on their share, as we estimate they will under existing licences, then, with participation, the Government's total take would be perhaps about 85 per cent. from profits over the life of the field.
The Earl of LAUDERDALE: My Lords, may I ask the noble Lord to be so kind as to answer the question which I just put to him about the letter which, according to my information, was sent on about 12th October to a number of applicants asking what was their attitude to accepting BNOC's 51 per cent. share in licences already existing under previous rounds? If he does not know the answer now, will be find out and give it to the House?
Lord STRABOLGI: Yes, my Lords, I will certainly do that.
Lord AVEBURY: On the question of the commercial confidentiality of these negotiations, is it not apparent from the questions that have been put to the Minister that some information is being given by the commercial companies to noble Lords? As the companies have no objection to the information being released, may I ask the noble Lord at least to undertake to consult them and make a statement later to the House about any conditions that may have been put to the companies as part of the negotiations?
Lord STRABOLGI: My Lords, I will certainly bring what the noble Lord has said to the attention of my right honourable friend.

SELECT COMMITTEE ON COMMODITY PRICES
3 p.m.
The LORD PRIVY SEAL (Lord Peart)The LORD PRIVY SEAL (Lord Peart) rose to move That the Select Committee on Commodity Prices have power to adjourn from place to place. The noble Lord said: My Lords, the House will remember that the Select Committee on Commodity Prices was set up in January this year. At that time it was thought unlikely that it would find it necessary to meet elsewhere than in London. It was, however, always understood that it should have the power to adjourn from place to place should the need arise. The Committee is now well advanced in its inquiries and hopes to conclude them in the next two or three months. It now finds it necessary to ask for this power for one specific purpose: this is to enable a quorum of the Committee to travel to Europe for a meeting with the Secretary General of UNCTAD, Mr. Gamani Corea. The bearing of UNCTAD's work on the Committee's remit is self-evident and I am satisfied that the Committee should be allowed the power of travel for this purpose. I hope that the House will agree. I beg to move.
Moved, That the Select Committee on Commodity Prices have power to adjourn from place to place.—(Lord Peart.)
Lord BARNBY: My Lords, when the announcement regarding the appointment of the Committee was first made, it was strongly urged that there would be difficulty in the Committee achieving anything very much unless some firm and constant unit of measurement could be determined and used. The fluctuations in the commodity prices which the Committee was appointed to investigate would have much less, if not little, meaning unless there could be some stable unit against which the fluctuations could be measured. Has any progress been made on that? Also, may I ask the noble Lord whether it is intended that some interim report should be published and, if so, how soon is that report on progress likely to be made?
Lord PEART: My Lords, I understand that the Committee is anxious to proceed as quickly as possible and also to have proper discussions, and I believe that

1281
what I have suggested is reasonable. The noble Lord, Lord Roberthall, is in his place today and no doubt he can answer detailed questions.
Lord SHINWELL: My Lords, can we have information as to the number of members on this Committee? When the matter was originally raised, I believe I asked a question about this journeying from place to place, for commodity prices have more than national ramifications—indeed, they have worldwide ramifications. How far have the members of the Committee to travel and how much will it cost, and is it worth while?
Lord PEART: My Lords, I agree that one must be careful about this. There are nine members of the Committee, which is chaired by the noble Lord, Lord Roberthall, who is here today. I think that, in the circumstances, it is important that they should go to UNCTAD Headquarters in Geneva. It is not usual for the Secretary General of an international organisation to be summoned to places outside the area where his organisation is sitting. Therefore, I feel that this is reasonable.
Lord ROBERTHALL: My Lords, I think it very unlikely that the Committee will want to use this power except for the purpose already stated by the noble Lord the Leader of the House. We have had great difficulty in getting hold of proper representatives of underdeveloped countries and therefore we attach great importance to being able to see Mr. Corea, who is in a unique position to speak on their behalf. As regards the questions raised by the noble Lord, Lord Barnby, which are not strictly relevant to the Motion proposed by the noble Lord the Leader of the House, we are hoping to make a report in the early months of next year. It is an extremely complicated subject and I do not feel that an interim report would be worth reading.
On Question, Motion agreed to.

RENT (AGRICULTURE) BILL
3.8 p.m.
Lord PEART: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill. In
1282
doing so, may I take this opportunity to say that, following representations which I have received, I shall not be moving Amendments Nos. 86 and 97 to 99. They will be withdrawn from the next issue of the Marshalled List. I beg to move.
Moved, that the House do now resolve itself into Committee.—(Lord Peart.)
Earl FERRERS: My Lords, we are very grateful to the noble Lord, Lord Peart, for having indicated that he does not intend to move these Amendments. We made representations that we thought it wholly inappropriate that these Amendments should form part of the Bill, and we are very grateful to the noble Lord for having listened to those representations and deciding not to move the Amendments. However, I feel that the Amendments should not have appeared on the Marshalled List in the first place. Amendment No. 97, for instance, takes up eight pages and refers to matters such as the Housing Act 1957, the Rent Act 1965, the Housing Acts 1969 and 1974, the Counter-Inflation Act 1973 and so on and, in order to achieve the Amendments, the Government had to put down one to alter the Long Title of the Bill.
We accept and are grateful to the noble Lord for having decided not to move the Amendments, but I believe—and I say this with the greatest possible respect to the noble Lord—that these Amendments which appear on the Marshalled List in his name, should not have been put down when the Government are in trouble with their business and we, as the Opposition, are doing our best to accommodate the Government. To have something like this suddenly appear on the Marshalled List, even if it is removed at the last minute, puts a very considerable strain on everyone trying to decide what is on the Marshalled List and whether it should or should not be so. It really jams up business in a quite disagreeable manner. However, having said that, we are grateful to the noble Lord for removing the Amendments.
Lord PEART: My Lords, I naturally discussed this matter through the usual channels and I believe that it was right to take the action I did. I may add, though, that my noble friend Lady Birk wrote about this matter to one of the colleagues

1283
of the noble Earl, the noble Baroness, Lady Young. The letter was dated 7th October. No discourtesy was intended, I can assure the noble Earl. There are great arguments here about consolidation. I am not a legal expert and do not pretend to be, but I think it right in the circumstances to take the action I have. I shall of course have this examined.
On Question, Motion agreed to.
House in Committee accordingly.
[The BARONESS TWEEDSMUIR OF BELHELVIE in the Chair.]
Clause 1 [Interpretation and commencement]:
3.9 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 1:
Page 1, line 9, leave out sub-paragraph (i).
The noble Earl said: This Amendment appears in the name of the noble Lord, Lord Swaythling, and myself and with it goes Amendment No. 2. I think it may be helpful if I explain at the outset the attitude which my noble friends and I have tried to adopt in our consideration of the Bill and the Amendments so that your Lordships can be perfectly clear where we stand.
We had a full Second Reading debate when it was made clear that our concern was not over what might be called the "humanity" aspect of the Bill but over the sheer practicality of making it work, and its effect on the efficiency of agriculture as an industry. I explained on Second Reading and I reiterate that I have very much sympathy with the underlying feelings that motivated this Bill, and that goes also for my noble friends. Eviction is unpleasant whatever the reasons and wherever it is found. That does not mean to say that there are no conditions where it ought to exist or where provision for it ought to be made.
In the same way I should not wish to minimise for one minute the emotional or traumatic stresses which the processes of court orders for possession can cause. They are real and they are frightening, and this is to be recognised by everyone. Furthermore the dignity of people becomes involved. I should not like it to be
1284
thought that in discussing any of these Amendments, or indeed even in putting them down, we on this side might be considered to be unseized of these feelings or unsympathetic towards them; we are not. They are fully recognised and fully accepted. I think it right that we should also make it clear at the beginning that on that part of the Bill which deals with what—for want of a better expression—I might call the humanity side there is no disagreement whatsoever. Where there is disagreement, it is over how the Bill is to work and how it will affect interests other than those of the immediate tenants for whose benefit it is introduced, and what is the correct balance to obtain for all those inevitably conflicting interests which get impinged upon by the Bill.
In some ways we are also handicapped because many of my noble friends and myself are farmers and landowners, and so as regards the Bill we might be considered to be landlords, and by those less charitable than some we might be accused of having a biased approach to the Bill. All I would say to that is that in the Amendments in my name and in the names of my noble friends, we have sought to be unbiased and to put down the Amendments solely in the interests of agriculture as a whole, and to enable the Bill, if and when it becomes law, to work as smoothly and effectively as possible. I thought it might be helpful to make that absolutely clear from the beginning so that we know where we stand and we know what are the reasons for our putting down some of the Amendments.
The first Amendment, in the names of the noble Lord, Lord Swaythling, myself, and the noble Lord, Lord Sandys, seeks to exclude dairy farming and livestock keeping and breeding from the provisions of the Bill. I realise that at first impression that may seem to be a fairly sweeping Amendment, and I will try to explain why we have put it down. The Bill gives security of tenure to farm workers. At Second Reading the noble Baroness, Lady Birk, explained quite clearly that the object of the Bill was to put the onus of housing farm workers on to the local authorities. We will consider at a later stage whether in fact the Bill as it is will achieve that. But the fact is that after one has gone through all the gamut of the Bill and all its provisions, it gives

1285
security of tenure; that is what the Bill is about.
If there is security of tenure in houses which are erected for and kept for stockmen, then there will be situations, in my view, where stock may well not be looked after. Of course in the old days dairy herds consisted of 10 or 15 cows. Sometimes there were a few pigs on the farm and periodically some poultry as well. But as economics have changed, so the very nature of farming has changed, and now there are dairy herds not of 10 or 15 animals but sometimes consisting of 30 animals, sometimes 120 and sometimes even 250, all in one place. Intensive pig units can now consist of not just hundreds of pigs but even thousands. Now an intensive poultry unit with 50,000 birds on a site is considered to be a small site, and such units can go up to 250,000 birds, all on one site.
It stands to reason that two results emerge from this situation. The first is that the capital involved in these enterprises is vast, and the second is that these stock, being animals, have to be looked after, sometimes 24 hours a day, and certainly seven days a week. This is not always done by the same person, but the management has to be there to achieve it. Anyone who knows anything about agriculture—and I reckon that a considerable number of people do—will recognise that the secret of success of any form of stock farming is stockmanship. If there is a good stockman the thing works; if there is a bad stockman it does not.
Inevitably with these units and with the vast sums of money tied up with them, it is essential frequently that houses should go with the units. Sometimes houses are erected specially, sometimes houses are earmarked specifically for a stockman. This enables the farmer to put into a house a person who will be able to look after the animals to the best of his ability. Frequently this means that a stockman returning home at night will take the opportunity of going around and seeing his animals before he retires to bed. That may be against normal industrial practices, but it is one of the facts of stockmanship, and a good stockman will do that.
If a stockman leaves, or has to be changed because his management is not
1286
good, then under the Bill he is permitted, indeed entitled, to stay on. I ask your Lordships to consider for a moment what the effects of this would be. Let us take, for example, a dairy unit of possibly 120 to 200 cows, all of which have to be tended and looked after. Under the Bill a stockman may leave his job yet remain in the house. What would the farmer then be able to do? Of course he can go through all the processes of notifying the local authority. He can inform the agricultural dwelling housing advisory committees—which have been called ADHACs for short—of the problem. But once all this has been done, it may be six months before the problem is resolved, and even then it can be resolved only by the local authority finding another house. Meanwhile the animals have to be looked after.
A farmer may well do this himself, or perhaps he will try to get somebody else to do it. But picture the situation. If he knows that his stockman has gone or is going, he will advertise for a new stockman. If he advertises and—as I said on Second Reading—states in the advertisement that there is no house available, the fact is that he will not get any replies. If, on the other hand, the farmer does not place such an advertisement in the paper but then invites a prospective new stockman over, he will then have to say, "This is the house which will go with the job, but you cannot go into it yet because my previous stockman is remaining on. He may be there for three months, six months, 12 months, or even for two years. So you cannot have that house until it is empty. But I will provide you with a caravan." The practicalities of the situation are that a stockman will not come to such a post. Imagine the situation if a stockman is asked to bring his wife and children to live in a caravan. This point will be discussed under later Amendments, but the fact is that stockmen are highly paid, highly skilled people, and it is unlikely that they will be prepared to move from one job where they already are into a new job where they have to live in a caravan in the hopes that one day a house may be available. That is a real practical difficulty.
I now move to the next point. Any farmer engaged in a business is able to take immediate action. Anyone can deal with a problem of short duration; of

1287
course he can. What is impossible is for him to deal with a problem which is of long duration. It may well be that some of these houses, some of these units, are right away from towns—they usually are—and quite reasonably isolated. I venture to suggest that those farmers who are beset with the problem of finding a new person and not being able to have possession of the house which has been specially designed and erected for a stockman may well in the end say, "It's just not worth it. It's not worth the palaver of a seven-day week. It's not worth the responsibility. It's not worth the capital investment. It's not worth trying to make a go", when not only have you got all the worries connected with livestock farming but, on top of that, you have got the problem of finding a stockman and putting him into a house, which you cannot get hold of. If that were to happen on any large scale at all, the effect would be that farmers would give up their livestock holdings.
One of the great fears about this Bill as it stands at the moment is, as I said on Second Reading, that with all the paraphernalia contained in this Bill one thing that the average farm worker—and indeed the average farmer, but particularly the farm worker—will gather from it, is the four words, "Now I can stay". Therefore, if you get a problem such as I have described in one place, the danger is that the effect of this Bill could be such as to increase the feeling among people, "All right, if I have to leave my job I can still stay on. It's my right to stay on".
The noble Lord, Lord Peart, who was after all a very distinguished Minister of Agriculture and who knows more about agricultural facts, I suppose, certainly from a ministerial point of view, than anyone else in this Chamber, knows perfectly well that there has been considerable difficulty over ensuring that there are sufficient dairy cattle. The statistics have been going down in the past. If the result of this Bill is that this trend of giving up cattle and a reduction in dairying were to take place, the effects on British agriculture would be very substantial, because this means that in the end it would not be doing the job it is supposed to be doing, which is providing
1288
food for the nation. That applies whether it is dairying or beef, intensive poultry units or intensive pig units.
If that were to result from this Bill—and I put this not as a short-term problem but as a long-term problem—I think it would be a sad thing. I do not believe the noble Lord, Lord Peart, would want for one minute to think that this Bill might in fact result in a depletion in the number of stock kept by farmers and a lowering of the ability of British agriculture to do the job that it ought to do. I put forward this Amendment with great feeling for this reason: I believe that the stockman's situation is totally different from that of the other people involved with agriculture. It is perfectly possible to say that a tractor driver could live in a village or live away from the farm. It is perfectly possible to argue that a tractor driver could live in a local council building, but it simply is not practicable to say that stockmen can live in council houses away from their jobs.
This is the real nub of it. If stock are to be properly looked after and adequately catered for, then the stockman looking after them as to live on his job, and the effect of this Bill as it stands now is precisely not to enable that to happen. It is for those reasons that I hope that the noble Lord, Lord Peart, who has the interests of agriculture very much at heart and who must know in his own heart of hearts that this could have a restricting effect on agriculture, will give this Amendment very serious consideration and realise that, whatever the merits of the Bill in many other respects, it really is impracticable to let it refer to stockmen. I beg to move.
3.25 p.m.
Lord BYERS: I must first say that the remarks I have to make on this Amendment are my own remarks and that I do not speak in any way on behalf of my noble friends on these Benches. I could not agree more with what the noble Earl, Lord Ferrers, has just said. If I may say so, he has said it very much better than I could put it to your Lordships. I should like to say that this Bill is full of discriminations. Its main discrimination is, as we said on Second Reading, that it is dealing with tied cottages, as they are colloquially called, better known as service

1289
houses. It deals with these in 10 per cent. of the cases. As we said on Second Reading, there are many others: miners', railwaymen's, police, the Armed Forces', nurses' and other hospital workers' service houses, and so on. It is therefore discriminatory in that way. On this Amendment, can we not arrange to discriminate again; to discriminate in favour of those stockmen to whom the noble Earl referred, those who are so essential for their duties? The herdsman has to be there when his cattle calve, the shepherd when his ewes lamb, the pigman when his sows farrow, but those are not the only times. As the noble Earl said, it is really a seven-days-a-week job and any good stockman is so devoted to his job and so anxious for the health of his animals that he recognises this completely. I feel that, as the noble Earl said, it would be impossible for farmers to carry on if this Bill contained the words of the paragraph that it is proposed should be left out. So I give my most sincere support to the noble Earl in what he has said and I trust that the noble Lord the Leader of the House will accept this Amendment.
Lord CLITHEROE: May I say a short word, which I very seldom do these days, in support of this Amendment. I have been for nearly 50 years a farmer and a landowner. My wife was the first woman ever to qualify as a land agent and she shares my views. As the noble Lords have pointed out, this is a very peculiar set of circumstances, when you come to dairy-farming and sheep. Cows calve at night, as the noble Lord has told us, and there have to be people there at the time. We have something like 170 cows at home and they are in more than one building. This means that it is necessary to have people there every night, for that reason and others. Another reason is that the herdsman looks round the cows late in the evening to see whether any of them need bulling. That is something which also has to be done. If you have a lot of sheep, the sheep have lambs, and the lambs come at any time of night or day and have to be looked after. It is essential to have men who live on the farm, if it is a dairy farm or a sheep farm. I know that the noble Lord, Lord Peart, is well aware of all that I have said and I hope that he will take every step he can to meet these difficulties, which are, indeed, genuine ones.
Lord COLLISON: I want to say, first, that, concerned as I am with this Bill, I do not intend to jump to my feet on every Amendment. One appreciates that there is a considerable shortage of time and that this House and its Committees must get through a great deal of work. Therefore I intend to contain myself. But I must say one or two things on certain of the Amendments. I appreciated what the noble Earl said about humanitarian matters when he started his speech. I believe that he feels that these considerations must be taken into account, but I would point out to him that the Amendment itself absolutely contradicts that sentiment. After all, the Amendment would eliminate dairy and stock farming, which represents a large proportion of the farming industry and is one in which very many men and women are employed. These men and women are just as entitled to protection as the farm workers who are doing other kinds of work in the industry.
The Bill itself concerns agricultural workers; therefore Clause 1 of the Bill is very necessary because if you are discussing agricultural workers you must define "agriculture". This clause defines "agriculture" so that we and every one will know what people we are talking about in the remainder of the Bill. I should like to see the Bill go through and I hope that it will go through unamended. I would point out to your Lordships that this draft was arrived at only after full consultation with all sides of the industry and others. It is therefore the result of considerable discussion and consultation, and the Government decision on it was not taken off-hand but only after all the people concerned had been consulted and their views taken into account. I ask the Committee to bear in mind that agriculture is a wide and extensive industry. It is important to this country; and, as I said on Second Reading, this is the one element in relations between farmers and farm workers which creates bitterness. I do not want to go into that again. I am convinced after many years of experience—and I hope that your Lordships will believe me—that if we can clear up this matter, then the one remaining point of friction and bad feeling in the industry will be cleared up.
The noble Earl, Lord Ferrers, painted a grim picture of the consequences of this Bill and, in particular, the consequences

1291
to dairy farming and stock farming. The Committee will forgive me if I say that I do not believe one word of it. I think it is a wild exaggeration. Already we have countless farm workers—and women workers, too—who are stockmen who are required to look after the needs if stock and who are living in tied cottages. Occasions arise when these same workers leave their employment or are dismissed from their employment or become ill or incapacitated. The problem arises only occasionally; it is not a common occurrence; it happens in a minority of cases. The local authorites have already acted to help resolve the situation. I have not seen, nor do I expect to see, any breakdown in the industry in stock-keeping and dairy farming, or in any other aspect where workpeople are required to look after stock. That I do not accept, and I suggest that this is an exaggeration.
I know the industry and I can claim, perhaps, to know the problems which arise on both sides of the industry. This, in fact, will not constitute one of them. The cases will be few and far between and most of them will be resolved satisfactorily. I would therefore ask your Lordships to discount these scare stories about what might happen. I assure you that it will not. I say this sincerely and from knowledge. I would not seek to mislead your Lordships on this point.
The Earl of KIMBERLEY: I do not wish to cross ploughshares with the noble Lord, Lord Collison, but I feel in relation to the beginning of this Bill (one of the objects of which is to provide security of tenure, particularly to stock-men) that if you do not have a tied cottage or a service house for a stockman you are making the security of tenure less. If you have a first-class stockman anywhere in England, Ireland, Scotland or Wales, he would know that if for family reasons he wants to change his environment he will be able to find another job with a good house to go to. The farmer who employs him will know he can get a stockman of the same quality and efficiency. In a sense, security of tenure is greater this way.
The Earl of ONSLOW: The noble Lord, Lord Collison, rightly said that this was a very minor problem compared with
1292
the number of people actually involved. He went on to say that we on this side of the Committee were indulging in scare stories. I do not think we are indulging in scare stories, but there is a slightly worrying thing that if you do, this particular aspect could produce the wrong impression: it would produce the impression that all stockmen stay for ever and consequently the legal machinery will have to be gone through more frequently than at the moment. Secondly, I do not think that we have to lecture the noble Lord, Lord Peart, on agriculture; I think that a lot of us could be lectured by him to good advantage; but I have a feeling that we do have to lecture the noble Baroness, Lady Birk, on this subject. In her Second Reading speech she prattled on about "rotten roots". As the noble Lord, Lord Peart, said, she spoke eloquently. The use of the words "rotten roots" was not perhaps showing her normal standard of high judgment—I will put it like that.
Next, I want to underline the stockmanship and calving aspect. One has been told that one must not speak from personal experience. It is very difficult to know whether personal experience underlines a situation as one sees it or whether one can be accused, possibly with justification, of being the most monumental bore about what happens on one's own farm. I will risk that accusation and will just say this on this particular point. I have been out to dinner late at night and have come back and have found that the stockman has also been out on Saturday evening, and I have been in my dinner jacket, with sleeves rolled up, trying to pull out a calf, helping him. If he is not very near to where this particular operation is going to happen, it is going to make stock-keeping more difficult.
This leads me on to my next point, which is that 80 per cent. of English-consumed beef is produced in this country, 100 per cent. of our drinkable milk, 90 per cent., I think, of our pork and 100 per cent. of our eatable chickens. This is a very capital intensive business and if we make it more difficult for the farmer we shall have a situation where two further people are going to suffer. First, the consumer: if we do not produce as much as we do already prices will go up and pressure on the Green Pound will

1293
become even more severe. Secondly, the farm worker will suffer and, above all, the balance of payments will suffer. There are complaints from consumers already about the perpetually rising prices; the balance of payments is under the most appalling stress and one does not want to make points about the general state of the economy.
We all know that we are in a position in which the Beggars' Opera might have to become our national anthem. We must be very careful that we do not make it more difficult to feed more of our people as cheaply as possible. I know that the noble Lord, Lord Peart, understands this. I know that the Labour Party, for all its good aspects, is basically an urbanly based Party, and since the Corn Laws the industrial working class has exploited the agricultural working class in the benefits of cheap food.
Lord JANNER: I sometimes hesitate to intervene in matters with which many in this House are more intimately connected than I. I have listened for years to the kind of arguments put up in regard to the Rent Acts, and I am bound to say that the desperate fears presented to Parliament by enthisiasts who know their subject and who have tried to prevent the protection which I believe on humane grounds ought to be afforded to every individual, have proved to be wrong.
Lord SANDYS: I do not think the noble Lord is quite right, because the 1974 Rent Act, which was one of the pieces of legislation which the Labour Party introduced comparatively recently, has amply born out all the criticisms made from this side of the House.
Lord JANNER: I have had a lot to do with the Rent Acts, and I have not yet found that the basic principles on which they were introduced have been proved to be wrong. This is a fact. Let me now give my side of the experience. Having listened to what happens when applications are made in various courts, and having represented people making these applications, I have come to the conclusion that from a humanitarian point of view the Rent Acts have proved of value.
Lord SANDYS: I hesitate to interrupt the noble Lord once again. Why is it
1294
that at the present moment over 750,000 houses are empty in excess to requirements? Many of these houses could and would be let, and the same applies to rooms and other accommodation.
Lord JANNER: I am sorry to say that the people who keep them empty should be dealt with in a different way from the way in which they are being dealt with at present. Empty houses should be carefully considered and there should be ways and means of dealing with those who own them. It may be that the noble Lord does not think the same as I do—I am not surprised and I do not blame him; I merely say what I think. I speak from many years experience in that direction.
I have listened carefully to both sides. I am impressed by the fact that my noble friend who spoke this afternoon, who represents those who work in the industry, has categorically stated that he supports the Bill as it is. To my mind that is a very important point. In my opinion—and I believe this opinion to be generally held—the agricultural worker is a man who is devoted to his work and is not going to leave for fear that his leaving the employer will prevent the employer from getting another person. In fact, from what we have been told here, I am of the opinion that the average agricultural worker sticks to his employer for a very long time and it is only the exceptions who might be affected by an act of this description. In the judgment of a person who has a direct approach to the workers there appears to be an undoubted consensus of opinion among the workers in the industry. That means that the worker himself is not fearing anything in this Bill and the specific workers to whom this Amendment applies come within that category. Further, if you start breaking down the Bill and making exceptions there is going to be considerable misunderstanding and agitation by those who feel that they are being discriminated against.
The Earl of ONSLOW: Would the noble Lord give way? He is talking first of all about the Bill as designed solely for the workers. For obvious reasons I have enormous interest in my own workers and in agricultural workers. Surely we should be talking in the interests of

1295
agriculture as a whole, for the benefit of the whole community. Secondly, the noble Lord stated that this Bill should not discriminate. But it does discriminate. It discriminates against coalminers, against the Prime Minister, against all the other 95 per cent. of people who live in tied accommodation who will not be protected by the Bill.
Lord JANNER: With the greatest respect—and we do not frequently agree with each other—on this occasion I agree with the noble Earl. The fact that there is a difficulty and that the principle of the Bill is not being applied to other people, does not necessarily mean that it ought not to be applied to them and will not be applied to them. I am sure that the question of tied cottages in other directions will come under consideration in due course. But at present we are dealing with one aspect, and the argument that because you do not deal with other sides of it at the same time and so give an opportunity to those who oppose the Government to filibuster and to try to prevent them from getting legislation through, is not a very effective argument. If we were to take the whole gamut at the present moment, I am sure there would not be just one all-night sitting, there would be very many all-night sittings between now and the time the House rises.
Earl FERRERS: Is the noble Lord suggesting that our consideration of this Bill is filibustering?
Lord JANNER: It will be filibustering if noble Lords continue to use the argument that because we are dealing with this matter, all other tied cottages should be considered before this one is put through. That is what I am saying and I believe the noble Lord is a fair man who will appreciate the point that I am making. The argument about the other industries that are concerned is something which has to be considered later on, and I am quite sure we shall have opportunities of discussing it.
With regard to this question, I say again that the spirit which we have been told prevails between the employer and the employed in this particular industry is of such a nature that I do not think for one moment the agricultural employers have
1296
anything to fear, except in a possible case where the employer has not treated the employee properly, or where at least the employee feels aggrieved, and there will be very few cases in that respect. I hope that the employers in the industry and those who have spoken already will weigh the facts and come to the conclusion that their Amendment ought not to be accepted, in view of what we have heard today.
Lord MOYNE: May I make a brief intervention to draw attention to a case where the employee has not treated the cows properly? I came upon our second cowman kicking a cow. It was not possible to retain him; he was very rough with the cows. We did not know that when we took him on. We gave him time to find another house and finally he left of his own free will. He said, "I realise I am not appreciated here; I am criticised all the time". It is essential that cows should be treated gently, not only for the sake of the cow but for the sake of the farmer and for the sake of agriculture. In such a case surely it must be possible to recover the house in the proximity of the cowshed.
Lord JANNER: I do not know whether or not that point was addressed to me?
Several noble Lords: No.
Lord JANNER: Would the noble Lord like the Minister to answer?
Lord MACKIE of BENSHIE: I have been trying to talk about the Amendment, but may I start by digressing a little and say that many times in the long reaches of the night, wakeful and thinking about life in general, I have reflected that it is a great thing to be born a Scot and to farm in Scotland; that the lesser breeds who live further South are nice people but I have been assured of my own superiority and good luck. That has been entirely reinforced by this Bill which does not apply to Scotland. The reason it does not apply to Scotland is that the Scottish farm workers' union does not want it and the Scottish farm workers, in my experience, are independent, upright and highly sensible people. I have an enormous respect for Lord Collison's experience, but in this case I believe that the Labour Party are infected by a sort of folk memory. They feel they must get rid of this evil,

1297
but they have not heard the good news that the Battle of Waterloo was won some time ago.
In talking about this Amendment, I should like to put the point of view of the farming ladder of the stockman who is on his way up. It is a very important one and it is important to the English because they appear to need a large number of Scotsmen to come down to be the best herdsmen in England. Your Lordships may laugh, but no one will contradict me. It has been a tremendous source of increased production in England. You will not get those men to come down any more because there will not be a house for them. It is a recognised pattern nowadays that a young stockman will start as an assistant in a big herd and, as the noble Earl says, the herds go up to 500 or 600 cows, competently managed. Once he has learned his trade he goes off to a job looking after 100 cows. That is not a big herd. A great many young men tackle them on their own, helped by their wives, and they make a great deal of money. They deserve it, and they learn a great deal more about the business from doing that. They then go on to become the managers of the big units which are becoming more and more important in the production of food in this country. It does not apply only to cows but also to pigs and to every other form of livestock. These people will now be totally held back. They will be kept to one farm or to farms near where they live. I assure noble Lords that in my part of Scotland stockmen move about more than other people simply as they ascend this ladder and because they want, in the main, to make more money than the other workers on the farm.
The problem of the tied house in the County of Angus, at any rate, has been largely solved because the county council has built a large number of houses for retired farm workers. That is the real problem of the tied house. It is not a matter of the wicked employer; it is the problem of a man retiring. I think the whole Bill is so silly that this Amendment—which is a fairly big one, I must say—stands out for that reason as a monument to good sense.
Lord GISBOROUGH: I should like to support this Amendment. My own experience began when I was a student.
1298
I well remember getting up at 5.30 in the morning, walking through the ice and snow on many occasions to do the mucking out, wash the udders, report on mastitis and all the other things that one had to do and was trained to do. Often in the morning one would find that cows had calved during the night. One was out of touch with that because one was living about a mile away in a small house and coming up two or three times a day when required for milking. Of course, all the calving, the bulling, and so on, was done by the herdsman who lived in the house next to the cowbyres, and he was up at any hour of the night, or when necessary, as calvings and so on took place.
This Amendment accepts the reality of the situation where you must have the herdsman on the spot all the time. It was mentioned by a noble Lord behind me that, with an urban-orientated view, there is still an idea that a farm is something like a factory; but in truth it is far from it. It is particularly necessary to cover the farms where no land is attached because there is less likely to be any other houses on that same holding. The noble Earl has mentioned the large numbers of stock which are on many of the units now, and these are ever increasing. There is an enormous capital outlay on the cattle, pigs or sheep which constitute these large herds. With chickens particularly one has phenomenal numbers, and things can go wrong extremely quickly. There can be a temperature fault; a heating thermostat can go wrong and, in a short time, there is trouble. The feed can go wrong; you may have an outbreak of disease. This has to be dealt with immediately. You may have escaped stock, break-ins, fire, and so on, and it is necessary in many of these outfits to have somebody living very close.
Many stockmen are naturalists in their own way and take great interest in the surroundings as well as in the farm. I remember a shepherd who took a great hand in killing foxes et cetera, and without his help the lambs would have not survived. There is perhaps a suspicion that many farm workers are always coming and going and causing trouble. This is totally wrong. There is very little problem in my experience. Ninety per cent. of the workers are extremely hard working and efficient, and the last thing

1299
one wants to do is to get them to leave. On the other hand, you undoubtedly get the bloody-minded chap. This is where the problem lies. That type of person comes in and is no good at work, or he comes to the farm merely for the house and causes trouble. He does not deserve a great amount of sympathy.
It has been mentioned that with no house it is extremely difficult to get new workers, particularly good workers. I am glad that we heard the point from the Scotsman about the efficient Scotsmen who leave houses and come down to take the jobs. I know of many people in my part of the world who have given up stock, given up dairy cows because of lack of labour and houses. We have had this problem in the past. The noble Lord, Lord Janner, mentioned that restrictions should be drawn ever tighter round those farms or the people who have houses which are kept empty because of the tightness of the laws. He felt that there should be still tighter legislation. The tighter you draw legislation, the more effort people put into avoiding it.
I should like to finish with the story of the sun and wind. The wind challenged the sun to take the overcoat off a person in a field. The wind tried first: he blew and blew. The harder he blew, the more the man clutched his overcoat. When the wind failed the sun said that he would try. The wind said he wanted to try one more puff. He still could not do it. So the sun came out and the man took off his overcoat.
4.5 p.m.
Lord PEART: It may be useful if I intervene, not to shut out anybody, but I am certain that because of the importance of this clause it is right that we should have a wide-ranging debate. I think it will follow the pattern of a similar debate in another place. No doubt noble Lords have read carefully what another place did and said on the matter we are debating today. I should like to thank the noble Lord for the way he moved his Amendment. I agree with many things he said. I believe that noble Lords opposite wish to see this Bill work if it is passed. I hope it will be passed. Inevitably, there will be a major job to do. I accept this. There will be responsibilities not only on farmers but on the
1300
new committees and in the housing authorities.
I accept the spirit in which the noble Lord made criticisms and also moved his Amendment. I believe that he is anxious to do his best for all sections of the farming community. He said that there is no disagreement on the "humanity side", to use his phrase. I accept that. Many of the happenings we used to see in the countryside in another period are not frequent now although there are still isolated cases which can be avoided. Generally speaking, there are good relations between farmer and farm worker. That is my experience. I have travelled around addressing farmers' meetings in different parts of the country. I have visited various sections, and I have always had good relations with the Country Landowners' Association. There is a general desire to have a proper system which works effectively for all. This is what we are trying to do. I do not believe that this is a Bill which will weaken that relationship, despite some of the fears.
I know that they have been mentioned by the noble Earl, Earl Ferrers. He believes in the importance of having a good farmer and a good farm landlord relationship. That is why he feels that we should think in terms of the interests of a vital part of the agricultural industry. Here I do not dissent. I noted what he said about how important it is that we should have stockmen on the farm or near the farm. I do not think this Bill will hinder that when it becomes an Act. He talked about the importance of the industry and about small herds, the farm with a herd of 10 or 15 cattle, the 30 herd, 120 herd and 250 herd farm. He went on to describe the trends in the pig industry. I agree that we now have large pig units and it is the same in the poultry industry which is highly efficient. It was never in the Price Review and I never had to negotiate prices in that section. I did not get into trouble—as occasionally happened with others—when they thought they were not treated rightly.
We have seen a growth of a great agribusiness in this field. It has been stressed by the noble Lord, Lord Gisborough, and the noble Earl, Lord Onslow, who know their industry and who are farmers and landlords, that we are dealing with large enterprises where a

1301
considerable amount of capital is involved. No one wants these to be damaged in any way by the alteration of any manpower arrangements. It is true that you have to have people to be on the farm and be available 24 hours a day. I accept that you need good stockmen. I will deal with the stockmen from Scotland a little later.
I do not believe that this Bill will destroy confidence in any way. We have one of the best dairy industries in Europe. It was my privilege to negotiate in Europe in the last Price Review and I dealt specifically with an award for the dairy industry. I know the difficulties that they have had with the weather and other things. There was a period of retrenchment. I know the difficulties of the high costs and the effects on seed prices. Nevertheless, we have a most efficient industry which also produces a large supply of our beef, and some people forget that. Therefore we as a Government do not want to harm that.
There is a danger that noble Lords can think in terms of the past and have the old arguments raised. We have to look differently. The arrangements in the Bill are modest. To the noble Lord, Lord Swaythling, I must say that in another place—I must not quote—a distinguished farmer, a member of the Liberal Party, declared his desire to support this Bill. He thought that we were not abolishing the tied system as it exists in this country but rather we were going to improve the landlord farmer and farm worker relationships. I believe that this will be done. I believe that it will be a boost to the morale of workers and farmers. I could quote—but I would be making a Second Reading speech, and must not be tempted to do that—from other responsible sources. I could quote from the Farmer and Stockbreeder which talked about this Bill providing something which can work, if we will it. So I hope that noble Lords will not be too pessimistic.
Of course, they must speak from their own experience of the farming industry and they are right to do so. I make no complaint of the fact that on the Benches opposite we usually find more farmers or landlords than on my side. But that does not mean to say that they have an argu-
1302
ment, because it is rather strange that my Party generally has some very good records in agriculture. I think of my noble friend Lord Addison with his Marketing Acts, and of a great Minister to whom I was Parliamentary Private Secretary who brought in the 1947 Act. I see many noble Lords in this House who served with distinction on many of the committees, and who sought to improve the 1947 Act.
Most of the legislation which affected our agriculture is still there, and it is a tribute to the all-Party approach in that section. So I do not believe that the fabric of this industry which we have created, and which will have to challenge because of our entry into Europe, will be harmed by the arrangements which we have put forward in this Bill. As I have said, many people in all Parties believe that this is reasonable, and I think my noble friend Lord Collison was right to say that we should not exaggerate. Let us remove friction and bad feeling, but let us not exaggerate. He knows the industry, too, and he said that there will be no breakdown.
The noble Earl, Lord Kimberley, argued that we need first-class stockmen, which was again raised by the noble Earl, Lord Onslow. I do not regard him as a bore, if he wants to say that he feels self-conscious about what people think he is. From talking to him when he came to see me when I was a Minister, I know that he was anxious to consider policies in the interests not just of his own holdings but of agriculture generally, and I think he was right to stress his worries. He talked about the Labour Party being an urban Party, and so we may be. But many farm workers are in my Party, although some may be Liberals or Tories. However, that is not the issue. The issue is whether this Bill will work or frustrate. Can we work out something practical? Will these new committees—I do not like the names, because we generally use initials—work? Will they serve the interests of the rural community? Will the farmer and the farm worker feel at different times that they are getting a square deal? Will their interests be protected? I think that they will and given good will, based on what we have seen in other sections of the industry—for example, the agricultural workers' committees—I believe that common sense

1303
will be applied here and no section should suffer.
I shall not get involved in arguments about the Green Pound. Such matters will have to be settled, but not today when we arc dealing with this important Bill. I would say only this to the noble Lord, Lord Moyne. Of course, we do not want cows to be treated badly—no one does—but this Bill will not stop good husbandry. Farm workers who are employed in these great enterprises will not harm them, and I believe that, when a worker is required on the spot, the committees which we set up will recommend in the interests of agriculture that a farm must have these personnel. So I do not think that we should be too pessimistic.
The noble Lord, Lord Mackie, who quite rightly, spoke so lovingly about his Scotland, knows that many good Scottish farm workers were driven away, not only to England, because of certain acts which I shall not go into. But they drove them to Australia, New Zealand and all over the world and that was very good for world farming. If one goes to the Argentine, as I have done, and sees the great shows, one meets Scottish stockmen and I pay tribute to them. But this Bill will not apply in Scotland. The noble Lord may argue that that is because of the good sense of the Scottish farmworkers' union. It may be, but I do not know. I was responsible as Minister of Agriculture, but I am still in the Government and I should like to think that I try to protect the interests of the farming community and do all I can. So I say to him, as a friend of Scotland and a Border Englishman, that I do not think he should worry too much. He is all right, as he said, but let me argue the English argument and the Welsh argument. After all, the spokesman for the Liberal Party was a Welshman, and a famous Welsh farmer. The Welsh were driven out, and there are some good Welsh farmers in England as well. So I would rather take his view than that of the noble Lord who sits in this House.
Lord MACKIE of BENSHIE: If the noble Lord will permit me, I would take him up slightly on the argument which he appeared to use that Scotsmen were driven to England, the Argentine and all over the world by the tied house system and repressive measures—
Lord PEART: I did not refer to the tied house system.
Lord MACKIE of BENSHIE: Perhaps the noble Lord left that impression. He knows that it was the terrible depression in agriculture, and the miserable wages which were all that could be paid, not only in Scotland but in England as well, which drove people off the land in such large numbers.
Lord PEART: The noble Lord knows his history, I hope, and I did not mean that at all. Anyhow, I must not go into too much detail. What we are doing here is considering this clause and the Amendments and very quickly I come to them. There is a definition of "agriculture" in the Bill, which is intended to cover the whole agriculture industry as it is generally recognised, and I do not think it would be right to mutilate this clause. I am well aware that some argue that to provide security of tenure to workers in sectors of agriculture involving livestock and, in particular, to dairy stockmen would have a damaging effect on the industry, but I cannot accept that. However, I recognise that there are occasions when it is necessary to house workers on or close to a farm. That is why there are provisions in the Bill for farmers to make application for the rehousing of outgoing workers, in a way which enables housing authorities to take full account of the agricultural need and the urgency of the case.
As my honourable friend the Parliamentary Secretary said in another place, when a similar Amendment was being debated:
"We are presently discussing with both sides of the industry how best we can guide housing authorities and the advisory committees on the weight to be attached to the various elements of agricultural need."
There have been a lot of consultations on this matter, both before the Bill was published and now, between the major organisations representing the industry. Then, as my noble friend the Parliamentary Under-Secretary of State said on Second Reading:
"I would expect that those sectors where the welfare of animals is directly involved would merit high priority ratings on grounds of agricultural need and of urgency in the advice which local authorities will be receiving from agricultural dwelling-house advisory committees."
Lord HARMAR-NICHOLLS: The noble Lord is admitting that what I hope will happen is a pious hope. We have evidence that certain sections of the trade union movement in Scotland think that this clause is a bad one. Has the noble Lord any evidence from the employer/farmer side, irrespective of Party, to show that they think differently?
4.19 p.m.
Lord PEART: I mentioned the evidence of a distinguished farmer who represents a quite important body of feeling. I could also quote the Farmer and Stockbreeder, and papers of that kind, which have stated that they now feel that this is probably the first step to try to resolve something which is there, and which should have been resolved a long time ago. I know that some farmers take a different view and I am not denying that there may be some farm workers who take a different view, and there are also landlords who take a different view; but if good common sense prevails there should, if we carefully examine the Bill, be no worries. If the Scottish Farmers' Union do not want it, that is their business. All I know is that the National Union of Agricultural Workers have campaigned for years for it. I am not saying that that is a reason for bringing it in; on the other hand it is an attempt to try to do something which is sensible.
Another Amendment which has been moved, which seeks to exclude the use of land for grazing, meadow, or pasture land, would exclude both land which is used for the grazing and free running of livestock and land producing grass for subsequent drying or riling. The Amendment is not acceptable for the same reasons and considerations as apply to the proposed exclusion of dairy-farming and livestock keeping and breeding.
Noble Lords must know that these two Amendments would drive a coach and horses through the Bill. A very high proportion of stockmen are housed by their employers and their cottages account for about one-quarter of the total cottage stock occupied by whole-time workers. Obviously the rehousing needs of such an important group of people were very much in our minds when the Bill was being prepared.
1306
In his Second Reading speech the noble Lord, Lord Swaythling, said something that was very important. He referred to disease risks from cattle breeding and I thought that he was going to raise the matter again today. I mention it because I think the noble Lord had a point about risks at Al units in circumstances where a worker leaves his job at the centre and takes up employment in, say, a slaughter-house. I accept that were such a situation to occur, the particular risk might well be higher than in the case of a normal livestock enterprise.
In addition to what I have already said about cases of this kind indicating a high priority in terms of agricultural need and urgency, may I point out that under Schedule 4, paragraph 9, to the Bill it should be possible for the statutory tenancy which could be drawn up on the termination of employment to contain clauses restricting access routes in such a way as to minimise any disease risks. I should like to remind the Committee that under the present system it can take up to six months to regain possession of a cottage. Therefore the problem already exists; it is not created by this Bill. As I have said, I hope that the Bill might lead to a generally more satisfactory solution where livestock are concerned.
In no way do the Government wish to turn back the clock regarding agricultural policy. Our main document Food from Our Own Resources describes the strategy, and we believe that our strategy is right. We do not wish in any way to harm the industry through bad arrangements between tenant and landlord farmer. If noble Lords look carefully at the matter they will appreciate that this is something which can work and that therefore it would be very wrong to mutilate Clause 1 by accepting the two Amendments which have been moved.
Viscount GAGE: May I ask one non-emotive question which arises out of what the noble Lord has just said. I understood the noble Lord to say that the local authorities will provide what is necessary: they will provide the houses for the workers connected with stock breeding and so forth. Can the noble Lord say whether the Government will give any more money to local authorities to provide these houses? I mention this

1307
because my branch of the district councils association have said:
"It is feared that housing authorities will be left in the intolerable position of having accepted the validity of an application for re-housing in respect of the tenant of tied agricultural accommodation but will be unable to provide alternative accommodation because of the central Government's restrictions on expenditure".
Lord PEART: In these two Amendments I am not dealing with that question; it will arise later in the Bill and I shall be delighted to reply to the point then. I think that I have said enough about the two Amendments.
Lord ROBBINS: May I declare a complete non-interest. I am not a farmer. It is true that I am the son of a farmer, but my father loathed animals and concentrated his attention on vegetables and fruit. Therefore I speak with not even a hereditary bias. However, I must confess to the noble Lord and to those of his Back-Bench colleagues who have supported him that I find it extremely difficult to share his optimism that no conceivable harm may result from the clause as it stands. I am not an expert in these matters, but I think that the burden of proof that the granting of security of tenure to people engaged in jobs which necessitate dwelling in the neighbourhood of those jobs lies with those who argue that no embarrassment may be caused. I am not a farmer but for most of my life I have been connected with education and certainly I can think of many educational employments where it is highly desirable that the person employed should be in close proximity by day, and sometimes by night, with the human stock for which he is responsible.
Would the noble Lord really argue that a blanket security of tenure in such cases would cause no embarrassment in education, or would he argue that machinery, which might be analogous to the machinery foreshadowed in the Bill, would remove all possible apprehensions? It is that insouciance with regard to the possibilities which surprises me. I remember that about two years ago we had a debate when the noble Baroness, Lady Young, and I, among others, warned the House that security of tenure being given in other housing connections, which I need not specify at this moment, would
1308
increase the shortage of accommodation among university students. With all due regard, I cannot help contrasting the attitude of the noble Lord the Leader of the House regarding this clause with the attitude of the noble Lord, Lord Shepherd, who in those days performed his functions, when he said that he thought that the restrictions we were considering then would slightly aggravate the shortage but that the moral arguments on the other side outweighed the inconvenience. The shortage has increased. I leave it to noble Lords to decide whether in that case or this the gain outweighs the disadvantages.
4.30 p.m.
Lord SANDYS: Having listened to the noble Lord, Lord Robbins, I feel he has greatly strengthened the case for the Amendment moved on this side of the Committee. I must say that what divides our two sides of your Lordships' Committee is one basic issue which is quite fundamental, namely, over-legislation in a field which is very sensitive. I dilated at some length at Second Reading on the question of the necessity to legislate; I questioned this most strongly, and I laid part of my argument at that time on the evidence which the Government brought forward in favour of the Bill. I will not rehearse it once again, but I must say to the noble Lord, Lord Collison, and the noble Lord, Lord Janner, that of the agricultural workers in England and Wales who were questioned by the Arthur Rank Centre, who did a very full study, only 5·7 per cent. were in favour of the Bill. This is a very, very small percentage. I think there is an overwhelming need to recognise the desire among this group of workers for no change in this particular field. Therefore, I am resisting most strongly the blandishments of the noble Leader and of noble Lords opposite who have suggested to us that there is nothing to fear. I think there is an enormous amount to fear in this field, for agriculture as a whole and for the production of the industry.
I was particularly glad when the noble Lord, Lord Swaythling, referred to animal disease. I noticed in the noble Leader's reply that he was sympathetic to this point, and I should like to say a little more about it. There is a very real issue that we should look at in the field of the dairy industry, which we have not examined

1309
sufficiently. Once again I do not wish to repeat all I said on Second Reading, but I referred to the dangers in regard to this Bill when related to foot and mouth disease. I suggested to Her Majesty's Government that it might be suitable to blow the dust from the cover of the Northumberland Report and think again rather carefully.
I have in the interval since Second Reading thought about the subject again, especially where it relates to the situation where a farm is infected. Only nine years ago we all too frequently, when passing a farm gate, saw an enormous notice in red letters saying "Infected place", and listing a great many columns of points concerning what should and should not he done. In this respect one of the especially sensitive problems was access to and from the farm. When a farm is infected, or, to put it the other way round, in order to protect an uninfected farm—and it does not matter whether I am referring to foot and mouth disease; I could equally well, in the poultry field, be referring to Newcastle disease—it is most strongly in the interest of the farmer concerned to have his stock-keepers housed, if possible, within the radius of the farm or within a very short distance, so that those infected do not come in touch with other people.
My second point is this. Over and over again, after an infection has taken place—and, once again, I do not specifically restrict my argument to foot and mouth disease—there is a report published by the chief veterinary officer of the Ministry of Agriculture. After the infection in 1967/68 the chief veterinary officer, having identified where this particular outbreak took place, made a number of recommendations. I think it is up to the Government to think very seriously indeed on this particular field, because our stock in this country is so subject to the possibility of infection from outside. We must support the work of the agricultural research centres throughout the United Kingdom who are working day and night to ensure that livestock is protected from disease.
One of the problems which divides and involves every one of us in the United Kingdom is consumption. It divides us in this respect, that only 3 per cent. of the population are concerned with production
1310
and 100 per cent. are concerned with consumption. It is perfectly true to say that outside the United Kingdom the issue of tied cottages is not a very great one, for that reason. I suggest to your Lordships that that might be true. A far higher percentage of the population in many countries is involved in agriculture, understands agriculture, recognises the important part it plays in the life of the country. In a highly industrialised society it is easy—and I make no complaint about this whatsoever—for those who live in urban areas to think that the agricultural produce will come anyway.
I was very glad that my noble friend Lord Ferrers referred to the disincentive effect so far as this Bill is concerned. He stressed that there is a risk that farmers, who are in any case working under very considerable pressure to overcome the bureaucratic problems imposed upon them by this Government, would find themselves in a position of thinking, "Well, shall we pack it in? Shall we sell the herd? Are the returns such that in all conscience we should concentrate on something else?" Should this opinion, and it is an opinion which could very easily be held by a large number of farmers, become generally acceptable, there will be taking place the exact opposite to what the Government intend.
The Minister referred to Cmd Paper No. 6020, Food from Our Own Resources, and I was particularly glad he did so. My noble friend Lord Onslow gave us figures, which I think he must have drawn from Annexes 3 and 5 of that Paper, in regard to production. I think it would be true to say that in regard to self-sufficiency in milk products—drawing again on these two Annexes, between 57 and 60 per cent.—the White Paper stressed the opportunities there were for expansion of grassland and of cattle and sheep and stock herds. If the Government expect their wishes to be fulfilled, they must consider the situation again in regard to the stockmen.
Wild exaggerations have been suggested by noble Lords opposite. Lord Collison said that he felt that there was no breakdown likely. I would never suggest that the noble Lord was attempting to mislead your Lordships, but I beg to disagree with him on this. He said from his knowledge, and, no doubt, in full sincerity,

1311
that he felt that it would not damage the industry, and here we are in head-on collision on this issue. Only two noble Lords opposite have supported the Government's case, and I would say that there are grounds for reconsideration. I have said quite enough in regard to the situation generally. I do commend the Amendments to your Lordships.
Lord COLLISON: Before the noble Lord sits down, may I just seek to correct one point that was made. Where this 5·7 per cent. figure comes from, I do not know—I have not seen the Report myself—but I can assure noble Lords that the vast majority of farm workers in the National Union of Agricultural and Allied Workers wish to see the tied cottage dealt with—not abolished in the sense that you knock them all down, and I am referring back to the fears which have been expressed. It is accepted that 50 per cent. of agricultural workers are members of the Agricultural Workers' Union, and at every conference or branch meeting you find a unanimous dislike of the tied cottage system. Despite what has been said about my views regarding the damage to the industry, I must in all honesty reaffirm what I said before: I do not believe, and I am sure that events will prove me right, that the grim pictures of what may happen are going to become fact. Already we have this problem of the tied cottage, of work people going to court or being taken to court, of six months elapsing; and there has been no breakdown. I would remind noble Lords that this procedure can very well speed up the settlement of difficulties of that kind.
I really got to my feet to correct this idea about the number of farm workers who dislike the tied cottage. I assure noble Lords that the union is right. Through its contact with workers at branch level, county level and national level, it has found that the tied cottage is entirely disliked by people who know what it is, who understand it or who have seen what happens when an eviction takes place. I know I am not doubted in terms of what I believe, but I must reiterate again, in all honesty, in all conscience, that I am quite satisfied that this Bill will improve the situation and will not damage the industry in any way.
1312
On the contrary, it will do much to improve relations between the farmers and the farm workers.
4.41 p.m.
The Earl of ONSLOW: Before the noble Earl either withdraws or presses his Amendment, there is a question I should like to ask the noble Lord, Lord Peart, arising out of his remarks. He said that now in certain circumstances it could take six months—and I am absolutely certain that he is right in this matter—to get vacant possession of a house. He also said, and I am absolutely sure that he is right but perhaps he was just being optimistic, that he hoped that the ADHACs and the county councils would react sympathetically. I am speaking perhaps for myself, but I am pretty certain that if we could get written into this Bill an absolute liability on county councils to rehouse people after three months, so that there would be no question of going to court or anything, this could be a great improvement. I noticed my noble friend Lady Young looking horrified at that aspect. I am sure that she sees the point, as we all do, that it is going to cost a lot of money and so it is difficult. But I am speaking solely in the interest of agriculture.
Viscount MONCKTON of BRENCHLEY: I apologise for intervening, as I have just come from a funeral and am just going to a yeomanry regiment, but may I follow up that last point? Many of us, however small our acreage, would be prepared to give up, I believe, half, one-and-a-half or two acres to house our retired farm workers. The essential thing is that our stockmen must live near their herds or flocks, or pigs. But the land we would give. I would give it to Mr. Bottini of the National Union of Agricultural Workers if I could be guaranteed that my stockman's cottage would remain a stockman's cottage. Would that help?
Lord SANDYS: May I just confirm to the noble Lord, Lord Collison, who asked me where the figure 5·7 per cent. came from, that that is the figure of those agricultural workers said to be in favour of the Bill. I told your Lordships on Second Reading, and repeated it today, that it was a figure produced by the Arthur Rank Centre who qualified a professional

1313
report on the subject, and this figure was the one which has been published. When speaking on Second Reading I asked the noble Baroness whether she would like to offer your Lordships another figure, but as no figure was produced I assume that this is an accepted one.
Earl FERRERS: We have certainly had an interesting debate on this subject and I am grateful to those who have taken part, and in that I would include the noble Lord, Lord Collison, whose views are always respected because he has been so involved with the National Union of Agricultural Workers and has been a distinguished General Secretary of it. We are grateful to him for saying what he has said. I am bound to say that we find this a considerable difficulty. The noble Lord, Lord Collison, said that he was quite convinced that this provision will improve the industry and eliminate bitterness. While accepting that those are his views, I beg leave to doubt it. My fear is that it might do just the reverse. It could well be that it will increase the bitterness where farm workers find themselves becoming statutory tenants in houses built for purposes for which they no longer intend to use them.
While the noble Lord, Lord Collison, quite reasonably says that the agricultural workers' union is, and has been, very keen on this Bill, and at every conference they have had this call for the abolition of the tied cottage, a fact which I absolutely accept, I am not sure that he will also accept that, as I think everyone knows, not necessarily every member of the National Union of Agricultural Workers agrees with that. Indeed, a great many people who are not members of that union but who are also farm workers do not share that view. While I accept that that is the official view of the union, I know that he will not expect me therefore to say that ipso facto that represents the view of 50 per cent. of those involved in agricultural work.
The noble Lord, Lord Janner, said that he thought that the fears that we have expressed are unfounded. The reason which he gave for expressing that view was that the Rent Acts had a number of expressions of fear mentioned about them, and those fears have been unfounded. I would how to Lord Janner's experience in this regard because I know he has
1314
been greatly involved with the legal aspects of those Acts. I would only ask him whether he really believes that, as a result of those Acts, rooms and houses to let are more numerous and are more easy to get, or does he think that rooms and houses to let have, as a result of those Acts, become more difficult to acquire?
Lord JANNER: What I believe is that tenants have been protected, and this involves not only hundreds of thousands but probably over one million people in the country. I think that the Acts themselves have proved to be an effective protection for tenants who otherwise would have been turned out. I should like to say one thing about the question raised by the noble Lord, Lord Sandys, for whose opinion I have a high respect, not in this particular direction but generally. The fact of the matter is that people who are keeping their houses empty are causing a considerable amount of damage to the housing situation for personal advancement, not only so far as dwelling-houses are concerned but, as he knows very well, so far as business premises and other premises are concerned. It is a serious matter that these people do not consider that. After all, today there is a Rent Act which provides a reasonable rent for a house. Those who are not prepared to charge a reasonable rent are doing a great disservice to the community.
4.49 p.m.
Earl FERRERS: The noble Lord has been fair. He has said that in his view the Rent Acts have given considerable protection to millions of people. He is absolutely right. That of course is one of the reasons why buildings, houses and flats to rent are less easy to come by. It is why, for instance, it is so difficult to get rooms to rent in any university town, because once having got a room to rent if a student stays on a second term he is automatically given security of tenure. Therefore, landladies quite reasonably prefer to let them to Greeks and Japanese because at least they go home and there will be rooms available. While I accept that that has given security of tenure it has also frustrated the renting of accommodation, and that is what we fear will happen under the Bill. Certainly there will be security of tenure for tenants, but equally in the same way it will frustrate the ability to have houses or cottages to let for the purpose of agriculture.

1315
Lord Peart agrees that we need good relations between farmers and farm-workers, and that is absolutely right. He agrees that the success of agriculture as a business is important; he agrees that we do not want to damage it and that we should not destroy confidence, but my fear is that we shall be doing just that. The noble Lord is an experienced Parliamentarian and he speaks with great charm and knowledge, but he did not answer any of the points I put to him. He did not say how a farmer would get over the problem of running his farming enterprise on finding that a house which he had made available to a stockman was being occupied by a stockman who, for one reason or another, had left his employment. He said that such a farmer would draw up a statutory tenancy. That is the whole point: he will do that and, by that statutory tenancy, that person will have a right to stay on in the house.
The noble Lord did not say how a farmer in that position was supposed to cope. I suppose we must assume that he will cope either by doing the work himself, which he will no doubt do for a limited period, or provide such other form of existence such as a caravan. What an extraordinary way to improve the condition of housing in rural areas! Are we to see a proliferation of caravans on farms as a result of this measure? The other possibility is that the farmer will eventually throw his hand in and say it is not worth a candle. The noble Lord did not address himself to that thought, but I hope he will do so. Nor did he address himself to the thought that not only will this cause difficulties for farmers running their businesses but that farmers and those involved in agriculture might well give up running livestock enterprises while others will be deterred from coming into them.
The noble Lord, Lord Peart, did not address his remarks—I do not blame him because I did not specifically push it today, although I mentioned it on Second Reading—to the fact that a great many farmers and landowners have provided and are providing accommodation for people who work for them. This is particularly the case in livestock businesses, where if one is to have a valuable unit producing a lot of milk, eggs or pigs one must provide housing
1316
accommodation. That is being done now, but I fear that it will stop because no individual will spend £12,000 on building a house only to find somebody else living in it and he can not or may not have recourse to it. Not only is this a deterrent from the point of view of encouraging people to provide houses for agriculture, it is also a restriction on the national housing problem in rural areas. Nevertheless, as a result of this measure we are bound to find a slowing down in the number of people prepared to make this sort of investment.
Lord HANKEY: Is the noble Lord aware that in the area where I live nobody is allowed to build any more houses because it is a white area and is scheduled for agriculture? One is not allowed to build, and how we will provide the houses that are required is not apparent.
Earl FERRERS: The noble Lord has problems in his area which are considerably greater than the problems which may apply in other areas, and I am glad that he has drawn attention to that point. The noble Lord, Lord Peart, referred, and rightly, to the fact that the Government stood by their White Paper Food From Our Own Resources in which they specifically state that they wish to encourage an increase and improvement in industrial production. I return to the point I made earlier, which is that the Government must give agriculture some encouragement. They have subjected the industry to one restriction after another; we have had the problems of the capital transfer tax, capital gains tax, development land tax and the Community Land Act, all of which in their own ways have imposed restrictions. We now have the Agriculture (Miscellaneous Provisions) Bill which also imposes restrictions, and here we have a Bill which will restrict agriculture yet further.
If the noble Lord wants agricultural production to increase, as I know he does—I know that his heart is in the right place—he must give it some encouragement. To do that is in the interest of the whole nation at the time when, goodness knows! food prices are rising to tremendous levels and when the pound is becoming more devalued and imports more expensive. Everybody recognises that increased agricultural output is required. Why, then, this further restriction? I accept that

1317
those who live in stockmen's cottages should be just as much the subject of protection as anybody else. That is a perfectly reasonable argument. However, in my modest judgment I feel that the balance is wrong because if we give that protection to those people we will cause such a restriction on the movement of agricultural workers and on the output of agriculture that, from the point of view of the national interest and the industry, it will work to the detriment of both.
I had hoped that the Government might have accepted the Amendment. In my view they should do so, but I realise they are up against difficulties which might make it awkward for them to accept it. I do not for a moment believe that Lord Peart wishes to see it said of his Government's Administration that they curtailed
the output of agriculture, restricted the amount of livestock production and the amount of dairying. I do not say that that will result, but it is possible that it will and, if that were to happen, it would be bad for the Government—because their record would show that they produced such measures against agriculture that output was restricted—and it would be bad for the national interest. I hope that the Government will think again about this but, if they will not, then I am bound to ask the Committee to divide on the issue.
5 p.m.
On Question, Whether the said Amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 144; Not-Contents, 64.

CONTENTS

Aberdeen and Temair, M.

Ferrier, L.

Norfolk, D.

Alport, L.

Fraser of Kilmorack, L.

Northchurch, B.

Amherst, E.

Gage, V.

Northesk, E.

Amherst of Hackney, L.

Gisborough, L.

O'Hagan, L.

Amory, V.

Gladwyn, L.

Onslow, E.

Amulree, L.

Glasgow, E.

Orr-Ewing, L.

Armstrong, L.

Glenkinglas, L.

Porritt, L.

Ashbourne, L.

Goschen, V.

Radnor, E.

Atholl, D.

Gray, L.

Rathcreedan, L.

Auckland, L.

Grey of Naunton, L.

Redesdale, L.

Balerno, L.

Grimston of Westbury, L.

Reigate, L.

Banks, L.

Hailsham of Saint Marylebone, L.

Robbins, L.

Belstead, L.

Robson of Kiddington, B.

Berkeley, B.

Hankey, L.

Rochdale, V.

Birdwood, L.

Harcourt, V.

Romney, E.

Blakenham, V.

Harmar-Nicholls, L.

Ruthven of Freeland, Ly.

Bourne, L.

Hatherton, L.

Sackville, L.

Bridgeman, V.

Hives, L.

St. Aldwyn, E.

Broughshane, L.

Hornsby-Smith, B.

St. Davids, V.

Burton, L.

Howe, E.

Salisbury, M.

Caccia, L.

Hylton-Foster, B.

Sandys, L.

Campbell of Croy, L.

Ilchester, E.

Savile, L.

Carr of Hadley, L.

Jessel, L.

Selkirk, E.

Carrington, L.

Killearn, L.

Sempill, Ly.

Chelwood, L.

Kimberley, E.

Sharples, B.

Clancarty, E.

Kinloss, Ly.

Shuttleworth, L.

Clifford of Chudleigh, L.

Kinnaird, L.

Somers, L.

Clitheroe, L.

Lauderdale, E.

Spens, L.

Clwyd, L.

Lindsey and Abingdon, E.

Stamp, L.

Congleton, L.

Long, V.

Strang, L.

Cornwallis, L.

Lonsdale, E.

Strathclyde, L.

Cottesloe, L.

Mackie of Benshie, L.

Strathcona and Mount Royal, L.

Craigton, L.

Macleod of Borve, B.

Strathspey, L.

Cullen of Ashbourne, L.

McNair, L.

Swansea, L.

Daventry, V.

Macpherson of Drumochter, L.

Swaythling, L.

Denham, L. [Teller.]

Mancroft, L.

Terrington, L.

Deramore, L.

Marlborough, D.

Teviot, L.

Derwent, L.

Marley, L.

Thorneycroft, L.

Drumalbyn, L.

Mersey, V.

Tranmire, L.

Dundonald, E.

Middleton, L.

Trefgarne, L.

Ebbisham, L.

Monck, V.

Tweedsmuir, L.

Eccles, V.

Monckton of Brenchley, V.

Vernon, L.

Effingham, E.

Morris, L.

Vickers, B.

Elles, B.

Mottistone, L.

Wakefield of Kendal, L.

Elliot of Harwood, B.

Mowbray and Stourton, L. [Teller.]

Ward of North Tyneside, B.

Emmet of Amberley, B.

Ward of Witley, V.

Erskine of Rerrick, L.

Moyne, L.

Westbury, L.

Faithfull, B.

Netherthorpe, L.

Young, B.

Ferrers, E.

Newall, L.

NOT-CONTENTS

Aylestone, L.

Hughes, L.

Ritchie-Calder, L.

Birk, B.

Janner, L.

Segal, L.

Blyton, L.

Kirkhill, L.

Shinwell, L.

Brimelow, L.

Leatherland, L.

Slater, L.

Brockway, L.

Lee of Newton, L.

Snow, L.

Burton of Coventry, B.

Longford, E.

Soper, L.

Castle, L.

Lovell-Davis, L.

Southwark, Bp.

Champion, L.

Lyons of Brighton, L.

Stedman, B.

Chorley, L.

McCluskey, L.

Stewart of Alvechurch, B.

Collison, L.

Maelor, L.

Stone, L.

Cooper of Stockton Heath, L.

Melchett, L.

Strabolgi, L.

Cudlipp, L.

Morris of Borth-y-Gest, L.

Taylor of Mansfield, L.

Darling of Hillsborough, L.

Murray of Gravesend, L.

Wall, L.

Davies of Leek, L.

Oram, L. [Teller.]

Wallace of Coslany, L.

Davies of Penrhys, L.

Paget of Northampton, L.

Wells-Pestell, L. [Teller.]

Delacourt-Smith of Alteryn, B.

Pannell, L.

White, B.

Douglass of Clevelend, L.

Pargiter, L.

Wigg, L.

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

Peart, L. (L. Privy Seal.)

Wilson of High Wray, L.

Garner, L.

Peddie, L.

Winterbottom, L.

Gordon-Walker, L.

Phillips, B.

Wise, L.

Henderson, L.

Pitt of Hampstead, L.

Houghton of Sowerby, L.

Popplewell, L.

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
5.8 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 2:
Page 1, line 17, leave out ("grazing, meadow or pasture land or").
Earl FERRERS Earl FERRERS moved Amendment No. 3:
Page 1, leave out line 21.
The noble Earl said: This Amendment goes with Amendments Nos. 4, 5, 7 and 11 and I think also with Amendments put down by my noble friend Lord Caithness. The Amendments in question are Nos. 75, 76, 77, 83 and 96. Whether he wishes to address his remarks specifically to those Amendments when they come up I do not know. Therefore, I shall move only the Amendments that are in my name, even though the others relate to the same point, which is the position of forestry. Forestry is included in the Bill, but I venture to suggest that there are peculiarities about it. The problem of forestry is somewhat different from that of agriculture. The first and obvious difference is that, on the whole, forestry takes place a long way from urban centres and operates in under-populated areas on the hills in Scotland and particularly in the North of England—areas which not only have many fewer opportunities of employment but also have fewer opportunities for housing.
The Government's Consultative Document said clearly that the problems of housing forestry workers had never been particularly onerous. Paragraph 19 of the Consultative Document, which referred to the application of forestry under the provisions of the tied cottage, said:
"Provision of tied accommodation for forestry workers has seldom given rise to the kind of problems or controversy found in agriculture."
The Government have included forestry in the Bill, but they have done three things. First, they have excluded forestry that takes place in Scotland; that is because the whole of Scotland is excluded from the Bill. They have also said that tied housing accommodation where it applies in forestry should not, for some mysterious reason, apply to those people who are engaged in forestry working for the Forestry Commission. So having restricted the number of people, reducing it to a very small number, the Government then say that they do not intend that the provisions of the Bill should apply to forestry anyhow at the beginning.
Clause 1(4)(b) says that Part II, which refers to forestry:
"postpones the operation of this Act in relation to certain persons employed in forestry …"
The conclusion is that the Government obviously have some reasons for excluding forestry. My guess, and I may be wrong, is that they have not enough statistical information as to what happens in forestry, as to what happens about those who are housed in tied cottages which relate to forestry. All the arguments they

1321
have produced in the Consultative Document and elsewhere concede the fact that the problem in forestry is very much less than the problem in agriculture.
I wish to make this point to the noble Lord, Lord Peart. Forestry is, as indeed agriculture is, a very important industry. It takes place in relatively unpopulated areas. If the provisions of the Bill operate in forestry, what happens, for instance, in cases of foresters who live, say, on the top of the Yorkshire Moors or on the top of some isolated hills in the North of England? How will those involved in forestry be able to replace those forestry workers? There is no point in saying that the local authority will provide housing for them if that housing is to be 10 miles from where they work. I believe that this will produce very difficult problems for those engaged in forestry.
I should be the first to accept that the argument of fair and equal treatment for all people, as was put forward in the previous Amendment, is a perfectly reasonable argument. I do not propose at this juncture to say that if it is to be fair and reasonable treatment, that that should apply to every other form of tied cottage other than those in agriculture. The point I would make is that it is right that there should be fair and reasonable treatment, provided that all the other circumstances are the same. I believe that to make the provisions of the Bill operate in the most outlandish parts of the United Kingdom, right away from other alternative accommodation, will put a strain on the existing rural housing system which it will not be possible to accept.
As the Government have specifically excluded those people who work in forestry in Scotland and have specifically excluded those who work in the Forestry Commission, and as the Government have specifically said that they do not want this to come into operation yet, anyway—presumably because they are not quite certain that they think it is right—I hope that they will accept our little Amendment and the series of Amendments which will exclude the provisions of the Bill from forestry. I beg to move.
Lord JANNER: I have a very great respect for the views of the noble Earl who has just spoken and for the courteous
1322
manner in which he always puts his case. I am a little puzzled here. If his argument is that this forest occupation is one which is very far from places which afford employment of another kind, what is he worrying about—
Earl FERRERS: I am sorry, I could not quite hear.
Lord JANNER: With the greatest respect, I should say that a person who is offered other employment would not want to remain far from the employment to which he is going. The only circumstances of which I can conceive of people wanting to remain in a remote place might be if the then tenant died and his successor—a widow or whoever it may be—could not find any other place to go. I should not imagine that even they would want to remain in a place which was so remote from general life or that they would want to insist upon retaining accommodation in those premises.
I think the point which the noble Earl is making, the point to which he referred, is that if one starts making exceptions difficulties can arise and must needs arise, because the situation can be utilised to create further exceptions. Frankly, I do not see how a person occupied in the forestry industry, or the industry itself, will suffer in the slightest. I cannot quite see how very many people would want to remain in a place in which they were no longer working.
5.17 p.m.
Lord TRANMIRE: The noble Lord, Lord Janner, says that if one starts making exceptions difficulties arise. The whole point about this Amendment is that the exception has been made by the Government, and quite rightly, because the forestry tied cottage is an entirely different species from the agricultural tied cottage, just as the Government no doubt maintain that there is a difference between the agricultural tied cottage, the clerical tied cottage, and the mining tied cottage. We were talking in the last Amendment—
Lord JANNER: But—
Lord TRANMIRE: I must ask the noble Lord to wait a minute. He has had a good deal of the debate this afternoon and I will give him time, but he

1323
must not interrupt in the middle of a sentence, which is never a very good thing in either House. We were talking in the last Amendment about the need for tied cottages for a worker; that is, to have a worker nearby to be available for the humane treatment of animals. The reason for the tied cottage in forestry is to have someone on the spot to prevent fires breaking out.
Most of the Forestry Commission area in North Yorkshire has this summer been in peril from fire and the Commission has lost 60 to 80 acres of woodland because there were not people on the spot to put out the fires. If there is a delay of three months between one worker going and another coming in, and that delay occurs in the summer months, then, as the Government have rightly seen, that would be very difficult to apply in forestry. Therefore, I commend the Government for having excepted forestry in the Bill, but I suggest that the right way would be for them to take it right out now and, if necessary, bring in a separate Bill later to deal with the problem of forestry tied cottages. It is the worst way of legislating that one tries to bring in the forestry worker and then say, "We will not bring it in until the Minister makes up his mind about it, and then he will do it through a Statutory Instrument".
I would beg the Government to think again on this and to accept these Amendments, and then later, if they will, to bring it in by separate legislation. As I see it, this Bill really is the "week-ender" Bill. I know that in the general area of the North of England in the last 50 years the reduction in the number of cottages for agriculture has been worrying to everybody. What has happened is that cottages that were agricultural workers' cottages, tied or untied, are being sold to become cottages of week-enders from the towns and are being lost to agriculture. That is the danger of the Bill, particularly in the forestry areas. Directly a threat arises to the forestry tied cottage, then the owner of that cottage, whether it is the Forestry Commission or the private owner, will be inclined to put it up for sale as a weed-end cottage—and he can get something like twice the agricultural value of the cottage from a week-ender. I am afraid that this Bill is the week-end cottagers' charter.
Lord JANNER: Before the noble Lord sits down, I merely intervene in order to tell him that he had not listened, possibly, to the arguments that were put forward with regard to the other tied cottages. No one has suggested for one moment that the other tied cottages have not to he dealt with at some time or other. The only reason why one cannot deal with them all, as I tried to explain before, is because there is a lack of time and we have to deal with these matters in whatever manner is available in order to get on with some kind of legislation.
5.22 p.m.
Lord MIDDLETON: I must declare an interest as an owner of forests and of agricultural service occupancies. There is at least a logical basis for legislating for farmworkers as distinct from forestry workers. There have been bad farm employers who have sacked a man at short notice and turned him out of his house. The cases have been few, but they are fully recorded. I can easily understand the motivation behind the long, persistent and historic campaign by the National Union of Agricultural Workers on behalf of farmworkers. However, as regards forestry workers, as my noble friend Lord Ferrers has said, the Government are quite in the dark about their problems, if there are any. Indeed, they have set up an inquiry, a study, to get more information about this subject.
So far, the only reasons given during the passage of the Bill for including forestry as it is in the definition of "agriculture" in Clause I have been the following. First, that the definition of "agriculture" in existing tied-cottage legislation derives from the Agricultural Wages Act of 1948, where the use of land as woodland is mentioned and the production of consumable produce. But the Consultative Document, to which the noble Earl referred several times this afternoon, is very wary about this definition, which it says guardedly "might be taken to embrace much of forestry". In other legislation, for instance the Agricultural Holdings Act of 1948 and the Town and Country Planning Act of 1947, "agriculture" does not take in forestry. So if it is a matter of definition I think this is a shaky argument.
Secondly, another argument that was heard in another place—I think it was

1325
the Parliamentary Secretary of State who said it in Committee—was that forestry is akin to agriculture. Well, I do not think this is a very convincing reason. One might just as well say that forestry is akin to coal mining, because the one deals with fresh timber and the other with fossilised timber. I do not think this is at all convincing.
Thirdly, it was suggested that the pay and conditions of many forestry workers are subject to the Agricultural Wages Act. I think I am right in saying that it is extremely difficult to get figures—in fact it is impossible—but the majority of forestry workers are employed by the Forestry Commission and, as your Lordships know, their wages and conditions are assessed quite differently and are not subject to the Agricultural Wages Board. It is therefore not surprising that the Government have decided that the provisions of this Bill, while embracing forestry workers, will not be implemented so far as woodmen are concerned, until a future date.
I fully agree with my noble friend Lord Ferrers that forestry should be struck out altogether, not merely because there have not been produced any convincing arguments so far for its inclusion, but because the fewer the categories of displaced persons who have to he rehoused by local authorities in a situation of acute housing shortage, the more chance there is that the local authorities can perform their existing duties, to which are to be added the duties under this Bill in respect of farm workers.
The Earl of CAITHNESS: I rise to support my noble friend Lord Ferrers on this very important Amendment. In doing so, I talk to all the Amendments with regard to forestry, as I believe it would be beneficial to the forestry industry. I do not believe it is right to legislate against an industry without its support or until a proper inquiry and resulting discussion have proved its need. There is no support for this measure in private forestry, and the Government have failed to produce any arguments to show that forestry employees have been harshly treated by the tied cottage system. There has been no report on this matter, and I understand that one is not due to be published until early next year.
1326
Was it not only last night that the noble Lord, Lord Jacques, arguing against an Amendment, said that there should be no change in the established machinery within a business until there was a good reason for that change? No good reason has been proved in this case. If the Government have the grace to admit that no action will be taken to include fish farming until a report is considered, why has forestry been included? If the need for legislation is proved it can easily be included by an Affirmative Resolution.
Another reason for supporting this Amendment is that private forestry, as my noble friends have said, has in general to compete with the Forestry Commission with regard to wages, houses and conditions. There is no comparable situation in agriculture, and I believe it is right, therefore, that both private forestry and the Forestry Commission with its 1,500 tied cottages should be treated in the same way. The need for housing in the key positions is particularly important, so that the forester can supervise the woods and the estate sawmill and yards in much the same way as the shepherd or cattleman manages his livestock. There are areas of woodland which are isolated and this, allied to the cost of travelling, makes housing in the right situation so important. This at the moment can best be achieved by tied cottages.
More recently, the question of easy management of woods has become more important with the continued opening up of the countryside to the public. Woods can easily conceal people and any damage in the way of pollution to streams, theft and, as has been mentioned, fire, committed wittingly or unknowingly, must be discovered at the earliest possible moment. From my experience I am convinced that tied housing played an important role in reducing the risks of damage such as occurred in the recent drought. Your Lordships will recall a debate on forestry held recently in this Chamber, when we heard of the depressing situation that existed (and it still exists) in the industry. So that the problems may not be increased, I support this Amendment, which I believe to be for the benefit of that industry.
5.29 p.m.
The Earl of RADNOR: I, too, must declare an interest, in that I am a forest

1327
owner and also an owner of so-called tied cottages. I will keep your Lordships but one short moment. It occurs to me that, talking of fire and the importance of having forest workers, so to speak, on the place, we have left out one of the most vital reasons why they must be there. I say "vital" because, though it may not happen that often, it encompasses injury and sometimes even death. When we talk of forest workers and forestry we are rather apt to think of the great big woods, and so on and so forth; but of course timber grows in our hedgerows.
We are a country which is absolutely interlaced by roads and rights of way of at least three sorts. Gales, as some of your Lordships will be aware, occur and trees, however carefully you look after them, sometimes rot underground and then fall across roads. If you are an unlucky passer-by they can fall on top of you. That is unfortunate and seldom happens; but there are a lot of accidents and the matter should not be treated too lightly. Where trees are left for too long somebody may come along in their car or moped on a dark and stormy night and be seriously injured or sometimes worse. I can assure your Lordships that I do not know whose responsibility it is. I suppose the councils could be asked to take the trees away, but it is more likely to he the owner's responsibility. Speed is of the essence. The sooner that tree is cleared away, the less is there a likelihood of injury, or even death. Although this does not happen often I think your Lordships should be aware that it does happen. It is one reason for keeping at least some tied cottages for foresters, so that they can be out and about on these dark and stormy nights and in those situations.
Lord GISBOROUGH: The Consultative Document said that the provision of tied accommodation for forestry workers has seldom given rise to the kind of problems found in agriculture. Before leaving that point, I should like to say that the NUAW in a public statement said that there were no fewer than 20 evictions every year out of 70,000 tied cottages; which means that for every three and a half thousand people, one will be evicted on present trends. The danger is that one cannot see the necessity
1328
in forestry, apart from the danger of fire—and I know this, for I had a forest burnt down in, this last drought—for having a man on the spot night and day. Obviously, apart from risks of fire and trespass, there is not the same need as with cattle. While there is a need to guard against fire and damage of that nature, it might appear to the courts that the need was not there and therefore did not justify that a house should be made empty for a new forestry worker. They may well, therefore, in many areas feel that it was adequate for workers to drive into work on forestry. But the need is there and particularly in the country areas where there is large forestry and few houses of other sorts are available for other labour.
The same argument goes as for agriculture, that you are not going to get good forestry labour without houses. Good labour of any sort is always difficult to find. One sees trees and thinks that they are not doing much, just growing, and that if one leaves them long enough they will get big enough to sell. That is far from the truth. It takes a long time for damage to become apparent. A great deal of work has to be done on trees and forests all the time. Pruning, fire precautions, thinning and all sorts of processes take place. It is essential that there should be good staff available if the trees are to be of any value at the end of the time—and one is talking in terms of 60 to 100 years. An interesting point is that near my own home the Forestry Commission have a large acreage and they have not got an adequate number of houses. The result is that they cannot get the work done and they have this large forest which is going bad on them and will be virtually useless as a result. The damage to the country will take a long time to make itself apparent. My own experience of these forest workers is that few of them want this protection under this Bill. I support the Amendment that forestry should he removed from it.
Lord BURTON: Although I support the Amendment, I had not intended to speak, but having heard the noble Lord, Lord Janner, on this Amendment, as on the first one, I feel that there is some misunderstanding on the Benches opposite of the true position. He said that he could not follow why a man should want to stay in a remote area. The position is

1329
that a good man who is a hard worker has no difficulty under the present set-up in finding a good situation with a good house. But such men are scarce. It is difficult to get good men, as my noble friend, Lord Gisborough, has just said. It is therefore important that you should have houses for them. The bad man may well sit on in the house, even if it is in a remote area. The problem which may arise, although I do not think it arises extensively over tied houses, almost invariably arises where there are bad employees and where a man has to be got rid of.
The good man has no problem. He can easily find a job and, anyway, one does not want to get rid of him. The bad man can sit on, and if he has a large family he will be able to draw a great deal more as an unemployed person, sitting in a house for which he is paying no rent and causing a problem. You may have some sympathy with this individual but he could be causing a backlog. I have had a case where no fewer than three other good employees were held up and could not get into the house because a bad man sat on and would not get out. The noble Earl, Lord Radnor, knows this only too well, for one of them was to come from him. As it was, he could not get his new man in, and so it went on and three people were held up.
Lord PEART: I think I should respond now to noble Lords' speeches on these Amendments. May I say, first, that in the Consultative Document we noted that existing tied cottage legislation will apply to many forestry workers and that pay and conditions for many forestry workers are subject to the Agricultural Wages Act. It was clear when we came to frame our proposals that the links between forestry and the remainder of agriculture were such that forestry should be included in the Bill; although there was a need to improve the information available on the situation in forestry. A survey is presently being conducted by the Tavistock Institute on behalf of the Forestry Commission to provide this information. When this is to hand we shall be able to determine the appropriate appointed day for forestry. I referred to this in my Second Reading speech (at column 1093 of Hansard (Vol. 374)). I then explained why. When the results
1330
are available, we shall be able better to decide on an appropriate implementation date for forestry workers. I should add that when the legislation for forestry is brought into effect we shall expect the Forestry Commission who, as noble Lords are aware, are the largest woodland owners in the country, to treat their tied cottage occupants exactly as private forestry landlords will be required to treat them. Although the Forestry Commission is exempted from any statutory obligation under the Bill, there will be no question of discrimination in practice between one and the other.
I have noted carefully what noble Lords have said and may I say again to the noble Earl, Lord Ferrers, who said that the problem may be less than in agriculture but that forestry is an important industry, that I accept that point. I was a Forestry Minister. I have a house in Lakeland surrounded by forests owned by the Forestry Commission and I have always taken a great interest in this. I think it is a great industry. On several occasions I have had to deal with this industry and I have tried to avoid any rivalry between forestry and agriculture. There used to be great controversies over whether we should have sheep or trees in the hills. I think it is right to consider always proper development and a combination of both. I have argued this in the Council of Ministers in Brussels. I recognise, we on this side recognise and the Government recognise the importance of forestry. There is no question about it.
I have the impression sometimes that people always think of the forestry worker as living in isolated conditions apart from his fellow man. It is not entirely true in the area I used to represent in the House of Commons, the Lakeland area of Cumberland. Along the shores of many of our lakes we have wonderful forests and many of the forestry workers are housed there. There are occasions when we have this remoteness argument. The noble Lords, Lord Gisborough, Lord Tranmire and others mentioned this. This was also emphasised particularly by the noble Earl, Lord Caithness, who has his name down to some of the Amendments.
There are problems of care and maintenance. The noble Lord, Lord Gisborough, was quite right when he

1331
mentioned our experience in the drought when he was in the Forest of Dean and saw the terrible fires that broke out. There is always a risk, particularly in an area like the Lakeland where there is a great tourist industry and people can be careless. You need good forestry workers. Apart from the general looking after of silviculture you need vigilant people always around. It is not quite the same as a dairy farm which we were talking about on a previous Amendment. I am sure noble Lords will recognise that we are right to ask them not to press their Amendments and I hope they will accept that we mean to protect the industry in the best sense. After we have heard the advice given to us in the survey we shall know better what the position is. I think we are right to do this so I hope noble Lords will withdraw their Amendment.
Lord MIDDLETON: May I ask a question about dates? We welcomed the Consultative Document which came out last year. The massive public expenditure cuts announced by the Chancellor of the Exchequer in May are going to put a greater strain on housing, and by cutting out forestry workers that strain could be reduced. Surely noble Lords would agree that events subsequent to the decision made to include forestry workers would perhaps make necessary a change of mind on this.
Lord PEART: I referred to the Forestry Commission survey which is now under way, and when the results have been analysed, I would hazard a guess in the Spring of next year, it will be possible to determine an appropriate appointed day for forestry. I cannot go beyond that.
The Earl of CAITHNESS: Could the Minister inform the House what will happen if the Tavistock Report shows that legislation in this field is not needed?
Lord PEART: I would rather wait to see what happens. Obviously if the facts went against my argument I would not be such a fool as to say that I would defy facts. We must look at the survey and apply the same arguments to noble Lords opposite.
The Earl of CAITHNESS: Would it be better to delete forestry, as we have not
1332
included fish farming, until the report is before us?
Lord PEART: No, I do not think so. That is why I am asking noble Lords to withdraw the Amendment.
5.45 p.m.
Baroness YOUNG: I should like to ask the noble Lord, Lord Peart, to reconsider his reply. I support my noble friend Lord Ferrers. It goes without saying on a Bill like this that I have no interest to declare as I have no connections with agriculture and I have never owned a tied cottage, although I lived in one for a short time. That is my only interest in this connection. I speak now as the vice-president of the Association of District Councils who are clearly very much affected by the Bill. Having heard the reply of the noble Lord, Lord Peart, to my noble friend about facing the facts of the situation, I hope that that will be done on both sides of the Committee and that we are not conducting this debate in an era of wishful thinking.
As I understand it, the effect will be to remove from the farmers responsibility for housing farm employees and placing it on the local authorities. It is a Bill to add expenditure and responsiblity to local government because, at the end of the day, they will have to house every agricultural worker. This is the logical conclusion of this piece of legislation.
Lord PARGITER: Would the noble Baroness give way? Do I gather from this that all tied houses will suddenly go out of existence when this Bill becomes applicable?
Baroness YOUNG: Of course the houses will still be there, but gradually these houses will go out of existence for agricultural workers, just as the continual Rent Act legislation has removed property from the supply of furnished and unfurnished accommodation privately rented each year. The noble Lord, Lord Janner, with whom I have argued housing many times before and with whom I am delighted to argue once again, I remember saying to us only two years ago that of course the 1974 Rent Act would make no difference to the supply of furnished accommodation, that all the safeguards would apply. A moment ago he laughed at the assertion of my noble friend Lord Ferrers that

1333
people let only to foreigners. Let me tell the noble Lord from my own experience of canvassing during the district elections this year in Oxford, that I visited two flats both inmates of which said to me, "It is an extraordinary thing, but I got this flat because I had a Japanese passport"; and the other one said, "I got this flat because I had an American passport". This is the end of Rent Act legislation.
Several Noble Lords: No!
Baroness YOUNG: As you bring in more restrictions so you will find that there will be less accommodation to let. Be that as it may, the responsibility is going to fall on district councils, and I should have thought that there was a great deal to be said for taking forestry out of this Bill. As the noble Lord, Lord Peart, has said, and as the Bill itself, as I understand it, indicates in Part II of Schedule 2, under the Bill there will be an appointed date for bringing in forestry. As the facts of the situation as to whether this is a desirable end or not are not yet available, we do not know how it is going to work out. It seems to me that as housing is going to be much more difficult for local authorities, there is much to be said for saying at this stage that we will not put further responsibilities on them.
I would refer noble Lords opposite not to my words but to the words of their honourable friend Mr. Freeson in a Written Answer on 5th August, 1976, after this Bill had been through another place. He had had a meeting with local authority associations and was explaining the cuts in expenditure for council housing in the country as a whole. The argument of the Government was,
"… it would be our main aim, on housebuilding, to ensure that first priority was given to the needs of stress authorities."—[Official Report, Commons, 5/8/76; col. 984.]
If one looks at the list of stress authorities they are, of course, the city centres and the urban areas, and the list is a long one.
The second aim, further down, is designed to deal with more localised stress in areas of other authorities. It stands to reason that agricultural or forestry workers will not be in city centres; they will be in country areas, and largely the responsibility of the 333 non-metropolitan district councils. Money is going to be taken away. I cannot see how the Government can square a
1334
Bill to put further responsibilities on local authorities and at the same time take money away.
Lord PEART: I think I ought to reply to the noble Baroness. She said she agreed with the noble Lord, but I did not hear much about forestry in her speech. I understand she is arguing about the responsibilities of local authorities in rehousing people and that this could impose burdens on local councils. In the Second Reading debate on 5th October I referred to the fact that my right honourable friend the Minister for Housing and Construction has already assured the President of the National Farmers' Union that, in administering the control of individual local authorities' housebuilding programme and other housing expenditure, his Department will take into account the rehousing duty imposed by the Bill. As an illustration of this we have said that this might be £5 million extra expenditure in the first five years or so. We recognise that we may have to do something. I hope that the noble Baroness will be pleased with that reply. It is very relevant to what we are doing.
Viscount AMORY: I am glad that my noble friend Lady Young said what she did say in her usual attractive and spirited manner. Practically every Bill that comes before us nowadays lays some new commitment on local authorities with very little indeed being said as to where they are going to find the resources to carry out those commitments. I want to warn your Lordships that the time is coming when local authorities will have to say, when new commitments are laid on them in this manner without anything being said about where the resources will come from, that they will have to reject and neglect those commitments because they cannot carry them out. I hope that local authorities will not say that in this particular case if this Bill passes, because their efforts will be relied on. However, we must keep this in front of us all the time. It is not good enough. It goes on and on, and the time will come when the worm—that is not perhaps a very respectful way of referring to my colleagues in local government—will turn and say to Parliament and to the Government, "We cannot accept any more of these commitments and if they are laid on us we propose to ignore them".
Lord GISBOROUGH: May I ask the noble Lord, Lord Peart, to expand on that figure of £5 million. If one estimates £12,000 for a house—which is not unreasonable—that means 416 houses over 600 local authorities, which means that each authority will be able to build two-thirds of one house.
Lord PEART: The £5 million has been mentioned as the extra expenditure which might be involved for the first five years or so. That assumes—and I go further and quote:
"… that local authorities will have to deal with some 500 extra cases each year by new house-building."
As I have said, the Minister has replied to the President of the National Farmers' Union and one should take note of that.
The Earl of ONSLOW: Arising out of what the noble Lord has said in reply to my noble friend Lord Gisborough, may I ask if he is saying they will deal with 500 extra houses each year for five years?
Lord PEART: Extra cases.
The Earl of ONSLOW: They presumably mean that each is a house, so that is 2,500 houses extra. If the noble Lord can sell me 2,500 houses for £5 million I think that even I should get an overdraft on that particular idea, because each house cannot possibly cost £12,000. I cannot divide £5 million by 2,500 off hand, but it is certainly a good deal less than £12,000 per house.
Lord COLLISON: I promised not to intervene frequently and I will honour that promise, but I am concerned at the way the debate is going, both on the first Amendment and on this one. We started off very well by accepting the humanities and proclaiming our belief that they must be honoured. Having done that, arguments are put up why those humanitarian obligations cannot be met—the difficulties are too great, and so on. I appreciate that in debates there is an anvil and you thrash out your pros and cons on that anvil, but the pros and cons put on it must be objectively put, and what I am protesting about—and it is a sincere protest—is the wild (and I again use the word "wild") exaggeration that is going on when noble
1336
Lords opposite talk about the consequences of what this Bill proposes, both in terms of agriculture and in terms of forestry.
For example, we were told just now by the noble Baroness that local authorities would have to house all the forestry workers. That is not only a manifestly wild exaggeration but also an unbelievable exaggeration. It just cannot be like that. We are told that the farm workers are going to sit in their houses and are not going to be moved out until there are no houses left to house new workers who want to come in. That, again, is a great exaggeration. I return to my point, which is that we accept, and the noble Earl opposite accepted, the humanitarian approach to this matter. Having done that, it is quite improper and unreal to put against the acceptance of those humanitarian demands arguments which are so exaggerated. I can only think that they are put because people are biased in this particular matter.
I do not want to talk too often or too much, but I believe in objectivity, and while I am prepared to look at arguments which are put and which may clear the difficulties—and in some cases there will be difficulties—do not forget all the procedures that have to be gone through: other alternative accommodation has to be proved not to he there; and there is the committee to give advice to the local authority. All the machinery is there to protect the farmer and, in the case of the forestry worker, I suppose the Forestry Commission. It is all there. The problems, and there will be some problems which will arise—I do not deny that—will not be any greater than the problems which exist now under the present system, where people go to the courts and back to the courts, time and time again, with all the delay.
If we are to have a debate about these things, let us have it objectively, and please do not try to overturn a proper, reasoned and I believe heartfelt—so far as many of our people are concerned it is heartfelt—attempt to resolve what is thought by them to be, and thought by me to be, quite honestly, a social evil. Do not let us throw up arguments against it which are so exaggerated that they make nonsense of some of the statements that have been made.
5.57 p.m.
Baroness BIRK: I had no intention of intervening on the Amendment on forestry, but it seems to me that in this discussion at the Committee stage of this Bill we appear to be having, as my noble friend behind has just said, the same general argument on every Amendment. If that is to happen we shall not make any progress on either side. It is no good noble Lords opposite saying that they are in favour of the ideas behind the Bill and yet moving right away from the specific amendment.
The Amendment we are discussing at the moment is one to do with forestry, but there have been so many wild statements made that it is important to put the record right. The noble Baroness, Lady Young, referred to the Rent Acts. It is natural that she should do so, but it is not natural or necessary to bring that into every Amendment we have. As the Bill progresses we shall have a great many opportunities to discuss the housing provisions which are in this Bill. The noble Baroness knows as well as I do that the number of private rented houses has been declining every year since the War and there is no evidence so far that even the 1974 Rent Act has accelerated that decline. This is a decline, a graph that has been going down and we are all absolutely aware of that.
My noble friend the Leader of the House quoted what our right honourable friend the Minister of Housing said, but in addition, on the 10th of September in Birmingham, my right honourable friend the Secretary of State for the Environment made it quite clear when he said:
"By no means all the housing investment funds will be used up on new housebuilding in the stress areas. There will be funds available for new housebuilding in the non-stress areas."
It is perfectly true that any burden one puts on local authorities is difficult and will not be welcomed by them, but, as I understand it, the district councils themselves have made it quite clear that they would do whatever they could in their power.
My noble friend Lord Pargiter is absolutely correct when he says that the assumption of noble Lords opposite appears to be that all the houses which are now tied cottages will be vacated immediately or will remain empty. They
1338
will still be part of the farm housing stock. The noble Earl, Lord Onslow, referred to figures. The figures were that £5 million annually for the first five years assumes 500 houses a year at £10,000 a house. This was an extremely rough and ready figure when the Bill was first introduced. This is a tentative forecast. We cannot say what extra burden there will be. It could be very small.
The Earl of ONSLOW: May I—
Baroness BIRK: Perhaps the noble Earl will allow me to prattle on a little further. We do not know what that burden will be. It may be very much less. It may well be that in many areas things will straighten out. We are also aware—and noble Lords brought this up during the Second Reading—that there are areas where there are empty cottages on farms which will be used. We are also forgetting that whether it applies to herd farming or forestry—and I will remind noble Lords that that is the Amendment we are discussing at the moment—the plans we have in other parts of the Bill deal with housing provisions and enable local authorities to plan ahead and make things very much easier. Having made this intervention now, and having got this off our chests—and I realise there is no guarantee that this will not go on through every Amendment—perhaps we could now return to the purpose of the Amendment which is to deal with forestry.
The Earl of ONSLOW: I understood the noble Lord to say £5 million over five years for 500 cases a year. That makes the figures very different, so it is £25 million as opposed to £5 million. I totally withdraw what I said. It is very different from £5 million over five years which was what I understood him to say originally.
Earl FERRERS: If the noble Baroness feels that we have been prolonging this debate by using the same arguments again and again, I only say with the greatest respect that her intervention does not help. She complained that we made the same arguments. That is not so. She explained on Second Reading that she did not know anything about agriculture and even suggested that it was based on rotten roots.
Baroness BIRK: May I just nail that down? I did not say it was on rotten roots. This was in a part of a speech when I was winding up. I said that we should get away from the present rotten root which I referred to as the tied cottage. I did not say all agriculture was based on it. I considered the tied cottage system was a rotten root in what I felt to be a lively and vital agricultural industry. The reason why I intervened in this debate was because this particular topic, the very specialised subject of forestry, was being discussed and we moved away from this. If we had continued along those lines, I would not have done so. But we went straight into a general debate on housing and I thought it was proper for me to intervene.
Earl FERRERS: I can remember what the noble Baroness said and—a funny thing!—I have a copy of Hansard in my hand, and at column 1171 on 5th October the noble Baroness said:
"A healthy agriculture should not depend on rotten roots".
I would merely comment upon that that the inference is either that agriculture is not healthy or, if it is, it is based on rotten roots. I think that was an extremely offensive remark to make about one of Britain's best industries. The noble Baroness has next to her the noble Lord who was a Minister of Agriculture, and she will probably think that she might have been better advised not to have used those words. I will not pursue that any more, and I think we had better address ourselves to the Amendment which I moved. I hope that the interventions of the noble Baroness will be somewhat less abrasive in the future.
The noble Lord, Lord Peart, said that this Bill contains provision for application to forestry. He has said that there is a need for more information to be available. I commend him for trying to get the information. If this is needed, I should have thought that it was better to bring the appropriate measure for forestry into action when the information is available and not to pre-empt the report by including forestry in the Bill. The noble Lord did not address himself to the position of the Forestry Commission. I do not know how many people are engaged in forestry and, of those, how many are engaged in forestry carried out by the Forestry
1340
Commission. What the noble Lord said was that he would expect the Forestry Commission to treat their employees in exactly the same way as those employed in private forestries.
Frankly, I do not think that is a good enough argument. If legislation is being introduced to cover a whole sector of people involved in certain parts of agriculture or housing, it is inadequate to say: "We will not let this measure prevail upon certain people simply because we hope that those bodies are responsible enough to carry it out under their own auspices." In Clause 6 there is a list of people, all of whom are going to be excluded from the provisions of the Bill. The noble Lord, Lord Janner, said that we must not make exceptions. If he addresses himself to page 7 of the Bill he will see the bodies which are exempted from the provisions of the Bill regarding tied cottages such as county councils, the Greater London Council, the Commission for New Towns and the Housing Corporation. All these people, who have houses occupied under this character, are to be exempted from the provisions of the Bill.
The noble Lord, Lord Collison, referred to the humanity argument. I told him that I was absolutely with him over it. The humanity argument applies to all people who are affected by any processes of eviction. This is the real trouble that you get into when you start to single out one small facet as has been done over agriculture. I do not believe that it is right that forestry should be put in the Bill. I do not believe that we have had enough information about it. I do not believe any substantial argument has been made in favour of it. As it is, forestry workers in Scotland are excluded and forestry workers in the Forestry Commission are excluded. The Government do not intend to bring it in yet because they do not have enough information. I suggest that the Government say, "Not until we have the information, will we draw up legislation referring to this".
6.8 p.m.
On Question, Whether the said Amendment (No. 3) shall be agreed to?
Their Lordships divided: Contents, 138; Not-Contents, 49.

CONTENTS

Alport, L.

Ferrers, E.

Northesk, E.

Amherst of Hackney, L.

Ferrier, L.

Norwich, V.

Amory, V.

Gainford, L.

O'Hagan, L.

Ampthill, L.

George-Brown, L.

Onslow, E.

Amulree, L.

Gisborough, L.

Orr-Ewing, L.

Armstrong, L.

Glasgow, E.

Platt, L.

Atholl, D.

Glenkinglas, L.

Porritt, L.

Auckland, L.

Goschen, V.

Radnor, E.

Avebury, L.

Gowrie, E.

Rathcreedan, L.

Barrington, V.

Gray, L.

Redesdale, L.

Beaumont of Whitley, L.

Grey, E.

Reigate, L.

Belstead, L.

Grimston of Westbury, L.

Robbins, L.

Berkeley, B.

Hailsham of Saint Marylebone, L.

Robson of Kiddington, B.

Blakenham, V.

Rochdale, V.

Boothby, L.

Halsbury, E.

Romney, E.

Bradford, E.

Hanworth, V.

Ruthven of Freeland, Ly.

Brougham and Vaux, L.

Harcourt, V.

St. Aldwyn, E.

Burnham, L.

Hatherton, L.

St. Davids, V.

Burton, L.

Henley, L.

Salisbury, M.

Caccia, L.

Hives, L.

Sandys, L.

Caithness, E.

Hornsby-Smith, B.

Savile, L.

Campbell of Croy, L.

Hylton-Foster, B.

Selkirk, E.

Carr of Hadley, L.

Ilchester, E.

Sharples, B.

Carrington, L.

Kimberley, E.

Shuttleworth, L.

Chelwood, L.

Kinnoull, E.

Somers, L.

Clifford of Chudleigh, L.

Lauderdale, E.

Spens, L.

Clitheroe, L.

Long, V.

Stamp, L.

Colville of Culross, V.

Lonsdale, E.

Stanley of Alderley, L.

Congleton, L.

Lyell, L.

Strang, L.

Cork and Orrery, E.

Mackie of Benshie, L.

Strathclyde, L.

Craigavon, V.

Macleod of Borve, B.

Strathcona and Mount Royal, L.

Craigton, L.

Marlborough, D.

Strathspey, L.

Cullen of Ashbourne, L.

Marley, L.

Swansea, L.

Daventry, V.

Masham of Ilton, B.

Swaythling, L.

Denham, L. [Teller.]

Massereene and Ferrard, V.

Terrington, L.

Deramore, L.

Merrivale, L.

Thorneycroft, L.

Derwent, L.

Mersey, V.

Tranmire, L.

Drumalbyn, L.

Meston, L.

Trefgarne, L.

Dundonald, E.

Middleton, L.

Tweedsmuir, M.

Ebbisham, L.

Monck, V.

Vickers, B.

Elibank, L.

Monckton of Brenchley, V.

Wakefield of Kendal, L.

Ellenboroigh, L.

Morris, L.

Ward of North Tyneside, B.

Elles, B.

Mottistone, L.

Westbury, L.

Elliot of Harwood, B.

Mowbray and Stourton, L. [Teller.]

Wigoder, L.

Elton, L.

Winstanley, L.

Emmet of Amberley, B.

Newall, L.

Young, B.

Faithfull, B.

Northchurch, B.

NOT-CONTENTS

Beswick, L.

Janner, L.

Popplewell, L.

Birk, B.

Kagan, L.

Ritchie-Calder, L.

Blyton, L.

Kirkhill, L.

Shinwell, L.

Brimelow, L.

Leatherland, L.

Slater, L.

Brockway, L.

Lee of Newton, L.

Stedman, B.

Castle, L.

Longforo, E.

Stewart of Alvechurch, B.

Champion, L.

Lovell-Davis, L.

Stone, L.

Collison, L.

Lyons of Brighton, L.

Stow Hill, L.

Cooper of Stockton Heath, L.

McCluskey, L.

Strabolgi, L. [Teller.]

Cudlipp, L.

Maelor, L.

Taylor of Mansfield, L.

Davies of Leek, L.

Melchett, L.

Wallace of Coslany, L.

Davies of Penryhys, L.

Milner of Leeds, L.

Wells-Pestell, L. [Teller.]

Douglass of Cleveland, L.

Murray of Gravesend, L.

White, B.

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

Oram, L.

Winterbottom, L.

Gordon-Walker, L.

Pargiter, L.

Wynne-Jones, L.

Henderson, L.

Peart, L. (L. Privy Seal)

Houghton of Sowerby, L.

Ponsonby of Shulbrede, L.

Resolved in the affirmative, and Amendment agreed to accordingly.
Baroness STEDMAN: This may be a convenient time to call a halt on this Bill, and I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

AIRCRAFT AND SHIPBUILDING INDUSTRIES BILL
6.17 p.m.
The MINISTER of STATE, NORTHERN IRELAND OFFICE (Lord Melchett): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, that the House do again resolve itself into Committee.—(Lord Melchett.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD AMHERST OF HACKNEY in the Chair.]
Clause 24 [Permitted dividends and interest]:
Earl FERRERS Earl FERRERS moved Amendment No. 131:
Page 29, line 38, at end insert—
("(2A) If, with respect to any period of control of a company payments of dividend are made on securities forming part of the share capital of the company (other than cumulative preference shares) which, when aggregated, do not exceed two-thirds of the certified net revenue of the company for that period, subsection (1)(c) above shall not apply in respect of those payments and they shall be within the maximum permitted for that period for the purposes of section 23 above.").
The noble Earl said: I wonder whether we could now address our minds to some of the more financial aspects of the Bill which we were discussing the other day, and in moving this Amendment I should like to make one or two points. At the moment, companies are limited to paying out the lesser sum of money between the previous year's dividend in which there was a final dividend paid, and the net revenue of the company. In other words, if a company has done well it may not pay out more than the previous year's dividend, and if it has done badly it may not pay out more than the net revenue of the company. It is perfectly understandable that there should be some
1344
restriction on dividends which are paid out, because otherwise parent companies could get their subsidiary companies to pay out dividends representing almost 100 per cent. of their assets; and if it was the intention of the Government to nationalise these industries and to compensate them in a certain way it would entirely frustrate the objectives if the subsidiary companies were to pay vast dividends back to their parent companies.
But the Bill effectively prevents dividends from being paid out in the years 1974, 1975 and 1976, when some firms had good years' trading which was nothing to do with the prospect of impending nationalisation. For example, the naval shipbuilders did relatively badly prior to 1974, and therefore the dividends which they paid out were correspondingly small. But since 1974 the terms of trade have turned in their favour in some cases, and certain firms have had extremely good years' trading.
I suggest that it is only fair and reasonable that where they have had a good year's trading, irrespective of the threat of impending nationalisation, they should be able to pay out dividends representing that year's trading. In the Amendment we have suggested that they should be allowed to pay out as dividends up to two-thirds of the net revenue of the company for any one year. I suggest that this is a reasonable figure to choose because the Treasury insist that when they make profits subsidiary companies overseas should remit two-thirds of their revenue to the parent company in the United Kingdom. That is the reason why this figure was taken.
One of the side effects of the legislation as drafted is that the dividend restriction which it imposes results in some naval shipbuilders being in the position where they have built up such a fund of cash, because it cannot be distributed, that the compensation which they will receive will be less than the cash in the bank. This is because the compensation is based on 1974 values, when they were not doing well; they are not allowed to take into account the cash which they have received but which they have been unable to pay out in the better years since 1974. Indeed, in one case the compensation payable will not even equal more than one year's

1345
profits. It seems to me that it is unreasonable for any Government to do this. I do not believe that it is intentionally unreasonable and our Amendment merely seeks to make the provision slightly more fair than the Bill as drafted. I beg to move.
6.22 p.m.
Lord ORR-EWING: We are now starting a series of Amendments concerned with compensation. One of the advantages of having discussed tied cottages for the last 3½ hours is that I have had a chance to look at the Amendments in rather more detail than is normally the case. First, I make the point that none of these matters was debated in another place. Therefore we are doing our duty as a revising Chamber. I think that the Government will agree that many of the Amendments concern technical points such as where a word has been left out, and all of them seem to me to be eminently reasonable. In most cases they are not contentious—certainly they are not politically contentious—and I think that they are constructive. I hope very much that we are now entering a period in which the Government will concede that we are doing our job by trying to improve the Bill, and in particular by trying to make sure that the words of Government Ministers and others—that is, that the compensation would be fair—come about as a result of the Amendments.
The previous Prime Minister, Sir Harold Wilson, wrote to the President of the Confederation of British Industry in 1975 and assured him that the compensation terms would be fair. In January 1975 Mr. Wedgwood Benn gave exactly the same assurance in another place, that the compensation terms would be fair. Also, Mr. Varley wrote in similar terms: the compensation terms would be fair to both taxpayers (I am interested in that phrase) and shareholders. Therefore we have had assurances and reassurances that the compensation terms would be fair.
I am a little puzzled by one matter which arose in your Lordships' House during Question Time on 1st October. The noble Lord, Lord Melchett, was not present, because he was in Northern Ireland at the time, and the noble Lord, Lord Kirkhill, answered in his stead.
1346
We were asking about the compensation terms and in particular about the issue of compensation stock. The Minister was asked, I believe by the noble Lord, Lord Trefgarne, whether he could give an indication of the coupon rate at which they might be issued. Perhaps we could clear up this matter right away because there is no need to debate it further. In his reply the noble Lord, Lord Kirkhill, said at col. 757 on 1st October:
"My Lords, it would not be possible for me at this time to say what rate of interest will be paid on the stock. That will be assessed much nearer the time of the date of issue which, depending on the process of the Bill,"—
and this is the significant word—
"would be probably in about one year from now".
Was that a slip of the tongue? If we are thinking of issuing the compensation stock one year from now and if there is to be a period of negotiation and arbitration which will take some time, it may be imperative after that period for companies to ask for stock to be held for a certain period. Sometimes it is held for a year in order to avoid capital gains tax and other taxation.
Perhaps the noble Lord could put us straight on this point before I continue with my speech. According to the Bill, surely the compensation stock would be issued shortly after vesting day. We were assured in another place and in formal discussion that the Government understood that these companies, a proportion of whose assets had been hived off, were desperately anxious to get some of the money in order to restructure the company, recreate the headquarters which may have been taken over, and the like, and therefore to create jobs and equip themselves with modern equipment so that they would be economically viable and able to give employment as they had in the past. We were told that a large section of the compensation would be paid. Unofficially it was suggested that something like 50 per cent. would be paid straight away. Therefore the suggestion that the stock will not be issued for another year is very disturbing. Is the noble Lord able to give an assurance on that point, or to say that he will look at it?
Lord MELCHETT: I am ready to answer questions relating to Amendment

1347
No. 131 with which the Committee is dealing. If the noble Lord cares to raise a general point on the Question that the clause stand part, I will happily deal with it then.
Lord ORR-EWING: I am delighted that the noble Lord has been so courteous and that I have had the opportunity to put the matter to him now instead of bowling it fairly fast at him just before he stands up. In this instance, of all the compensation clauses, may I endorse what my noble friend has said and support this modest Amendment which is seeking, as are many others, merely to be fair. I will leave it at that until we have heard the noble Lord's reply.
The Earl of ONSLOW: The point which was made by my noble friend Lord Ferrers in his opening remarks was that certain companies which are to be taken over will be taken over possibly at less than the value of their cash reserves, or at less than the value of one year's profits. If this is true it seems to me to produce a quite frightening result. First, it is palpably and grossly unfair. To put that right, one year's profits must be multiplied at least by 10. Consequently, this will increase Government expenditure even more. We are back to the old merry-go-round of spending money which we have not got at a time when we are beggars and are having to go to the IMF at a time of increasing Government expenditure. I know that this question has been raised before not only by myself but by other noble Lords. However, it seems to me that the noble Lords opposite, who are happily chattering away, have not grasped the simple fact that we cannot go on spending money which we have not got. Even the Chancellor is beginning to realise that. This runaway "rakism" is terrifying.
6.30 p.m.
Lord MELCHETT: The purpose of Clause 24 is to set the permitted level of dividends for the purposes of Clauses 23 and 25. It is right that dividends should be paid for the period up to vesting. In this interim period the shareholders retain their control of the companies, and this control is stringent in the case of wholly-owned subsidiaries. It is right
1348
that in this period they should receive fair remuneration for their capital.
Up to that point there is absolutely no difference between noble Lords opposite and myself. But, equally, it is important that the companies should not use the device of dividend payments to deplete the value of the business; and again I think I am in agreement with the noble Earl on that point, which is one that he very fairly made himself. The Government are paying compensation for the securities of the businesses on the assumption that in the period up to vesting the companies will continue to operate, subject to normal commercial variations, in the same way as they had previously. If companies were suddenly to make substantially increased dividend payments, it would negate this basic assumption. But to set as the base level of permitted dividends those paid in the recent past establishes the continuation of the business in the same form.
The proposed Amendment would in many cases permit sudden and, I would suggest to your Lordships, unjustified, increases in dividend payments. Irrespective of the performance of the companies between the base financial year and the subsequent period, they would automatically be permitted in many cases to increase their dividend payments. In such circumstances it would be surprising if companies did not take full advantage of such a provision. I am sure that no noble Lord would consider it right positively to encourage increased dividend payments even if profits might have deteriorated substantially.
But this is not to say that companies may not pay higher dividends. There is a provision in Clause 23 for my right honourable friend the Secretary of State to approve higher dividends if the performance of the company justifies such an increase, and it was this provision in Clause 23 which I do not think noble Lords who spoke to the Amendment touched on, certainly not at any great length. My right honourable friend the Secretary of State has made it clear, and I can reiterate now, that he will consider any applications put to him. It is perhaps significant that only nine of the 43 scheduled companies have as yet sought his approval since these provisions were announced nearly a year ago. I think it

1349
would be hard to argue on this evidence that the existing provisions are unduly restrictive. Of those nine companies all but two of them received approval for an increase above the permitted level because of special circumstances applying to the companies, and I understand that of the other two cases one is still under consideration.
The present provisions of Clause 24 allow for shareholders to continue to have their investment remunerated at the same level as in the recent past, with discretion for the Secretary of State to agree to a higher level if circumstances warrant. The permitted level may well, in the case of some companies whose prospects have deteriorated since the base period, lead the companies to pay more dividend than they would prudently have paid had nationalisation not been pending. The proposed Amendment would amount to an open invitation to the companies to dissipate their financial assets in the interim period, and for that reason I regret to say it would not be acceptable to the Government.
Earl FERRERS: I am grateful to the noble Lord, Lord Melchett, for that answer. I do not think there is very much between us over this. He is quite right when he says that it would be wrong for companies to dissipate their capital because of impending nationalisation. Certainly my Amendment would not seek to do that, and if the effect of it is that, that is not its intention. The noble Lord's argument was really based on, "Do not worry, because the Secretary of State can give approval in certain circumstances". I understand that, but I think it is another example of really huge powers being given to the Secretary of State. If a company has done better and made more substantial profits, according to the noble Lord, Lord Melchett, it can apply to the Secretary of State, and as he said nine have done so; but it is then up to the Secretary of State to say, "Yes, you can pay it" or, "No, you cannot pay it". That is, I suggest, a very powerful lever in the hands of the Secretary of State.
The noble Lord did not wholly address himself to the point I made earlier, and I think it is a valid case, that some shipbuilders did very badly because of the terms of trade and economic circumstances
1350
up to 1974. Of course, 1974 is the date upon which their assets, such as they are, arc to be valued, and if they did badly, of course their assets will be valued poorly. But then, when despite the prospect of nationalisation things suddenly have got better and they have made large profits, the Bill says, "You must not distribute those. You can, if you like, apply to the Secretary of State and he will decide whether or not your application is reasonable". I should have thought we should have something slightly firmer than that.
After all, this is a case of the Government taking over the assets of various companies, and the Government have said, and the noble Lord, Lord Kirkhill, said on Second Reading, "We want it to be fair". Yet as it stands at the moment I do not think it is fair, and the only person who is to adjudge whether it is fair is the Secretary of State, who is a very interested party. I wonder whether the noble Lord, Lord Melchett, would care to comment upon this: whether in fact it is right for companies who have done well since 1974 not to be able to distribute some of those profits. After all, if they have done very well, irrespective of the prospect of nationalisation, those were the terms of trade they encountered at the time. It is not unreasonable to say that they could distribute, not all of their profits, but two thirds of their profits. If the noble Lord could help me on that point I should be very grateful.
Lord MELCHETT: As the noble Earl says, I do not think there is a great deal in principle between us, though we may well be disagreeing about how to achieve something which we both wish to see achieved. As I said in my original reply, I would suggest, first, that the fact that only nine companies out of the large number in the Bill have applied to the Secretary of State would suggest that there is not a great deal of ground for complaint about this; but I would only use that as an indication and certainly not pretend that it is a conclusive argument. Secondly, I would suggest that the fact that seven out of those nine companies have been permitted to increase the dividend paid is an indication that my right honourable friend the Secretary of State is certainly not being oppressive in the use of his discretion. Of course I could not accept from the noble Earl for a moment any

1351
suggestion that my right honourable friend would seek to use, or fail to use, his discretion in an onerous or unfair way to prevent any increased dividends which were justified and permissible. I can assure the noble Earl that if circumstances do warrant an increase the Secretary of State will allow one.
In some cases where there is no permitted level—for example, if no dividend was paid in the base period or if only interim dividends and no final dividends, in the terms of the Bill, were paid—the Secretary of State must determine the permitted amount. Again there, I can assure the noble Earl—though I know this will not be entirely convincing to him—the Secretary of State will act fairly, and I hope that in the cases which have so far come to the Secretary of State, that has been the experience of the companies when they have gone to him under the provisions of the Bill.
Viscount SIMON: May I ask the noble Lord two questions on that point in order to help us make up our minds on what is a difficult question? Can he say whether in the cases which he mentioned—I think seven out of nine—where additional dividends have been agreed to by the Secretary of State, they were agreed to up to the extent the companies were asking for; in other words, were the companies quite satisfied with that decision? Secondly, assuming that they are not satisfied, assuming that in some cases the Secretary of State has not agreed, then, as the noble Earl has pointed out, the company is left with cash in the coffers. Will that be taken into account in any arbitration there may be on the amount that ought to be paid for the shares in the last resort when the settlement is made?
Lord MELCHETT: May I say straight away that I do not know the answer to the noble Viscount's second point off the cuff. No doubt it will come up again when we deal with compensation, and I will take an opportunity to give the answer at some convenient moment. On the first point, it would of course be for the companies to say whether they were satisfied, and not for me as a member of the Government. As I say, in seven cases there has been a permitted increase; on one of the other cases, as I understand
1352
it, discussions are still continuing. I think it would be for the companies rather than for me to say whether they were entirely satisfied with what has taken place.
Viscount SIMON: If they were not satisfied I imagine they may have told the Secretary of State, and the information might have come to the noble Lord.
Lord MELCHETT: The difficulty in this matter is that who the companies are and what has taken place is commercially confidential information with the Department of Industry, and must remain so.
6.41 p.m.
Lord SELSDON: I must apologise to the noble Lord for not having arrived earlier, and therefore 1 feel it would be totally wrong for me to intervene on this particular Amendment. I am sure that everything that needs to be said to make the point has been said. It is, however, much more appropriate that it should be discussed in some ways in general terms under the whole question of compensation, to which the noble Lord referred just now. I hope he will forgive me if I raise certain issues on the general theme relating to this Amendment later under Clause 35, because it is not something that we can look at in isolation. The reason why it has been included is to try to put right one element of fairness, and later we shall talk about the whole concept of fairness. You cannot put fairness right by just altering one element of it. So if you will forgive me, I will raise one or two points later in support of the whole concept on which this Amendment is based.
Lord ORR-EWING: I think we rather object to the reference date because it is rather old. It could be trading results for 1973/74, and therefore a company which has been doing exceptionally well in 1975/76 is rather harshly treated. I was interested to hear the figures given, because my information is that the companies which had applied had had rather "unsatisfactory"
—I think that was the word—results from the Secretary of State. I wonder whether I can persuade the Secretary of State to use the same flexibility as the Treasury do.

1353
I have had cause in the past even to ring up the Treasury and say, "Would I be in a position to pay an increased dividend as a recovery stock?" They say, "We will ring you back tomorrow". You get extraordinarily quickly highly confidential decisions, and they set standards for a recovery position, in which some of these companies arc. They were going through a very bad time in 1973. I think we should be happier if we could be given the assurance that the Secretary of State would set the same sort of standards that the Treasury do within the general provision now that they cannot be higher than 10 per cent. We are only saying in this Amendment two-thirds of the net revenue, and this is the same proposition which, under the Exchange Control Regulations, British investors controlling overseas companies must repatriate; and this is the rule of the Government, of the Treasury. We are not asking for anything unreasonable but for something that we have to do if we have overseas companies. We have to bring back and repatriate two-thirds, so it is not an unreasonable amount that we are asking.
Lord MELCHETT: No, I do not think on either side that we have claimed that the other side's position has been unreasonable. I am delighted at the spirit of compromise and good will with which the debate on this Amendment has been carried on. I would say to the noble Lord, as I have been given some information in a sense in reply to the noble Viscount's first point, that my understanding is, without disclosing which companies are involved and in how many particular cases that has happened, that in most cases we have in fact been able to agree to the request put to us by the companies.
Lord CARR of HADLEY: May I say, directly relevant to that point, and again without disclosing any names or identities, which would not be proper, that I have been given rather opposite information. I have been told that some, at least, of the companies that have applied and have been granted some permission have not been satisfied, because they have had the feeling that the judgment has been made very much in relation to an historical level of dividend. In an ordinary public quoted company the historical level of dividend
1354
is not always, but may usually be, regarded as a fair base from which to work. In the case of subsidiaries of holding companies that of course is not the case, where dividend policies may fluctuate considerably not only in accordance with the performance, the profitability in any given year, of the subsidiary, but perhaps even more sometimes in accordance with the financial needs of the parent.
Therefore, if the base year was a year in which the parent did not call on any particularly large dividend from the subsidiary and that year's small dividend is used as the base amount, and then the application is made to the Secretary of State, he uplifts by a percentage but really in his mind is working on the historical value, this could be very unfair. It was because of representations of that kind from firms who have applied and felt that, for reasons they understood, with the Bill drafted as it is the Secretary of State might work on a one-year base period and extrapolate from there, that we were persuaded that it was right to move this particular Amendment. I am afraid that our evidence is rather contrary to the noble Lord's; namely, to the effect that those companies who have had some increase permitted have not been satisfied because they have felt that the wrong criteria have been used by the Secretary of State—I am not saying anything critical of the Secretary of State personally, but merely because of a lack of proper yardsticks provided in the Bill.
Viscount ROCHDALE: When I heard Lord Melchett's first reply to my noble friend I was inclined to agree with my noble friend that it appeared that we were not all that far apart. The noble Lord, Lord Melchett, referred back to Clause 23 and said that these matters could be referred to the Secretary of State; that they had in certain instances been referred to the Secretary of State and that there had been certain replies. What worries me more is that here is another instance when the Secretary of State has to be brought into the discussions. But who is the Secretary of State? He is not an individual. He is, in fact, nominally the head of the Department, and obviously he will make his decision on what his officials recommend, and they equally and rightly must work to play safe.

1355
It seems to me that all this must make for delay. If we pass this Amendment which is now before us, here will be something that could be decided by the companies themselves without reference to the Secretary of State, and so they would not be held up. It would be much smoother and easier for them to go ahead and not always be worried by the question, "Are we right in this. We have to refer it back". I am making a point to which I referred to some extent when I spoke on Second Reading: the problem of the activities of the Department as opposed to the individual Secretary of State. Personally, despite the discussion, I am still of the opinion that it would be right if this Amendment were agreed to.
6.49 p.m.
The Earl of ONSLOW: Perhaps we could solve the argument between my noble friend Lord Carr and the noble Lord, Lord Melchett. Presumably these companies went to the Secretary of State and said, "Please, may we put up our dividends by a certain amount?" Surely the noble Lord can answer us, without any breach of commercial secrecy, how many of the companies were allowed to increase their dividends by the amount they asked so to do, or how much it was reduced by. That would settle the argument one way or the other, and would not necessarily breach any commercial secrecy.
Lord MELCHETT: I do not have the precise information with me. I know that it is most, which must mean more than half, which must mean at least four out of seven. Perhaps that helps the noble Earl.
Lord ORR-EWING: Many companies have been waiting for this debate because it did not take place in the House of Commons; they have been waiting to see the Amendment probed and to be given assurances. The noble Lord can rest assured that he will be getting a good many more than the nine applications that have come in. He must not think that they are all satisfied or are not in a position to ask for increased dividends, and certainly some more will he coming in.
Lord MELCHETT: I assure the noble Lord and, through this Chamber, those companies that apply that their applications will be treated by the Secretary of State as fairly and as expeditously as possible. Although this Amendment was not debated on Report in the House of Commons, it was discussed in Committee there.
Earl FERRERS: I am grateful to the noble Lord for what he said and for the explanation he gave. Clearly, there is some unease on our part and I hope that he will not feel that this has been in any way a frivolous discussion. This is an important point and, as my noble friend Lord Orr-Ewing, said, it was not discussed in another place, certainly not on Report, and it has been right for us to discuss it here. We still feel unhappy about it. It gives tremendous power to the Secretary of State and we want to try to make it as fair as possible. I will not take the matter any further now, although we may wish to return to it at a later stage. I hope the noble Lord will, if he has any spare time, look into the point to see whether there is not some substance in the argument we have adduced. I think there is, and we should appreciate the noble Lord's looking into it. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 24 agreed to.
Clause 25 [Final payments of dividend and interest]:
6.52 p.m.
Earl FERRERS Earl FERRERS moved Amendment No.133:
Page 31, line 19, leave out from beginning to ("not") in line 21 and insert ("payments on all securities forming part of the loan capital of the company of interest which has accrued up to the date of transfer and has").
The noble Earl said: This Amendment goes with Amendment No. 135 and I am hugely hopeful that the noble Lord, Lord Winterbottom, will say that the Government accepted it because, like all our Amendments, it is helpful. Indeed, it is particularly helpful because it is only a drafting, Amendment. It is also slightly grammatical, which should appeal to the noble Lord. The two references in

1357
Clause 25 relate to the payment of interest on loan capital in the final financial period. The present wording refers to "interest payments which have accrued", but of course technically it is the interest which accrues and not the payment, particularly if no payment has been made. We suggest, therefore, that the Amendment would relate it to the actual interest which has accrued and not the payments.
Lord WINTERBOTTOM: I am grateful to the noble Earl, Lord Ferrers, for that explanation of the Amendment, which is identical to Amendments Nos. 282 and 283 which were put down in the Commons but which fell by the guillotine on Report. I am glad to say that the Government can accept it.
Earl FERRERS: Now we are making progress. I am delighted to hear that the Government can accept it, particularly as it is one of those which fell by the guillotine in another place. May I ask the noble Lord to say that the others which fell by the guillotine will also be accepted? Perhaps that is asking a little too much.
On Question, Amendment agreed to.
6.55 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No 134:
Page 31, line 30, at end insert ("and for the purposes of this paragraph there shall be taken into account the largest amounts, if any, approved in the case of those securities under section 24(1)(c)(ii) above, and, in the case of each of those amounts and the amounts approved under section 23(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: This Amendment is not only long, but complex. I am glad to see that I have sitting behind me some merchant bankers and stockbrokers who I hope understand more about this subject than I do. However, I will do my best to explain the Amendment. Clause 25(1) provides for mandatory payments by an acquired company after the date of transfer of interest and dividends
1358
up to the date of transfer. In the case of dividends that are for the final financial period as defined in Clause 25(4) and (5), they are basically to be of the maximum amounts which would be permitted if that period were a period under control as defined in Clause 23(7). However, under subsection (1)(b) if larger amounts have to be approved under Clause 23(1), the dividend payments are to be of " the largest amounts so approved " but unfortunately subsection (1)(d) omits to make similar provision in relation to any amounts previously approved by the Secretary of State under Clause 24(1)(c)(ii) in a case where a company has no basis financial year, and without such a provision the maximum amounts either cannot be ascertained or will be nil.
The contention, therefore, is that what should be taken into account is the largest amounts previously approved under Clause 24(1)(c)(ii) as well as under Clause 23(1), which brings me to the point that although Clause 24(4) makes provision for an increase or a reduction of amounts according to whether a period of control is longer or shorter than the basis financial year, this does not apply to either of the amounts which may be approved by the Secretary of State under Clause 23(1) or Clause 24(1)(c)(ii). As either of these amounts may govern the payment of dividends for the final financial period as determined under Clause 25 (l)(b), the same principle should, we contend, clearly be applied for this purpose, and the Amendment is directed towards rectifying both of these omissions.
Lord WINTERBOTTOM: Like the noble Lord, Lord Strathcona and Mount Royal, I am in somewhat of a fog on this issue but I hope that I may be able to convince him that the Amendment is unnecessary. As drafted, Clause 25 already contains provision which will protect the interests of shareholders of the vesting companies. As drafted, Clause 25(1)(b) provides that payments of dividends for the final financial period must be paid at the maximum level which would be permitted if that period were a period of control or, if larger amounts have been approved by the Secretary of State under Clause 23, at that approved level. In other words, the final financial period is required to be treated as though it were itself a period of control.

1359
Clause 24(4) already provides that the amount of dividend payable in respect of a period of control must be pro rated in accordance with the length of the period. Presumably that means that it must be proportional to the length of the period, if I translate my brief into English correctly. This also, by implication, brings in the provision in Clause 24(1) (c)(ii) since the Bill already provides for the final financial period to be treated as a period of control. I therefore ask the noble Lord to withdraw the Amendment because we believe it is unnecessary and because the interests of shareholders are adequately protected.
Lord STRATHCONA and MOUNT ROYAL: We have not succeeded in flushing out any of the experts who would, no doubt, be willing to give their additional advice to us this evening. It seems abundantly plain, since neither the noble Lord nor I would claim to be in that happy position, that the best thing we can do under the circumstances is to read what the noble Lord has read out so beautifully in his excellent English and see whether it meets the points which are being raised by those who are briefing us. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Earl FERRERS Earl FERRERS moved Amendment No. 135:
Page 31, line 37, leave out from ("securities") to ("not") in line 38 and insert ("payments of interest which has accrued on those loans up to the date of transfer and has").
The noble Earl said: This Amendment is the same as Amendment No. 133. I am not moving it formally because I long to hear the noble Lord, Lord Winterbottom, say that he accepts this Amendment too. It really makes a bit of history. I beg to move.
Lord WINTERBOTTOM: Yes.
On Question, Amendment agreed to.
7.3 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 136:
Page 31, line 43, leave out from ("statutory") to first ("of") in line 45 and insert ("provisions and rules of law applying to the company shall be deemed to permit such payments").
The noble Earl said: The purpose of the clause is to deal with the situation in which, even though a dividend is required by the Act to be paid for the final financial period, there might be some legal provision in the Companies Act or in the articles of association of the company which could prohibit, or put conditions upon, any such payment. We are concerned that the reference in Clause 25(3) to,
"statutory or other provisions relating to the company",
should overcome any inhibition on the company, whether statutory, common law, contractual, financial or any other. The Amendment attempts to produce a clearer and more all-embracing wording to avoid any potential pitfalls. That is the explanation of the Amendment and 1 look forward with heady anticipation to its acceptance to the noble Lord, Lord Winterbottom. I beg to move.
Lord WINTERBOTTOM: I am afraid that the noble Earl's lucky streak is running out, but I think that we shall he able to agree at least on this Amendment. Like Amendments Nos. 133 and 135, this is a drafting Amendment. We believe it to be unnecessary since it could, in certain circumstances, be positively disadvantageous to shareholders or creditors. Subsection (3) is designed to ensure that the payments prescribed by Clause 25 can be made irrespective of any other restrictions that might apply to the company. Such other restrictions may, under the present drafting, be statutory or other provisions, but the Amendment would confine this to statutory restrictions or the rules of law.
While this might make little difference, it is potentially more restrictive. For example, the Amendment would not release from provisions of company memoranda or articles of association related dividend payments or, for example, any conditions attached to a Ministry of Defence loan. If the Amendment could result in creditors or shareholders being in a worse position than under the present drafting, I believe noble Lords would agree that that would be wrong. For that reason I ask the noble Lord not to press the Amendment.
Lord SELSDON: Is the noble Lord saying that the Amendment is unnecessary because the points that it is trying to make

1361
are already made and that the Government will support the principle behind the Amendment? If so, we are not disagreeing and I shall not waste your Lordships' time, but hope that I may assist in the passage of the Bill.
Earl FERRERS: That was a very deflationary end to my noble friend's speech. I thought he was going to say that, as there was nothing between us as regards the merits of the Amendment, the noble Lord, Lord Winterbottom, might consider an Amendment at Report stage that would cover the point that we are concerned about. As I understand it—and it is, of course, always possible and, indeed, almost certain that 1 shall be wrong, though the noble Lord, Lord Melchett, should not nod his head with such glee—companies could be made to pay out a dividend even though some of their legal, contractual or articles of association obligations might prevent them from doing so. If, for some reason, a company is so constructed that it is not allowed to carry out these payments, is it right that the Bill should force it to go against its articles of association, or any other kind of legal restriction it may be under? I am not quite certain whether the noble Lord, Lord Winterbottom, has answered that point.
Lord WINTERBOTTOM: I think I did. There is a problem here. 1 believe that the Committee would wish, where there is an area of doubt, that the Government should be generous to shareholders and others who are due to receive interest or some other payment, so that if there were some grey area it could be removed and the individual and the company concerned could receive the maximum possible under the present provisions of the Bill. If there are restrictive clauses in a memorandum or in articles of association, it is right that the interpretation should be generous rather than stingy.
Lord SELSDON: When I was insisting that I would support the passage of the Bill, I meant up to the stage where we come to deal with compensation proper, rather than with all the little bits that come too soon. May I ask the noble Lord whether he is saying that the Government will not require people to do things that they are not permitted to do, or that they will not permit people to do things that
1362
they are not required to do? I am not sure which way round it goes. There is an anomaly here that needs to be corrected because it is not absolutely clear. I hope that the noble Lord is giving an undertaking that, in some way or another, this will be made straight, clear and legal so that there can be no doubt. Otherwise, we shall have arbitration going on and on, for ever.
Lord MELCHETT: What my noble friend said—and it might repay study in Hansard because this is a complicated point—is that what we are contending is that the Bill, as drafted, achieves the result that noble Lords opposite wish to see achieved and that their Amendment, while it achieves part of the result that they wish for, would be restrictive because it does not mention all the possibilities. My noble friend gave the examples of the memoranda or articles of a company and a Ministry of Defence contract. So, unintentionally, the Amendment would be restrictive. We are quite satisfied on our legal advice from the draftsmen that the Bill as drafted achieves what the Amendment seeks to achieve.
Earl FERRERS: I am grateful to the noble Lord. We shall certainly study with care his words and those of his noble friend. I must say that we have got into an amusing situation in which noble Lords opposite are trying not to accept our Amendments because they are too restrictive and are encouraging companies to pay out more than we might have thought appropriate. It is a fascinating exercise. I am grateful to the noble Lords for their explanation and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 25, as amended, agreed to.
Clause 26 agreed to.
Clause 27 [Removal of company from companies to be acquired]:
7.9 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 141:
Page 34, line 34, leave out ("with respect") and insert ("in relation").
The noble Earl said: This, too, is a drafting Amendment. It suggests that

1363
we should leave out the words "with respect to" and substitute "in relation to". Unless the meaning is intended to be different, there seems no reason for the use of the words "with respect to" in line 34 when the phrase "in relation to" is used in line 32 in a similar context. I cannot see that it is, and it therefore seems sensible to have the same words in both places. I beg to move.
Lord WINTERBOTTOM: The noble Earl is returning to a point raised in another place, and I am glad to say that this is another case where the Government are willing to accept the Amendment.
Earl FERRERS: Words fail me for the moment! I am more than delighted, and I think that we will have to celebrate on some occasion. I am most grateful.
On Question, Amendment agreed to.
7. 10 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 142:
Page 36, line 31, after ("the") insert ("transaction effecting such").
The noble Earl said: Clause 27 enables the Secretary of State to remove from the list of companies to be acquired those which, broadly speaking, are in liquidation or which have disposed of substantial assets since the initial date or which have a parent company which has already been acquired. Where Clause 27 is to operate for the last reason I mentioned—in other words, because the company has a parent company which has also been acquired—and the parent company then following service of the notice disposes of any of the shares in its subsidiary, that disposal of shares is deemed to be void. This is designed to prevent the situation where the Secretary of State has served a notice under Clause 27 that he was not intending to acquire a company because the parent company has already been acquired, the parent company could then sell shares in its subsidiary and those shares could then not be nationalised.
But in doing this the clause does only half of the job which it is intended to do. It is all very well providing that a disposal of shares shall be void, but those shares could have been transferred and considera-
1364
tion could have been paid for them. To achieve its purpose equitably this clause should, I suggest, make the whole transaction void, so that both the seller and the purchaser can be restored to the position they were in before the void transaction, both as regards the shares and the consideration paid.
The Amendment which I have moved, and is put down in the names of my noble friends and myself, is designed to do just this providing as it does that the whole transaction, not just the disposal, is void. I think the noble Lord will agree with me that it is almost a drafting point, but it is probably a reasonably important one. I beg to move.
Lord WINTERBOTTOM: As the Government understand it, the noble Earl's interpretation is correct. The Amendment has the effect of providing that instead of the disposal being void it would be the transaction effecting such disposal which would be void. That is correct, is it not?
Earl FERRERS: Yes.
Lord WINTERBOTTOM: Clause 27(8), we believe, is a safeguarding provision to ensure that a holding company cannot, once it has become subject to a notice of acquisition under Clause 26, dispose of the securities of its subsidiaries with the result that they would not come into the public sector. Any such disposal would be void. The use of the word "disposal" follows logically and correctly from the use of the word "disposes"; the word "disposes" precedes "disposal". Therefore it would be illogical and incorrect to refer to the, "transfer effecting such" disposal instead of merely the "disposal". We are really having a semantic argument, and for this reason I ask the Committee to reject Amendment No. 142.
Lord SELSDON: Surely the whole object of legislation of this kind is to make the law and the position absolutely clear. What the noble Lord is saying is that the position is not clear and our recommendation does not make it any clearer either, but that we have to accept law that is not clear. As the noble Lord knows from his own background, if one is dealing with the private sector and shares as such and anomalies of this kind, there is the Council

1365
of the Stock Exchange which gives a view and therefore law is not necessarily required. I know that it is extremely difficult to legislate in matters relating to this because it is a very complicated position.
I do not think that one can allow legislation which is not clear and where there are anomalies to pass through your Lordships' House. There is a slight anomaly here, no matter how small it may be and bearing in mind that it may never actually occur. We are not talking about an enormous number of companies. But to allow law to go through where there is an anomaly is morally wrong. If the noble Lord will not accept our Amendment, I cannot think of an alternative which he might accept, but again this is one of the matters which one should consider perhaps at a later date.
Lord WINTERBOTTOM: Noble Lords will I think agree that apart from the matters of principle in the Bill, the Bill is on the whole very well drafted—
Several Noble Lords: Oh!
Lord WINTERBOTTOM: I think that is true: it is well drafted. I say that because so far as I know there are only two Government Amendments to the Bill, so it must be well drafted—
Earl FERRERS: Could it be that the noble Lord's advisers have got so confused with their own script that they found it almost impossible to amend?
Lord SELSDON: I must say to the noble Lord that the Bill is not well drafted because it puts together draftings from previous legislation. It is not original drafting; much of it is repetitive from past nationalisation Bills and other Bills, which may have been well drafted for the particular circumstances at that time, but this Bill is not well drafted for the particular circumstances we are in today.
Lord WINTERBOTTOM: I do not agree with that. Nevertheless, I accept the fact that there is an element of doubt about the exact implications of the difference between "disposal" and "transaction effecting such" disposal, and I will have another look at it and perhaps we can come back to it at a later stage.
Earl FERRERS: I am very grateful to the noble Lord for saying that he will have another look at this point. I should like to give him an example to which he can address his mind. In July 1974 the Government announced that they were going to nationalise the ship repairing and shipbuilding industries, and in November 1974 they announced that they were going to nationalise the aircraft industry. The situation is this. If after those dates the parent companies dispose of their shares in their subsidiaries, this clause says that they should be void, and that is perfectly fair. But it is not only the disposal which should be void, but of course the whole transaction; in other words, the person who bought those shares should be legally in a position to get his money back. The noble Lord said that this was semantics, but I think it is a little more than semantics. That is the kind of situation to which I should be most grateful if he would address his mind. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 27, as amended, shall stand part of the Bill?
Lord CARR of HADLEY: I should like to ask the Government two questions before we allow this clause to go through as amended. If under Clause 27(2)(a)(iii) a receiver has been appointed for part of an undertaking, how and when will the Secretary of State decide whether to serve notice under this clause? If he does serve a notice, what will happen to the assets? Will the Secretary of State acquire them separately? If so, how and from whom? In that event, how will the company be managed under receivership, and who will want to purchase the assets of the company in such circumstances? I apologise for my voice which makes it difficult to proceed at times. I hope I have made clear my first question—what happens if we use the receivership powers in the clause?
My second question is this. If a notice under Clause 27 is served and subsequently withdrawn, will the directors of the company be liable for excess dividends, onerous transactions, et cetera between the serving and the withdrawing of the notice, or will the company have to wait until the arbitrator has ruled on the merits of the notice before it knows what it can and cannot do?
Lord MELCHETT: That is a series of very technical questions and I do not pretend to know the answers off the cuff. I wonder whether the noble Lord would agree that I could look into them and write to him between now and the next stage of the Bill, and if there is anything in the latter which he finds unsatisfactory we could return to it at Report stage?
Lord CARR of HADLEY: That would be perfectly satisfactory and I am grateful to the noble Lord for his offer.
Clause 27, as amended, agreed to.
Clause 28 [Prohibition of transfer of certain works]:
7.22 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 143:
Page 37, line 22, after ("time") insert ("after the passing of this Act and").
The noble Earl said: This is another almost drafting point, but as the Bill now stands it is intended that any transaction of transferring certain works which takes place before the vesting date but after the Bill becomes law should be illegal; and for any transaction before the Royal Assent the Secretary of State has powers to recover those assets under Clause 29. What I am sure the Secretary of State does not mean is that that transaction should of itself be illegal. It is in fact perfectly legal for companies to transfer their assets before the Royal Assent. The only thing is that if they do so the Secretary of State has the right to recover them. So I hope that the noble Lord will be able to accept this Amendment. I beg to move.
Lord MELCHETT: This was something which my honourable friend the Minister of State said he would look into following Committee stage in another place, and indeed the Government have looked into it again and taken advice on it again. As the noble Earl said, Clause 28 prohibits certain transactions. However, as there is no provision in the clause which applies the clause retrospectively to some earlier date, as there is in some of the safeguarding provisions, the clause can only be effective from Royal Assent. Therefore my advice is that Amendment No. 143, and indeed Amendment No. 144,
1368
which the noble Earl did not mention but which I think covers the same point, are unnecessary and I am advised that from a legal point of view they are ill-conceived, if that is not putting it too highly. To agree to them would be to imply that the clause as it now stands would be retrospective. This, as I have said, is not the case and my advice is quite clear on that.
As the noble Earl knows, the majority of the provisions of the Bill are effective only from Royal Assent, but it is not necessary to specify the fact in each clause. Likewise it would be wrong to specify the fact in this particular case, because to do so might imply that all the clauses in the Bill that did not have these particular words in them were retrospective in some way. In other words, to put it shortly, my advice is that the clause certainly is not retrospective, but if you spelled it out it might imply that in every clause where you did not spell it out they all were. I hope that with that explanation, and under a firm assurance, the noble Earl will feel able to withdraw the Amendments.
Earl FERRERS: Yes, I can see what the noble Lord means. The Bill as it reads at the moment says:
"Subject to subsection (4) below, it shall not be lawful for an acquired company … to enter at any time before the date of the transfer into a transaction …"
From that we assumed that if they had done this before the Bill became law, that itself would be illegal. But if the noble Lord says that in fact it is quite all right and that the Bill does not act in any way retrospectively I am quite happy to accept that and I am grateful to him. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 28 agreed to.
Clause 29 [Recovery of assets transferred away]:
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendment No. 145:
Page 40, line 40, leave out from ("the") to ("or") in line 41 and insert ("circumstances stated in the Schedule 4 notice as having appeared to the Secretary of State in accordance with paragraph (a) of subsection (1) above do not exist").
The noble Lord said: I beg to move Amendment No. 145. It might be to the convenience of the House if I could discuss Amendment No. 146 at the same time, because they obviously go completely together. Clause 29 and Schedule 4 empower the relevant Corporation to reclaim the rights of ownership in or user of any works or industrial property, et cetera, which has been transferred to a third party by a company due to come into public ownership, where such transfer has taken place without the Secretary of State's consent. What we are dealing with in this Amendment are circumstances in which a company against which the Secretary of State has served what I think I can call a Schedule 4 notice in order to recover property alleged to have been transferred can contend that this was not properly done or that there was no need to have done it. Subsection (7), to which the first of these two Amendments applies, shows what must be contended by a company in serving a notice challenging the Secretary of State's Schedule 4 notice, and one of the only two possible contentions which can be made by a company in its notice is that the condition specified in paragraph (a) of subsection (1) above is not fulfilled.
Now the condition specified in paragraph (a) of subsection (1) to which I have just referred reads as follows:
"it appears to the Secretary of State that…"
It seems to me that it is quite impossible for a company to show that something did not appear to the Secretary of State. That seems an almost impossible task; therefore we want to remove from lines 40 and 41 the phrase:
"the conditions specified in paragraph (a) of subsection (1) above is not fulfilled"
and to substitute for it the words:
"circumstances stated in the Schedule 4 notice as having appeared to the Secretary of State in accordance with paragraph (a) of subsection (1) above do not exist".
The contention is then changed from being what seems to us a basically hopeless and impossible contention about what appears to the Secretary of State to a contention about the facts which led the Secretary of State to come to his view.
Leading directly on from that is the Amendment which we propose in the next subsection, our Amendment No. 146, because subsection (8) of this clause
1370
provides, or purports to provide, a right to refer the same question to arbitration. But how can there be arbitration about what appears, or indeed does not appear, to the Secretary of State? Indeed, I should like to point out to the noble Lord, Lord Winterbottom, if he is to reply, that it was stated by Mr. Neil Carmichael, then the Under-Secretary of State for Industry, in the Standing Committee in another place on an identical question:
"In principle, if something appears to the Secretary of State to be in the public interest that cannot really be arbitrable. If certain circumstances appear in a particular light to the Secretary of State, that is not an objective matter of fact which can be subject to an arbitrator's ruling."
So it would seem that this subsection (8), which purports to be a relief to an aggrieved company and to give an aggrieved company the right to go to arbitration about the argument with the Secretary of State, is, on another Minister's own admission, not aright at all.
Once again, then, we propose to insert words which will transfer the matter of arbitration from what may or may not appear to the Secretary of State, to a matter of fact. We also propose to insert after "question" in line 3 of page 41 virtually the same words as we proposed in the previous subsection. We want to say that it is a question of whether the circumstances referred to in that subsection exist; and there has to be a consequential "or". Once again, here we are proposing to put into this subsection a matter of fact which can be arbitrated about rather than the matter of the question of what did or did not appear to the Secretary of State. I hope that these two Amendments will commend themselves to the Government.
Lord WINTERBOTTOM: The noble Lord, Lord Carr, has attempted to produce greater clarity. We believe that he has succeeded. Perhaps, for the sake of other people who have to follow us in their study of the Bill, I might take some time to explain why we think the drafting is better that that we have at the moment.
Subsection (7) empowers a person on whom a Schedule 4 notice is served by a Corporation, for the purpose of reclaiming assets which have been transferred away, to dispute that notice by means of a counter notice. The grounds for serving

1371
notice must be that the condition specified in Clause 29(l)(a)—that assets have been transferred away between the initial date and the date of transfer—has not been fulfilled. If it can be demonstrated that the transfer has not taken place, or that it did not take place in the prescribed period, then the Schedule 4 notice falls. Subsection (8) provides that the question shall be settled by agreement with recourse to arbitration. While this intention is clear from the present drafting of subsections (7) and (8), Amendments Nos. 145 and 146 improve the drafting materially, and I am therefore very happy to accept them both.
Lord CARR of HADLEY: I am most grateful to the noble Lord, Lord Winterbottom. He has come to the Committee tonight in a generous and co-operative mood. I hope that this continues and that it may prove contagious on the Front Bench opposite.
On Question, Amendment agreed to.
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendment No. 146:
Page 41, line 3, after ("question") insert ("whether the circumstances referred to in that subsection exist or").
On Question, Amendment agreed to.
On Question, Whether Clause 29, as amended shall stand part of the Bill?
7.35 p.m.
Lord TREFGARNE: Like my noble friend Lord Redesdale, I was hoping to pop up on the previous clause, but I think that the point that I have to raise is equally apposite to this clause. The other morning the Committee agreed an Amendment to delay the vesting day of the aircraft industry for a considerable period—whatever it might be, 12 months or more. I wonder what will be the position with aircraft companies who clearly need to deal with their assets for what may be a long time? I wonder whether the Government have applied their minds to this new difficulty and what conclusions they have reached?
Lord MELCHETT: I should have thought it was a difficulty to which noble Lords opposite might have applied their minds before pressing the Amendment.
1372
The answer is, No. The Government have not applied their minds to this or to any other of the substantial difficulties which will arise if the Amendment which noble Lords opposite pressed into the Bill should remain. All of us, the Government, the companies and the industry, no doubt will have to apply our minds seriously to the very substantial and legion difficulties which will arise if the Amendment stays in the Bill. At this stage, we have not had the time to do so.
Lord ORR-EWING: I have been examining the clauses. I am not sure which clause is appropriate to my earlier query. I must apologise to the Committee that owing to a long-standing commitment, I must leave shortly. Perhaps the noble Lord will elucidate a little the position given at Question Time on 1st October.
Lord MELCHETT: I am delighted to try to help the noble Lord. The noble Lord asked about the interest on the stock and when the stock would be paid. That, I believe, was the question.
Lord ORR-EWING: I appreciate that the interest will depend on time. It is not the interest; I realise that that must be according to the market and the position of the pound and other factors. It is when the stock would be issued.
Lord MELCHETT: I was going to cover both points. Unquoted securities will be issued when negotiations are complete, with provision for earlier payments on account. That will depend on the progress which negotiations make. I would emphasise that there would be provision for payments on account in the interim. For quoted securities, payments will be made on or about vesting day. In that respect, I think payment will be made a lot sooner than the noble Lord may have inferred from my noble friend at Question Time.
Lord ORR-EWING: I believe I am right in saying that there is only one quoted security out of the 43, that, therefore, 42 are going to have a long period; but it would not stop during the period of arbitration. Will some sum be paid on account?
Lord MELCHETT: Some sum will be paid on account. We hope that negotiations will not be too protracted and in some cases we will be able to settle reasonably quickly. With two parties involved, it will be a matter for both sides. I hope that the noble Lord will agree that the sooner the matter is settled the better.
Clause 29, as amended, agreed to.
Clause 30 [Dissipation of assets by transactions involving holders of securities etc.]:
7.38 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 146A:
Page 41, line 39, leave out ("on") and insert ("following")
The noble Lord said: This is a simple drafting Amendment which, I believe, will commend itself to the Government. The underlying purpose behind what appears to be a simple piece of semantics is possibly more substantial than may first appear. The situation is that Clause 21 comes into effect only as a result of the steps which are suggested in this clause and, therefore, a certain amount of argument and negotiation would happen subsequently. It is thought it would be proper to say that the trigger action bringing in the clause should allow time to do that rather than suggesting that the thing automatic ally happens at the same time. I should add that Amendment No. 177 is directed to the same general purpose. I beg to move.
Lord WINTERBOTTOM: I assume that the noble Lord is referring to Amendment No. 177A, not No. 177, in conjunction with this one. I am able on behalf of the Government to accept this Amendment. The substitution of the word "following" for the word "on" which Amendments Nos. 146A and 177A seek to make would have the effect of more correctly describing the sequence of events in Clauses 30 and 39 in relation to the service of a notice under Clause 21. May I say that I do not claim any virtue for these Amendments. They were due to be put down by my noble friend Lord Kirkhill who is battling with the problems of Scottish licensing.
Lord STRATHCONA and MOUNT ROYAL: I am grateful to the noble Lord.
On Question, Amendment agreed to.
7.40 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 147:
Page 42, line 12, 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: In moving Amendment No. 147 may I first welcome the way in which the noble Lord, Lord Winterbottom, has been able to accept Amendments this evening, I hope that he will be able to accept more. I have just left the Committee on the Scottish Licensing Bill which I can tell the noble Lord finished this afternoon's Sitting, and I am glad to say that the noble Lord, Lord Kirkhill, has gone off with all the suggestions we have been making in that Committee to consider the Amendments which he can then bring in to meet the points. There, as here, he has been exceedingly good at listening to our points and trying to co-operate.
Turning now to Amendment No. 147, I think this could be considered with Amendment No. 152 which is on a similar point, and I would speak to that as well. These Amendments apply to those companies who, on the initial date, were carrying on business as ship repairers as well as shipbuilders. The purpose of the Amendments is to enable the companies, if they wish to do so, to reorganise their affairs so that their shipbuilding and ship repairing businesses, where they happen at present to be carried on within the one company, are treated differently. Perhaps the best example is Vosper Thorneycroft, because the ship repairing business of that company is substantial. It represents about 10 per cent. of the whole of the United Kingdom ship repairing industry. The Vosper Thorneycroft ship repairing business is organised as a separate, autonomous division. It has its own managing director, production management, accountant, personnel, purchasing and commercial managers and its separate

1375
labour force. It is simply an accident of organisation that it is a division of a single company rather than a separate company. Indeed, the ship repairing facilities are entirely separate geographically from shipbuilding in that they are on opposite sides of the river Itchen. Consequently, the ship repairing business could be separated without any difficulty from the shipbuilding activities of the group.
As noble Lords on the Government Front Bench will know from the debates we have had on the ship repairing companies which are affected by this Bill, we hope that the Government will think better of the 12 companies listed in Schedule 2 and in due course will agree that it would be best if they were not to remain within the Bill. If they do not come to this conclusion of their own accord, at a later stage we propose to return to that point and to commend to the House various changes in the Bill to that effect. If the ship repairing companies in Schedule 2 are dropped from the Bill, it would be only right and fair that this quite separate department of Vosper Thorneycroft should be treated similarly, and of course any other company in the same position should also be treated in the same way. The purpose of moving Amendment No. 147 is to point out that at least one company has a substantial ship repairing department which is entirely separate from its shipbuilding activities, and that if ship repairing is to be treated differently from what is now proposed in the Bill then this and the consequential Amendments should be made in order to be fair to those other companies.
Lord MELCHETT: I am glad that we have been able to make such rapid and harmonious progress this afternoon. I hope that the slight hiccup which we have now reached will not delay us unduly or disturb the calm waters through which we are managing to sail. I had rather expected that the noble Lord would include Nos. 174 and 207 which, as well as 152, seem to me to be on the same point. In fact all four Amendments fall into place as part of the declared and, if I might say so, long awaited aim of noble Lords opposite to remove ship repairing from the scope of the Bill.
1376
In addition to the other Amendments to which noble Lords have spoken during the Committee stage, these Amendments would permit the shipbuilding companies listed in Schedule 2 which have a separate ship repair division within the company to hive off the ship repair operations without the consent of the Secretary of State so that these ship repair operations also could be excluded from the scope of the Bill. I have already to the best of my ability explained the reasons behind the Government's policy to bring the major ship repairing firms into public ownership. I have tried to point out the industrial logic behind our proposals in that many ship repairing facilities and operations are closely integrated with shipbuilding yards. This is especially true when ship repairing and shipbuilding are carried out in the same company.
In these circumstances, the Government believe it would be wrong to permit the ship repairing part of the business to be separated off from the rest of the business which will vest in British Shipbuilders. This would be to handicap the Corporation by breaking up the logical integration of the two activities which led to their incorporation in one company. I therefore regret to have to tell the noble Lords that the Government would resist these Amendments and the other Amendments on ship repairing which we discussed.
Lord MOTTISTONE: Would the noble Lord not feel that he is being slightly unreasonable? It is obvious that there is a strong body of opinion, not only among noble Lords on these Benches, which identify ship repairing as a separate activity. In fact it might be said that those firms which are big enough to do both jobs of shipbuilding and ship repairing have, I think I am right in saying, organised their businesses virtually separately in the way outlined by my noble friend in describing Vosper Thorneycroft. There must be a reason behind that. If, as the noble Lord, Lord Melchett, said, it is better to have them all together, it would not be logical to manage them so obviously separately, so it could be that the thinking behind the advice which the noble Lord has been given is not quite as sound as he thinks it is. There are quite good arguments for keeping ship repairing and shipbuilding separate for practical reasons quite apart from businesslike ones and

1377
quite apart, if you like, from separating those ship repairing companies that are independent and whose livelihood may in due course be threatened by some degree of unfair competition.
Altogether it seems to me that there is quite a strong case for this, and as I understand it my noble friends are going to press for it at the varying stages of the Bill. It is an accident, so to speak, of the way in which the Bill is laid out that the Amendment we are dealing with now is effectively a consequential Amendment to one which is coming at the end. It might seem, therefore, that as there are sound practical reasons, perhaps the Government could listen a little less to those who advise on the merits of ship repairing automatically being included with shipbuilding. If it was a good commercial proposition there would be an opportunity in the future for the Corporation to attempt to buy back the ship repairing companies. I know that politics is not sensible, and in fact sometimes procedures in your Lordships' House are not sensible, but the most sensible thing to do—and the Front Bench opposite have been so sensible so far that perhaps they could keep this happy feeling going—would be to accept this Amendment now knowing that it is consequential. In due course they could have the argument on the later Amendments and see what happens. Maybe it could all be put right at Report stage.
Lord MELCHETT: I am afraid that I could not accept the Amendment whether it is consequential or not, and I am not sure that it is. This is a separate series of Amendments although it is part of the general and continuing debate about ship repairing which we have had at all stages of the Bill and almost every single day of the Committee, except for the last day and night when we did not manage to reach a point where we got to a ship repairing Amendment.
I accept that noble Lords opposite think they have very good arguments on their side, but they must accept from me that I think I have very good arguments on my side and it is something over which we shall simply have to agree to differ. I do not want to prolong the debate because it is one we have had so often before, but I make the point that my understanding is that although the parti-
1378
cular instance quoted, Vosper Thorneycroft, may well divide shipbuilding and ship repairing into two divisions some of the ship repair labour has been used at times for fitting out ships on the shipbuilding side. That is the experience of other countries and I have quoted before, and will not weary your Lordships with it again, the example of Japan, a very highly successful competitor of ours in this field, where labour is used on ship repairing and shipbuilding within the same companies.
Lord CAMPBELL of CROY: I am grateful for the support of my noble friend Lord Mottistone, who, in one of those previous debates on ship repairing, gave the Committee the benefit of his own experience in the Navy and his own experience of the ship repairing industry as being completely separate and quite a different business from shipbuilding.
So far as this Amendment is concerned, my object, as I made clear, was to register with the Government that there was this side which we had to consider as well, where a company had a division which was dealing with ship repairing and which was quite separate from its shipbuilding business. I pointed out that in this case it was geographically separated and certainly there was no question of integration. I do not know the details of whether some of the labour force had been used on one side of the Itchen and got crossed over to do other work, but certainly the labour forces are separate in this company about which we have been talking.
The noble Lord reminded the Committee that we had said that we were not at this stage pressing the series of Amendments on the ship repairing industry, because we are giving the Government time for second thoughts themselves on something which is a very arguable matter. It could be said that this is the Opposition being very reasonable in giving the Government plenty of time to think about things and also to deploy any arguments they may wish to deploy in support of their view.
Having made the point that when we reach a stage where we have to decide whether ship repairing should remain in the Bill or not, we must not overlook these companies and we must make sure that they are dealt with in the same way.

1379
Having registered that point, I now beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
7.55 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 148:
Page 42, line 39, leave out from ("reduced") to end of line 41 and insert ("in accordance with section 38(7A) below").
The noble Lord said: I beg leave to move Amendment No. 148, and with it I suggest we discuss Amendment No. 175 which is linked to it. These Amendments are addressed to the valuation of assets which are hived off. We attach great importance to these Amendments. Apart from requiring the securities of scheduled companies to vest in the two Corporations, the Bill provides for some re-arrangement of the corresponding assets.
Under Clause 20 certain assets owned by a company in the same group but—and here I use a phrase from the Bill— "appurtenant to the undertaking" of an acquired company are to be taken into public ownership along with that company, Conversely, assets which are agreed not to be "appurtenant"—again to use the word in the Bill—may be hived off from the acquired company, subject to the approval of the Secretary of State, under Clauses 26, 28, 29 and 30. There is a difference, however, in the provisions for the valuation of such assets, and I hope the Committee will bear with me if I go into some detail here because the important point is the way in which this valuation is done.
The difference in the provisions depends upon whether the companies are to come into public ownership or to be excluded. A different valuation system is to be used depending upon which course is adopted. Clause 38(7) provides for assets included under Clause 20 to be valued by setting the base value for compensation as if the company which acquires them when it is nationalised had held them during the relevant days—that is, from the 1st September 1973. On the other hand, a company which is given approval under Clause 30(2) to transfer works to its parent or fellow subsidiary, will find that the compensation payable for its securities may be reduced under subsection (4)(b)
1380
to whatever extent the Secretary of State pleases.
If the assets to be transferred away are valued as if an open market transaction between a willing seller and a willing buyer were involved at the time of the transfer, it is quite possible for the compensation for the securities of the company to be reduced to nil. That is the point, that the compensation could be reduced to nothing. That is because the value of the part of its undertaking on this latter basis could be greater than the whole on the basis laid down in Clause 38(1). The Amendments are intended to ensure that assets that are transferred away with permission are valued on the same basis as those which remain with the company that is nationalised or are acquired by that company on nationalisation.
I hope that I have explained what is, I fear, a little complicated, but we feel it is only simple justice that the valuation in the two cases should be carried on on the same basis, otherwise it may lead to compensation of nil and it will certainly be unfair. I hope that the Government will be able to accept these Amendments or be prepared themselves to offer similar Amendments, because otherwise there will be great unfairness arising from this aspect of the Bill.
7.58 p.m.
Lord MELCHETT: As the noble Lord has explained, Amendment No. 148 seeks to prescribe the method of valuing assets transferred away with the approval of the Secretary of State under Clause 30, rather than leaving it to the Secretary of State's discretion under the Bill as drafted.
The purpose of Clause 30 is to prevent vesting companies or their wholly-owned subsidiaries disposing of assets, whether in the form of physical assets or money to their parent companies or other non-vesting companies in the same group. Such disposals, if subject to no controls, would reduce the value of the vesting companies without any corresponding reduction in compensation. Nevertheless, we recognise that certain disposals could be industrially sensible, or justifiable for other reasons. Provision is therefore made in the Bill for the Secretary of State to give his approval to transactions

1381
covered by the clause, thereby ensuring that the consequences laid down in the clause will not result.
Nevertheless, there still remains the possibility that a disposal, though industrially or commercially sensible, could give rise to a loss to the new Corporations. Subsection (4) therefore provides that the Secretary of State may impose certain conditions to his approval, which may provide for a reduction in the compensation payable in respect of the vesting securities to compensate for the loss to the Corporation.
If a transaction which contravenes Clause 30 is undertaken, then the directors become liable to the relevant Corporation for the net loss to the Corporation resulting from the transaction. Where the Secretary of State gives approval to a transaction subject to conditions, those conditions will be designed to ensure that the relevant Corporation in fact suffers no net loss. If assets are taken out of the scope of public ownership after the reference period for compensation purposes, this is equivalent to the removal of a sum of money from the Corporation equal to the market value of the assets which comprise the works. Any condition to an approval must, therefore, ensure that the compensation is reduced by an equivalent amount.
As I understand it, Amendment No. 175 (which the noble Lord took with Amendment No. 148) seeks to provide that, in the case of any disposal of tangible assets, compensation should be reduced by reference period valuation of these assets, less any consideration received. And Amendment No. 148 seeks to limit the conditions in Clause 30 to the same basis. I regret to tell the noble Lord that that would be unacceptable to the Government. We have given assurances to companies that any funds injected into them by their shareholders after the reference period shall be repaid at their face value by the Corporations. Where such injections are in the form of new securities, the Bill provides for compensation at the face value. If shareholders are to receive full face value repayment of any new funds they put in, then I suggest to noble Lords opposite that in equity the new Corporations should receive full face value compensation for funds taken out after the base reference period. This need not apply simply to cash. The
1382
removal of assets from a company is exactly equivalent to the removal of funds. The actual loss to the Corporation is, by direct analogy, the open market value of the assets at the time they were removed. I suggest that to allow a different treatment for funds put in and funds taken out would destroy the existing balance at present in the Bill, to the sole benefit of the shareholders and to the sole disadvantage of the new Corporations. For that reason, I regret to say that I am not able to accept Amendments Nos. 148 and 175.
8.2 p.m.
Lord GISBOROUGH: I find it difficult to follow the noble Lord in his argument that this provision is in any way fair. It concerns groups in companies where part will be nationalised and part will not. With the approval of the Secretary of State, part will be able to be kept in private hands. It is only right that the group should either pay for the part transferred back to them or the compensation for nationalisation should be reduced accordingly. As has already been stated, the Secretary of State is directed to pay compensation to such an extent as may be specified. I find it difficult to understand that where you have two different sets of valuations the whole thing can be in any way fair. You get one set of valuations on a notional stock exchange valuation, which anyhow is absurd in the first place, for the business that goes out, and to bring back part of the business at a market value is totally different. It could well—and probably will—result in the value of the part coming back exceeding at market value valuation the value of the part to be nationalised. In practice, what is happening is that the Department of Industry are using the full open value, and it seems most unfair. Furthermore, it is compulsory acquisition on one valuation and selling back on another. There will be considerable profit which will be kept by the Corporation. This Amendment will automatically ensure that the parent company will pay and be paid at the same rate of valuation. As it stands, the clause is nothing short of daylight robbery.
Lord CARR of HADLEY: This is a complicated matter and I am not sure that I understand it. I hope that my understanding is wrong, but if I and my noble

1383
friend are right about it, it seems to me absolutely outrageous. May I try to put it in simple terms, because it may disclose that I am failing to understand the technicalities? As I understand it at the moment, if there is a whole company which is due to be nationalised but a part of that company is permitted to be transferred back again to the original owner and not kept in the Corporation, when the whole company is valued for compensation it is done on the notional share price basis which we have in the Bill and which we have not yet discussed. I am going to assume that that is the basis on which the compensation will be paid.
Then we get to the point of the original company bringing back to itself that part of its operations which are not relevant to the Corporation. It is allowed to do this. It has to buy back at current asset value. If it is having to pass over at notional share price value and then buy back at the current asset value, it seems outrageous and cannot be equitable. The word "fair" could not possibly be stretched to cover such a case. I sincerely hope that I have misunderstood the technical complexities of the matter and that my noble friend Lord Gisborough has also misunderstood it. If we have not, the Government have a great deal more explaining to do.
Lord CAMPBELL of CROY: It seems that none of the noble Lords opposite feel that this is the moment to do the further explaining.
Lord MELCHETT: I thought the noble Earl behind the noble Lord, Lord Campbell of Croy, was about to get up to speak. I was waiting.
The Earl of ONSLOW: I was leaning back on my shoulder and making no effort to do so.
Lord MELCHETT: I apologise for not being faster on my feet. The noble Lords, Lord Carr and Lord Gisborough, have not misunderstood this matter; but at the same time they have not entirely taken the point I made. As the noble Lord said, it is a complicated subject. I made the point that we have said to shareholders that any new funds put into a company will be treated at
1384
their full face value, full market value. We are treating anything taken out of the company in exactly the same way. Funds put in or taken out after the base period—as the noble Lord says we shall come to a discussion on the valuation of the securities—anything going in or out of the company, will be treated on the same basis. That is what led me to say that I thought this was a reasonable and fair thing to do. I remain of that opinion. It seems to me that these are two exactly comparable although opposite transactions which should be sensibly treated in the same way.
Lord GISBOROUGH: Surely that is exactly where it is wrong. Money going in and coming out is fair enough; it is treated at the same rate. But you are taking the whole of a company in at one rate and taking half out at another rate. It is exactly against what you are saying.
The Earl of ONSLOW: The noble Lord, Lord Melchett, has just said that my noble friends Lord Carr and Lord Gisborough have got it absolutely right. What he has not done is answered the fairness point.
Lord MELCHETT: I am in the middle of a speech and am trying to do so. If the noble Earl wants to intervene, I shall be happy to give way to him.
The Earl of ONSLOW: I apologise to the noble Lord. I thought he had finished his speech. It is sometimes not easy to know.
Lord MELCHETT: The noble Lord behind the noble Earl got up to intervene and I gave way to him, I think as politely as I possibly could, and I am happy to try to finish what I was saying. As I said, we are looking at transactions both in and out of a company after the base period and it seems to me, as I have said already, that we are treating those two situations in the same way. If the shareholders put extra money into the company they will be paid that amount, and if they put extra assets into the company they will be paid for those assets at their market value, their face value. Similarly, if things are taken out of the company after the base period, they will be paid for on the same basis as something put in. That is the point I am trying to make.

1385
The question with which I should like to deal very briefly, if I may, is that normally, if assets are transferred from a company in this way, the seller will receive some kind of price for the sale. Normally, of course, the price will be the full market value and then there will be no question of the Secretary of State needing to impose conditions, because the full market price will have been paid to the bit of the company which is to vest. The conditions imposed by the Secretary of State will deal only with the gap, if there is a gap, between the price paid for the assets transferred away and the open market price. Unless a company actually gives away assets, I suggest that the difference between the price paid and the open market price is most unlikely to be anywhere near the compensation sum, and somebody suggested to me earlier that it would be a great deal more than the compensation sum. As I said, unless the bit of the company which is to vest actually gives away part of it to its parent, or it goes somewhere else, that is unlikely and all that the Secretary of State's conditions will be designed to do is to bring whatever price is received up to the full market value.
Lord CARR of HADLEY: I am still seeking clarification. I think it is agreed that in most cases, though not perhaps in every case, compensation based on a notional share value as at present laid down in the Bill will give a lower valuation figure than compensation based on current asset value. I agree that it need not always be so, but in a flourishing company it probably would be so more often than not. Let me give the example of a hypothetical company called Jones Group Limited, which has a subsidiary called Smith Ship Repairing and Plastic Moulding Company Limited. The ship repairing company has a turnover in the relevant period of more than £3·4 million, is in possession of a dry dock and meets all the other criteria and so falls to be nationalised. Therefore, the value to Jones Group Limited of its subsidiary, Smith Ship Repairing and Plastic Moulding Company Limited, is based on the notional share value. But the plastic moulding part of the Smith subsidiary has nothing to do with the Corporation, and Jones Group Limited will be permitted to keep it and want to keep it.
1386
But the compensation it receives in respect of the plastic moulding part of its Smith subsidiary will have been based only on the notional share value, and when it tries to get back to itself the plastic moulding part of the business—I have used this hypothetical example of plastic moulding because I know that it involves very high capital expenditure—the assets which it will have to buy back will have a much higher value than the value attributed to them on a notional share price valuation. It would be grossly inequitable, absolutely intolerable, and the amount that it would have to pay for getting back its high capital plastic moulding machinery, particularly if it was at the heavy end of the trade, could well be greater than the total compensation that it received, based on a notional share value, for the whole of the Smith Ship Repairing and Plastic Moulding Company Limited subsidiary. I believe that I have correctly interpreted the meaning of the Bill, and I must say to the noble Lord that it is absolutely intolerable; it cannot be tolerated and the Government must not tolerate it.
The Earl of ONSLOW: My noble friend Lord Carr has made this complicated issue totally and completely clear to me. As the noble Lord, Lord Melchett, admitted in the first part of his previous remarks that this is to be the case, I would put this to him. It is not a question of being unfair; it is a question of behaving in exactly the same way as Charles I behaved by forced loans, and your Lordships know what happened to him. It is exactly the same behaviour as that of which some of the noble Lord's colleagues in another place have accused Mr. Slater, and over which they have raised the roof with rage. It is more than intolerable, it is more than unfair, that the noble Lord and Her Majesty's present advisers should behave like this. It is pure robbery—there can be no other description of it—to buy something from somebody at one price and force him to buy back his own stuff at slightly more. That is in no way equitable, it is in no way fair and it is verging on tyranny. The noble Lord opposite ought to remember what is in the Bill of Rights, which is that no man should be deseized of his freeholds or liberties, and if noble Lords opposite go on deseizing us of our free

1387
holds we will end up by being deseized of our liberties.
Viscount SIMON: I do not want to follow the noble Earl, because I feel sure that the Government do not mean to do the kind of things he is suggesting. But it seems to me that this is a very complicated—
The Earl of ONSLOW: If the Government do not mean to do it, they are even more incompetent than I thought.
Viscount SIMON: I was saying that this is a very complex matter, and I would not accuse people of being incompetent if they do not necessarily understand a very complex matter—and I do not understand it. All I want to say is that I thought the noble Lord, Lord Carr, made a very strong case, which was very logically argued, and, if the effect of the Bill is as he described, then I am in entire agreement with him that it ought to be altered. Perhaps the noble Lord will tell us that that is not the meaning of the Bill, and will explain it to us. If so, my views will be different.
Lord STRATHCONA and MOUNT ROYAL: I should like to support the noble Viscount, Lord Simon, and I do not ascribe to the Government any unworthy motives—quite the reverse. I totally accept that what they say they are trying to do is inherently reasonable. I did not begin to understand the argument on both sides, until my noble friend Lord Carr put it in the kind of terms that I could understand. Having been in the plastic moulding business myself for a short time, I found it particularly relevant. But what I found difficult to follow was the argument of the noble Lord, Lord Melchett, and I reduced it to rather simple terms that I thought I understood for a moment. It seems to me that the Secretary of State agrees that action should be taken, and he gives his permission. The fact that he graciously agrees that somebody should be allowed to keep something which I consider belongs to him, is perhaps putting it in rather emotive terms. But the Secretary of State agrees that something should happen, and he agrees the basis upon which it should happen.
As the noble Lord said, the Secretary of State may reduce the compensation.
1388
Surely that must mean that he is going to value the transaction on a different basis, yet later on the noble Lord said, "We do not think that there should be different ways of treating these transactions". That seems to me to be a curiously inconsistent attitude.
The noble Lord then went on to say that the Government have given an assurance. This is a more general point that should be made quite clear. With the best will in the world, and I am not trying to impute any base motives or dishonesty to him, the Minister must know (because he would be saying exactly the same thing if he were standing where I am now) that Government assurances are of very little use when you are dealing with legislation that affects people's livelihoods and property. Governments change, we hope sooner rather than later. Governments have even been known to repudiate the activities of their forebears. This has happened quite often. During a Conservative Administration I remember a considerable business tycoon saying at a board meeting: "I will believe anything from people I trust, but I do not trust Governments. I never take a contract from a Government unless it is totally binding, for all sorts of reasons, but mainly because Governments change and Governments repudiate contracts and it is extremely difficult to sue Governments."
With the best will in the world, therefore, may I say to the noble Lord that we ought not to rely upon assurances. If the assurances are genuine then they ought to be written into the law of the land which, Heaven help us! we are trying to make in this Chamber this evening.
8.21 p.m.
Lord MELCHETT: Regarding the latter point which was made by the noble Lord, Lord Strathcona and Mount Royal, I shall be happy to think about it. It seems to me that it would not be in conflict with our basic argument but, to be frank with the noble Lord, that is not what the Amendment seeks to achieve. So far as the use of the Secretary of State's power is concerned, what I said was that if a company which is to vest gives away part of it to its parent so that that part does not vest and it goes to the parent, then the Secretary of State would seek to see that the part which is due to vest gets

1389
the market value for the bit which has gone to the parent. That is the extent to which the Secretary of State's power will be used. If the noble Lord would like that to be made clearer in some way I think that we could look at it in a constructive way. I slightly resented the way in which the noble Earl, Lord Onslow, set about us since, on the whole, we have been making fairly good progress this afternoon and, generally speaking, both sides of the Committee have been constructive. It does not help to accuse people of robbery, which is patently nonsense, but it is the kind of remark which is very easily picked up and put out of context into the newspapers. I know that the noble Earl uses extravagant language and I am sure that he did not mean what he said because it is quite unfair and not true.
The compensation paid under the Bill relates to the value of companies as a whole. The companies will be valued as a whole when it comes to determining their compensation, and this price represents the true earning power of the assets of the company. In principle, therefore, there should be no conflict over valuing a part of the assets and valuing the shares under the Bill. That is the basic tenet on which the argument which I am advancing is based. It is an argument with which noble Lords opposite will disagree when we deal with compensation, but these are the terms upon which compensation is decided under the Bill and we believe, broadly speaking, that the method of arriving at compensation will give us a fair picture of the earning power of the assets which are to vest in the new Corporations and, therefore, a reasonable indication of the value of the different bits of the companies which are to vest.
The transfer away from a vesting company of any part of its business must result in a direct financial loss to the company unless the transfer is balanced by an equivalent payment. That is all that we are talking about—the transfer away of a part and a payment back for the part which is transferred away. It is not possible to value a works or even an undertaking on the same basis as one values the securities of the company as a whole. The value of securities represents their earning power to the shareholders. The value of an undertaking which is only part of a greater undertaking is the contribution which the lesser undertaking makes
1390
to the total earnings of the greater. May I suggest that the only sensible way to value such an undertaking is by reference to what a willing buyer would pay to a willing seller when we are talking about a lesser part of the total undertaking, just as a Stock Exchange quotation represents the price at which securities would change hands between a willing buyer and a willing seller. As there is no Stock Market analogy for part of an undertaking, the only way to assess the correct transfer price is by an independent outside valuation—in other words, the market price of the bit which is not going to vest in the Corporation.
The Earl of ONSLOW: May I take up the point with the noble Lord, Lord Melchett, that in this instance there are no willing sellers. They are sellers who are being forced to sell by Act of Parliament.
Lord MELCHETT: No; that is not true. We are talking not about the fact that the companies are being taken over by the Bill but about the fact that the companies seek and, with the agreement of the Secretary of State, are able to divest part of the company because it does not fit sensibly into the Corporation's activities. The noble Lord, Lord Carr of Hadley, gave us a good example of that. In the situation that we are talking about, if that part of the company which is going to vest does not sell the bit that is going back to the parent at the open market price (which I think they would, so we are probably talking about only a few occasions), then the Secretary of State would seek to bring up the price to the open market price.
Lord WARDINGTON: I came in just when the noble Lord opposite was referring to a Stock Exchange price. A Stock Exchange price is as quoted in the newspapers that one sees and it is followed by investors generally and the management of investors' funds. That is what they invest in and on, with the earnings and yields commensurate with that price. However, as I submitted to noble Lords early on Tuesday morning, when you get into bid situations you have an entirely different set of circumstances. Assets then come in and have to be paid for. As I mentioned on Tuesday morning, this is best illustrated by the recent bid for

1391
Teachers. The Teachers' price was 190 in the market before the hid and the yield was the normal one in that brewery and distillery market, but when there was a bid the price reacted to 380 and it is still 380 on that bid.
Lord CARR of HADLEY: May I be quite clear that I am still not misunderstanding, because if I am not I shall have to stand by the strong words that I used a few moments ago. To return to my mythical Jones Group Limited, at the moment they are enjoying the use of their ship repairing and plastic moulding assets which are held in their Smith Company subsidiary. At the moment they have the use of the profit from both types of asset. Along come the Government and take from Jones Group their Smith subsidiary, and for the privilege of keeping just one part of what they possess at the moment they have to pay something to the Government. This seems to be quite appalling. At the moment, they have got both their ship repairing assets and their plastic moulding assets, and in order to keep their plastic moulding assets in the future, although they are of no interest to the British Shipbuilders Corporation, the Jones Group have to pay money to the Government. If that is not robbery, I really do not know what is. I am sure my noble friend was not wishing to accuse the noble Lord or his right honourable friend the Secretary of State of wishing to indulge in robbery. But if what I have described is possible, the effect of this clause is robbery. It is not compensation, it is robbery; there is no other word for it, and Parliament cannot allow it to happen.
8.31 p.m.
Viscount SIMON: Can the noble Lord, Lord Melchett, help us again, because this is a very difficult matter and some strong words have been used. He said in his last intervention that the basis of payment—and he implied the basis of payment in each case—was earning capacity. That is, of course, different from the basis of the market value of the assets, if you are thinking of pieces of machinery and things like that. Is he saying that the notional share price of the whole organisation, Smith Ship Repairing and Plastics, is based on the earning capacity of Smith Ship Repairing and Plastics;
1392
and that the amount which the company will be required to pay for retaining Smith Plastics is the earning capacity of the plastics section of that business? If that is what he is saying, it sounds to me reasonable. But I am not sure that that is what the Bill says.
Lord MELCHETT: It is not exactly what I am saying. I am saying that the compensation will be arrived at as the Bill lays down, on the stock market analogy, and we will come to deal with that later. I know this is not accepted by noble Lords opposite, from the Amendments they have put down and the remarks they have already made about the way the compensation is arrived at, but my contention was that the compensation paid will reflect the earning value of the assets of the group as a whole. But, unfortunately, it is not possible on the same basis to easily value one particular part of the group. What I am saying is, that if one part is transferred away from the group as a whole, the part that the Corporation is going to get, compensation having been paid for the whole, should have paid into it the market value of the part transferred away. It is just as if the shareholders, who get compensation for Smith Group as it was during the base period—I do not know whether this is a very good analogy, but it will do even if I have not got it quite right—paid to take over Jones Plastics Limited; the Government have undertaken to reimburse the shareholders for that amount of money and not for some notional value of Jones Plastics Limited.
Viscount SIMON: I think I follow what the noble Lord is saying. It is, of course, difficult to assess the Stock Exchange value of any part of a business; but provided it can be done, surely it can be done equally well by dividing the two and saying, "This part of the business is worth so much and that part of the business is worth so much".
Lord MOTTISTONE: This is the problem, that there are two bases being used, one being the basis of what the main business is going to be paid when the Government kindly take it from them, and a quite separate basis for any transaction which is done subsequently with a part of it. What the Minister is saying is, "Forget the first part, the major part

1393
of taking the company over; that is a separate issue. It is only fair that the asset value of the minor part should be paid for at the current rate because whoever has got it will be able to use it at the current rate". I am sure the Government want to be seen to be fair. There may be some of their supporters in another place who do not feel that way about it, but on the whole it must be only reasonable to assume that the Government should want to be seen to be fair. Surely it is fair that they should not have an artificial method of calculation of the asset value of the businesses they are forcing to join their organisation. It seems to me that if the Government could think about the effect of what they are trying to do on the world in general, instead of just satisfying a few of their supporters, they would be on a much better wicket and we should not be having these arguments.
The Earl of ONSLOW: Perhaps the noble Lord, Lord Melchett, can answer one very simple question. Is the situation as depicted by my noble friend Lord Carr, that the company may have to pay more for part of itself than it gets from the Government for the whole of itself? If that is not true, and we have all got it wrong, that is one thing. But if that is true, then I do not withdraw one single word about whether it is robbery or not, because it is robbery—if not highway robbery perhaps piracy, as we are talking about shipbuilding.
Lord MELCHETT: I have already said that I do not think there will be a great deal of difference between the valuation put on the company as a whole, by looking at the value of the shares of the whole thing, and the value that will be put on a part which is divested; so I do not think that would be possible. If there is a particular instance where this is happening—because, after all, we are talking about actual companies and actual parts being sold off—certainly I will be happy to look into it. But so far as I am aware there is no case where the compensation paid is less than the company is being asked to pay as a going price for the part it is buying back.
Lord CARR of HADLEY: Although, of course, one cannot be certain, because the Government cannot, or to some extent do not think it right to, give us
1394
much information about how these compensation values might work out, on such responsible "guestimates" as one can make, there is a particular company which believes that it is going to be in the position of my mythical Jones Group. I am not permitted to name that company, and I do not think the noble Lord would wish to press me because we both agreed that it would be improper for either side to identify particular companies. But I assure him that I raised the point only because I have been told enough to make me believe that the sort of situation I have instanced could indeed become a real one.
I cannot believe that it is the sort of situation which the Government can possibly intend to wish to happen. I feel that if they can be convinced that there is a reasonable chance that it might happen they would wish to give an undertaking to Parliament that somehow they will prevent it from happening; because, I repeat, if it were to happen it would be robbery. I also repeat that I do not imagine for one moment that the Government wish to indulge in robbery. So I do hope they will look at it.
May I just challenge one thing that the noble Lord, Lord Melchett, said. He said that it would be impossible to arrive at a valuation of the contribution made by one particular part of the Smith subsidiary, to take my mythical example again. I find that difficult to believe. If it is possible to form a judgment about a notional share value of the Smith subsidiary of the Jones group, because we have to remember that it does not have a quoted value of its own, it must be just as possible to arrive at a notional value for the two halves of it. So I am afraid I cannot accept that it would be impossible to do it, unless I am going to argue, which I may well wish to do later on, that the whole idea of calculating a notional share value is impossible in itself. If it is possible to do it in relation to the whole of the Smith subsidiary, it must be just as possible to do it in relation to part of it. If the Government are going to hold to this extraordinary business of working in terms of notional share values then the movement both ways must be done on the same basis, otherwise it will be robbery.
Lord WARDINGTON: I support my noble friend Lord Carr. Price represents the totality of its business. The components are entirely separate. Any bidder who bids for a company splits it down and assesses the value of those components. One person puts an entirely different figure on a component than somebody else. It is up to the advisers of that company, the expertise of the officers of that company, to assess what any one component is worth to them. Many bid situations actually result with a subsidiary of that company being sold off immediately. That possible price at which they can sell the subsidiary is assessed at the time of the original bid.
Lord CAMPBELL of CROY: After I moved this Amendment, the noble Lord, Lord Melchett, attempted to explain the purpose of the Government behind this part of the Bill. He was right in saying that we disagree with the way in which the Government are treating assets and the handling of compensation. But he has not met the point about two completely different systems of valuation. He has indicated that the Government are not budging on their proposal to use two different methods of measurement in valuation in the two different circumstances.
He said that assurances had been given about the valuation of injections of funds after the base period but, as he later said
to my noble friend Lord Strathcona, that does not affect these Amendments. Writing those assurances in would not carry out the purpose of our Amendments. We believe that the application of these two different systems of valuation could lead, as my noble friends have said—and some of them of great knowledge in this field—to completely different valuations, and could mean that a company received no compensation at all even though it was parting with a part of its assets.
This is entirely unacceptable, but the Amendments which we have proposed, if they are included in the Bill, would mean that compensation would be determined in a way that would ensure that the parent company is paid at the rate laid down by a general formula for compensation for those of its assets which actually pass into public ownership: no more, and no less. That is a reasonably fair proposal. What the Government have been trying to defend—and the noble Lord, Lord Melchett, has been doing his best, but again he is on a bad wicket—is, in our view, totally inequitable, and I would ask my noble friends to support me in pressing this Amendment.
8.46 p.m.
On Question, Whether the said Amendment (No. 148) shall be agreed to?
Their Lordships divided: Contents, 77; Not-Contents, 35.

CONTENTS

Alport, L.

Gray, L.

Onslow, E.

Armstrong, L.

Greenway, L.

Redesdale, L.

Atholl, D.

Grey, E.

Rochdale, V.

Auckland, L.

Hanworth, V.

St. Aldwyn, E.

Barber, L.

Hives, L.

St. Davids, V.

Barrington, V.

Hornsby-Smith, B.

Sandys, L.

Beaumont of Whitley, L.

Hylton-Foster, B.

Savile, L.

Belstead, L.

Inchcape, E.

Selkirk, E.

Blakenham, V.

Inglewood, L.

Selsdon, L.

Burton, L.

Kimberley, E.

Sharples, B.

Byers, L.

Kings Norton, L.

Simon, V.

Campbell of Croy, L.

Lauderdale, E.

Somers, L.

Carr of Hadley, L.

Lloyd of Kilgerran, L.

Stamp, L.

Chelwood, L.

Long, V.

Strathclyde, L.

Colwyn, L.

Lyell, L.

Strathcona and Mount Royal, L.

Cullen of Ashbourne, L.

Mackie of Benshie, L.

Swansea, L.

De Freyne, L.

Macleod of Borve, B.

Tranmire, L.

Denham, L. [Teller.]

Margadale, L.

Trefgarne, L.

Dudley, E.

Monson, L.

Tweedsmuir, L.

Ellenborough, L.

Morris, L.

Vickers, B.

Elton, L.

Mottistone, L.

Wakefield of Kendal, L.

Falmouth, V.

Mowbray and Stourton, L. [Teller.]

Ward of North Tyneside, B.

Ferrers, E.

Wardington, L.

Gainford, L.

Northesk, E.

Winstanley, L.

Gisborough, L.

Nugent of Guildford, L.

Wise, L.

Gowrie, E.

O'Hagan, L.

Young, B.

NOT-CONTENTS

Blyton, L.

Lyons of Brighton, L.

Shackleton, L.

Brimelow, L.

McCluskey, L.

Stedman, B. [Teller.]

Brockway, L.

Maelor, L.

Stewart of Alvechurch, B.

Castle, L.

Melchett, L.

Stone, L.

Champion, L.

Morris of Kenwood, L.

Strabolgi, L. [Teller.]

Collison, L.

Murray of Gravesend, L.

Taylor of Mansfield, L.

Cooper of Stockton Heath, L.

Oram, L.

Wallace of Coslany, L.

Davies of Leek, L.

Peart, L. (L. Privy Seal.)

Wells-Pestell, L.

Davies of Penrhys, L.

Pitt of Hampstead, L.

White, B.

Houghton of Sowerby, L.

popplewell, L.

Winterbottom, L.

Kirkhill, L.

Raglan, L.

Wynne-Jones, L.

Lee of Newton, L.

Ritchie-Calder, L.

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
8.54 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 149:
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: While I regret to say that this Amendment is on a somewhat similar issue to the one we were just discussing, it is a rather easier point with which to deal. We are seeking here to provide an escape clause for existing companies to safeguard the innocent. In effect, we are saying that if the Government suspect that the intentions of the Bill are being evaded, the onus of proof must lie with them. We also believe that an Amendment on these lines would go some way towards alleviating the inevitable tendency towards inertia which has been created by some of the restrictive clauses on compensation in the Bill.
Clause 30 deals with transactions involving the transfer of assets of a company coming into public ownership in a way which is beneficial to the holders of its securities, and provides that where such a transaction is entered into, in this case without the Secretary of State's consent, after the safeguarding date—that is, 17th March 1975—and results in a loss to the Corporation, the Corporation may seek, through the arbitration tribunal, compensation from the directors of the company, and indeed in certain circumstances even from those who acquired assets.
Clause 31, which provides that a Corporation may recover from the directors
1398
of a company coming into public ownership compensation for loss suffered by the Corporation as the result of an onerous transaction—about which there has been, shall we say, a little argument—has already been amended, and the important point is that no compensation can be recovered where the transaction was not entered into with a view to defeating the objects of the Bill; that is Clause 31(7). We are seeking here to introduce a provision similar to the conditions which apply in Clause 30 so that those who enter into an analogous transaction but who do not benefit from the transaction will have a protection similar to that which has now been written into Clause 31(7).
We are attempting to do two things: first, a certain amount of tidying up, in that it seems anomalous to have a protection in one clause which is not included in the other, and, secondly, to do the reasonable and what seems to us fair thing of saying that if the Government believe that somebody is behaving in a way which defeats the provisions of the Bill, it is basically up to them to prove it, rather than that the accused party should have to prove his innocence.
Lord MELCHETT: As the noble Lord, Lord Strathcona and Mount Royal, explained, the Amendment seeks to allow directors of vesting companies to avoid the adverse consequences of Clause 30 if they can demonstrate that a transaction governed by that clause was not undertaken in anticipation of nationalisation. I understand that a similar Amendment was discussed in Committee in another place. The noble Lord said that he has in mind a change to Clause 31 similar to that which the Government made following discussions with the companies during the summer of last year, a change which was announced in another place on 7th August 1975.

1399
The Government believe that the circumstances in Clause 30 are very different from those in Clause 31. While the Amendment was desirable in the case of Clause 31, I regret to say that I do not think it would be appropriate in Clause 30. As my honourable friend the Minister of State explained in another place on 2nd March, Clause 31 deals with what are termed "onerous transactions". These are unusual or imprudent transactions which cause a loss and could be foreseen to cause a loss to the company. In the commercial world, particularly in the aircraft and shipbuilding industries, many decisions involve a risk. It is a matter of commercial judgment whether the risk is justified and of course a successful business is one where this judgment is exercised wisely. But the risk cannot he eliminated entirely and a decision taken in good faith can, in the event, turn out badly. This is recognised by everybody and we should certainly not wish to penalise directors in such a case.
Therefore, Clause 31 only has effect where it can also be demonstrated that the transaction was undertaken in anticipation of nationalisation. As I say, I believe that the position under Clause 30 is entirely different from that under Clause 31. The transactions covered by Clause 30—the so-called "material transactions"—are by their very nature unusual. This, I suggest, is apparent from the definition of material transactions in subsection (1). They include capital and special dividends, premature redemption of securities, sales of assets where the proceeds pass direct to the shareholders and so on. Because they all benefit shareholders, they have a direct implication for the compensation terms.
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 are carried out in the full knowledge of nationalisation would, I suggest, clearly lead to the conclusion that there must have been at least some degree of anticipation in their taking place at all. Nevertheless, if the Amendment were carried it would be likely that directors would seek to argue the point before the arbitration
1400
tribunal, if only as a means of delaying the ultimate decision. I put it in that way because I think that, given the terms of the clause, it is probably unlikely that such arguments would be successful. However, if the decision were delayed, this would be in no one's interest but would involve both the directors of the vesting companies and the Corporations in unnecessary and time-consuming arguments which, in the event, could have no bearing on the issue. Release of the directors from the provisions of the clause as the Amendment envisages could make it easier for material transactions to take place and thus to invalidate the basis of compensation. For those reasons, I seek to make a distinction between Clauses 30 and 31. I hope that, with that explanation, the noble Lord will not press the Amendment.
Lord REDESDALE: I should like to raise a point which, strangely enough, comes back to the point that I would have raised on the Question, That Clause 28 stand part of the Bill—that is, the question of the "date in question". At that point, we were talking about Royal Assent and "any previous time". If one goes through the record of Standing Committee D, one sees that the noble Lord gave us almost verbatim what Mr. Kaufman said in another place. I am not criticising him for stating the argument as it is laid out there, but the point that he did not answer was that which was raised by Mr. King on the matter of "any previous time". I do not believe that that has been put on the record in this debate.
The other point which worried me and which was not answered in another place was that if the answer was that it was simply going to cause additional trouble for the tribunal, as was suggested in another place, it was not really a very satisfactory argument. I wonder whether the noble Lord could cover those two points. For his information, I am referring to cols. 1404 to 1406 in Part 2.
Lord MELCHETT: The noble Lord has managed to get in his point from Clause 28, but I must say that I do not really follow how it applies to Clause 30, or upon which particular words in Clause 30 he has hung his question. I saw the point which the noble Lord explained to me off the Floor of the Committee on Clause 28, where the words "at any

1401
time" appear, and I told him off the Floor, and it may be helpful if I repeat it now, that my understanding was that, without some particular reference in the clause, that meant from Royal Assent onwards. In other words, if the provision is to be retrospective, it must say so directly. But I am not quite clear where this comes up under Clause 30, though I admire the noble Lord for his ingenuity in raising it at this stage.
Lord TREFGARNE: It struck me that the words upon which the noble Lord hung his argument just now were his assertion that any novel transaction entered into in the knowledge that nationalisation was around the corner was, ipso facto, one to which the Government would take exception. I think that that is a very wide statement and it strikes me as quite unreasonable and unjustified.
Lord MELCHETT: If I had said it, it might have been unreasonable, but I do not think I did.
Viscount SIMON: I wonder whether the noble Lord can help us on this point. Many of the transactions referred to in the early part of the clause would clearly be transactions that could reasonably be thought to be evasive transactions, if I may put it like that. However, it is conceivable to have a transaction—for instance the disposal of some part of the plant—because the directors genuinely feel that plant is getting out of date and it is time to replace it with something else, but, as a result of a change in circumstances it is impossible to replace that plant so that a loss is in fact suffered. This loss would have been suffered through what were bona fide actions by the directors. I think that there should be some provision—perhaps I have missed it and there is already one—by which the directors would be relieved of personal responsibility for a bona fide transaction which turned out in the last resort to be unfortunate.
Lord MELCHETT: I confess that I do not entirely understand the noble Viscount. In the example that he gave, if the directors had sold part of the assets because they felt they were out of date and had given the money direct to the shareholders, that would be a material transaction under Clause 30. I believe that the noble Viscount and I would agree that that, with
1402
impending nationalisation, would be seen as evasive. I do not think that it would apply if the money were merely to be reinvested in other assets or held in the company rather than being transferred to the shareholders.
Perhaps I can just help the noble Lord, Lord Redesdale, in relation to Clause 30, if this is the point that he was raising. My understanding is that Clause 30 applies from the safeguarding date, which will normally be 17th March, 1975. I do not know whether that answers the noble Lord's point.
Lord REDESDALE: Yes, it answers my point.
Lord TREFGARNE: May I give an example to the noble Lord? What would happen if the directors of a company named in the Bill decided to invest in new plant and, in order to do so, disposed of assets to realise the money, then paid for the new plant forthwith but, unfortunately, the company supplying it went into liquidation and the money was lost? Would the directors then be liable?
Lord MELCHETT: It would help me to answer these very complicated questions off the cuff if the noble Lord could tell me which part of Clause 30(1)(a) to (g), which defines material transactions, he is applying his mind to. Then I would find it easier to say whether I agree with him as to whether or not the point comes under the clause.
Lord TREFGARNE: It was a perfectly straightforward question.
Lord MELCHETT: I am not suggesting that it was not, but I am having difficulty following it and I wonder whether the noble Lord could help.
Lord TREFGARNE: So that the noble Lord can consider the answer carefully I will bide my time and await the answer under clause stand part.
Viscount SIMON: Perhaps I can help the noble Lord, Lord Trefgarne, because I think he may have fallen into the same error as I did. This is a complicated Bill and I hope that we may be excused for sometimes getting it wrong. Looking carefully at the earlier parts of Clause 30, it appears that the only transactions that render directors liable in this sense are transactions which involve the payment to the holders of securities in a company

1403
of the proceeds of such a transaction. In that case I think that the noble Lord, Lord Trefgarne, will agree that there is no point there.
Lord MELCHETT: That is exactly why I was asking the noble Lord, Lord Trefgarne, to which part of Clause 30(1) he was particularly addressing his mind, because it seemed to me that the example he gave did not fall under it. I did not want to answer the point off the cuff unless I had a clear idea of which part of the clause the noble Lord was referring to, and I regret to say that I still do not know.
Lord STRATHCONA and MOUNT ROYAL: Here again, nobody is arguing about the fundamental concept lying behind Clause 30. One knows from long experience that there are very ingenious people who spend their lives trying to find ways round legislation, particularly tax legislation. On the other hand, because levels of tax have now become very high, many rather complicated schemes are devised by lawyers and accountants, and I suggest to the noble Lord that not all these complicated schemes are necessarily designed as means of getting round the intentions of the nationalisation legislation.
What slightly bothers me about this is that here is a list of transactions which an accountant with a slightly more devious mind than I have might regard as a perfectly sensible and normal way in which to do business. I am rather worried about the way this clause is set up, and here we are back to the very old principle of English law, which regrettably has been heavily eroded in recent years, of making the onus of proof of an allegation of some improper action lie with the Government. As this matter lies at present we are saying to a director who does something which is defined in the Bill as being an unusual transaction, "You did something unusual. Please explain to me why you thought it was a legal thing to do within the definitions of this Act from the safeguarding date".
In simple language, it seems to me that we are getting into the position whereby the person concerned is innocent until he can prove himself guilty. We all know the kind of thing that crops up. Any of us who have ever had to pay income tax—and that means practically everybody in
1404
the country these days—knows that when the tax people want to catch you, instead of it being up to them to prove that you owe them some tax, all they do is to raise a totally unreasonable assessment and say, "If you don't agree with us you prove that you should pay less tax". We all know that they do this. In other words, they are saying, "You are liable to this tax unless you can prove that you are not liable".
Surely it is true that the situation in this clause is that if one has performed any of these so-called unusual acts, they say, "You show that when you performed this act it was done without the purpose that we ascribed to it because we think you are trying to evade the Act". I think that that is rather objectionable in principle. However, I accept that the intention is not an objectionable one. The noble Lord has been at great pains to explain, and has patiently explained, what is intended in this part of the Bill, and I do not think that it would be appropriate for us to elaborate the point any more at this time of night. Therefore at this juncture I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 30, as amended, agreed to.
Clause 31 [Onerous transactions: disclaimer and recovery of losses]:
9.14 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 150:
Page 44, line 23, at end insert ("would be a material transaction but for an approval given under subsection (2) of that section; or").
The noble Lord said: I beg to move Amendment No. 150 standing in the name of my noble friend Lord Carr of Hadley, other noble friends and myself. Now we come to the clause dealing with what is termed in the Bill, "onerous transactions". I should like to ask the Government whether they can explain the purpose behind this part of the clause and tell us whether Amendment No. 150 would not make it clearer. Under Clause 31, subsection (2)(b), a transaction is not an onerous transaction if it is a material transaction within the meaning of Clause 30, but if one looks at Clause 30(2) we see that such a transaction ceases to be a material transaction when it is approved by the Secretary of State. On the face of it, therefore, a transaction could become onerous as a result of its

1405
approval by the Secretary of State. I cannot believe that this is really the Government's intention and it may be that the combination I have described of these two clauses has not been seen before. Alternatively, there may be a perfectly good explanation for this, but this Amendment seeks to make clear that an approval for the purposes of Clause 30 would not have that effect. I hope that the Government, in seeing this Amendment, will have realised the point that I was going to make and I hope they will now either accept the Amendment or be able to give an explanation.
Lord WINTERBOTTOM: The noble Lord has done the Committee a service by pointing out what is an imperfection in the Bill. Paragraph (b) of Clause 31(2) provides that a transaction cannot be an onerous transaction if it is a material transaction under Clause 30; but under subsection (2) of Clause 30, as the noble Lord has pointed out, a transaction is not a material transaction if it has been approved by the Secretary of State. The Amendment proposed by the noble Lord and his friends fills a gap in the present provisions, and we are pleased to accept it.
Lord CAMPBELL of CROY: I am glad to think that the point has been observed by us. The noble Lord, Lord Winterbottom, did say earlier on how exceptionally well drafted this Bill was, which provoked some comment from this side of the Committee. But I am glad that not only has this Amendment met a point that needs to be met, but also the drafting has been acceptable, because had the Government wanted to redraft it I would of course have withdrawn. I am grateful to the noble Lord for his courtesy in accepting this Amendment.
9.17 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 151:
Page 44, leave out paragraph (d).
The noble Lord said: This Amendment is a probing Amendment, with the intention of trying to find out from the Government what is the purpose of paragraph (d) and, if possible, to have some examples, and I beg to move Amendment No. 151, which is to leave out paragraph (d). It is not intended by this Amendment to render onerous the transactions to which the paragraph applies.
1406
As I said, it is purely to try to find out what it means. Can the Government give some examples of transactions made in connection with the determination of matters falling under Part II of the Bill which, but for the existence of this paragraph (d), the relevant Corporation might consider to be onerous transactions? If one turns to paragraph (d), line 25, page 44, one sees that for the purposes of this clause
"a transaction is not an onerous transaction … if it is made or entered into in connection with the determination of any question, dispute or matter falling to be determined by or under any provision of this Part of the Act"—
that is to say, Part II. As I indicated, it is not clear to us what is intended, and it would be helpful if the noble Lord the Minister could give us some examples.
Lord WINTERBOTTOM: Before I give an explanation which I hope will satisfy the noble Lord, he twitted me about saying the drafting was good, but he would agree that "good" can be translated to "excellent" and that is the help that he has given us, in achieving excellence rather than mere goodness.
Paragraph (d) is intended to afford protection to a company under action under Clause 31 which it has a right to undertake under other provisions of the Bill. The noble Lord asked for an example. For example, under Clause 26 a company has a right to dispute a notice of acquisition served by the Secretary of State. A company entering into such a dispute could, and indeed would, incur legal costs which could, but for the provisions of Clause 31(2)(d), the subsection we are talking about, be deemed an onerous transaction. It would clearly be wrong for a company to be inhibited from exercising its legal rights because of the threat of penalty under another clause of the Bill. That is one example and I expect others could be thought up. For that reason I hope the noble Lord will not press Amendment No. 151.
Lord CAMPBELL of CROY: I am grateful to the noble Lord for giving us that example. I had hoped for others; but I will not pursue the matter now. He has given one example of what the Government have in mind. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 31, as amended, shall stand part of the Bill?
Lord TREFGARNE: I wonder whether this is the appropriate time to put to the noble Lord, Lord Winterbottom, what I put to the noble Lord, Lord Melchett, a few minutes ago on an earlier Amendment which related to an earlier clause. I agree that my question could be more appropriately asked here. To recapitulate to the noble Lord, what would be the position of directors who decided to purchase new plant for their company, realised certain assets of the company in order to pay for the plant, paid (shall we say?) a substantial deposit on the purchase price, and after payment of the deposit the company who were to supply the plant went into liquidation or out of business, were unable to supply and the deposit was forfeit? Would the directors themselves be liable for that deposit?
Lord WINTERBOTTOM: I think the noble Lord is "bowling a fast one" in asking me a question that he has already asked earlier of my noble friend. As I understand the position, it is a normal commercial risk which would not be caught by the clause in question.
Clause 31, as amended, agreed to.
Clauses 32 to 34 agreed to.
Clause 35 [Compensation for vesting of securities]:
9.23 p.m.
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 153:
Page 48, line 14, at end insert—
("( ) The compensation stock to be issued under the preceding subsection shall bear interest at a rate of not less than 15 per cent. per annum, and shall be redeemed for cash not later than 31st December, 1982.").
The noble Lord said: This Amendment is primarily a probing Amendment but it has the merit that if the probing is unsuccessful I could then, if I felt so inclined, press it, because I think the principles raised by the Amendment are quite important. Subsection (1) of Clause 35 provides for the issue of compensation stock to those whose assets or shares are to be acquired under this Bill. It has been my concern, and it is the concern of this Amendment, to determine the terms on which this stock would be issued. A week or so ago I put down a Question in this House which I must confess was principally aimed at another
1408
point. During the supplementary questioning on that occasion, I asked what would be the rate of return on the stock to be issued and whether it would be dated stock. The noble Lord, Lord Kirkhill, was unable to give me any answers on those two points.
I hope that by now the Government will be able to be more helpful, but in anticipating their answer upon the question of the rate of interest to be paid on the stock I would ask the noble Lord, Lord Winterbottom, whether he is satisfied that the rate to be paid, whatever it may be, will be no less than the rate of return that investors in the companies to be acquired have enjoyed hitherto. I know that there is no single answer to that because different companies have offered different returns on their shares. In the case of the aerospace companies, at least, the rate of return that has been earned in recent years is substantially more than the sort of rate that could be expected on Government stock of the type at present available.
The other point relates to the date of redemption. I was very disturbed that when the noble Lord, Lord Kirkhill, answered my Starred Question he was unable to confirm that the stock would be dated stock. There is nothing in the Bill as at present drafted to prevent the Government from issuing undated stock. Of course there is undated stock available on the market now, and we all know the discount at which that stock changes hands, if it ever does. Therefore, I hope the noble Lord will be able to give me some assurance that the rate of return on the stock to be issued will be no less than the rate presently enjoyed by the shareholders in these companies and that the stock will be dated. I beg to move.
Lord WINTERBOTTOM: I suspect that the noble Lord, Lord Trefgarne, is, to use a military metaphor, "tapping in", and I am afraid that having tapped in he will not find very much that will satisfy him in the undergrowth.
Lord TREFGARNE: Will the noble Lord tell me what "tapping in" means?
Lord WINTERBOTTOM: Those members of armoured car regiments will know precisely what it means. It means pushing your finger in to see if anything is there—

1409
and may I say that one is normally very glad when one finds that there is nothing. The noble Lord is making a valid point and is trying to find the answer to a question which is of importance. I can certainly, I hope, satisfy him on one point. The Amendment would have the effect of ensuring that, whatever the market conditions at the time of issue, the stock which will be used will have a redemption date of 1982 and will bear a minimum interest rate of 15 per cent. That is tying down the Government firmly on both interest rates and redemption date. It is not possible to say what the market conditions nearer the time of issue will be, or, indeed, to specify the coupon and redemption date of the stock, as this Amendment seeks to do. It would not only prevent the Treasury from choosing the stock most appropriate to market conditions then pertaining, but it could also have unfortunate repercussions on the gilt-edged market as a whole.
May I illustrate this point? If, because of the conditions specified in the noble Lord's Amendment (if the Amendment were carried) the Treasury were forced to issue a new stock specifically defined as in this Amendment, its marketability would be likely to be affected. If it were so affected, this could only be to the detriment of those people who have had this special stock issued to them.
Under Clause 35(5) the Treasury, when choosing what type of stock to use, will take into account the market value of other Government securities at or about the date. I can assure noble Lords that the capital value in the market of the stock issued will be such that it is exactly equal in value to the compensation due on the day of issue. The rate of interest payable will be that appropriate to the particular stock issued. I am arguing now that in the view of the Government it does not make any difference whether the stock is long or short dated. The requirement is that the value should be the same as the compensation due, and this ensures that, no shareholder will be any worse off by holding Government stock instead of his original securities. I hope that satisfies the noble Lord on the first point he made. As to the other point, the stock will be dated but the Government's view, as I said, is that it is not important whether it be long- or short-dated. I hope that satisfies the noble Lord.
Lord SELSDON: It is difficult for me to intervene on this Amendment because I agree with the principles expressed by the noble Lord, Lord Winterbottom, and disagree with the Amendment of my noble friend. But since he was putting a finger into something I am going to try to pull it out.
Noble Lords will know that I have tried in this Committee stage to intervene only on two matters, cost and compensation—which I will intervene on in a moment. This concerns cost, and obviously the Government cannot declare what coupon their stock will hold or how long-dated it will be. But the stock that they issue in the short-term interests of the nation should be as long-dated as possible. In the long-term interests that might be wrong. Many of us in the financial world are disturbed about this matter. We read that the Government may not be able to go on for ever issuing stock. That is a fact. It depends on the economic circumstances. At the moment, while we may expect long-dated stock we hope for a short-dated Government. We are concerned about the next six months and we are concerned about the moment when the Government will issue stock and how much stock they will issue. We are concerned also about the absorptive capacity of the non-bank private sector. If inflation falls then presumably interest rates will fall and therefore Government will be able to issue stock at a lower level.
At the moment Government could issue stock—and I hate to go on record on this—probably, as I said the other night, at about 16.2 or at about 16.2½, since the Government paid no attention to my recommendations the other evening. It is certainly rising and the problems of the Government raising money are growing. That we do know. I would feel much happier if the noble Lord's right honourable friend the Prime Minister had got the job as head of the IMF and that someone else were in his shoes in the country at the present time, because Mr. Witteveen and his team are not easy people with whom to negotiate, they are professionals. My concern is that the Government have not said how much stock they will issue. If they had said how much stock they would issue and when I could probably estimate what

1411
coupon it would be on and what length it ought to be.
The noble Lord has made these points and has moved an Amendment which I would not support because it would be dangerous for the nation to support it. The points he has made in raising the whole question of the issue of Government stock are points worth considering. We must consider also that we know the Treasury would issue Government stock only at whatever was the going rate because they could not afford for an issue to be a failure. But the Corporations, because of the question of capital gains tax and other things, will be required to hold the stock for a year. It would be fairer if the Government said to them, "You must hold the stock for a year", because in that year and the year that comes after this nationalisation Bill, God alone knows what will happen. We do not know whether the stock will go to a discount.
There are possibilities if certain things happen and the right things were done; if the level of inflation was reduced and interest rates came down, the stock might go up. If inflation got out of hand because of the 20 per cent. increase in money supply recently, the stock could fall. What would in essence be possibly a capital gain for some people, could ultimately end up as a capital loss. I hope the Government will understand that what they are doing when they are acquiring these industries is they are not giving people money that they can use today. That is the only point I wish to make and I apologise for having taken so long.
Lord WINTERBOTTOM: May I say to the noble Lord what I said to him earlier, that his contributions to this debate are both informed and serious, and naturally will be studied by those whose duty it is to follow your Lordships' discussions. I am certain that what he said will be borne in mind.
Lord TREFGARNE: I am obliged to the noble Lord, Lord Winterbottom, and indeed to my noble friend Lord Selsdon, for their interventions which are, as always, most helpful. I would make just one point. Clearly the Amendment as it stands is not a serious contender for space in the Bill, but I say to the noble Lord that if the gilt-edged market is not
1412
as good as it might be, come the day for the issue of this compensation stock, then those who are to be compensated will be at some disadvantage if they cannot, in a very short space of time, dispose of their stock without losing money.
I am concerned that in that situation they ought not to be taking a loss in the rate of interest that they would be earning had their shares in the aerospace and shipping companies not been acquired. I ask the Government to consider—and perhaps I can put down an Amendment to this effect—that the amount of stock ought to relate to the interest that was being earned before the companies were taken over and the rate of interest then being paid upon the compensation stock that was to be issued. With that, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
9.36 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 154:
Page 48, line 19, leave out ("subsection (4)") and insert ("subsections (4) and (4A)").
The noble Lord said: This is a paving Amendment for the more substantial Amendment, Amendment No. 158. I suggest that it would be convenient if we now discuss Amendments Nos. 154 and 158 together. Clause 35, supplemented by Schedule 5, contains the provisions for paying compensation for the securities of companies which vest in one of the Corporations. When the Bill was first introduced in the last Session of Parliament, it did not contain subsections (4), (6), (7) and (8). These additional subsections are presumably intended to reduce the compensation which would otherwise be payable in the case of companies which receive Government assistance, where that assistance, in the opinion of the Secretary of State, saves them from liquidation or receivership. If the Government are to have an opportunity of reducing compensation in special circumstances such as these, they should also accept that they have a responsibility to increase it in other special circumstances.
Certain companies since the last of the relevant days (that is, 27th February 1974) have considerably improved their positions; but insufficient allowance will be given for those improvements in the terms of the Bill as now drafted. Those improvements

1413
have arisen to a large extent from special efforts in the export field, which is in the national interest. Furthermore, the profits earned by these companies have been largely derived from orders taken before 27th February 1974—that is to say, before proposals for nationalisation were put forward. This affords a further demonstration that the compensation to be paid to these companies is both inadequate and grossly unfair. The object of these Amendments is to ensure that the holders of securities of companies which have performed particularly well since the last of the relevant days are given adequate compensation. We ask the Government to reconsider the terms in which the Bill is now drafted. It does not take this into account. I beg to move.
Lord MELCHETT: As the noble Lord explained, Amendments Nos. 154 and 158 would allow an increase in compensation where the company had undergone exceptional developments since the reference period. I understand that identical Amendments were discussed for some three hours in Committee in another place. I merely mention the fact in the hope that, with your Lordships' customary speed, we shall not spend that length of time on the Amendments this evening. In the Bill, compensation is fixed on the basis of a past reference period for 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 they will remain in that state up to vesting day.
Clearly, the prospects of individual companies may have changed since the reference period, but this does not in itself affect the basis of compensation. By basing compensation on a past period, the compensation payable is fixed and, generally speaking, shareholders are assured as to the basis on which the compensation they will receive will be assessed. The Government will be valuing shares at a past reference period. There are good reasons for this. In particular, the reference period chosen is the six months before the end of February 1974; in other words, the most recent period before a Government committed to nationalisation was returned to Office. At that stage, the shares of the company were unaffected, either adversely or beneficially, by the prospect of nationalisation.
1414
The Amendment, though not drafted in so obvious a way, seeks to overthrow the whole basis of the past reference period and to substitute the present-day valuation. Any such valuation must be affected by the possibility of nationalisation. By valuing the securities of companies at a past reference period, the Government accept the risk of any deterioration in a company, short of bankruptcy, in the period up to vesting. As a converse, therefore, I suggest it is reasonable that the Government should benefit from any improvements. But as to whether any of these improvements, if there be any, constitute an exceptional development in the terms of the Amendment, I am very doubtful.
Noble Lords opposite have suggested to me on several occasions during the progress of this Bill, that these businesses are in their nature very long-term. I do not dispute that, but against this background are they not really claiming that something exceptional has happened in the last two years, which could not have been foreseen two years ago, to overthrow the whole basis for compensation? I find that hard to believe, particularly in the light of publicity given to the long-term prospects of companies. The Government believe that the compensation terms in the Bill are fair and that these Amendments, if carried, would result in excessive payment to some shareholders. Therefore, I regret to say that I must continue to take the same attitude as my honourable and right honourable friends did when similar Amendments were discussed in another place.
Lord CAMPBELL of CROY: I hope the fact that there was discussion in another place will not, in itself, rule out the opportunity of further discussion here, because we hoped that those parts of the Bill on which the guillotine allowed discussion in another place would have meant that Ministers were able to take away and consider the points that had been made, and might indeed take advantage of the debate here to come some way to meet those points, if not all the way. We disagree with the way in which the Government are proposing to handle the whole question of compensation. The noble Lord is already aware of that, and when we reach Clause 35 and the associated clauses there will no doubt be considerable further debate on that subject.

1415
There is at least one company of which I know which has made exceptional advances in both status and performance in the last two years. I have no hesitation in mentioning its name, which is Kincaid, one of the diesel engine manufacturers, and later on the appropriate clause I propose to expand on that. The noble Lord asked for an example and there is one, and no doubt my noble friend will produce others.
We had hoped that since the discussion in the Commons on this question, the Government would have been prepared to come some way to meet the case of companies which, in the last two years, have been transformed by their own efforts, and that some account would have been taken of this in the terms of compensation. But I shall not pursue that point on this clause, and I now beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.44 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 155:
Page 48, line 24, at end insert ("the resulting amount to be increased in the proportion (to the nearest one tenth of one 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 36(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.").
The noble Lord said: With this Amendment I think it would be convenient to consider Amendment No. 157, which is associated with it. Here we are proposing a system of indexation. Clause 35 provides that compensation due to holders of securities which vest in the Corporations shall be the base value of those securities, valued in accordance with Clauses 37 and 38 as an average of the period of six months beginning 1st September 1973, less deductions.
Although Clause 36(7) gives to the Secretary of State a discretionary power to make payments on account of compensation, and although by paragraph 5 of Schedule 5 interest on compensation stock is treated as accruing as from the date of transfer, owners of securities are
1416
not compensated for being deprived of the use of the compensation paid for the securities between February 1974 and the receipt of that compensation. The Amendments are intended to compensate owners of securities for being deprived of the use of the compensation due to them by introducing protection against inflation into the compensation payable. This is in terms similar to the provisions of Section 2 of the Pensions (Increase) Act 1971.
The reasons for introducing this protection are as follows. Subject to the possibility that payments on account of compensation may be made on or at any time after the date of transfer, no compensation is payable for any class of securities until a conversion date for the securities of that class has been specified. In the case of the equity share capital that date cannot be earlier than the date by which both the base value of all the securities forming part of the equity share capital of the company has been determined and the amounts of all deductions from the compensation payable to any person in respect of those securities have been determined.
Amounts which are not agreed fall to be 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 amounts are likely to be agreed fairly quickly, in some cases years may elapse before these amounts have been determined. Furthermore, some shareholders may be paid at any time between 1976 and 1980, or even later, for securities transferred in 1976 in exchange for compensation based on 1973–74 values. Parent companies cannot sell their investments in the companies to be acquired. They cannot replace them, therefore, until they have received the compensation. However, the real value of replacement assets bought with the value of money at 1976–80 will be significantly less than the real money value of the nationalised securities in 1974 and 1975.
The discretionary power given to the Secretary of State to make payments on account of compensation, and then only on certain terms, is unlikely to mitigate to any great extent the severity of the effect of these provisions. We believe that the inflation protection proposals which are incorporated in these Amendments are fair and reasonable, and I would point

1417
out that they are not linked either to the retail price index or to any rigid formula. I hope that the noble Lord will tell us that the Government have not closed their mind to a system which would give some protection against inflation 10 compensation which may be paid many years after it was originally determined. I beg to move.
Lord MELCHETT: As I understand it, the noble Lord believes that the holders of securities in the vesting companies are disadvantaged by the combination of the past reference period and the recent regrettably high rate of inflation, but stock market prices do not reflect the prevailing rate of inflation. In the past two years we have suffered a regrettably high rate of inflation, but this has not been in any way reflected in the general level of the stock market. Since the reference period, the market has fallen to a 15-year low, and while for short periods it has been above the reference level it now stands at 20 per cent. below it. By valuing the securities of companies in relation to a past reference period the holders are protected against market fluctuations.
The noble Lord, with this Amendment, would not only ignore this built-in protection but also offer a bonus which is not available to the shareholders of companies not being nationalised. Shareholders in other companies are protected against general and particular market factors, and they are certainly given no protection against the effects of inflation. If other companies do not receive these benefits, I do not believe there are grounds for giving such benefits to certain companies solely because they fall within the scope of the Bill. As I have said—and, no doubt, will say many more times as the evening progresses—the Government believe that the compensation terms in the Bill are fair. I regret to say that I believe that these Amendments would give an uncovenanted benefit to shareholders, and I would, therefore, urge the noble Lord not to press them.
Lord MONSON: I should like to give full support to this Amendment and the Amendments which follow. I do not think any noble Lord would deny that a compensation price which is less than the price at which a willing buyer would be prepared to buy from a willing seller is
1418
tantamount to expropriation. I do not think any noble Lord would deny that expropriation is equal to theft; it is certainly the view of the man in the street, I would suggest. Unfortunately, there is a precedent for expropriation in this country. I am thinking of the unhappy owners of small terraced houses in many of our major cities, in particular London, who have had the misfortune to live in an area acheduled for slum clearance and redevelopment by the council. Because their bedroom ceilings are perhaps four inches too low, or perhaps there is an inadequate number of air bricks in their kitchen, or possibly because the house lacks a damp course—in this respect being no different from the majority of architecturally distinguished houses in this country, but no matter—they have had their houses declared unfit for human habitation and effectively been evicted from their houses, with only the minimal amount of compensation. This is something for which both major Parties which have been in office since the war share the blame. To its credit, an earlier Labour Government did something to rectify this, but not enough. As I say, there is some precedent for citizens of this country being expropriated, but two wrongs do not make a right.
It is interesting to note that previous compensation terms agreed when other industries have been nationalised since 1945 have not on the whole been too unfair. I can think of the occasional exception, one being the Steel Company of Wales debenture stock, or possibly it was a loan stock, where the trust deed stipulated immediate repayment in certain circumstances, one of the circumstances in question being nationalisation. But in fact the stock was not repaid at par; it was paid at between 55 and 60, I believe. But, on the whole, the terms have not been too wildly unfair. However, the terms proposed in this Bill as it stands are, in many cases, if not most cases, demonstrably unfair, in some cases amounting almost to confiscation.
On Monday night or in the small hours of Tuesday morning the noble Lord, Lord Goodman, from these Benches, gave his reasons why he thought so, drawing attention in particular to the premium that is normally paid for control of a company. I am not going to concentrate particularly on that aspect,

1419
but merely to refer back to the median date on which the compensation terms are based, the six months between 1st September 1973 and 28th February 1974. The median date is, therefore, approximately 30th November, 1973. What distinguishes this particular period of two years and almost eleven months that has elapsed since these terms were fixed is an inflation rate of about 65 per cent. On Second Reading I said 59 per cent., but I underestimated; it is about 65 or 66 per cent. As the noble Lord on the Opposition Front Bench has said, these companies have to replace their assets at current prices, not the prices prevailing in November 1973. These Amendments would help considerably in this respect.
There is, of course, a certain element of capriciousness, naturally, if all the companies or subsidiaries which are to be nationalised have their compensation prices raised by an equivalent amount, but this excess payment, if you like, which one or two companies may receive if this Amendment is carried, does not amount to any assault on human rights. The taxpayer is affected, but that is rather a different matter. The taxpayer has to "shell out" nowadays for all sorts of wasteful things. One has only to think of the Institute of Contemporary Arts, which receives a grant from the Government and which has recently mounted an exhibition showing soiled nappies, piles of dust, bloodstained bandages, and so on. To pay a few shareholders, many of them beneficiaries of pension funds, a little above the odds is really nothing to worry about in this context.
I wonder whether the noble Lord, Lord Melchett, when he comes to reply, would deny that expropriation contravenes both subsection (2) of Article 17 of the United Nations Universal Declaration of Human Rights, and also Protocol 1 of the European Convention of Human Rights, which this country has ratified? That being the case, and leaving aside for a moment the Government's legal obligations, would he not agree that actions of this nature diminish Britain's standing in the eyes of the world at large?
9.56 p.m.
The Earl of LAUDERDALE: I should like to apologise to noble Lords for having missed some of the recent steps in this
1420
debate. I have had the greatest difficulty in keeping away, but I tried to keep away lest I should incur charges, which have been whispered here and there, that somebody or other was talking for too long or too much. Whether that was myself or whether it was my noble friend Lady Ward, I am not quite sure, but at any rate there were suggestions and I have tried to keep out for as long as possible. But now that such splendid progress is being made with the Bill, and we have plenty of time to look at it more closely, and a lot of progress has been made since I was last on my feet, I feel that one should address oneself to some remarks that have been made in another place.
The Prime Minister has accused your Lordships' House of taking upon themselves the self-appointed task—that was his phrase—of causing trouble with this and other Bills. If the Prime Minister is going to make speeches of that sort about this Chamber and still hope that his business will pass through smoothly and in a hurry, he is greatly mistaken. It would be to his advantage, and that of his Government's business, that aspersions made elsewhere about this Chamber should not be repeated. They are not taken kindly, because in fact there is a great deal in this Bill, and in other legislation that we have been looking at, which has not been properly debated in the other place.
It is not a self-appointed task to look at these things: it is a task laid upon us by history and by the Constitution. The minute the Executive foreswear the use of the guillotine, then the case for close examination throughout the night and throughout the day, and perhaps through another all-night sitting, falls. But in the meantime, when serious matters relating to human rights and individuals' rights are exposed to guillotine procedure, then an entirely different situation arises.
I for one will make no apology whatsoever for thumping this point home. I have much sympathy with the noble Lord, Lord Melchett, who looks remarkably bright after his marathon on Monday, and we should congratulate him for batting so well with such good humour for so long. But that does not alter the situation, which is that we have a job to do, which is to examine and scrutinise. That arises on every single Amendment that has been put down, and the things that were said

1421
by the Prime Minister on this matter do not help the Government's case to get their business through swiftly.
I think I am right in saying that this clause got but a few hours' consideration in the other place. I remind the Committee of what was said by the noble Lord, Lord Monson, speaking from the Cross-Benches. This is not just a question of the Tory Lords, using their inbuilt majority, to block the Bill; there is a consensus from all serious-thinking people—those who have left the Opposition Benches for the Cross-Benches, those who are chosen Cross-Benchers, Liberals and progressive Tories on these Benches—who are taking exception to what is being done.
The word "expropriation" has been used. It is a word which, if there were ever an attempt to make an issue between the Peers and the people, we should trumpet throughout the country. Do not let anybody imagine that we are frightened by the sort of blackmail talk that is heard in some quarters about curtailing their Lordships' powers. It ever an endeavour were made to raise an issue of the Peers versus the people, we could point to this clause and many others where an Executive, supported by a minority of the electors, have sought to impose measures that amount to expropriation. And it is not the expropriation of some wealthy capitalists. It is the expropriation of the small savings that have gone into small companies that have built themselves up. Baileys is an obvious case, and there are others. These are matters in which the public, the people, are interested and therefore I make no apology for spending a few minutes of the Committee's and the Government's time drawing attention to this issue. It is difficult to make a case better than that made by the noble Lord, Lord Goodman, on Monday night, and if it would serve any purpose I would produce the Hansard of those proceedings and simply read out his speech to noble Lords in case the points he made did not sink in. I say that because I had the impression that they were not, so to speak, taken on board by the Front Bench.
Lord SHACKLETON: The noble Earl will appreciate that he is in breach of Standing Order No. 25 by his speech, as was the noble Lord, Lord Goodman, the other night.
The Earl of LAUDERDALE: I am much obliged to the noble Lord, whose former leadership of your Lordships' House we enjoyed so much and whose knowledge of the rule book is very much better than mine. My recollection is that when Lord Goodman spoke he was out of order because we were not then dealing with Clause 35, but we are now on that clause.
Lord SHACKLETON: If the noble Earl would turn his attention to the Amendment instead of debating relations between the two Houses he would come to order again.
The Earl of LAUDERDALE: Again, I am obliged to the noble Lord because I had finished my sort of philosophical observations and was about to turn to the Amendment, the case for which I need not go into in detail because it has already been made. In the interests of brevity—because noble Lords know how keen I am to help the Committee in this matter—I will only add my still small voice in support of the Amendment. I am doing that as briefly as I can, but the trouble with being interrupted is that one loses one's train of thought and is tempted to go back to the beginning.
The point I want to make is that, broadly speaking, this is expropriation and everybody knows it to be such. It is only the intellectuals on the Front Bench who cannot see it. If there was ever an issue before the public, they would see it and we should make sure of that. I hope that Lord Melchett, who has shown commendable good temper in a trying time, will realise that we are not speaking for a lot of bulky capitalists but for people whose savings and efforts have gone into their businesses. "Expropriation" is not a happy word, but perhaps I can sum up the Opposition's philosophy by suggesting that behind the clause and indeed the Bill there is the principle that all that is not compulsory is forbidden.
Lord MELCHETT: Possibly it would help to bring us back to Amendment No. 105 if I answered—
The Earl of ONSLOW: Is the noble Lord really intending to filibuster by starting again from Amendment No. 105?
10.5 p.m.
Lord MELCHETT: No, I meant Amendment No. 155, but I believe that the noble Earl will agree that, while we have made very good progress this afternoon, it has been difficult on occasions during the last few minutes to remember which Amendment we were talking about because there have been a couple of speeches where the Amendment has not been mentioned at all. The noble Earl, Lord Lauderdale, pointed out how difficult it was to keep the thread of one's thoughts and how if one was interrupted one might well take up more of your Lordships' time than one would wish. I should therefore like to make one very brief point and then to sit down.
The noble Lord, Lord Campbell of Croy, in moving the Amendment, made one point that I did not reply to in my original answer. This related to the question of the delay in giving stock to shareholders after vesting but during the time when negotiations and arbitration were taking place. I did not make it clear that shareholders will be entitled to rights of compensation as from vesting day. These rights can be traded in the same way as other negotiable instruments. Shareholders will also get substantial payments on account, as I told the noble Lord, Lord Orr-Ewing, when we were discussing this matter earlier. Interest will be back-dated to vesting day. I believe that that covers one of the points which the noble Lord put to me on moving the Amendment.
Lord MONSON: The noble Lord, Lord Melchett, is not denying that expropriation contravenes both the Universal Declaration of Human Rights and the European Convention on Human Rights. Is that because he is unable to do so?
Lord MELCHETT: It is because I am talking about Amendment No. 155 and the compensation terms in the Bill and not about expropriation.
Lord CAMPBELL of CROY: I think that there are some Members of the Committee who feel that there is not a great deal of difference between the two. In his last reply to me, the noble Lord gave some information which I am sure will be of interest to those who are following the Government's proposed scheme. I am grateful for that but, in his first reply, the noble Lord gave the impression that he thought that I was suggesting that share values have a direct relationship with the rate of inflation. Of course I was not suggesting that at all. I was trying to provide a system that would enable people i who, for one reason or another, found that their compensation was long delayed in payment to have some protection against ordinary inflation, that inflation which we unfortunately know only too well and have suffered from particularly during the last three years. It was to that that I was directing my opening remarks, and I gave some instances of where payments would be delayed.
The noble Lord has replied on one of these points and I am grateful to him for that. However, there are other occasions which I mention where it is clear that a payment will be due and may not be made for some time, perhaps even for years later. It was to guard against the erosion of the value of that compensation during that period that we were suggesting in the Amendment a system of indexation. The discussion has enabled various suggestions to be made on this and has allowed the noble Lord, Lord Melchett, to give us more information. At this stage, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
10.8 p.m.
Lord SELSDON Lord SELSDON moved Amendment No. 156:
Page 48, line 24, at end insert ("or, if on application by the stockholders' representative or the Secretary of State, the arbitration tribunal consider that, having regard to all the circumstances, that amount does not represent fair compensation, such amount as the tribunal shall determine to be fair compensation in respect of those securities.").
The noble Lord said: I am in a very embarrassing position. I am going to try in a few moments to persuade the Government that they are on the wrong track on the subject of compensation, but I am also in a position where I believe that I have to declare an interest. I am a director of a merchant bank which is owned by a clearing bank, and within our group many of the companies that arc to be nationalised are clients in one form or another. I asked my colleagues whether I should declare an interest and they said, "It is nothing to do with you. You are not directly connected with any of these companies and you do not have to declare an interest. "However, in the course of the investigations that I have made privately, I have naturally spoken with numerous companies and organisations and my problem in declaring an interest here is that what I am going to say now could be against the interests of some of the clients of my group.
I happen to know, for a number of reasons, that within those companies that are going to be nationalised there are certain companies who believe that the compensation methods proposed by the Government are over-fair and over-generous and that they will certainly receive more money than they could hope to receive if they wished to sell their businesses. There are others who feel that under the terms proposed by the Government they will receive less money. And there are those, such as myself in the middle, as a banker, who believe that there is no possible way that one can describe the methods of compensation proposed by the Government as being fair to all parties. Surely it is a duty of your Lordships' House, if the Government declare that something is fair, to explore whether or not it is fair. The former Prime Minister, I believe, in a letter to the industry, pointed out that the Government thought the method was fair but that it was now a matter for Parliament,
1426
and surely at the moment your Lordships' House still classifies as Parliament.
I will try in a very simple way to explain also my other interest, because I am not sure whether I speak as a part-time politician, who occasionally puts his toe into the dirty water of politics and withdraws it, or as somebody who is very intimately and closely affected with matters of this kind in my commercial life. I have been employed by a quoted company that has been acquired by another quoted company. I have been employed by a subsidiary company of a non-quoted company which has been acquired by a foreign non-quoted company. I have been employed by a group which was threatened with nationalisation by Mr. Wedgwood Benn—on a list—and I am now employed by another group which is also threatened by nationalisation.
Both as an employee and in terms of an adviser, I have been involved in the buying and selling of businesses by Government sectors, private sectors and others. Therefore I must start by exploring the question of whether this is compensation or confiscation. If it is confiscation, then the question of fairness does not arise. If it is compensation, then the basic principles of whether you are providing the person you are buying something from with something reasonable, which he would put as a reasonable value for the transaction must be debated.
People have advanced the argument of whether this is a price or a method that should be fixed between a willing buyer and a willing seller. I do not accept that in this argument because at the moment the Government are a willing buyer, half of the industry, or part of it, is a willing seller but will not admit that it is a willing seller, and a large part of the industry is not a willing seller. What one must attack on this basis is the whole principle of the valuation of a business—not whether it is a valuation of a Stock Exchange quoted business or a utilisation of the Stock Exchange system.
There are four methods of valuation. The first is when a company goes into liquidation, when a liquidator is appointed and seeks to do the best he can for the shareholders. The good will element of the

1427
company has disappeared and it is purely a basic asset value on disposable assets. The second is an acquisition through a stock market, whereby you have a willing buyer but an unwilling seller, where the price is forced up to unprecedented heights sometimes in order to obtain the business. The third is a stock Exchange valuation which does not place a full value on a business and is merely, as we have had explained again and again in this place and in Committee, a valuation for one share, a minority interest, and does not represent the total value of a business.
Noble Lords should pause on this and bear in mind that those people who claim that the capitalisation of a business, the market capitalisation—its true value—must bear in mind one instance of a company I used to work with, which is an example of many, and the fluctuations in share prices. On Monday morning The Times produces information on market capitalisation. An analysis of those market capitalisations over the past few years will show very substantial fluctuations.
Further, one could point out that it was possible not so long ago to buy practically all of British industry for virtually a pittance. The company I used to work with, one of the major companies in the United Kingdom, at the time of the reference period had shares at a medium price. The shares went up and down but the value of the company in a period of eighteen months moved from £191 million to £19 million; yet even at £191 million the company's owners, the shareholders, might have been reluctant to sell. I will come back later, but I will pause in a moment and ask the noble Lord, Lord Melchett, to answer me.
The fourth method of valuation which one can look at as well is the principle of asset value plus something else. That asset value is not a difficult valuation to make; it is something that any accountant can make and has made again and again. It is the goodwill element that adds the difference to the price. Goodwill is something that has built up over time, and we are one of those peculiar countries that can in fact capitalise goodwill and it is taken into a balance sheet; whereas it
1428
is sometimes more difficult to capitalise debts, as the Government will know. What we must consider is that in this particular case it is not a willing buyer or a willing seller. The Government is seeking to acquire businesses, as it says in the national interest. It has put forward a method of valuation for compensation, I would assume in the best interests of being fair; but I would point out that unfortunately the Government has not consulted those people who know about the valuation of businesses.
Further, because of the circumstances of this Bill, many professional organisations, including the Stock Exchange and others, and the companies themselves are hesitant to advance their views to Government because they are frightened; they are frightened that this could adversely affect not only the prices that the Government would pay for their businesses but also such circumstances as credits, loans and other things that are also involved and, further, that they might seem to be hobnobbing with the capitalists and the Conservative Party and therefore being divisive. I suggest that there are Members of the Committee, perhaps not on these Benches, who are themselves concerned that by seeking to oppose the principles of compensation there are people who are saying, "You are providing more money for the capitalists". That is totally untrue.
The object of my Amendment—and the noble Lord, Lord Melchett, might be about to interrupt me, because it was exactly at this point in time the other night that he did so—is to say to the Government that its method of valuation, the basis upon which it bases its compensation, is wrong; it is not fair. As a member of the Council of Europe, if we come to the question of human rights and other questions the presentation of something such as this would prove that it is not fair. If the Government will drop the word "fair", then the position can change.
My Amendment is this: that if a government or a body produce a method that is unfair but seek morally and rightly to find something that is fair for everybody but cannot do so, and have included in a Bill the question of arbitration—and the relationship between" arbitration"

1429
and "fair" should be very close, although sometimes it is widened unnecessarily—then I seek to give increased powers to the arbitration committee, that the Arbitration Committee may decide what is fair, based upon the general intention of the Government to be fair. I see nothing wrong in putting an Amendment like this at this stage to Clause 35, because it is surely a question of judgment as to what is fair and what is not fair, rather than a question of legislation. If the noble Lord will answer me on this point, and answer satisfactorily, I shall sit down and shut up; but if not I must then, in the interests of democracy and fairness of your Lordships' House, and since the Prime Minister declared that this was a matter for Parliament, seek to explore every avenue to try to prove whether this method of compensation is fair or unfair.
I think it is unfortunate that on the Government Benches opposite we do not have at the present time sufficient people who have been intimately involved in the evaluating or the valuing of businesses or in transactions of this sort. I know the Government must operate from their briefs, and I am not sure whether I should address my remarks to the Government or to their advisers, but there have been fair methods of valuations of non-quoted companies by the Treasury in connection with estate duty and capital transfer tax which were perfectly acceptable. I believe that in the interests of political expediency the most important aspect of the Bill, which is fairness, has not been properly explored in another place. If the noble Lord will give way and accept the Amendment that I propose, I will withdraw all the other Amendments in my name, because the others are related to pursuing certain aspects of compensation and exploring certain alternatives. If he will allow me, I will sit down and await with eager interest his definition of what he feels is fair and unfair based on his own personal experience and the experience of the Government.
Lord WARDINGTON: I am a stockbroker and have been since the war. I have looked at the shares over the years with considerable interest. I should like first to make one point on Lord Selsdon's speech. He referred to companies and said that half were willing to sell and half were not. He could have followed that
1430
up by saying "at a price", but he did not do so. At a price, they might be willing to sell but not at what is proposed.
Lord MELCHETT: It might be important to get this right. I understood something different from the noble Lord and I was listening very carefully. I understood him to say—and he is here and can put us right—that he felt that some companies were happy to sell at the price they were going to get because they felt the terms were on the generous side. I may have misunderstood him, but I thought I heard him say that.
Lord SELSDON: I felt that some companies were so concerned at the non-viability of the companies in their group that the Government were going to acquire that they were willing to get rid of them. Any price which removed the liability would be a good price; but not a fair price. A fair price means fair to both sides. I would suggest that some of the companies the Government will be acquiring under the Bill will be acquired at an unfair price to the nation. The point that I made earlier in the Committee stage is that having decided to go ahead with this Bill it is the Government's duty to be not only fair but as fair as possible to themselves and to the taxpayers.
Lord WARDINGTON: A precedent is being set in these compensation terms whereby successful companies can be acquired at under 50 per cent. of the asset value. This has disturbing implications for the future. Leaving aside my belief or otherwise on the suitability of these two industries for nationalisation, let me enumerate one or two things that I consider to be unfair about the compensation terms. The first is that the conditions that existed in the six-months period which is taken for compensation were remarkable and exceptional. To enumerate five factors, there were: the Arab-Israeli war, which changed our lives completely; the petrol/oil crisis which has been in existence since but which nevertheless appeared first in this country at that time; the miners' strike, which one hopes never to see again; the three-day week, which in some industries had a beneficial effect; and then there was the run up to the Election itself with the trade union and Labour Party document (I cannot remem-

1431
ber its name) which appeared in August 1973 but was not available generally until 1974.
Is it fair to base compensation on a period during which these very exceptional conditions existed? Present proposals are that compensation has to be based on a price as quoted on the Stock Exchange and perhaps subsequently by arbitration, but is it fair that the Government should have unilaterally taken this decision and no authoritative financial body seems to have been consulted? I may be wrong, but I have not heard of anyone. As I said, the Stock Exchange does not purport to represent in any way a fraction of the whole, nor do the prices of the shares represent anything other than the whole based on a balance of earnings and assets. This is illustrated most strongly in many situations, most recently teachers.
The market in the ordinary way is perhaps 10,000 shares at 190p, but when you are buying assets you have to pay up for them and this puts an entirely different price on those shares in the mind of the public and in the mind of any investment manager. Is it fair that when you are acquiring assets you should relate the amount you pay to the price quoted on the Stock Exchange? If you relate it to the assets, I suggest that the cost that the Government are going to have to bear—which they cannot or will not disclose to us—is going to be very much greaetr, and the actual accounting, arbitration and other expenses will be very large indeed. This may be a reason why the Government are seeking to base the compensation on prices as disclosed in the Stock Exchange.
Referring back to the proposal that compensation is to be based on an average price over a six months' period, why has this been decided upon when previously in the steel industry it was based on an average price covering 61 months? Why should the Government consider it fair to base it on six months? Earlier this evening we debated clauses 23 and 26 on dividend limitation. Is it fair that dividend limitation imposed by this Bill has effectively stopped any increase in the valuation of those companies' shares in the Stock Exchange? Prices are related to income. Alternatively, if you accept the dividend limitation, is it fair that retained profits ploughed back into further
1432
expansion of those companies are not allowed for in the compensation that will eventually be paid by the Government?
I would quote again that retained profits after dividends which have been limited have been excluded from the period since nationalisation proposals were made and Swan Hunter in 1975 completed a £24 million programme. Both Yarrow and Vosper have made many major additions to their assets. Many other companies have retained from their profits, and ploughed back, substantial sums to expand their activities. Indeed, the very fact that substantial amounts have been invested has, in some circumstances, delayed the profitability of that company, with harmful results to its share price. Is that fair?
It is realised that in many cases the latest figures that shareholders had in their hands at the time of these proposals, and that the securities market had available to it, were the accounts to the 31st December, 1972, a whole year and a quarter before the final date of this period for compensation. Some of them had half-yearly statements. Half-yearly statements are not anything like as full and, although people react to them, it is not the same as a full set of accounts and directors' report. Do you think that is fair? Referring to the rate of exchange: the sterling/dollar rate has fallen from 2·3475 on the 1st September to 1·65. Yet, inflation-proof Civil Service pensions have been introduced and implemented since this Bill was introduced. Is that fair? Can it possibly be argued that it is fair to consider the price of potatoes in 1973 when one is buying them today?
It should be remembered in the case of Swan Hunter, assuming the whole group was nationalised, that compensation would amount to £16·7 million as envisaged in the Bill. That would represent a discount of 50 per cent. on the assets at the 31st December 1973, which was shown at £36 million, and that is unfair enough. But how can the Government call this fair when in November 1974 Court Shipbuilders, a subsidiary of Court Line, received compensation of £16 million and that company was one-third the size of Swan Hunter? In other words, fair takeover prices in future situations can no longer be expected if the current terms are allowed to remain. I think

1433
I am correct in saying—and I cannot see the noble Viscount, Lord Brookeborough, at the moment—that although we know the sum handed to Harland and Wolff, the terms and the base on which that sum was calculated has never been disclosed.
Let us consider for a moment the situation of BAC, the British Aircraft Corporation. This company is owned 50 per cent. by GEC and 50 per cent. by Vickers. Under the terms proposed in the Bill and basing the compensation as proposed in the Bill on the price of its parent companies over the six months' period, one gets a figure of compensation to Vickers of approximately £19 million and a figure of £33 million to GEC for an equal 50 per cent.
Can your Lordships imagine anything more ludicrous, and is it fair? The use of Stock Exchange prices as a method for calculating compensation in this instance is made even sillier when one considers that only two companies are directly quoted on the Stock Exchange. One of these, Robb Caledon Shipbuilders (which I am sure the directors will forgive me for mentioning) is one of the smallest shipbuilding companies, the shares of which have always been an extremely small and difficult market. It is like taking the value of a high street chemist and then trying to arrive at compensation terms for Boots. It is not fair.
In steel nationalisation, the major steel companies (eight of them) were all quoted, except for two: English Steel and John Lycaght Yard. Both were major subsidiaries of major companies. There were two or three smaller ones. There was a very active market in the leading shares in steel. They did give something to go on from the point of using price and by arbitration, arriving at a figure of compensation for the remaining companies. Is it fair in an industry like this that the profitability of one company varies in time with that of another and one of its competitors? To base it on price in the Stock Exchange is silly; it would be fairer if the period was extended. But over a short period of time it is not fair.
What I say next applies very much to this Bill. Is it fair that in respect of a subsidiary the compensation received cannot be passed on to its parent shareholders
1434
without that parent company in some cases having to bear a very considerable tax penalty? In many cases—and this is important—reinvestment in the normal, private commercial world will involve paying a substantial premium, as I stated happens with Teachers. The price should be based on assets and related to earnings for all these companies which are being nationalised, and not based on a very artificial price as shown by two small companies in the Stock Exchange.
I mentioned on Monday—and I am afraid many of your Lordships felt I was producing it at the wrong moment—the fact that by using a fixed interest stock to purchase shares based on a price and not assets, the Government were laying themselves open to the charge that they are following some of the financial wizardry which is not part of the established City that people are criticising at the moment. They are using an artificial price to acquire assets without arbitration, and are issuing a loan stock against it.
My last point is that I believe there to be 26,000 people employed in the ship repairing industry; I believe there to be 69,000 people in the shipbuilding industry—and that includes companies that are already under Government control; and I believe there to be 70,000-odd in the aircraft industry which is to be nationalised. That makes a total of approximately 150,000 to 170,000 people who will be affected by nationalisation, and many of them do not want it. The number of shareholders affected in the companies to be nationalised, or which have subsidiaries which are to be nationalised, amounts to 350,000. I am talking about small investors when I say that, and that does not allow for the hundreds of thousands, even millions, of people who are affected through their pensions and life assurance funds.
10.42 p.m.
Lord HARMAR-NICHOLLS: While on a number of Amendments and clauses which have been debated so far anyone could rightly have been accused of a certain partisanship—quite apart from the merits of the case—which was inevitable on a Bill of this kind, it cannot be said about the debate on this Amendment. The absolute sincerity and impartiality of

1435
the noble Lord, Lord Selsdon, in putting his case put it completely outside any suggestion that any axe is being ground or any partisan advantage is being sought. He moved the Amendment on the basis that if this is to be the legislation of this country, and if the Government of the day want to be fair in what they are doing—as I believe they do—then what is in the Bill will not achieve that, even with the best intentions in the world. But if the Amendment is accepted, it will be achieved.
I am convinced that the Government in general and the noble Lord, Lord Melchett, in particular are very eager to make the Bill fair, although by its nature many parts of it will remain unfair. But the Amendment of the noble Lord, Lord Selsdon, will not make the Bill more unfair, and there is a very good chance indeed that it will go some way to making it more fair. So I hope that the noble Lord who speaks for the Government will show some desire to meet the noble Lord, Lord Selsdon, and, having done that, will use what influence he possesses—which I hope is considerable—with his colleagues in persuading them to accept it.
We know that in normal times the procedure laid down in the Bill would have been fair and would have been accepted. But, as the noble Lord said a moment ago, we are not living in normal times and it is not fair that people who, unhappily, happen to be at the receiving end of Government legislation, not through their own choosing, should be the victims of abnormal times which are not of their making. If it was not possible for the Government to end the abnormal times, I would say: so be it. They think that their legislation is right: you have to take it and lump in any of the hardship which may come with it. However, by his Amendment the noble Lord, Lord Selsdon, has shown that, despite the abnormality of the times, it is possible to make what would have been right in normal times more likely to be fair today. I do not think that the Government ought to misuse the opportunity to do this.
All of us know that Stock Exchange prices today bear no relation to the true value of somebody's possessions. We all know about the uncertainty and lack
1436
of confidence, and that the feeling that what is just round the corner has knocked for six what would be the true evaluation of almost anything today. I gather that the noble Lord, Lord Melchett, is a wealthy man, and the best of luck to him. I have no doubt that his wealth is in the form of stocks, shares and many other things. When the noble Lord considers what the value of those possessions may be and the fact that he might have to sell some of them, if he could choose whether to sell them at a time when it was disadvantageous to do so compared with a time when he thought it was right to sell, he would find that the difference between the two figures would be considerable.
If it were not possible to dispense with unfairness I should say that I objected to the whole idea of nationalising everything but that we must grin and bear it. But it is possible to do something about it. The Amendment moved by the noble Lord, Lord Selsdon, clearly shows that it is possible to do something about it. There is no guarantee that his Amendment will produce absolute fairness, but if it ensures that the victim (if that is what the recipient of underpaid compensation is) is in a position to take his special case, which will take into account abnormality and passing difficulties, and put it to a tribunal which will have the power to take into account those special considerations, then you will remove much of the sourness which will otherwise exist long after this Bill becomes an Act. If the Government wish this legislation to be presented in a way which will produce the minimum of sourness when inevitably it becomes the legislation of the country, they will have to think very hard before they turn down this Amendment.
There is no guarantee that the Amendment will answer all of the problems which some of us think will arise, but it has every chance of reducing the number of unfair cases and minimising the difficulties which many people will have to face. The noble Lord, Lord Selsdon, may well have found a formula which ought to be used not only on this occasion but on many other occasions when compensation has to be paid because normal evaluations are going through abnormal periods. Those of us who make speeches—sometimes many more speeches than

1437
we ought—do not always make the impact that the research we have put into our arguments ought to receive.
I should like to impress upon the noble Lord, Lord Melchett, and his colleagues that, quite apart from any preconceived views which I may have held in the past regarding politics or economics, if we must have this legislation and recognise that we are living in abnormal times, I believe that the normal formula must not stand alone and that the Amendment moved by the noble Lord, Lord Selsdon, ought to be the accepted rule. If the noble Lord, Lord Melchett, can give the lead in so doing he may well do a good turn not only to his Government today but to the general governmental way of doing things in the future.
10.49 p.m.
Lord ORR-EWING: May I support the noble Lord, Lord Harmar-Nicholls, in urging the Government to be a little more sympathetic. The Government have heard some very penetrating speeches and good reasons why we ought to try to honour more justly the criterion of fairness. I am afraid that in the other place the Government showed a closed mind on compensation. I read at length the debates which took place there. However, we in this House are by tradition more flexible and open minded and less biased.
As my noble friend Lord Wardington said in a masterly speech, we are basing these compensation terms on results which were achieved in 1972, and we are going to pay this in 1977. I wonder whether any industry has changed more in five years than shipbuilding has in the last five years. We are taking as the criteria a period since when there has been a world crisis in merchant shipping, that has depressed merchant shipbuilding. At the same time it has stimulated the special shipbuilding in some of our yards which have specialised—Austin Pickers-gill, particularly with the SD 14. It has been a period, too, when there has been a tremendous upturn in the Free World's purchase of naval ships, particularly from British yards.
Perhaps the injustice is most stark, and seem to be stark, in the performance of our naval yards. The Government must be sensitive to the employment position. It so happens that our naval
1438
yards in two cases, of Vickers and Yarrow, are in areas of considerable unemployment and poverty. Look at the figures of those three naval shipbuilders, Vickers, Yarrow and Vosper Thorneycroft. In 1971 they were employing 22,000 people. In 1975 they were employing 25,500 and getting very much greater productivity from that team as a result of the investment. I went up to look at Yarrow's myself to refresh my memory, and I was pleased to see that they had invested in that comparatively small yard on new facilities an extra £9 million in the last year and a half. This is good for the future. I am sorry that no adjustment has at the moment been allowed because of that initiative and that sacrifice. If you look at the export performance of these three naval shipbuilding companies in the last five years, you see it is really remarkable. They have achieved in five years exports of £390 million.
Therefore, why am I asking for fairness? First, because unfairness and broken pledges further discredit our whole Parliamentary system. Our Parliamentary system is fragile enough, and respect for integrity and honesty is not as high as it should be. Therefore, we are risking democracy if we flagrantly disobey everything which has been said, by Prime Ministers downwards, on the question of fairness. But I ask the Government to think seriously of another good reason. This money, certainly in the whole of the shipbuilding area, is not going to private shareholders, although they are indirectly very concerned; it is going to recreate a viable economic engineering group, because this nationalisation measure in 42 out of 43 cases is just taking one part of a group and nationalising it and leaving the rest to reorganise itself and become economically viable. This compensation is not wanted in the majority of cases for individual shareholders, because they would, even after the Finance Bill which did help in this direction, still be very highly taxed on any compensation they received. It is wanted to buy new machinery, to create new jobs, to create the viability of industries strong in engineering; and, as noble Lords know so well, engineering is the backbone of all our exports.
We are not only risking, by under-compensating, the reputation of Parliament as a whole, not only risking criticism of unfairness and dishonouring pledges given.

1439
Do your Lordships really think that some of the people leading these firms are going to stay there when they see little hope, because of gross unfairness, of recreating a viable economic whole from a group which has been decimated by nationalisation? If we are dependent on anything in our engineering industry and in British industry as a whole it is the leadership provided by the managers, the sub-managers, the supervisors, the technicians, the draughtsmen. Do you think they will go on working for a group which cannot be made economically viable because they have been compensated at a ridiculous—I use the term used by, I think it was, Mr. Willey—standard of compensation? I would urge the Government, for the reasons I and so many other people have given, to think about this with a flexible mind, and think about the creation of jobs and the future of the industries which have been so attacked in this unfair way.
Lord MONSON: There is something else which has not been mentioned. I do not suppose I need to explain to the Committee the functions of that invaluable organisation, so far as Britain's export trade is concerned, the Export Credits Guarantee Department. Would the noble Lord, Lord Melchett, not agree that it is beyond dispute (as was brought out in another place) that if a foreign Government had nationalised British companies, or their subsidiaries overseas, on the same compensation terms as are set out in this Bill, the companies affected would, in many cases, be able to claim additional compensation under their Export Credits Guarantee policy, on the grounds that the overseas Government's nationalisation terms were tantamount to confiscation, or to partial confiscation?
10.56 p.m.
Lord CARR of HADLEY: Before we get too deeply involved in the description of the unfairness which we see in the terms as at present proposed, or possible alternative methods which might be fairer, it would be worth while to spend a moment or two considering one or two of the basic issues at stake and what matters about being fair or unfair. We should bear in mind throughout all our discussions on this subject exactly who it is who is going to be affected by compensation. In the
1440
first place, it is mainly companies rather than individuals who will be directly affected. Most of the companies being taken over are unquoted subsidiaries. Up to that point it all sounds nice and impersonal. Perhaps companies do not suffer too much if they get clobbered.
The degree of fairness of compensation which the holding companies get affects the financial resources which they have to reinvest in equivalent alternative assets and activities. If it is fair, they will be able to undertake this investment and new activities on an equivalent scale. If it is unfair, they will not. It is at that stage that the fairness or unfairness of compensation is immediately carried through to individual people and their families. If the holding companies are fairly and adequately compensated so that they can reinvest on an equivalent scale, then they will maintain their employment and be able to provide more jobs in the future. If they are not adequately compensated, their capacity to find jobs for people will be reduced and unemployment will be that much higher.
If they are fairly compensated, the share values of the main holding companies will remain at a reasonable level. If they are unfairly compensated, the share values will not. The share value of these main holding companies is not something which is even primarily of interest to a few rich people; it is, above all, of interest to tens and hundreds of thousands of people's future pensions. It is noteworthy that perhaps the strongest and most solemn of the representations made from an early date to the Government have been made by the Investment Protection Committee of the British Assurance Association, the National Association of Pension Funds, the Association of Investment Trust Companies, and the Association of Unit Trust Managers, all people particularly involved in people's small savings and their future pensions. They wrote jointly to the Prime Minister saying:
"We are deeply concerned that the value of certain of these pensions and savings and so on may be diminished if the compensation terms proposed in the Bill are enacted in their present form".
I stress that the fairness of the compensation affects, first, the future of the holding companies who get the compensation to employ people and, secondly, it affects more than anybody else the financial

1441
interest of hundreds and thousands of small savers and their prospective occupational pensions, annuities and the like.
Let us be clear what we mean by "fair", because there is a tendency—I say this with respect to Ministers; it is clear from reading the Official Report of the debates in the other place that there was this tendency—for Ministers always to react to a claim for fairness with the supposition that what we are pressing for is an increase in the total amount of compensation. Of course, if the present formula produced an inadequate amount in total, that would be unfair. Also it would he unfair if it produced an excessive amount in total. But quite apart from the total amount which a formula produces, fairness also requires that the total amount is distributed fairly between the various claimants.
On this point, one thing is so obvious that I should not have thought it needed even raising, although later I shall argue its necessity. The compensation basis that has been chosen—this Alice in Wonderland idea, as the noble Lord, Lord Goodman, described it the other night—namely, that of basing the compensation on notional share values, means that the distribution of the total, whatever size that total may be, between one company and other is almost certain to be unfair. Some will get more than they should out of the total while others will get less than they should, and that is true regardless of what the total amount is. Thus, when we think about fairness we must think that it must be fair to the taxpayer as well as to the companies: it would be unfair if it were too high or too low. Not only that, we must also consider the way, whatever a fair total may be, in which it is distributed between the different companies, and the kind of unfairness about which I have been speaking in the distribution between the different companies would have—and will have if it is persisted in—bad effects on the future both of the Corporations and the economy as a whole.
Let us consider, first, the bad effect on the Corporations. If the distribution of any total is wrong, the compensation paid to the various companies and therefore the commencing capital of the Corporations will not be properly related to the true profit-earning capacity of the assets which the Corporations take over. The Corporations will start with the wrong
1442
capital base and that will inevitably lead to the mismanagement and mis-allocation of capital in future. Although the aim has not yet been achieved, we should not forget that in numerous White Papers the Government have stressed that the country's and the Government's economic resources cannot be allocated efficiently unless, first, the capital resources tied up in each industry are measured properly and, secondly, that those industries earn sufficient returns on capital to justify the resources tied up in them.
The relevant part is the first of these conditions: the need is stressed over and over again by the Government that the capital resources tied up in each industry should be measured properly, so one of the effects of unfairness in this method of calculation of compensation is that the main purpose of the Government which I have just described—the economic allocation of capital—will be defeated, for the capital allocated by the compensation will not have been properly measured.
This is the bad effect of unfairness on the future economic health of the Corporations. But the same will happen in the holding companies which receive the compensation, because, if it is unfairly distributed so that the stronger companies and those with more growth capacity which are to be nationalised get too small a share, while the weaker and less efficient or less fortunate get too much, this too will produce a misallocation of capital in the private sector. One will find that the stronger, more efficient companies, with the potential for growth, will not have the resources that they could employ, whereas the less efficient, weaker ones will have more than they either deserve on the basis of true fairness or have the capacity, for one reason or another, to make good use of for the general good of the economy. So the unfairness of application will affect the economy in that way.
There are just two other factors that we must take into account. The first is that just mentioned by the noble Lord, Lord Monson, who suggested that if a British Government set an example of unfair compensation to an extent which I believe has never been done before, this will be a direct invitation, incitement or precedent—call it what you like—to Governments of other countries to treat

1443
our British assets unfairly if they ever decide to nationalise any of our assets in their countries.
Lastly, I want your Lordships to realise that, if we set this precedent of unfairness here, it will be a severe discouragement to foreign capital to invest here in the future. If foreign capital believes that if in future it comes into areas that are subject to nationalisation it can no longer be confident about being fairly compensated should the companies in question become subject to nationalisation, I do not think that I need stress that foreign investors will start to look at every other country but Britain to put their money into.
So I think it important that we should realise that the case for fairness is a very important one. It is not just giving a fair amount of money to a few people. The case for fairness is the well-being of hundreds of thousands, if not millions, of our own citizens, the future of full employment to a significant extent and indeed, the future economic prosperity of the country. So I beg the Government not to think that, when we discuss our complaints about the present measures or consider the merits of any alternatives we may put up, we are talking about a financial reward for a few people who will be either more or less comfortable. We are talking about something fundamental to the future economy of this country.
11.4 p.m.
Viscount SIMON: I should like to say a few words to express the views of those on these Benches before the noble Lord, Lord Melchett rises to speak. I feel that we were all very impressed by the noble Lord, Lord Selsdon, who presented his case so very frankly and in so well balanced a manner. It cannot be denied that, as he pointed out, the system of the basis of compensation proposed in this Bill will produce anomalous results. As the noble Lord said, it will not only produce too little for some people; it will produce too much for others.
Apart from altering the whole basis—at this stage of the Bill we could hardly try to do that—I can see no way of dealing with this matter that would be more effective than what the noble Lord,
1444
Lord Selsdon, suggested; that is, to provide for a system of arbitration to be applied in cases where it appears that the compensation under the Bill is manifestly unfair. There is only one thing I have to say, and if I do not say it, the noble Lord, Lord Melchett, will say it. The Amendment of the noble Lord, Lord Selsdon, is one-sided because it provides that people who feel that they are inadequately compensated can then make representations and have their case taken to arbitration, but those who, as the noble Lord said, realise that they are going to get a good deal more than they really expected or deserved will not move to go to arbitration. If the noble Lord, Lord Melchett, accepts the principle here, the clause would need some modification to enable the Secretary of State to ask for arbitration in cases where the boot is on the other leg—
Lord HARMAR-NICHOLLS: If the noble Viscount will allow me to intervene, I should like to say that I had that point in mind. As I read the Amendment of the noble Lord, Lord Selsdon, it states:
"… if on application by the stockholders' representative or the Secretary of State …"
So that means that both sides are allowed to go to arbitration. The point being made by the noble Lord is very proper and the Amendment, as I read it, meets the point he is making and balances it.
Viscount SIMON: I am greatly obliged to the noble Lord; of course he is right. I can only confess that after a number of late nights I was reading the Amendment incorrectly, and I thought that the word "or" was "to". I can easily withdraw the point I make. I think that the suggestion made by the noble Lord, Lord Selsdon, might well be accepted. I am sure that if the Government were to accept it in principle and wanted to suggest another clause to give effect to it, the Committee would be very grateful. I am sorry to see the noble Lord, Lord Melchett, shaking his head, and we shall now share the reason why.
Lord MELCHETT: I am afraid that I was shaking my head, because Amendment No. 156 goes right to the root of the compensation provisions of the Bill. It seeks to embody within the Bill the opportunity of valuing securities on a

1445
basis totally divorced from that already included. A long time ago when the noble Lord, Lord Selsdon, introduced the Amendment he said something with which I entirely agreed. I think he said that the only real test of fair compensation is whether it makes good to each and every shareholder the capital and income that that shareholder has lost from the acquisition of his or her shares. That is precisely what the Bill tries to do.
Lord SELSDON: I did not say that deliberately. These are arguments I would advance later because that is only one aspect of compensation.
Lord MELCHETT: As I say, that is what the Bill tries to do. The Bill as drafted provides for securities to be valued on the basis of their stock exchange quotations, or, if they are not quoted, what would have been their value had they been quoted. In the case of unquoted securities, the value will be arrived at by negotiation between the Secretary of State and the Stockholders' Representative with recourse to independent arbitration.
The terms of the Bill ensure that the compensation terms will be fair on two counts. First, the stock market is an independent and objective means of assessing the worth of a company at any given time. The price of shares as quoted on the stock exchange represent the price at which these shares will change hands. The use of a past reference period does not invalidate this argument in relation to the companies named in the Bill. The stock market generally is now significantly lower than at the reference period; and the quoted prices of the parent companies of those named in the Bill are for the most part also lower, some of them substantially so. While this is not the only guide, it serves to indicate that, far from being unfair, in many cases the terms are generous.
Secondly, the Bill makes provision for independent arbitration. This will ensure that all security holders will he treated equally and with impartiality under the terms of the Bill; in other words, not only are the terms of the Bill fair, but also their method of application is fair. Amendment No. 156 would overthrow all this. It replaces the defined terms with the possibility of an undefined basis of compensation. Companies which have been
1446
conducting their operations over the past 18 months on the basis of the published terms will be thrown into uncertainty and, in many cases, be at risk of receiving less compensation than they might have done under the present terms of the Bill. Such a breach of faith is unacceptable to the Government, and I regret to have to urge your Lordships to resist this Amendment.
Lord SELSDON: That is the most unfair statement that I have ever heard. This is the first Amendment that I have ever moved in this House. When I started I had no intention of pressing it. I sought information and thought the Government could concede on the principle of fairness. I have not argued all the aspects of compensation. It is a very confusing issue. Amendments that we have already discussed have demonstrated this. It is not something that can be fragmented. The noble Lord, Lord Melchett, was fair in one remark which he made: this Amendment gets to the root of the problem. I am seeking to ensure that, if one uses the word "democracy" at this time, it really works; and democracy means fairness. This is not fair.
There are reasons why it is not fair, many of which I can argue. I will not do so except to say that in putting down this Amendment and following it up I took advice from various bodies. The first of these bodies was the Council of the Stock Exchange. I thought that, if somebody was to use somebody else's valuation for a body that was not controlled by law, it was only fair to seek their advice. I found that the Government had not sought their advice. I asked the Stock Exchange Council: "Will you please write to me or to somebody or to the Government and say whether you feel that this is fair or unfair?" They said: "It would be unfair of us to do this. The Government is not a quoted company and of the companies with which the Government are dealing, only one is quoted. If there was an application from the Government for that one quoted company to make an acquisition, probably it would be in our interest to suspend the quotation".
The only thing that the Stock Exchange would authorise me officially to say is that they would like to be consulted and to co-operate. All I can say is that if some

1447
body has a method of valuation and produces a daily list when their name and terms on which they do this are included in a Government Bill, then if the Government have not consulted them there is something wrong. I believe that if the Government consult them, they will be advised by the Stock Exchange Council that in normal circumstances the stock exchange daily price is not a fair valuation for the total value of a business. It is only a guide to market capitalisation.
Many noble Lords have made this mistake. Perhaps it is the fault of the City and of the whole organisation for failing to explain how financial things operate. But there is absolutely no doubt that the value of a quoted security is the value of the security (be it 1 per cent. or one half of 1 per cent. or one share) to the man who holds it and the man who wishes to buy it. It is a willing buyer, willing seller concept. The value of a business is different.
I have endured many hours of negotiation and discussion when I have been acting on behalf of either foreign or British companies in international acquisitions. I have had to sit down to try to explain to one company that is unquoted that wishes to sell itself to a foreign company that because it says that its PE is so much, because the man has adjusted its profits and assets and perhaps it is under-geared, he ought to have a valuation equivalent to the market capitalisation of a company in the same sector on the Stock Exchange. This might be a high street chemists like Boots. I have had to explain to the foreign company and to both of them that this is not true. When you sit down and negotiate on price, often the differences in price can be as much as 100 per cent. or more. In the greatest single acquisition I was involved in, there was a difference of some 150 per cent. between the two factors. They ultimately came together on an evaluation which was fair. All sorts of aspects must be taken into account, not only the stock and the balance sheets, but the value of stocks.
I have been with English auditors who, when checking the value of a timber merchant's stock, insist on taking every single piece of wood in the yard to make sure that there were not two pieces joined together and hidden in a stack in
1448
order to get a greater value. One then realises that the valuation of businesses and acquisitions and sales is a professional business and something that costs a lot of money and something which the private sector are willing to pay for in the interests of fairness to its shareholders.
It employs professional people who are independent; it employs good accountants who produce good evaluations. If the Government really wished to be fair they should seek to approach, employ and utilise in these resources people who are known to be fair, people who give a true and fair view, and they should not forget that fairness is one of the few assets we have left in this country. If, by one Act of Parliament and the inclusion of certain clauses in it, you destroy the whole principle of fairness you will destroy more than you realise. While I will not at this stage argue the Amendments, I will repeat to the noble Lord, Lord Melchett, that if the Government will accept this Amendment I will withdraw all the others which are related to alternative methods of compensation and concentrate entirely on the principle of fairness in the Arbitration Committee. This will save time and get things through much quicker.
To me one of the overwhelming problems is not so much what we in Parliament feel about this, but what people in business will feel about it, and more important what future investors will feel about it. I do not speak for the private small shareholders or for the institutions. I speak more for those people whom the Government seek to attract to invest in this country. Both with this Government and with the past—and noble Lords may check this if they wish—I have in a private capacity as a banker sought to encourage people to invest in this country. I have written personally to 25,000 companies throughout the EEC suggesting that they should invest. I have paid for a brochure describing the advantages of the United Kingdom. I have been faced with arguments about industrial relations; I had to try to defend the Conservatives' Industrial Relations Act to foreigners, who said this might stir it up. On that Act—and my noble friend Lord Carr will forgive me—even in your Lordships' House I put down a lot of Amendments, but I was advised in the interests of expediency that I should not include them. I withdrew

1449
them. On this Bill I cannot do this, because I see unfairness rearing its ugly head, not just at this time of night in your Lordships' Committee, but in a much wider context throughout the world.
When you ask people abroad, "Will you invest in our country?", the first reason why was industrial relations. This is now forgotten. The second reason was inflation because inflation will lead to a weak currency. There was then a general belief—and I have had this argument abroad with people who have said, "Ah, but you cannot argue that the price should take into account inflation, because although it may be 22 per cent. at the moment the Chancellor of the Exchequer and the British Government, whom we can trust, say it will be down to 8 per cent. by the autumn of this year." These arguments create problems but they then pointed out that inflation leads to falling currencies and while inflation was then the argument, it is now falling currencies which are the argument. Only recently, when this Bill first appeared on the Statute Book and was discussed, the next argument was advanced: "How do I know that, if I set up in a business which is related to the North Sea, although I may be at arm's length with it at the present time, I will not be acquired and taken over? How do I know that, if perhaps I am allied to the pharmaceutical industry or to the construction industry, whether or not it be builders' merchants?"
Unfortunately our own Press sometimes does not serve us well in promoting the nation abroad. The points that come out are often those that are inflated out of all proportion by the foreign Press. The feeling going abroad to some extent is that there are so many areas in the United Kingdom where there is going to be Government involvement that to get direct investment into any area associated with these would be wrong. I have argued with them that you should never worry about that; that if by chance the Government do come in and require to acquire part of your business—and foreign companies will not he quoted because it is often impossible for them for technical reasons for them to meet the very stringent requirements of the Stock Exchange—I have assured them, "Do not worry; you will receive a fair price". They have never believed that the price of shares on the Stock Exchange is fair, and they do not
1450
believe, with all the cost of stamp duty and so on connected with investing in the United Kingdom, that it is a worthwhile activity because of the fear of declining sterling. Yet, equally, they have a tremendous regard for our industries and companies.
My biggest concern is nothing to do with the price that companies get for these businesses. I would happily form a group myself and produce fair valuations of all of them. I am concerned about the principle of fairness. The noble Lord, Lord Melchett, has tried to explain from a written brief that what the Government are doing is fair.
If noble Lords from all sides of this House say and believe that it is not fair—and there has not been one person from the Government Benches, other than the noble Lord, Lord Melchett, who has tried to say that it is fair—and there is not one argument that I can accept, then if I wish to be fair I must press this Amendment, because that is surely the object of a debate in your Lordships' House. It is fair to point out that because of an attempt and a desire to try to be fair I, because I have a full-time job, have had only six hours' sleep in the last two days. I was in Wolverhampton last night. I came on the early train this morning, and I am not being as coherent as I normally should be. But having come from that area I will repeat to your Lordships a quotation I used the other night from Tom Brown's Schooldays:
"He never wants anything but what is right and fair; only when you come to settle what is right and fair it is everything he wants and nothing that you want and that is his idea of compromise."
In the interests of fairness, if this were a private company and a private sector and I were a shareholder, I would sell my shares in the Government because of this. And if I were a director I would resign. But the way our organisation is at the moment I understand that constitutionally I cannot resign. Therefore, if I am to be connected with something like this which I genuinely believe to be unfair, I must press the Amendment; and that I do.
11.27 p.m.
On Question, Whether the said Amendment (No. 156) shall be agreed to?
Their Lordships divided: Contents, 77; Not-Contents, 33.

CONTENTS

Alport, L.

Gisborough, L.

O'Hagan, L.

Atholl, D.

Gowrie, E.

Onslow, E.

Barrington, V.

Gray, L.

Orr-Ewing, L.

Belstead, L.

Greenway, L.

Redesdale, L.

Blakenham, V.

Grey, E.

Rochdale, V.

Bradford, E.

Hanworth, V.

St. Aldwyn, E.

Burton, L.

Harmar-Nicholls, L,

St. Davids, V.

Campbell of Croy, L.

Hives, L.

Salisbury, M.

Carr of Hadley, L.

Hornsby-Smith, B.

Sandys, L.

Carrington, L.

Inchcape, E.

Savile, L.

Chelwood, L.

Kimberley, E.

Selkirk, E.

Clinton, L.

Kissm, L.

Selsdon, L. [Teller.]

Colville of Culross, V.

Lauderdale, E.

Sharples, B.

Cork and Orrery, E.

Long, V.

Simon, V.

Craigmyle, L.

Lyell, L.

Somers, L.

Cullen of Ashbourne, L.

Mackie of Benshie, L.

Stamp, L.

de Clifford, L.

Margadale, L.

Strathclyde, L.

Denham, L. [Teller.]

Massereene and Ferrard, V.

Strathcona and Mount Royal, L.

Drumalbyn, L.

Middleton, L.

Terrington, L.

Dudley, E.

Monson, L.

Trefgarne, L.

Ellenborough, L.

Morris, L.

Vickers, B.

Elles, B.

Mottistone, L.

Ward of North Tyneside, B.

Elliot of Harwood, B.

Mowbray and Stourton, L.

Wardington, L.

Falmouth, V.

Newall, L.

Winstanley, L.

Ferrers, E.

Northesk, E.

Young, B.

Ferrier, L.

NOT-CONTENTS

Blyton, L.

Kagan, L.

Raglan, L.

Brockway, L.

Kirkhill, L.

Ritchie-Calder, L.

Castle, L.

Lyons of Brighton, L.

Segal, L.

Champion, L.

McCluskey, L.

Shackleton, L.

Cooper of Stockton Heath, L.

Melchett, L.

Stedman, B.

Davies of Leek, L.

Morris of Kenwood, L.

Stewart of Alvechurch, B.

Davies of Penrhys, L.

Murray of Gravesend, L.

Stone, L.

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

Oram, L.

Strabolgi, L. [Teller.]

Fisher of Camden, L.

Peart, L. (L. Privy Seal.)

Wells-Pestell, L. [Teller.]

Hirshfield, L.

Pitt of Hampstead, L.

Winterbottom, L.

Houghton of Sowerby, L.

Ponsonby of Shulbrede, L.

Wynne-Jones, L.

Resolved in the affirmative, and Amendment agreed to accordingly.
11.35 p.m.
Earl FERRERS Earl FERRERS moved Amendment No. 159:
Page 49, line 1, at end insert—
(""independent accountant" means a person who is—

(a) a member of one of the bodies referred to in section 17(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: In moving this Amendment, I should like to discuss Amendment No. 161. Under subsection (6), the Secretary of State is given power to certify what is "the reduced amount" by which companies may be reimbursed for various reasons. If a company, subsequent to 6th November, receives a Government loan, and without it the company in the Secretary of State's view would have gone "bust", he is given
1452
power to impose "the reduced amount" and to make a "special declaration". If he does that, the amount which may be paid out in the form of compensation is either 5 per cent. of the notional value of the shares, or what would have been the break-up price of the company. That is a fairly stringent power to give to the Secretary of State, and the purpose of this Amendment is to say that he ought, first, to have the advice of a qualified accountant. He does not have to take the accountant's advice, and I suggest that this is a reasonable Amendment in view of the very substantial power which the clause gives to the Secretary of State. I beg to move.
Lord WINTERBOTTOM: These two Amendments taken together once again demonstrate the fear of excessive power being wielded by the Secretary of State. I recognise the concern which noble Lords feel about a possible lack of control over the Secretary of State, and I know that they wish to be assured—as I wish to

1453
assure them—that the Secretary of State will not use his powers in this provision capriciously. I can give noble Lords that assurance. After all, we have two Houses of Parliament, and if we do our job he will not act capriciously. That is fair comment. It is up to us.
Earl FERRERS: And if we do our job, he will act even less capriciously.
Lord WINTERBOTTOM: Measuring capriciousness is a difficult matter, but I think we can do it by instinct. In the exercise of his powers under any Statute, the Secretary of State must ad reasonably. He can act only within the framework of a Statute and is accountable for all his actions. He has at his disposal the resources of Government experts to investigate and advise on a particular case, and there is nothing in the Bill now which prohibits him from seeking outside advice if he considers it appropriate. This Amendment would impose outside advice on him.
I see the reasoning behind this Amendment. I believe that noble Lords opposite want, as it were, an independent referee. But what we are talking about is a potential bankruptcy situation, which can arise very quickly indeed; it drops out of a blue sky. If the Secretary of State were required in every case to seek outside advice, as the noble Earl's Amendment would demand, there could be such delay that a company might collapse before the aid could be given, with all the disastrous employment, social and regional consequences that that would entail. It is for that reason that I ask that these two Amendments should not be pressed.
Lord HARMAR-NICHOLLS: Is there any guarantee that the inside advice will be from an accountant? The noble Lord says that inside advice will be taken, but from whom? Can the noble Lord guarantee that the inside advice which is available will be of the quality that warrants that it should be acted upon? It may be the office cat; that would be inside advice. I understand the objections to the independent outside accountant, but the least we can be offered is that the inside advice has at any rate the qualifications of the independent accountant. Can the noble Lord give us that assurance? I was very disturbed at the end of the last debate
1454
when the noble Lord, Lord Selsdon, disclosed that the Government had not even inquired of the Council of the Stock Exchange whether the measuring rod that they were using was the right one. The term "inside advice" sounds very grand, but what is it? The term "independent accountant" means something and can be identified. But who is meant by "inside advice"? Is it the office cleaner?
Lord SELSDON: Having already raised the question of the independent accountant, it would be perfectly possible for the Government to appoint an accountant, in which case he would accept an assignment from the Government and would be acting for them as an inside accountant. Independent accountants always represent the interests of their clients. In this case there is an undoubted need for a qualified accountant mind—for somebody who is known to be independent and who comes from one of the acceptable, true and fair view organisations or firms of leading British accountants rather than from abroad.
If one looks at the two extremes the anomalies are considerable. Let me take the case of a company which had a thriving business and was doing well two years ago but then suffered from blight and has declined since then; it has had a declining value and now has a lower value than it would have had two years ago. In the interests of fairness, the value taken should be its value two years ago. At the other extreme, another company may not have been doing very well two years ago but has now moved forward successfully and has a higher value than two years ago. Both of these aspects have to be taken into account and the people who are best able to take them into account are accountants, not Governments.
Lord WINTERBOTTOM: If noble Lords are willing to be fair on this matter they must recognise that the Secretary of State must always act reasonably. He cannot be like the Roman Emperor who made his horse Consul, nor do I foresee any Chancellor of the Exchequer making the cat his chief adviser. He must act within the framework of the Statute. There is a major accountancy service within the Government which is at the disposal of all Government Departments

1455
and, with all its shortcomings, there is no doubt that the Treasury is a very acute critic of Government policies. No single Department can act frivolously in matters as important as this. As I have said, the Government have experts—and a large number of office cats as well—and those experts will advise the Government. If the Government or the Secretary of State of the day thinks that it is appropriate, I am certain he will seek outside advice as well. He is not forced to take inbred information. Since the Secretary of State must act reasonably and is accountable to Parliament, and since I am quite certain that he will be watched by Parliament, noble Lords need not worry that his powers will be used capriciously in a situation where action has to be taken quickly if a firm is sliding unexpectedly into bankruptcy.
Lord MOTTISTONE: The problem in dealing with the Bill is that our ultimate faith in Secretaries of State and Government is somewhat undermined. What sticks in my gullet about the Bill is that the Government are making their own rules—and very carefully thought out rules—for taking something from somebody else in accordance with some kind of political theory. Where a Government legislates in an impartial way, which they endeavour to do in most cases, then one accepts various statements in all kinds of Acts of Parliament that the Secretary of State will do this, that and the other, because the general framework is not one which has discredited the name of government by the very root of the Bill which they are putting before Parliament. That is why there are so many arguments of this sort in relation to the Bill, which may appear to noble Lords opposite to be a little unreasonable, and why we seek the safeguard of somebody who is independent of government, because as we see the Bill it is not one which is independent of a political theory which has discredited the Government as an independent arbitrator.
Lord ORR-EWING: Increasingly the principle in public life in recent years has been that one should have an independent arbiter. When the Press Council was set up, it was manned wholly by Press men, and then in reaction to public demand it was felt better if an independent judge was Chairman of the Press Council. The
1456
Police Bill, brought in by the very gallant Home Secretary who is now leaving us for Europe, made exactly the same point: that it was no good the police being judge and jury in their own cases, albeit that it was some other police authority looking into the case. We are not asking for anything exceptional; this is in the context of Government action in many other spheres. We are not upsetting the general principle of nationalisation; we are asking only that an independent accountant, properly trained, should be the assessor.
I have not got the up-to-date figures, but I remember putting down a series of Questions on how many qualified accountants were employed in various Government Departments. I am afraid they could not be counted even on the fingers of one hand because there were so few. I think in the Treasury there were nine qualified chartered accountants. When the noble Lord says that the Treasury can he relied on, I am not sure that they can. If there was an undervaluation, something which would save taxpayers' money, I think even now, flabby as they are, they would think of the advantages. But I am not sure that they can be relied on as being independent. They are, I hope, still trying to save the taxpayers' money—although they have not been very successful in recent years—but I should not think anyone could object to an independent trained accountant advising the Secretary of State. It would then be seen to be fair, seen to be independent and not partial. I should have thought there was everything to be said for the Government looking at this in that context and saying, perhaps at Report stage: "This is sensible. We might as well do it, because it accords with Government policy in recent years".
The Earl of DUDLEY: In this context, following what Lord Orr-Ewing has said, one is entitled to ask whether, when the other night the noble Lord, Lord Melchett, rejected the proposition put by the noble Lord, Lord Selsdon, that net profit was a better yardstick of efficiency than return on capital employed, he was using his own judgment or that of inside experts, or even taking the office cat's advice. I happened to study this morning, as no doubt many noble Lords did, the results of that great organisation Hawker-Siddeley, a large part of which it is proposed to nationalise under the Bill.

1457
I think something like 20 per cent. of Hawker-Siddeley is to be nationalised. If those results are looked at on the basis of the yardstick of efficiency that the noble Lord, Lord Melchett, proposed—he said he thought the present levels of interest on money were about appropriate, which I would reckon for a company of that size to be something of the order of 15 per cent., more or less, give or take a little—you come out with a figure of 32 per cent., or £12½ million less than the net profit earned last year by Hawker-Siddeley. If these companies are nationalised, and the noble Lord, Lord Melchett, or the Secretary of State, will be patting them on the back for making a return 32 per cent. less than they are making at the moment, then I ask myself what are the advantages of nationalisation. I trust that the noble Lord will think hard and take better advice before he rejects again the advice put forward by the noble Lord, Lord Selsdon. If Lord Selsdon presses his Amendment, I wish, on the basis of the Hawker-Siddeley results, that he had done so last night also.
11.51 p.m.
Lord HARMAR-NICHOLLS: Has the noble Lord wondered why we accept Government guidance more readily on legal matters than we do on accountancy matters? The reason is because we have law officers of the Crown, an Attorney-General, and a Lord Chancellor, who sit both as representatives of a Government but also representing the impartiality and objectivity of a profession. When you get a ruling on a matter of law, while you may not always agree with it, you know that it is coming from someone who has had in mind the stature of his own profession and the way it is generally run.
Now that we are living in an age where matters to do with accountancy are coming from a Government more than ever they did before, it may well be that we ought to have an Accountancy General as well as an Attorney-General. If, instead of having some unidentified accountant such as my noble friend Lord Orr-Ewing said exists, the Accountant General, in giving any advice to the Government, had not only to satisfy the Government's desires but to pass the test of examination by his own professional institute and general tradition, it may be that the advice given would be more
1458
careful and perhaps not quite as ideological in its results as comes now from the anonymous and unidentifiable inside adviser who may, or may not, be an accountant.
It is because there is this difference between legal and accountancy matters that we accept legal matters. The Lord Chancellor and the Attorney-General have too great a standing in their professions outside Parliament to be disregarded. Produce such a man on the accountancy side, and you may have less trouble. But until you do, the noble Lord ought to advise his friends to have an independent outside accountant to fill the gap.
Lord SHACKLETON: If I may follow the noble Lord's remarks, he is being unfair to the developed accountancy service in the public service. A distinguished accountant has been recently appointed as the professional head. This is part of the post-Fulton reforms, which suggests that there is a degree of ability that was not there in the past. I hope that the noble Lord will withdraw any implication that the head of the accountancy service in the public service is somehow a stooge.
Lord HARMAR-NICHOLLS: If the noble Lord would assure me that it is the head of the accountancy service who is the inside informant and adviser, I may well withdraw. But we have been told that it is some anonymous inside adviser. There is no certainty that it is an accountant, much less the leading accountant. If I can be assured that the advice given tonight has come from an identifiable person—in this instance the very eminent man mentioned by the noble Lord, Lord Shackleton—it would make some sort of difference. I do not think he can give it, and I do not think the noble Lord, Lord Melchett, can give it, and it is because it cannot be given that the uncertainty remains. Until we can be more certain where the advice is coming from, I believe that it ought to be rectified by an independent accountant, such as was suggested.
11.55 p.m.
Lord CHELWOOD: I hope the Government will think again on this issue. Having listened to the last two hours of

1459
debate, it is clear that the Committee is overwhelmingly in favour of the Amendment. I would remind the Government that the last Division was substantially in favour of that Amendment. I read in Clause 35 various passages about the Secretary of State making a special declaration, things in the opinion of the Treasury, what a special declaration means, and so on. I agree it would be unfair to criticise Departments and say that they do not add up properly and do not have the benefit of the advice of first-class accountants, but they are part of the Government machine, and if people are to feel that compensation is fair there must be some sort of independence which can be seen to be independent.
This subject was not properly debated in another place. I have read the Official Report of those debates thoroughly. Nor has it been really properly debated here, in the sense that all we have had in reply to the pertinent questions that have been asked are short, prepared briefs read out by Ministers and their remarks have not really been relevant to the questions that have been asked. As a very new Member of your Lordships' House I feel shaken because I have always had a high opinion of your debates, but the quality tonight has deteriorated sadly. Noble Lords of the Opposition Benches—Cross-Benchers, Liberals and my noble friends—have questioned whether the compensation will be fair and be seen to be fair. We are profoundly unhappy on this score but we have had no assurance that the basis of compensation will be fair.
We have heard that the asset values of more than half the cases are not being taken properly into account because of the five-year gap between 1972 and 1977. That has not been answered. Nor have we been told what, if any, consultation there has been with the Stock Exchange Council. We have had no reply to the important question asked by my noble friend Lord Carr of Hadley about the extent to which pension funds are involved in all this. I believe—I am open to correction—that pension funds are involved to the tune of about £2,000 million, a large part of which, no doubt, is invested by the big unions in this country. What will be the feeling of the trustees of those pension funds when they find that the
1460
compensation is inadequate because no independent view has been taken but that it is simply the view of the Government? I am profoundly unhappy about the way this debate has gone and I hope that before we part with the Amendment we will have a further statement from the Government dealing with the important questions that have been asked. The Government must remember that the whole question of foreign confidence in this country is involved here. As everybody knows, we desperately need foreign risk capital.
Lord WINTERBOTTOM: To answer the noble Lord, Lord Harmar-Nicholls, as my noble friend Lord Shackleton pointed out, the Government have recently appointed a well-respected accountant at Permanent Secretary level to head the Government accountancy services. I cannot give his name—that would be improper—and in any case, when a crisis situation arises, as foreseen in the clause, we do not know which individual will deal with it. But there is a body of qualified accountants within the Government Accountancy Service who are perfectly capable of giving sound professional advice to the Secretary of State.
May I interject one other argument into the debate at this late stage? A special declaration under the meaning of the Act is made before any aid is given. Before taking that aid, therefore, the company that is in trouble is free to make up its mind whether to try to solve its own problems or to accept the aid, which they realise will reduce the compensation that it will receive. A Government decision is not imposed upon the company; it can choose between following its own policies and seeking its own salvation, or following the procedures laid down in the Bill, which will, as I say, be administered fairly and not capriciously. For that reason, I would say that the noble Lord's Amendments are based on an unfounded suspicion of the character and intentions of the Secretary of State and I ask the noble Lord to withdraw the Amendment.
Lord SELSDON: I should like to intervene in case there is any misunderstanding. I think that those of us who know the Government Accountancy Service have a very high regard for it. I have such a high regard for it that I cannot believe that it

1461
was consulted on the subject of compensation. If the noble Lord advises me that it was consulted, my regard for it will fall, but, if not, I feel that the Government have not consulted the right people.
Lord CARR of HADLEY: Can the noble Lord tell us: was the Accountancy Service consulted?
Lord MELCHETT: This honestly is not something that arises on this Amendment. We dealt with compensation on the last Amendment and no doubt it is something which can properly be raised on the Question, That the clause stand part when we get there.
Earl FERRERS: Perhaps the noble Lord will be good enough to seize himself of the information so that when the question is asked on the Question, that the clause stand part, we shall be able to receive an answer. What we have tried to do in the Amendment is something quite modest. The noble Lord, Lord Winterbottom, will have been aware of the considerable feeling expressed for the principle that the Secretary of State should have the advantage of independent advice. My noble friend Lord Orr-Ewing said that the independent accountant should be the assessor. That is going a great deal further than the Amendment: all the Amendment says is that an independent accountant should give his advice. It does not say that the Secretary of State should take it. The noble Lord, Lord Winterbottom, said that it was necessary to act very quickly because liquidation could drop out of a blue sky.
Lord WINTERBOTTOM: I said that insolvency could drop out of a blue sky!
Earl FERRERS: I was not certain what it was, but whatever it was was rather disagreeable! However, the point is quite simple, and I believe that we are slightly at odds here because I understand that, under this part of the Bill, which the noble Lord, Lord Winterbottom, said was brilliantly drafted and he could understand perfectly—I find it possibly slightly less easy—the Secretary of State may pay a reduced amount in compensation for a company that has borrowed money from the Secretary of State.
What in fact happens is that if a company has been in a certain amount of
1462
financial difficulty, or possibly even if it has not, it has had a value at 1974 prices. It is perfectly possible that that company may have been able to secure an order since 1974 and that in order to do so it has had to invest some money, perhaps in order to re-tool or to buy extra machinery. In order to do that, the company would have had to obtain extra funds, but it might well have been that it could not get the extra funds from the banks or any normal lender because of the process of nationalisation, because any normal lender would say, "No, we shall not lend you this money because you are going to be nationalised." Therefore, the company has only one alternative which is to go to the Secretary of State to get the necessary money. As soon as the company has done that it has sipped from the poisoned chalice, because in fact the money having then been obtained from the Secretary of State, he can then pay only a reduced amount which means 5 per cent. of the notional value of the shares at 1974 prices, or the break-up price of the company at, presumably, current prices.
If one were to take, for instance, a firm which might have been valued at £5 million in 1974 and supposing it had required a £½ million loan, the reduced amount of compensation which that firm would be paid would be either 5 per cent. of £5 million which is £¼ million, or the break-up price. That is a very substantial reduction. It may well be that it is justified, but the object of the Amendment is merely to say that it would be fair to have an independent accountant look into this as well and give the Secretary of State his independent advice; the Secretary of State need not take it.
I hope that the noble Lord will look at this again; I hope that he will give me an undertaking that he will look again at it. But if he cannot I must say that we may have to raise it again at the Report stage. This is not a difficult Amendment, or a hard Amendment, nor is it being critical in any way of the Secretary of State. It is merely a prudent step where the Secretary of State has very considerable powers to reduce substantially the amount of compensation which could be given. I hope that the noble Lord, Lord Winter-bottom, will be able to say that he will look at this. But the noble Lord is continuing to sit in his seat. Does that mean that he will not look at it?
Lord WINTERBOTTOM: I will certainly note what the noble Earl has said and will think about it, but I cannot give any undertaking this evening.
Earl FERRERS: If the noble Lord thinks about it perhaps he will also be able to look at it at the same time. I am sure that if lie looks at it and reads the penetrating remarks which have been made from this side by my noble friends his thoughts will be very much the more concentrated. Therefore I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord MELCHETT: I hope that it was not the fact that we were able to accept so many of the Amendments of noble Lords opposite which has slowed us down so much in the later stages this evening. But despite the fact that we have gone rather slowly I understand that it might be the wish of the Committee that we resume at this hour. If that is the case, I beg to move that this House do now resume.
Moved accordingly, and, on Question Motion agreed to.
House resumed.

COITY WALLIA COMMONS [H.L.]
Returned from the Commons with Amendments; the said Amendments considered and agreed to.

AGRICULTURE (MISCELLANEOUS PROVISIONS) BILL
Returned from the Commons with certain Lords Amendments agreed to; a Lords Amendment agreed to with a consequential Amendment to the Bill; a Lords Amendment disagreed to with
1464
Amendments to the words so restored to the Bill; and the remaining Lords Amendments disagreed to with Reasons for such disagreement: the said Amendments and Reasons to be printed.

  INCOME TAX, NATIONAL INSURANCE AND WELFARE BENEFITS
  INCOME TAX, NATIONAL INSURANCE AND WELFARE BENEFITS
  CHILE: PAYMENTS FOR SUBMARINES
  CHILE: PAYMENTS FOR SUBMARINES
  HIGHWAY INQUIRIES PROCEDURE
  HIGHWAY INQUIRIES PROCEDURE
  VEHICLE NOISE CONTROL
  VEHICLE NOISE CONTROL