Sitting of 25 October 1976

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS

  CROMARTY PETROLEUM ORDER CONFIRMATION BILL (By Order)
  Order read for resuming adjourned debate on Question [21st October] That the Bill be now considered.
  Debate to be resumed this day at Seven o'clock.
  Mr. Dalyell: On a point of order, Mr. Speaker. May I ask whether this Bill will indeed be taken at 7 o'clock, in the light of the Government motion on the Order Paper?
  Mr. Speaker: I can explain that. I was a little puzzled myself. I understand that the motion that the House may pass later will supersede what we are doing at the moment.
  Mr. Rooker: Further to that point of order, Mr. Speaker. Will you ensure that the House has an opportunity to decide
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  whether, at 3.30 p.m., it wishes to pass the Government motion relating to Business of the House?
  Mr. Speaker: Yes, I will.

ORAL ANSWERS TO QUESTIONS
  ENERGY

    Fuel Industries (Nuclear Strategy)
    Mr. Pardoeasked the Secretary of State for Energy if he has involved the electricity, coal, gas and oil industries in the development of a nuclear strategy for the United Kingdom.
    The Secretary of State for Energy (Mr. Anthony Wedgwood Benn): I am in regular contact with the energy industries about the formulation of energy policy, which includes the role of nuclear power.
    Mr. Pardoe: Given that our coal, oil and other resources give us a breathing space of perhaps 10 or 20 years of self-sufficiency, what estimate has the right hon. Gentleman made of the contribution that could be made to our energy use by alternative sources of energy, such as solar and wind power? Has he done a similar study to that conducted by the Lockheed Corporation, which has estimated that 20 per cent. of the United States' energy use could be supplied by wind power by the year 2000?
    Mr. Benn: All the information that we have on this subject has been published and I shall send it to the hon. Gentleman so that he may have an opportunity to study it. There is no doubt that these benign alternative sources of energy are available at a cost and after a period.
    When the hon. Gentleman has had a chance to study the recommendations made to me by those who have studied this matter, we might pursue it further. There is no doubt of the scope, but whether it would make an impact in the mid-term is not altogether clear.
    Mr. Dalyell: Does my right hon. Friend think that this country needs a green field oil refinery?
    Mr. Benn: That is another question.
    Mr. Skeet: The right hon. Gentleman has been talking about an energy policy for years, but when are we to have a policy for the United Kingdom and when will the Government work out a realistic arrangement with the EEC?
    Mr. Benn: As far as the EEC is concerned, the hon. Gentleman follows these matters carefully and will know that I went to the Energy Council in February or March ready to endorse the recommendations from the Commission, but difficulties arose elsewhere. We had a meeting in Luxembourg last week, when there was some serious discussion. I made the point, with which I think the House will agree, that protection of energy investment that has already taken place is a necessary preliminary to any energy policy that relates to minimum support price.
    Mr. Palmer: Can my right hon. Friend give us an assurance that there is no danger of nuclear development being given second place in the thinking of his Department? Is he aware that the industrial future of this country depends on our having an adequate nuclear capacity?
    Mr. Benn: My hon. Friend knows, because his Select Committee is working on it, that discussions are in progress about the steam-generating heavy water reactor, and I have made clear that there must be proper public debate before a decision is reached on the fast breeder. I think that the House will believe it right
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    that matters of this importance should be discussed before decisions are made.

    Gas and Electricity Disconnections
    Mr. Gowasked the Secretary of State for Energy what advice he has received from the management and trade unions employed in the gas and electricity supply industries concerning the importance of the ultimate sanction of disconnection in order to secure the payment of energy bills; and if he will make a statement.
    The Under-Secretary of State for Energy (Dr. John A. Cunningham): The electricity and gas industries have expressed their concern over recommendations that their statutory powers of disconnection should no longer be exercised. As my right hon. Friend announced on 2nd August, it has been agreed with the industries that they should apply a code of practice designed to protect genuine hardship cases from disconnection.
    Mr. Gow: Has the code of practice yet been published? If not, when will it be published? Has the Minister read the courageous speech of the Secretary of State at the Labour Party conference on 1st October, when he resisted attempts to remove the ultimate sanction of disconnection in cases where there is an unreasonable withholding of payment of charges for gas and electricity?
    Dr. Cunningham: The code of practice has not yet been published. Discussions to finalise it are still going on between the Department of Energy, other Departments and the industries concerned. The opinion of trade unionists in the industries will be taken into account. I think that my right hon. Friend was saying in Blackpool that the Government had decided that, for the moment, the statutory power of disconnection should not be removed. This matter will be kept under review, particularly in the light of the working of the code of practice.
    Mr. Robert Hughes: Will my hon. Friend ensure that there is the closest possible consultation between local electricity and gas board officials and social workers, since early notification of a failure to pay gas and electricity bills is often a symptom of hardship and ought,

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    therefore, to be drawn to the notice of those authorities?
    Dr. Cunningham: We absolutely agree with my hon. Friend's first point. Whatever the code of practice may say, its usefulness will depend on the spirit in which it is applied at a local level.
    We are aware of the problem and wish to encourage people not to wait till they are in difficulties but to consult the utilities if they think that a problem will arise.

    Power Stations (Coal Consumption)
    Mr. Edwin Wainwrightasked the Secretary of State for Energy if he will give the number of tons consumed at coal-fired power stations over each of the past six years; what are the estimated consumptions over each of the next three years; and if he will give the comparable figures in million tons of coal equivalent for oil-fired power stations.
    Mr. Benn: With permission, I will circulate the details in the Official Report.
    Over the last three years there has been an increase in coalburn of 4½ million tons, and a decrease in oilburn of 9·6 million tons coal equivalent. The CEGB's present central estimate of coal consumption in the current financial year is 68 million tons—that is, an increase of over 1 million tons over last year—with oil consumption down by over 3 million tons, to about 13 million tons coal equivalent. Over the next two years the consumption of both fuels may be expected to increase slightly.
    Mr. Wainwright: Does my right hon. Friend realise that there is a feeling throughout the industry that the Government are lax in making a decision about a new coal-fired station? When will they make up their mind to build a power station so that, when the coal at Selby starts coming on stream, the power station will be available to use it? Will he also take into account that the plant-making industry is greatly disturbed because of the lack of work, and that if we are not careful, because we are reluctant to make a decision, we shall lose highly-skilled teams of men to other countries, which would be a great loss to this country?
    Mr. Benn: I confirm the importance of this decision. My hon. Friend knows that I have met the management and unions on this matter. The papers that have come in, particularly on the trade union side, have been of the highest order, and have contained great detail. They have been put before Members and the Government. There has never been any doubt in the Government's mind that another coal-fired station would be linked with Selby. With the postponement of the SGHWR, which was announced in the summer, the question of another order for a coal-fired station is very much in the Government's mind. However, I must ask my hon. Friend to await the announcement of the decision.
    Mr. Costain: Is the Secretary of State aware that, in the process of getting rid of fly ash from power stations, thousands of hectares of good land are being destroyed? Will he institute research to see whether this fly ash can be put into derelict mines, and so preserve the countryside?
    Mr. Benn: I shall certainly consider that point.
    Mr. Skinner: Will my right hon. Friend acknowledge the urgency of the Question put down by my hon. Friend the Member for Dearne Valley (Mr. Wainwright)? Does he appreciate that it is not good enough constantly to tell us that the Government are considering, reviewing and thinking about and that they have got the matter in mind? It is time that some action was taken. Thousands of people will be thrown out of jobs in the power generating industry if action is not taken. When all these factors have been taken into account over this long period, will my right hon. Friend get something done?
    Mr. Benn: My hon. Friend knows very well, because I have discussed this matter with a number of people over a long period, that the Government have been working on it for a considerable period. They set up an inquiry through the CPRS to consider the impact on the plant industry. The responsible Minister is my right hon. Friend the Secretary of State for Industry. There has been no lack of urgency by the Government. If my hon. Friend discussed this matter with those concerned in the industry, he would discover that they are well satisfied with

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    the extent to which the Government have taken this problem on board.
    Mr. Biffen: Does the right hon. Gentleman realise that his hon. Friend the Member for Bolsover (Mr. Skinner) has been most unfair towards him and that we appreciate that there are serious difficulties attending any Government decision that will add to the total installed electricity capability when there is already a substantial shortfall in demand?
    Mr. Benn: Undoubtedly one of the problems confronting the Government is that there has been no energy planning for a long period and there have been wide fluctuations in forecasts by the CEGB which have gravely affected the prospects for continuous work in the industry. These matters must be sorted out. At the same time, it would be a tragedy if this country were to run any risk whatever of losing capacity in the heavy electrical industry, upon which so much of our future at home and abroad depends. The Government have made this clear at every meeting with delegations from the industry, both management and unions.
    The following are the details:
    The consumption of coal and oil in CEGB power stations during the last six financial years has been:

    Year

    Coal (million tons)

    Oil (million tons coal equivalent)

    1970–71

    …

    67·5

    19·4

    1971–72

    …

    61·5

    22·7

    1972–73

    …

    61·9

    26·2

    1973–74

    …

    62·7

    24·2

    1974–75

    …

    63·8

    23·2

    1975–76

    …

    66·4

    16·6

    Oil Prices
    Mr. Arnoldasked the Secretary of State for Energy what representations have been made by him to OPEC about an increase in the price of oil.
    The Minister State, Department of Energy (Dr. J. Dickson Mabon): Her Majesty's Government have not made recent representations on oil prices.
    Mr. Arnold: What kind of balance should be struck with regard to oil pricing generally between Britain's long-term interest as an oil producer and our present position as a heavy consumer? Is it still the Government's intention to press
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    the EEC for a minimum floor price for oil, currently quoted at $7 per barrel?
    Dr. Mabon: The answer to the second part of the hon. Gentleman's question is "Yes". Last week my right hon. Friend persuaded the Council of Energy Ministers to look at this matter in greater detail, in the hope that we would reach agreement by the end of this year, but that remains to be seen.
    Regarding the other matter, we must consider not only the position of the United Kingdom but the conditions that will inflict themselves on many of the poorer, less developed nations if OPEC raises its price substantially.
    Mr. Jim Marshall: Does my hon. Friend agree that, in view of the uncertainty surrounding the future of oil prices, it is essential that indigenous fuel resources, such as that recently found in the Vale of Belvoir coalfield, should be exploited as quickly as possible, with due regard being paid to the relevant environmental factors?
    Dr. Mabon: Yes. I very much agree with my hon. Friend.
    Mr. Viggers: When are we proposing to apply to join OPEC, and will our attitude then change?
    Dr. Mabon: In order to qualify, we would have to comply with the OPEC rule that one-half of our entire exports is in oil. We have a long way to go before we achieve that position.

    SGHWR Programme
    Mr. Warrenasked the Secretary of State for Energy if he will publish comparative data on the expenditure and delay to the SGHWR project compared with the budget figures to the latest available date.
    Mr. Benn: I announced in July that expenditure on the SGHWR in 1977–78 would be reduced by £45 million. Expenditure in 1976–77 will be approximately £15 million less than previously expected. There has, in effect, been one year's deferment of the project.
    Mr. Warren: I thank the right hon. Gentleman for that reply, but I am afraid that he has not answered my Question. I wanted to know how much had been spent against that which had been

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    budgeted. Bearing in mind that he has not given me the figures, may I have an assurance that he will not take any final decision on the future of the SGHWR before the reference design has been completed in 1977?
    Mr. Benn: I am sorry if I did not give the hon. Gentleman the figures that he sought. Many are published. If there has been an omission, I shall see that it is remedied. It has always been clear that the order for a power station of this kind would have to be cleared against the nuclear inspectors, and so on. That would be normal practice. Here we have a combination of a technical slippage, the need for public economy, and a rundown in current forecasts of demand which made it possible for the slippage to occur.
    Mr. Rost: When does the Secretary of State expect to have an updated cost estimate of the SGHWR programme?
    Mr. Benn: I shall look into that and see what the latest figures are. In fact, it has turned out to be more costly than was at first thought.
    Mr. Rostasked the Secretary of State for Energy if he will make a statement on the future of the SGHWR nuclear reactor programme.
    Dr. John A. Cunningham: The National Nuclear Corporation has sought authority from my right hon. Friend for the Nuclear Power Company to carry out an assessment of the SGHWR, PWR and AGR systems. He has agreed to this on the understanding that it will in no way jeopardise the nuclear industry's ability to start work on site on an SGHWR early in 1979. Agreement to this assessment does not mean that the Government are committed to its conclusions.
    Mr. Rost: If evidence accumulates to the Minister showing that the SGHWR programme is proving too difficult and too costly, and will not be commercially viable in export markets, would it not be more sensible to reach an early decision for us to cut our losses and to allow the British nuclear industry the opportunity of developing a system—the AGR or PWR—that would at least win us some export orders?
    Dr. Cunningham: My right hon. Friend cannot reach a decision until some of the points that the hon. Gentleman has mentioned have been covered. In that connection, the views of the Nuclear Power Company are germane to the discussion.
    Mr. Hooley: As we already have the Magnox, AGR and the SGHWR systems either actually working or in development, what on earth is the point of reviving the arguments about the PWR?
    Dr. Cunningham: My hon. Friend is right to say that we have Magnox and AGR stations, but we do not have a commercial SGHWR station operating in this country. My hon. Friend will know from his membership of the Select Committee that the United Kingdom Atomic Energy Authority has written to my right hon. Friend advising him to look again at the choice of thermal reactor.

    Fuel Bills
    Mr. Greville Jannerasked the Secretary of State for Energy what plans he has made to assist the less-well-off to cope with their fuel bills during the coming winter.
    Dr. John A. Cunningham: Detailed arrangements will shortly be published for the scheme that my right hon. Friend announced on 2nd August to allocate £25 million to help those likely to have the greatest difficulty with electricity bills this winter. The gas and electricity industries, together with the Government, are making good progress with the code of practice designed to help poor consumers to make suitable payment arrangements and to protect them from disconnection.
    Mr. Janner: I welcome my hon. Friend's statement about the imminence of details. Is he aware that it is not merely electricity which is worrying people, but coal, coke, oil, paraffin and—
    Mr. Skinner: Solicitors' fees.
    Mr. Janner: —other fuels for which people have to pay? Is he further aware that elderly people do not consider this to be a joke, whether the joke is made on one side of the House or the other?

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    This is one of the greatest and most imminent problems that will worry many of them to death before the winter arrives.
    Dr. Cunningham: The Government are well aware of the problem of heavy bills in the winter, particularly in the case of the elderly. The point about allocating money for electricity bills is that almost everyone receives an electricity bill, as opposed to bills for other fuels. We felt that help ought to be concentrated in the area where it would be most effective. Many elderly people live in houses heated only by electricity. Another point about the scheme is that, with limited public resources at the Government's disposal, we recognise that we cannot help everyone.
    Mr. Thompson: Will the Minister assure us that people who experience difficulty in budgeting will have restored to them the facility of prepayment meters?
    Dr. Cunningham: An important part of the discussions on the code of practice has been concerned with the availability of prepayment metres. I cannot anticipate the publication of the code, but I assure the hon. Gentleman that we shall have his point very much in mind.
    Mr. Mike Thomas: When does my hon. Friend expect the Government to reply to the Select Committee report on this matter? What confidence has he that electricity and gas boards will carry out the instructions given to them by him and his colleagues, bearing in mind that I have had continued correspondence with his predecessor, instancing examples of occasions when the boards do not carry out the spirit of what I know to be the Secretary of State's intention?
    Dr. Cunningham: The answer to the first part of the supplementary question is "As soon as possible". The answer to the second part is that trade unionists within the industries are concerned about the attacks being made upon them which seem to indicate that they do not care about the welfare of people who have difficulty in paying their bills. I know that is true in the gas industry, because I used to represent trade unionists in that industry before I came to the House. It is also true in the electricity industry. We should bear in mind that there are people
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    in the industries who are as concerned as are many hon. Members to ensure that people who are in difficulty with their bills are treated fairly. As I said in answer to a previous question, our aim will be to ensure that the spirit of the code of practice is interpreted effectively at local level.
    Mr. Beith: Does the Minister recognise the difficulties which arise because so much of the assistance given with fuel bills goes to those who are already in receipt of social security? Does he also recognise that there are many categories of people, particularly among the working poor, who experience difficulty with energy bills and do not receive any benefit?
    Dr. Cunningham: We are aware of this problem. That is why the £25 million scheme will cover those who are in receipt of the family income supplement as well as those who are in receipt of supplementary benefit. But the hon. Gentleman, and other hon. Members who are pressing me, in the next breath will be pressing the Government to cut public expenditure. They cannot have it both ways.
    Mr. Sainsbury: Does the Minister agree that improving home insulation, particularly for the less-well-off and the elderly, is an effective and sensible way to help them cope with their fuel bills? Is he satisfied that enough is being done by interdepartmental discussion to ensure that this method is progressed?
    Dr. Cunningham: The hon. Gentleman has raised an important matter. We understand that 66 per cent. of all local authority housing has no loft insulation of any kind—and a large number of elderly people live in local authority accommodation. The Department of Energy is concerned to try to improve this situation. One of the aims of the recently announced job creation project, to which £70 million has been allocated, is to improve loft insulation in local authority houses for the very purpose mentioned by the hon. Gentleman.

    Sea Wave Energy
    Mr. Jesselasked the Secretary of State for Energy what progress is being made towards the conversion of sea wave energy into electricity.
    Dr. J. Dickson Mabon: This Department, on the advice of the Advisory Council on Research and Development for Fuel and Power, has set up a research programme to examine the feasibility of large-scale extraction of sea wave energy. Details of this programme were given to the House on 29th April this year. The work is being directed by the Wave Energy Steering Committee which reports to our Chief Scientist.
    Four particular types of device have been chosen for study, each depending on a different mode of operation. These are now at different stages of development, but it is expected that at the end of about two years sufficient information will be available to allow a decision on whether or not to proceed to larger-scale models and eventually prototype work.
    Mr. Jessel: If the experiments go well, what proportion of British electricity requirements does the Minister foresee ultimately coming from this system?
    Dr. Mabon: I know that there is a certain amount of hilarity about this in the House, but the amount of energy in the seas around the United Kingdom is in the range of two to four times the present-day output of electricity. It is difficult to predict the development rate at which we shall be able to exploit wave energy, but the figure of about 4,000 mW electrical equivalent by the end of the century has been judged by scientists as a reasonable forecast, so I think that the hilarity should be restrained.
    Mr. Ronald Atkins: Is my hon. Friend aware that an official report declared the viability of tidal power in the Severn Estuary more than 50 years ago? Will it take equally long for nothing to be done about sea wave energy?
    Dr. Mabon: There is a tide in the affairs of men—. As the Science Research Council, Harwell and other notable institutions are examining this matter very seriously, and as the Government have great energy, something will be done.
    Mr. Donald Stewart: In view of the early work done in Scotland, will the Minister confirm that research will continue in Scotland, bearing in mind the significant wave reactions off the Western Isles?
    Dr. Mabon: Yes, but that is nothing to the Labour typhoon that is about to sweep away the SNP.

    Electrical Engineering Industry
    Mr. Frank Allaunasked the Secretary of State for Energy if he will make a statement on the future of electricity generation and its effects on the turbine generating industry; and what are the possibilities of transferring some of the CEGB research staff to the turbine generating industry.
    Mr. Whiteheadasked the Secretary of State for Energy what representations he has received about the ordering policy of the nationalised energy industries in relation to the British power engineering industry, in the light of the forthcoming CPRS report on the industry.
    Mr. Benn: I have received numerous representations about the present problems of the power plant manufacturers and have held useful discussions with those concerned. These problems are being considered by the Central Policy Review Staff in the report that is due at the end of this month. Staffing questions are a matter for the industries concerned.
    Mr. Allaun: To prevent the collapse of this industry probably for ever, and the loss of thousands of jobs in Manchester, Sheffield, Rugby and the North-East, will the Minister decide now to proceed with Drax B early in the coming year? If he will not give a decision this afternoon, when will he announce his decision?
    Mr. Benn: I share my hon. Friend's concern, and so do the Government. The maintenance not only of jobs now but of capacity for the future for home needs and export development is of essential national importance. In the past we have seen much of our engineering capacity disappear. I am not in a position to announce a decision today, but it follows from what I said earlier about the deferment of the SGHWR that a coal-fired station—Drax B is coal-fired—will come forward for consideration in this context. I know the industry's anxiety, but I think that the industry recognises that the Government should approach this matter seriously and that the industry is

    15
    ready to allow us to complete our consideration before announcing our conclusions.
    Mrs. Bain: Does the right hon. Gentleman accept that there is a desperate need for his Department to clarify the Government's overall long-term strategy planning for the power generation industry? Does he also accept that an early statement would be greatly welcomed by many industries, including the boiler-making industry, which is so important to the economy of western Scotland and the employment prospects there?
    Mr. Benn: I entirely agree with the hon. Lady. It is not possible for the supplying industries to be able to plan their future unless they can be sure of a steady flow of orders coming from the industries concerned. One of the most powerful reasons, among many others, for having a proper energy planning mechanism is that reasonable security should be available for those who have so much to offer on the industrial side.
    Mr. Joseph Dean: My right hon. Friend referred to exports. Although the placing of the order for Drax B would be very acceptable, it would relieve matters only in the immediate future. Would my right hon. Friend care to go into the question of the export effort with the Secretaries of State for Industry and Trade and try to get the manufacturers of turbines in this country to make more effort in the South American market? I understand that Venezuela is placing largish orders for hydroelectric and generating plant, to which the manufacturers in this country appear to be deliberately turning a blind eye.
    Mr. Benn: My hon. Friend is quite right in saying that it is not only the home position but the export possibilities which should decide the future shape of the industry. As we are such a big energy supplier, and will become a bigger one, it would be right for this country to aim to supply not only the fuel but the equipment which allows that fuel to be used, including heavy electrical equipment. I shall look into the two cases that my hon. Friend has mentioned and refer them to my right hon. Friend the Secretary of State for Trade.
    Mr. Biffen: If, in the light of the Central Policy Review Staff report, the Secretary of State requires the CEGB to order a power station ahead of its own assessed requirement, will he ensure that the public is made aware of the subsidy involved in that decision?
    Mr. Benn: All the implications, and the long-term energy planning, need to be thought about most carefully by the House. One cannot, on the one hand, attempt to take advantage of the daily fluctuations of market forces and, at the same time, expect to retain any decision over the future of these key fuel industries or their supplying industries. The cost of that against the cost of losing capacity and having to import fuel, which would restrict the demand for heavy electrical equipment in future, would have to be confronted fairly and squarely. It is with that in mind that I am determined to develop a proper long-term energy policy.
    Mr. Biffen: None the less, will the Secretary of State now answer my question—when this decision is taken, will he ensure that a proper amount of information is given, so that the public can make their judgment?
    Mr. Benn: I think this information is made public. The Ince B Station was brought forward and it has been necessary for some subvention to be made by the Government in pursuit of that interest, which, as far as I recall, was taken by the previous Government. There is no desire to withhold information on these matters. What I am saying is that if it is necessary to do that, it would be for the longer-term interests, and we might then have to consider what the short-term cost was.

    Oil Platforms
    Mr. Grayasked the Secretary of State for Energy whether he is yet in a position to make a statement on the likely level of activity in the United Kingdom platform-building industry in 1977.
    Dr. J. Dickson Mabon: As I announced recently, the Government believe that there is a reasonable prospect of three, perhaps four, platform orders

    17
    by the end of 1977 or early 1978. Our aim is to ensure that United Kingdom yards are given a full and fair opportunity to compete for these orders.
    Mr. Gray: Is the Minister aware that the platform building industry is in real danger of disintegrating due to lack of orders? Bearing that in mind, will he ask the Secretary of State to make an early decision on the Williams and Mertz report about the proposed gas collection line, as this could assist the platform yards to diversify in their attempts to keep going?
    Dr. Matron: We are seriously considering this proposal by Williams-Mertz. There is a second stage on which I hope the Government will soon be able to make a statement.
    On the generality of the position, I do not think that the hon. Gentleman will want to exaggerate it. Two yards in the Highlands Region are very well placed for orders.
    Mr. Robert Hughes: Has my hon. Friend considered discussing with the ordering part of the industry the possibility of bringing the orders forward from the dates he has mentioned, since many yards are faced with a short-term unemployment position? Will he consider the possibility of discussing, perhaps with the Chancellor of the Exchequer, a forward stock ordering scheme, so that once orders are placed they can be processed with the utmost possible speed?
    Dr. Mabon: On the first part, yes. It is my job daily to urge on the different companies which come to see us about these matters our anxiety to give confidence to the industry by their bringing forward the orders, or at least bringing forward the announcement of orders. That is almost as important. I do not think that having stock platforms is a realistic proposition. [Interruption.] I mean modules, not platforms. That might have been looked at more closely than has been done so far. I would prefer that we dealt with real orders rather than orders in stock. In respect of actual orders, I would point out that exactly a year ago there was no such thing as the Murchison field. Now there is a platform being ordered by Conoco
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    for the Murchison field. Therefore, these matters can change quite rapidly.
    Mr. Gordon Wilson: Will the Minister comment on the announcement today about the prospects of a platform being set up in the yard at Portavadie, which is not yet operational, although it has cost a lot of Government money? Will he comment on the effect of initiating action in that yard and other yards, such as Ardyne and Kishorn, producing concrete platforms, where, if orders are not placed in future, there will be a drop in the labour force?
    Dr. Mabon: The hon. Gentleman knows as much as I do about this matter, namely, that some companies may prefer to have a particular design. If they prefer to go to Portavadie in order to acquire a different design from those constructed in other yards making concrete platforms, they are free to do so. Where the Government would be remiss would be in closing down Portavadie and excluding ourselves from orders in future and seeing them go to another country.
    Mr. Viggers: How does the Minister expect us to have a proper share in the industrial development of North Sea oil as long as British companies and nationalised industries have to borrow their money at 15 per cent., whereas foreign competition can borrow its money at 6 per cent.?
    Dr. Mabon: That is really a matter for the Chancellor of the Exchequer and not for me.
    Mr. Litterick: In view of the present unexpectedly high extraction rates from the North Sea oilfields, does my hon. Friend agree that it is now urgent for his Department, together with the Department of Industry, to move fast to conclude planning agreements not only with the rig building industry but also with all those industries connected with oil, such as the refining and the petrochemical industries?
    Dr. Mabon: I do not think that my hon. Friend lacks confidence in the ability of my right hon. Friend, who has such a profound view of planning agreements, or would suspect that he is not trying to push ahead as fast as he can. In my own personal experience of my right hon. Friend, he is moving as fast as he can.

    Environment (Royal Commission's Report)
    Mr. Stephen Rossasked the Secretary of State for Energy what action he intends to take over the latest report from the Royal Commission on the Environment.
    Mr. Benn: I am considering the specific recommendations in the report which relate to my responsibilities. The Government will take full account of the report in reaching decisions on nuclear power.
    Mr. Ross: Is the Secretary of State aware of the growing concern about the way we deal with nuclear waste products? Does he take on board the recommendation in the report that we should set up a nuclear waste disposal corporation to do development work for dealing with nuclear waste and report back to the Department of the Environment and the Minister of State for Agriculture?
    Mr. Benn: I am well aware of the growing concern, not only in this country but world-wide, about this problem, the magnitude of which may not have been fully appreciated in the early days. The recommendations made in the Flowers Report are the ones that the Government will consider. At the moment I am not able to say anything in answer to the hon. Gentleman's specific question about the waste disposal corporation.
    Mr. Dalyell: As we are using 60 per cent. of the refining capacity, will the Secretary of State refer to the Royal Commission the question of the good sense or otherwise of setting up a green field refining site at Nigg?
    Mr. Benn: I congratulate my hon. Friend on his persistence. In view of the fact that he has asked me whether I will do that, I am bound to say that I shall consider it and write to him on the matter.
    Mr. Forman: Does the right hon. Gentleman accept that the best Government response on the Flowers Report would be a period of intelligent delay, during which our nuclear industry would be able to satisfy beyond doubt some of the very sensible, stringent, safety and environmental requirements suggested in the report?
    Mr. Benn: That argument is one that emerges from one reading of the report. I am grateful to the hon. Gentleman for being the only hon. Member who responded to my request to put questions about safety, which I have now put to the Nuclear Inspectorate. A combination of economic factors and uncertainties about safety, not yet entirely resolved, and the fact that the forecasts are not as strong as they were and that energy supplies may be more plentiful than we thought, justify us in taking adequate time to be wholly satisfied about that question.
    Mr. Hugh Jenkins: May I take it from that answer that, on balance, my right hon. Friend is against the fast breeder reactor rather than for it, and that he takes the view that the dangers exceed the benefits?
    Mr. Benn: What I have said today—I must stick to it, although I appreciate my hon. Friend's desire to push me further—is that these are matters of very great public interest. There are uncertainties that should be publicly aired, and the Government are determined that sufficient time will be available for information to be made public before a decision is reached.
    Mr. Biffen: Does the right hon. Gentleman agree that Sir Brian Flowers and his colleagues deserve the warmest congratulations of the House for having initiated a debate with the most profound implications for the future structure of our society? How does he hope that the House will take part in this debate? Does he intend to publish the Government's reactions to the Flowers Report, or is he pressing the Leader of the House for time, so that we may have an early and considered debate on this matter?
    Mr. Benn: I shall certainly convey to Sir Brian Flowers the tribute paid to him by the hon. Member—one that I absolutely share. I have myself seen Sir Brian to thank him very much for the work that has been done. As for the form of parliamentary debate that should take place, there is a Select Committee, there will be opportunities for this to be discussed, and, without speaking for the Leader of the House, who is responsible for Government business, I should think it inconceivable that a decision of this magnitude could be taken without the

    21
    House having an opportunity to express its view. I shall certainly convey that view to my right hon. Friend, but I must not be taken to be announcing future Government business.

    Coal Stocks
    Mr. Hannamasked the Secretary of State for Energy if he will make a statement on the Government's policy on coal stocks.
    Dr. J. Dickson Mabon: Due to the fall in demand for energy, coal stocks are high, but they are not excessive. The Government are assisting the National Coal Board by providing stocking aid this year. The level of stocks in South Wales poses a particular problem, which is being examined.
    Mr. Hannam: Is the Minister aware of the adverse effect that large coal stocks are having on productivity in our mines, especially compared with other countries? Will he adopt two measures to try to deal with this long-term problem? First, will he ensure the provision of better and longer-lasting equipment for the extraction of coal, and, second, will he bring into effect a steady reduction in the retirement age of miners from the present unacceptable level?
    Dr. Mabon: With all respect, that matter is raised by another Question. I shall certainly ask my right hon. Friend to deal with these matters.
    Mr. Ioan Evans: What action is being taken to reduce and, if possible, eliminate imports of coal and to encourage the export of coal so as to reduce these stocks?
    Dr. Mabon: We are certainly anxious to get back into the coal exporting business. This matter was discussed at the Council of Energy Ministers meeting last week. I would not exaggerate the amount of our coal stocks. After all, we may face a tough winter, with stocks run down substantially. As for importing coal, there are certain inhibitions on us, inasmuch as long-term contracts have been signed which must be honoured, but we are keeping the matter under close review.
    Mr. Michael Latham: Since the previous Under-Secretary of State—the hon. Member for Widnes (Mr. Oakes)—told
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    me in an official letter only three months ago that the Government were in no way committed, either in principle or in detail, to the Vale of Belvoir coal mine, will the Minister withdraw the suggestion that he made earlier in answer to the hon. Member for Leicester, South (Mr. Marshall) that the Government are in some way committed to this project?
    Dr. Mabon: I cannot withdraw the answer that I gave, because what my hon. Friend said and what I said is true. As to the desirability of mining in that area, that is a matter for planning, for the Department of the Environment in the first instance, and for a public hearing. But if the decision is that we shall go ahead with this, subject to certain safeguards, it will be a welcome addition to our resources.
    Mr. Palmer: Does my hon. Friend agree that the difficulty with the electricity supply industry is that there is not enough load and there is too much coal? Would not matters be helped if the Department gave some attention to a rational pricing policy for all energy resources?
    Dr. Mabon: Certainly, most of our coal is electricity coal and not suitable for burning in domestic fires or boilers. Therefore, the suggestion that we should sell the coal to old-age pensioners at reduced prices and similar suggestions are not realistic. However, my hon. Friend makes a fundamental point, which we shall consider.
    Mr. Patrick McNair-Wilson—
    Mr. Speaker: Mr. Mayhew—I beg the hon. Member's pardon.
    Mr. McNair-Wilson: No matter, Mr. Speaker—"a rose by any other name". Does the Minister agree that the large stocks of coal have a depressing effect on those working in the industry? He said just now that he hoped that we would get back into the export business. Does he realise that that will be not at all well received by those in the industry who hope that if there is any silver lining from the fall in the value of our currency it is that our goods will be cheaper abroad? Is not the export position of Britsh coal depressing in the extreme, since the whole market seems to have evaporated? Will someone get off his bottom and go out and sell British coal

    23
    now, when its price advantage has never been better?
    Dr. Mabon: I am not certain about the hon. Gentleman's being a rose, but there were certainly many thorns in that question. I do not accept his depressing view of the industry. The subject of productivity will come up on a later Question. It is important for the industry to get back into exporting. Our European partners hope that we can contribute in that area, and I am certain that the National Union of Mineworkers wants to see us back as we used to be—one of the best exporters in the world.

  OVERSEAS DEVELOPMENT

    Crown Agents (Fay Report)
    Mr. Skinnerasked the Minister for Overseas Development whether he has now received the report of the Fay Committee dealing with the Crown Agents; and if he will make a statement.
    The Minister for Overseas Development (Mr. Reginald Prentice): No, Sir. I expect the committee to report in the first part of next year.
    Mr. Skinner: In the meantime, will my right hon. Friend indicate, by publishing information in the Official Report, the extent to which the Crown Agents in recent times have broken the law by failing to pay the dollar premium on certain transactions? Does it not follow that the taxpayer, who is largely footing the bill for the Crown Agents now as a result of those transactions, has to find an extra £3½ million? Why is it found necessary for the Crown Agents to have a subsidiary bank in the tax haven of the Bahamas?
    Mr. Prentice: None of those questions arises from the original Question. If my hon. Friend wants to ask me questions about those matters, he can do so. I do not understand why he keeps putting down these Questions, with supplementaries that become increasingly offensive and increasingly irrelevant.
    Mr. Spearing: Does not my right hon. Friend recall that when some misgivings were expressed in this House over the activities of the Crown Agents, one of the causes of concern was the manner
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    in which and the authorisation by which the former Crown Agents expanded from their well-proven traditional role? Will he assure us that the Fay Report will deal with the authorisations that were or were not, supposedly, given at that time? If not, will he ask for further investigations to be pursued?
    Mr. Prentice: My hon. Friend is fan-to refer to the disquiet that was felt in the House about the activities of the Crown Agents. That is why the Fay Committee was appointed by my predecessor. Its report will be published in due course. In the meantime, I am glad that my hon. Friend drew a distinction between the undesirable investments of the Crown Agents and their traditional activities. Their traditional activities have continued. They showed a profit last year, and they are of great benefit to this country and to developing countries throughout the world.

    Arab Refugees
    Mr. Canavanasked the Minister for Overseas Development whether he will offer development aid towards assisting Arab refugees in the Gaza Strip.
    The Parliamentary Secretary to the Ministry of Overseas Development (Mr. Frank Judd): I think that we can best assist in this field through the substantial contributions we already provide to the work of the United Nations Relief and Works Agency (UNRWA). Britain expects to contribute some £3·75 million directly to the agency in 1976 and we also bear our share of the European Community contribution to it.
    Mr. Canavan: Since that refugee problem has existed for almost one-third of the century, and since thousands of people are living in absolute squalor in one of the most densely populated areas in the world, will my hon. Friend assure us that he will continue to do all in his power to assist in rehabilitation programmes to try to rehouse these refugees and their families?
    Mr. Judd: We deeply appreciate the reasons for my hon. Friend's anxiety. The British Government are the second largest cumulative contributor to the agency after the United States, with the basic contributions that I have just outlined.
    Sir John Hall: What contributions are being made by the oil-rich Arab countries to helping Arab refugees?
    Mr. Judd: UNRWA is an international institution, which draws its support from the world community as a whole.
    Mr. Heffer: Is it not a scandal that the oil-rich countries should not make a real contribution towards helping the Arab refugees? If the Government are making any representations, is it not time that they made them to those who are very rich indeed, and asked them to help the poor people of their own nationality?
    Mr. Judd: I am sure that my hon. Friend, with his concern about this matter, will agree that the lead given by the Government on this issue is one of which the whole international community should take note.

    International Development Association
    Mr. Hooleyasked the Minister for Overseas Development what discussions he has held with the appropriate Minister of the West German Government concerning the fifth replenishment of the IDA.
    Mr. Prentice: I have not recently had a meeting with my West German colleague, but I expect to see him later this week at a meeting of the Development Assistance Committee of the OECD. My officials have naturally had bilateral discussions with their colleagues from other countries, including West Germany, in preparation for or during the various international meetings which have been held on this important subject.
    Mr. Hooley: Does my right hon. Friend agree that it is absurd that a country with reserves of $35 billion should be haggling and niggling over a contribution to this important agency? Will he use all his influence with both the Germans and the Japanese to make sure that these international bodies, which are of vital importance to the world economy, and not only ours, are replenished on a sufficient scale?
    Mr. Prentice: I agree very much about the importance of the replenishment of the IDA. My hon. Friend will be glad to note that at a meeting held in Japan on 12th and 13th October a considerable amount of progress was made. Among
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    other Governments, the German Government said that they expected to be able to play their part in a replenishment which would be something between $7 billion and $7½ billion from the traditional IDA donors. In addition to that, we would hope to receive new contributions from the oil exporting countries.
    Mr. Forman: Would not the British point of view carry more weight in these discussions, and would we not be able to exercise more influence, were it not for the fact that the British Government have been almost the most frequent arrival at the International Monetary Fund and other international institutions for grants-in-aid or loans of one kind or another? Would it not be sensible if we exercised our minds on the matter before trying to back up the points of view put forward by Labour Members?
    Mr. Prentice: That matter goes a little wider than the original Question, but I agree that our influence in world affairs will be stronger as and when our economy becomes stronger. It behoves hon. Members on both sides of the House to make a constructive contribution towards the solution of that problem.

  ENERGY

    Nuclear Power Stations
    Mr. Beithasked the Secretary of State for Energy if he has plans to publish further material to allow public debate to take place on the building of further nuclear plants in the United Kingdom.
    Mr. Geraint Howellsasked the Secretary of State for Energy if he will publish and encourage public debate on the dangers to the public that might be incurred if the United Kingdom builds a commercial scale nuclear fast reactor.
    Mr. Benn: I welcome public debate and shall continue to keep the public fully informed about factors bearing on nuclear decisions. In this connection, I have just pubished some questions bearing on the safety of the fast reactor, which I am putting to the Nuclear Inspectorate and other bodies concerned, and I shall in due course publish the answers that I receive.
    Mr. Beith: Does the Secretary of State recognise that what we need will be objective information on a variety of matters

    27
    and not the bland unsubstantiated assurances that have been criticised by the Royal Commission? Cannot he set an example in the short term in the way in which he deals with the reprocessing plant question arising at Windscale, by providing adequate information on long-term problems which might affect the work force and the problem of pollution in the Irish Sea? There are serious problems on both aspects of our nuclear policy on which we need information.
    Mr. Benn: I entirely agree that people are entitled to have clear answers to the questions that are put. On the other hand, if there are uncertainties, as there are, people should know exactly what is the nature of those uncertainties before a decision is taken. The Windscale question is a separate matter, and there is another Question on the Order Paper about that.
    Mr. Robert Hughes: Has my right hon. Friend received the same representations as I have from the Transport and General Workers' Union at Caithness to the effect that there should be a demonstration of the commercial fast breeder reactor sited at Caithness and built by a consortium of the Central Electricity Generating Board, the South of Scotland Electricity Board and the North of Scotland Hydro-Electric Board? Will he give considerato these views?
    Mr. Benn: I have had representations of all kinds, including those to which my hon. Friend refers. At Dounreay there is a 250MW fast reactor now on stream. The decision that we have to take is whether to go ahead with the CFR—the commercial fast breeder reactor—and it is on this that there must be time for public discussion.

    Coal Production
    Mr. Patrick McNair-Wilsonasked the Secretary of State for Energy if he is satisfied with the current level of productivity in the coal industry.
    Dr. J. Dickson Mabon: The level of productivity has been disappointing. This is fully recognised by both sides of the industry. The National Coal Board and the mining unions are setting up a joint team to investigate the problem, and to recommend positive measures to improve productivity.
    Mr. McNair-Wilson: Can the Minister throw any further light on criticisms that have been made of the mechanical equipment that is now working underground? During my own visit to the South Wales coalfield during the recess, while I was watching a plough I saw it break down four times. There is now concern that this matter could be holding up productivity. Secondly, can the Minister give any idea of how one can motivate the miner, upon whom this industry depends, at a time of price and pay restraint?
    Dr. Mabon: I am not certain about the point raised by the hon. Gentleman at the beginning of his supplementary question. However, I shall certainly look into the matter and see whether we can get any information on that. I am told, however, that productivity is influenced to some extent by the increasing number of miners who are employed on development work. I am not hiding from the House the fact that the level of stocks may to some extent be acting as a disincentive to production. The productivity target for 1976–77 was 46·5 cwt per man-shift. In fact, that was reached in February, but productivity has slumped back since then.
    Mr. Skinner: Does my hon. Friend agree that the productivity rate in the United Kingdom mining industry is, on the whole, very much higher than the rates of our competitors in the Common Market? Does he also accept—[Interruption.]
    Mr. Speaker: Order.
    Mr. Skinner: I thought that it was about time. [An HON. MEMBER: "Withdraw."] Ask me to withdraw in a minute.
    Does my hon. Friend also accept that there is an optimum with regard to technological advance that is bound to be reached in the mining industry, and that it could be argued that we have almost reached that point? Will he bear in mind that what he should concentrate his mind upon is the attempt to get rid of those coal stocks in order to raise morale?
    Dr. Mabon: My hon. Friend and I at least share the distinction of having actually worked hi a coal mine. Those

    29
    who have had to work in small seams realise how difficult it is to win coal. Post-war pits in, for example, Yorkshire and the Midlands area achieved outputs per man-shift of 70 cwt. I think that our miners, given the same chances in the same pits and with the same machinery, would be able to produce just as much as anyone else.
    Mr. Peter Bottomley: Will the hon. Gentleman confirm that increased productivity would help consumers, through the level of prices, would help British exports, and is the clue to higher earnings in the industry? After confirming that, will he state what was the level of productivity this year, last year and the year before that?
    Dr. Mabon: I confirm the hon. Gentleman's earlier remarks, but what I said was that the target was to be 46·5 cwt. per man-shift. In fact, the figure reached in February was 46·3 cwt. The figure is now, I regret to say, 42·4 cwt. for the 27 weeks ended 2nd October.

£ STERLING
The Chancellor of the Exchequer (Mr. Denis Healey): With permission, Mr. Speaker, I shall make a statement.
The sterling dollar rate declined sharply when business began this morning. At one point, it was more than 7 cents down on its closing rate in London at the end of last week, a week in which sterling held up well in active trading conditions. There has been some improvement in the rate in the last few hours.
I understand that the whole of today's pressure has stemmed from the story in The Sunday Times yesterday which suggested that the International Monetary Fund and the United States Treasury have agreed on a set of conditions, including a lower exchange rate, for the projected United Kingdom drawing from the Fund.
This story has been denied in the most unequivocal terms both by the IMF and by the United States Treasury. The House will have seen that Mr. William Simon, the United States Secretary of the Treasury, has described the story as—I quote his words—"irresponsible and patently untrue". Mr. William Dale, the Acting Managing Director of the IMF, said that the reports—I quote again—
30
"have absolutely no basis in fact as to either the Fund's methods of procedure or the particular nature and size of the terms. The Fund does not, and cannot, determine its views on detailed measures until after a careful examination of the economic indicators on the spot."
These are Mr. Dale's words.
In fact, the mission from the IMF staff will not be arriving in London for discussions with Her Majesty's Government until next month. It will not form a view on what terms are appropriate until it has been able to assess the prospects for the British economy in the light of Treasury forecasts which will then be available.
Sir G. Howe: The House will be glad to have the Chancellor's confirmation of the firm denials already made by the United States Treasury and the International Monetary Fund, but does this not suggest the necessity for speeding up the timetable of the visit of the IMF? Is not the entire story a savage condemnation of the Chancellor's management of the economy—namely, that 7 cents has been knocked off the value of the pound as a result of a single newspaper story? Will the Chancellor not now accept that it is only by resolute and urgent action in cutting public spending, and by abandoning the partisan and gravely damaging measures that are being forced through this Parliament, that confidence in the pound can ever again be restored?
Mr. Healey: Neither I nor any other Minister—nor indeed anybody on the Opposition Front Bench—can accept responsibility for an irresponsible newspaper article or for the market's decision to pay more attention to that article than to unequivocal denials from those whose views it purports to describe. The right hon. and learned Gentleman may recall that a Conservative Government of which he was a member were equally vlunerable to that type of article in a newspaper.
On the question of speeding up the visit of the IMF staff, the right hon. and learned Gentleman will recognise, if he reads Mr. Dale's statement, that the Fund does not wish to consider the prospects of the British economy and the terms under which a borrowing might be made until it has an opportunity to consider forecasts for prospects over the next 18 months which are not currently available. I have made it clear on many occasions that this was the view of the Fund and

31
that this has determined the programme of discussions with the Fund.
On the right hon. and learned Gentleman's last point, I have made it clear repeatedly—and I did so in my Mansion House speech last Thursday—that I believe that our strategy is the right one and that the Government are moving in the right direction. My view has been endorsed in the last week by leading members of the Governments who are likely to contribute to the standby, particularly by Mr. Simon and Mr. Greenspan of the United States, and by Chancellor Schmidt and Dr. Emminger of West Germany. The whole country would benefit if the Opposition Front Bench could sometimes be as optimistic in their views about the future of the United Kingdom economy as are our friends abroad.
Mr. Pardoe: Is the Chancellor aware that his statement this afternoon demonstrates a stupefying complacency? Does he really believe that one newspaper article could knock this amount off sterling in one weekend? Is he not aware that before last Friday the forward market was already forecasting a rate below $1·50 in a year's time. If The Sunday Times had not been published this Sunday, the view of Professor Friedman, the Nobel prize winner, would have undermined the rate of sterling by as much as The Sunday Times has done.
Mr. Healey: The hon. Gentleman is no less an expert on stupefaction than is the right hon. and learned Member for Surrey, East (Sir G. Howe) on anaesthesia, but he should know, because I understand that he studies these things, that the forward discount is very much less a reflection of what the market thinks the spot rate will be at the relevant time than a measure of the cost of borrowing sterling. If he has watched the movement of the forward discount over recent months, he will be able to verify that that is the case.
Mr. Jay: Would it not be more reputable if the British Press, the Opposition Front Bench and the hon. Member for Cornwall, North (Mr. Pardoe) refrained from making statements which they must know will do the utmost harm to their own country?
Sir John Hall: Does not the Chancellor agree that this dramatic fall in sterling today does not reflect the effect of one newspaper article but, instead, shows the lack of confidence among our overseas depositors in a number of countries in any intention by our Government to take action to get our country on its feet?
Mr. Healey: I cannot agree with that statement, and if the hon. Gentleman watches the movement of the exchange markets he will know that his statement is untenable. There is no question whatever—and he can consult his friends who are dealers—that the sole cause of the fall today was yesterday's article in The Sunday Times.
Mr. Atkinson: Does my right hon. Friend not agree that it is an absolute outrage that our manufacturers should continue to be blackmailed and imperilled by the antics of speculators based in London who can undermine British exporting effort to such an extent that the pound is now grotesquely undervalued? Will he now say that the time has come when we should take away from the speculators the chance of dealing in that way, that the Government will set the exchange rate and will adopt positive policies to bring our external trade into balance, thus doing away with the vulnerability which continues to exist and to weaken the Labour Government?
Mr. Healey: I very much agree that it is the Government's duty to adopt a policy to bring our external trade into balance. I hope that the Government will have the support of all my hon. Friends in any measures that are necessary for that purpose. My hon. Friend must accept that speculation against sterling as properly defined is not possible by people based, as he suggested, in this country. The element of pressure that can be exerted on sterling and by those based in this country is associated largely with what are termed leads and lags. The action taken by the Government in the monetary field a fortnight ago in operating a credit squeeze has already had some effect in discouraging that kind of pressure by United Kingdom residents.
Mr. Tapsell: Does the Chancellor deny that he and the Prime Minister know perfectly well that in the national interest it is necessary urgently to take further

33
measures to restore international confidence in sterling, and that they are delaying doing so only for fear of splitting the Parliamentary Labour Party?
Mr. Healey: The hon. Member was responsible the other day for making a statement about the terms which, according to him, the IMF would press upon this country. Interestingly that statement was totally at variance with the report in The Sunday Times yesterday. The Government have shown on many occasions that they are prepared to take whatever measures are required—we proved that again a fortnight ago—to keep the economy on course and to see that we reach our goal in time. It would be quite improper and unwise for us to act before, like the IMF, we have the chance for mature consideration of the prospects for the next 18 months.
Mr. Mellish: Is my right hon. Friend aware that many members of the public, perhaps most, and perhaps many Members of this House are utterly bewildered that we should have a situation in which, as a result of an article in a newspaper or a speech by Mr. McGahey, or some other unimportant people, sterling can drop in price, forcing the Treasury to borrow vast sums of money from abroad and getting us further into debt? Is there no way in which such speculation or manipulation can be suspended? Is there nothing that the IMF can do collectively to stop what appears to most of us to be an appalling and disastrous story? Is there no answer and is it just a question of going down and down? Is my right hon. Friend further aware that anyone with any common sense knows that if the Conservative Party had got into power there probably would not be a pound at all?
Mr. Healey: All experience in this country when the Tory Party was last in power suggests that my right hon. Friend's final words represent no less than the truth. As for the vulnerability of sterling to articles in newspapers, the House must recognise that at a time when the IMF mission is about to visit London and when sterling is already under pressure an article in what was regarded as a responsible newspaper stating unequivocally that the United States Government and the IMF staff have colluded to insist on the depreciation
34
of sterling by another 15 points is bound in any situation to have the most damaging effects on the rate. This point was made by Mr. Simon in his statement yesterday. I am glad to see that at least one Tory Member—the hon. Member for Gosport (Mr. Viggers)—regards the behaviour of the newspaper as requiring further consideration.
My right hon. Friend will also recognise that the currency will remain vulnerable, like the franc and other currencies whose value has fallen in recent months, as long as our inflation rate is higher than that of our major competitors and as long as our economy has not yet recovered from the disastrous imbalance which we inherited two-and-a-half years ago.
Mr. Alan Clark: Does the Chancellor ever ask himself why it is that these recurrent and repetitive statements of his about the value of the pound do not have any effect? Could it not be because all that he has done and all that he proposes to do is to borrow enormous sums of money from one set of foreign bankers to finance speculation against the currency by another set?
Mr. Healey: The hon. Gentleman has given a comical description of what he thinks is happening with currency borrowed by this country. The hon. Gentleman will have seen that the Government's economic policies have been warmly endorsed recently by the United States President and the Federal German Chancellor. I put it to right hon. and hon. Tory Members that they do themselves no good with British opinion in taking pleasure in fouling their nests.
Mr. Heffer: While, up to now, I have never accepted the theory of politics based upon conspiracy, in view of the circumstances I am increasingly becoming convinced that the theory of politics based upon conspiracy is actually taking place—
Mr. Sandelson Mr. Sandelson rose—
Hon. Members: Hear, hear.
Mr. Heffer: Is my right hon. Friend aware that many of us are now convinced that there is a conspiracy on the Tory Benches and among certain Press barons to try to force the Government out and that that is the whole design

35
behind the present policy which we are facing? Is it not clear that we have to ignore the nonsensical rubbish that we are getting from people such as Milton Friedman, who advised the Chilean junta on how to deal with its economy and which now has tripled its unemployment and inflation rates—all as a result of the rubbish we have been hearing from Tory Members and people such as Milton Friedman?
Mr. Healey: Without endorsing my hon. Friend's views about a conspiracy, I must say that the way in which many, but not all, right hon. and hon. Members on the Tory Benches have reacted to recent difficulties faced by the whole country which—as the recent policy pamphlet of the Conservative Party reminded us—long pre-date the accession to power of the present Administration two-and-a-half years ago shows their impatience to derive petty party political advantage from the nation's troubled economy. That is not a basis on which right hon. and hon. Members can seek popular support. They will certainly, as has been demonstrated, unite this party against them.
Mr. Viggers: Is the right hon. Gentleman aware that I have asked the Press Council to investigate the story in The Sunday Times so that in due course the truth may be known? Is the right hon. Gentleman further aware that he must know, as the world knows, that he cannot continue with his present policies, and that as long as he refuses to admit this, the pound can never be safe?
Mr. Healey: I have paid tribute to the hon. Gentleman's action. Whether the story was in detail well judged is not for me to say. The Press Council will take its view. I am glad to applaud the courage and patriotism of one Tory Back Bencher in respect of the behaviour of this newspaper. He, at least, felt that it was deserving of some consideration by those whose responsibility it is to ensure a responsible Press.
Mr. Anderson: Is it not clear that the only new event of significance over the weekend was this one Press article? In the light of that, does my right hon. Friend not agree that this journalist has been thoroughly unpatriotic? Can he
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give some measure of the damage done to the country by this journalist?
Mr. Healey: I do not think it fair to concentrate all recrimination on this individual journalist, although I must say that I was disturbed, listening to him broadcast on the "World at One" programme today, to discover that he thought that it would be a good thing if the rate fell and suggested that the consequences of his action were not unwelcome to him.
Mr. Norman Lamont: Is the Chancellor aware that many people will accept that The Sunday Times article was both inaccurate and irresponsible? But is he also aware that it is extremely difficult for financial markets to obey his injunction to pay more attention to official denials when these have been so misleading in the past, like the denial of the approach to the IMF up to the moment that it happened? Is he aware that the fall of sterling this morning is a comment not just upon his wrong policy but, I am afraid, upon his personal lack of credibility?
Mr. Healey: I am glad that the hon. Member has raised that point. I was asked in an interview by Mr. Peter Jay some weeks ago whether the Government had decided to apply for further standby credit from the Fund. I said that the Government had not so decided. Nor did they decide until after the run on sterling which started a few days later. There was no intent to mislead nor was there any misleading of anyone in the statement I then made. The hon. Gentleman must, if he reflects on the situation, recognise that that is the case.
Mr. Wrigglesworth: Would not my right hon. Friend agree that one of the causes of the constant pressure on sterling is the steady drain on the sterling balances? Has he had any discussions with our partners in the EEC, or the IMF or any other Governments about funding the balances, or does he propose to have any such discussions?
Mr. Healey: This is a matter of great concern to the Government, and we have considered it along with some of our friends. But I think that the general—indeed, unanimous—view is that the basis on which any action should be taken on it would be the successful application by the United Kingdom for a further

37
standby by the IMF, and that is where the matter for the time being must rest.
Mr. Lawson: Is not the right hon. Gentleman aware that this House is sick and tired of hearing him blame everyone but himself—including the Press and the Opposition? [Interruption.] Is it not time for him to be man enough to take the blame himself for the total failure of his policies and to resign?
Mr. Healey: I have the impression from the reaction of my right hon. and hon. Friends that at least this side of the House is pretty sick and tired of the hon. Member.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: I shall allow two more questions on this matter.
Mr. English: Has my right hon. Friend considered that the source of the story might be the people who have denied it? It also mentions the Federal Reserve Bank, and suggests that it regards the IMF loan as being one that could be granted without any tight conditions at all. Has my right hon. Friend considered that it might have been possible that that was not unconnected with the story?
Mr. Healey: I think that I can regard myself as the personal friend of the Chairman of the Federal Reserve Bank as well as of Dr. Witterveen and of Mr. Simon. I cannot speculate on the origins of the report in The Sunday Times, except to say that I would be flabbergasted if the origin were the Federal Reserve Bank.
Mr. Maurice Macmillan: If the right hon. Gentleman is so confident that his policies are on the right course, and attributes the fall in the value of sterling solely to the newspaper story, can we imagine that he expects it to recover? If not, what is the effect of this loss of 6 cents likely to be on both a rise in unemployment and a rise in the retail price index?
Mr. Healey: If this fall were maintained—it was just over 5 cents when I came to the House—it would lead to an increase in the retail price index over the next six months of well under 1 per cent. But, like, I think, the right hon. Gentleman, I hope that the fall will not be maintained.

STATUTORY INSTRUMENTS, &c.
Mr. Speaker: To save time I will put the Question on the four motions relating to Statutory Instruments together.
Ordered,
That the Legal Advice and Assistance (Financial Conditions) (No. 2) Regulations 1976, be referred to a Standing Committee on Statutory Instruments, &c.
That the Legal Aid (Financial Conditions) Regulations 1976 be referred to a Standing Committee on Statutory Instruments, &c.
That the Legal Aid (Scotland) (Financial Conditions) Regulations 1976 be referred to a Standing Committee on Statutory Instruments, &c.
That the Legal Advice and Assistance (Scotland) (Financial Conditions) (No. 2) Regulations 1976 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Graham.]

STANDING ORDER No. 9
Mr. Gow: On a point of order, Mr. Speaker. I was not able to give you notice before the Chancellor of the Exchequer's statement, but I beg to seek leave to move the Adjournment of the House, under Standing Order No. 9—
Mr. Speaker: Order. I am sorry, but the hon. Gentleman has left it too late. We have started Public Business. We have moved on past the motions relating to the Statutory Instruments.

BUSINESS OF THE HOUSE
Motion made, and Question proposed,
That, at this day's Sitting, proceedings on any Bill set down for consideration at Seven o'clock by direction of the Chairman of Ways and Means shall, instead of being considered at that hour, be considered as soon as a member of the Government shall have signified his intention to move, That this House do now adjourn, for the purpose of bringing the sitting to a conclusion.—[Mr. Graham.]
3.55 p.m.
Mr. A. J. Beith: On a point of order, Mr. Speaker. Do I understand that the motion is debatable?
Mr. Speaker: That is correct.
Mr. Beith: The House is put in something of a mystery by the terms of the

39
motion. It seems to set a rather unusual precedent. My recent experience of Private Business, which has been greater than usual in the past few weeks, has led me to suppose that the Chairman of Ways and Means has usually put it down for between 7 p.m. and 10 p.m. and has been most anxious that it should not be relegated to the distant hours of the night, as we have recently had some Government business so relegated.
It would be helpful if we could know whether the Chairman of Ways and Means takes, or is entitled to take, any view as to the propriety of this motion, or is formally neutral. The House should also consider whether it is right that Private Business should be shunted by the Government to a position after a whole series of other matters. I speak as one with no direct or immediate interest in the item of Private Business being considered tonight, but I know that there are other hon. Members who may wish to comment on it.
It is extraordinary that we should seek to change long-established procedure for Private Business and make a practice of interposing it immediately before the Adjournment debate. If the Chairman of Ways and Means is able to give his view, I am sure that the House will welcome it. If he is not, the House should resist the motion rather than be pushed into so drastic a change without having the opportunity to consider it at length.
3.57 p.m.
Mr. Tam Dalyell: Unlike the hon. Member for Berwick-upon-Tweed (Mr. Beith), I can hardly say that I have no interest in the topic concerned. At 2.30 p.m. when, puzzled, I raised this with you, Mr. Speaker, you said that you, too, had been puzzled. Therefore, I put a question either to you or to the Chairman of Ways and Means. On what occasion has there been a precedent for shifting Private Business as put down by the Chairman of Ways and Means from 7 o'clock? Is this a precedent?
Mr. Speaker: I understand that it has been done before and that this motion is not a precedent.
Mr. John Peyton: Would you clear up one small point, Mr. Speaker?
40
Have those who have already addressed the House done so not on a point of order but on the motion? Is that correct?
Mr. Speaker: That is correct—except that the hon. Member for West Lothian (Mr. Dalyell) did, I think, raise a point of order.
Mr. Dalyell: On a point of order, Mr. Speaker. I was referring to the point of order that I raised with you at 2.30 p.m., when it had to be a point of order. Perhaps one other question should be asked. Should there not be an explanation from the Government why they have done this?
3.59 p.m.
Mr. Nicholas Ridley: I want to add my voice of protest against the motion. It seems an extraordinary procedure that, at any time from now on when any member of the Government rises in his place and signifies his intention to move, "That this House do now adjourn", all the business comes to an end and suddenly, precipitately, we are embarking upon a Private Bill. That is an impossible situation for hon. Members. It might be that—not myself—some hon. Members were taking a cup of tea and would miss their cue because some junior Whip, sitting at the end of the Treasury Bench, had risen in his place and moved that the House should adjourn.
Surely it is customary to give notice of the time at which certain business is likely to be brought forward. I know that we are accustomed in this House to awaiting the end of one piece of business before we commence another, but it is always possible to ascertain whether a piece of business is drawing to a close. In this instance, however, it is possible that a Minister could rise in the middle of an hon. Member's speech in a preceding bit of business, move the Adjournment and put the motion on the Private Bill, and the whole thing would be over because there would be no one present who was expecting that to happen.
This cannot be a procedure which the House would wish to adopt. I am sure that the House would like to stick to its established procedure of taking Private Bills between 7 o'clock and 10 o'clock. Even if it were decided by the House to take this Private Bill at a separate time, the procedure suggested in the motion seems to me to be utterly unacceptable.

41
It seems to me to be a sort of confidence trick procedure.
If the House were to agree to the motion this afternoon, it might find that it had created a precedent. It might well find that this Government—unrepresentative, unloved, hard-pressed for time and in chaos on its legislative programme—could well begin to adopt this new procedure and put similar motions on the Order Paper in connection with any piece of legislation that they happen to want to get through.
What would there be to stop the Government, after this, in the case of, for example, the Aircraft and Shipbuilding Industries Bill, suddenly getting one Minister to pop up in the middle of Question Time or one Friday afternoon in order to say "I beg to move, That this House do now adjourn", and then for another Minister to say, "I beg to move, That the Aircraft and Shipbuilding Industries Bill be now read the Third time". He could then sit down and expect to get his business motion through in that way.
This is no way in which to conduct a Parliament. It is necessary to have an orderly agenda, and to be clear which business succeeds which business and at what time certain business will be embarked upon. I strongly urge the House to throw out the motion and to ask the Chairman of Ways and Means to revert to the normal procedure of giving notice of the precise time at which Private Bills will be entered into, so that hon. Members can be certain of being present on matters which interest them.
4.3 p.m.
Mr. John Peyton: On the whole, on this matter I am more kindly disposed than my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), who has just spoken. I would not wish to see anything too precipitate done in regard to the motion in the name of the Prime Minister, although I think it would be very nice indeed—
Mr. John Pardoe: Conspiracy.
Mr. Peyton: I assure my hon. Friend the Member for Edinburgh, South (Mr. Hutchison) that no such thing—
Mr. Michael Clark Hutchison: I did not say it.
Mr. Peyton: I might have known that the remark came from the hon. Member for Cornwall, North (Mr. Pardoe) who sits behind my hon. Friend, and from whom it comes far more in character—
Mr. Pardoe: Because it is true.
Mr. Peyton: I am sorry that the Home Secretary should have had to be called on at rather short notice to be responsible for the appalling mess in which the Government's programme now stands. On a day when he could have looked forward to relative calm and peace, it is unfortunate that this little thing should have blown up, but no doubt we shall have from him a very lucid and clear explanation of the Government's intention. After all, we must take it that exceptionally the Government have moments of clarity and lucidity, and I am sure that we shall want to give the right hon. Gentleman the benefit of the doubt.
As I understand it, there are three important Scottish measures on the Order Paper this afternoon. Most exceptionally for these days, they are not obnoxious. They are not even exceptionable. We wish them no ill. But why suddenly must this rather novel procedure be put forward? Why should the Private Business, which is of some importance and of very great interest to many people, suddenly be subordinated to some hour of which no one can be certain? Once again, one of the very small privileges that we have in this House is being eroded and taken away. There are not very many left.
Then there is the question of the Prayers, on which the right hon. Gentleman would do well to offer us his observations, because praying in this House—and, Heaven knows, we have cause for praying—is now becoming a very hazardous occupation. Prayers very seldom receive the attention which they deserve—and this at a time when delegated legislation is running riot.
I could go on longer, if I felt it were necessary, in order to give the Home Secretary a better chance to digest the wisdom which is being poured into his ears by the Patronage Secretary. But as I gather that that passage is now over,

43
I will very helpfully sit down, at the same time asking the right hon. Gentleman to be kind enough to acquaint the House with exactly what is intended here. I hope that he will tell us at what hour we can have a reasonable expectation that the Private Business will be reached, and what is to happen to the Prayers.
4.6 p.m.
The Secretary of State for the Home Department (Mr. Merlyn Rees): Responding to the right hon. Gentleman's mood—calm and peace is my watchword, and that is the way in which I hope I shall continue—the Prayers will come first, at the request, as I understood it, of the Opposition, and the business that we are talking about will be at the end. I have made quick inquiries, because, frankly, this matter was new to me. This is not an unprecedented way of proceeding. It is a matter for the Chairman of Ways and Means. There is Scottish business. There are agreed measures in front of us, and as I understand it, the hon. Member for Ross and Cromarty (Mr. Gray) was agreeable to the procedure.
Mr. Dalyell: I bet he was.
Mr. Merlyn Rees: And the hon. Member for Ross and Cromarty is important in this matter. [HON. MEMBERS: "Oh!"] My advice is that we should continue in the way in which the order is written, and I hope that the House will agree.
Mr. Teddy Taylor: If we do not get to Scottish sex by 10 o'clock, do we have to drop it? [Interruption.] There are, in fact, three Scottish Bills to come before the House, dealing with Scottish teachers, then valuation, and then Scottish sex. If we do not finish these three Bills by 10 o'clock, when the Prayers come on, will the Government drop the Bills?
Mr. Merlyn Rees: I understand that Scottish sex is a consolidation measure.
Mr. George Younger: May I ask for clarification of one very important remark that the Home Secretary, with respect, must have made in error? Without expressing any view either way on the Private Business that is to come up tonight, he would surely be quite wrong in saying that the important thing is whether one side of the argument found
44
it convenient to consider it tonight. Both sides have an equal right to be heard, and without pronouncing either way I hope that he will make that clear.
Mr. Merlyn Rees: That is what I meant. The hon. Member for Ross and Cromarty is in charge of the Bill and is agreeable to this course. Both sides of the argument can be put.
Mr. Dalyell Mr. Dalyell rose—
Mr. Speaker: Order. I thought that the hon. Member for West Lothian (Mr. Dalyell) had already spoken on this matter.
Mr. Dalyell: By leave of the House—
Mr. Speaker: I am on my feet. We cannot have two of us on our feet at the same time. The hon. Member may speak by leave of the House—if the House gives it.
Mr. Dalyell: May I ask my hon. Friend the Home Secretary why the hon. Member for Ross and Cromarty (Mr. Gray) should be singled out as being important in this matter? I think there is quite a serious issue here. Is the hon. Member important by virtue of having taken a strong view as the hon. Member for Ross and Cromarty, or is it that he is important in his other capacity, wearing his other hat, as a Front Bench spokesman on energy? If it is as a Front Bench spokesman that he has taken this view, then, because of the traditions of the House, I should have to accept that of course he has a special place and is important in this matter. But I hope that he is not specially important because he takes a very strong view on a particular issue in the controversy that is before us. I ask the Home Secretary, therefore, precisely why the hon. Member is specially important above all the rest of us.
Mr. Merlyn Rees: The hon. Member for Ross and Cromarty is important—if that is the way in which one needs to put it—because this measure, and what will result from it, arises in his constituency. It is not, therefore, that he is more important as far as this House is concerned but because we consider it right that this matter should arise. What is before the House is not unprecedented, and the view of the Chairman of Ways

45
and Means and the other points that I made must be taken into account.
Mr. Peyton: With the leave of the House, may I ask the Home Secretary one very simple question? Will he give an undertaking that he will not allow this Private Business to come on in the small hours of the morning? If it cannot be reached by a reasonable hour, will he undertake that it may be put over to another day?
Mr. Merlyn Rees: I think that the best course is to see how we go. I am seized of the point.
4.10 p.m.
Mr. J. W. Rooker: I am not rising on a point of order, Mr. Speaker. I think that it is worth pointing out that there is £36 million of taxpayers' money going into what I consider to be a bucket-shop company under this Bill, and the Government have constantly refused to take a view and to pronounce on this. In fact, if the hon. Member for Ross and Cromarty (Mr. Gray) is in charge of the Bill, it should be stressed that he has not so far answered any questions on the matters raised by those of us who are concerned about the Bill.
I treat this motion with suspicion, if only on the ground raised by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), that at any point between now and the end of today's sitting the motion can be moved to adjourn and, if hon. Members are not in their places—and I have in mind especially the hon. Member for Maidstone (Mr. Wells), who rose before you adjourned the debate last Thursday—the business can go through.
On the other hand—and I make no bones about this—if the business comes on in the early hours of the morning, whatever the Government may say about their view, I shall be here, together with a number of my hon. Friends, and the chances are that the payroll vote will not be here. I know that there is a free vote on this Bill. However, the payroll vote, on free votes, tends to go into the Government Lobby. So I shall not raise too many complaints about it. However, I am very unhappy about a procedure whereby a matter of this kind can be raised without notice at any time, even
46
before the completion of business which appears on the Order Paper.
It may be said that it is not thought necessary to proceed with the Prayers on the Statutory Instruments on sports grounds. It may be felt that they could be done away with, in which case a Whip could move, "That this House do now adjourn," and, bingo, the Cromarty Petroleum Order Confirmation Bill would go through.
I do not think that this is a satisfactory procedure. This is a Back Benchers matter. It is not a Government matter, nor an Opposition Front Bench matter. You, Mr. Speaker, as guardian of the interests of Back Benchers, will, we hope, pronounce on this matter or invite the Chairman of Ways and Means to do so.
4.12 p.m.
Mr. Hamish Gray: First, I must thank the Home Secretary for elevating me to a position to which I have not aspired.
I speak as a Back Bencher and not as a Front Bench spokesman on energy matters. At the beginning of the debate on this subject on Second Reading, the Opposition indicated that they would follow precedent and not oppose this Private Business. I am acting entirely as a Back Bencher, therefore.
The reason why I have taken an active interest in this matter is that it very much affects my constituency. In view of several statements made earlier today, I should have thought that my right hon. and hon. Friends would welcome the thought of £l50 million worth of private investment at this time—
Mr. Dalyell: Raised in London.
Mr. Gray: The fact that it will also attract Government aid is incidental—
Mr. Dalyell: Raised in London.
Mr. Gray: The hon. Member for West Lothian (Mr. Dalyell) has been making remarks from a sedentary position for days now. But I am sure that he will have an opportunity to contribute to the debate later.
I support this motion because, as I see it, there is a consortium of personalities in the House prepared to go to nearly any length to ensure that my constituency does not have this investment. If

47
the Government think that this is a reasonable way to proceed, I am prepared to accept their ruling on the matter.
4.15 p.m.
Mr. Ian Gow: I have no wish to embarrass the hon. Member for Birmingham, Perry Barr (Mr. Rooker), but I agree with every word that he said. This matter is one of very great importance to this House.
It is important for three reasons. First, there is £36 million at stake. A sum of £36 million has a certain magical ring in this context. The Government are borrowing £35 million a day, and £36 million expenditure on this proposed Bill is just £1 million more than the Government are borrowing each day—
Mr. Robert Hughes: It is not in the Bill.
Mr. Gow: But that is what we are discussing—the expenditure of £36 million.
Mr. Speaker: No. What we are discussing is the order in which that matter shall be discussed.
Mr. Gow: I am endeavouring to show that the order in which we debate these matters is related to the importance of the matters which we are discussing.
Mr. Ridley: Would not it be better if we discussed borrowing £36 million before we discuss spending it? Is not that really the way in which we should do business?
Mr. Gow: I do not think that I should be diverted, even by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley).
The second important point is whether we should leave it to a member of the Government to decide at what time and at what stage the business of the House is debated.
If we allow a member of the Government—and it would be interesting to have a definition—
Mr. Merlyn Rees: It does not say that.
Mr. Gow: It says "a member of the Government". It is all very well for the
48
acting Leader of the House to say that it does not. It says "a member of the Government", and the payroll vote in this House is large enough already without giving right hon. and hon. Members who happen to be members of the Government further powers to decide what shall be the timetable of the business of the House.
Finally, if we agree to this motion we shall be creating a very dangerous precedent. We shall be granting further powers to the Executive and eroding still further the rights of Back Benchers.
I agree, therefore, with the hon. Member for Perry Barr. We look to you, Mr. Speaker, to protect our rights, and I must give notice that, very emphatically, some of my hon. Friends and I will divide the House on this subject.
Mr. Hector Monro Mr. Hector Monro (Dumfries): rose—
Mr. Speaker: Before I call the hon. Member for Dumfries (Mr. Monro), since two hon. Gentlemen have referred to it, let me make it clear that I cannot intervene on this matter. It is a motion on the Order Paper, and the House must decide for itself whether it approves of the motion.
Mr. Monro: I rise on that very point. We want the acting Leader of the House to give us a timetable. Like my hon. Friend the Member for Ross and Cromarty (Mr. Gray), I want to see this Private Business proceed and proceed favourably. However, if my Prayer on the safety of sports grounds is shut out by Scottish sex, can I get it later this week, or what plans has the Home Secretary for leaving it on the Order Paper?
Mr. Merlyn Rees: I have an interest in the Prayers on sports grounds. I have made my view clear. I believe that this is the correct way to proceed, and I hope that right hon. and hon. Members will now come to a decision on the motion.
Mr. Beith Mr. Beith rose—
Mr. Speaker: Order. The hon. Member for Berwick-upon-Tweed (Mr. Beith) has addressed the House already.
Mr. Beith: I rise on a point of order, Mr. Speaker. The Home Secretary seemed to suggest that in some way the Chairman

49
of Ways and Means was responsible for the motion. Is it possible for you, Sir, to indicate that what appears on the Order Paper is a Government motion and not one which emanates from the Chair, which appears to be the substance of your ruling?
Mr. Peyton: The right hon. Gentleman has not yet answered my question. Will he safeguard the Prayers?
Question accordingly agreed to.
Mr. Merlyn Rees: My answer to that is, again, "Yes".
Mr. Speaker: The answer to the point of order raised by the hon. Member for Berwick-upon-Tweed (Mr. Beith) is that, of course, this is a Government motion.
Question put:—
The House divided: Ayes 149, Noes 34.

Division No. 340.]

AYES

4.20 p.m.

Abse, Leo

Graham, Ted

Perry, Ernest

Allaun, Frank

Grant, George (Morpeth)

Radice, Giles

Anderson, Donald

Gray, Hamish

Rees, Rt Hon Merlyn (Leeds S)

Archer, Peter

Grocott, Bruce

Roberts, Albert (Normanton)

Ashton, Joe

Hamilton, James (Bothwell)

Robinson, Geoffrey

Atkins, Ronald (Preston N)

Hardy, Peter

Rodgers, George (Chorley)

Atkinson, Norman

Harper, Joseph

Rooker, J. W.

Bain, Mrs Margaret

Harrison, Walter (Wakefleld)

Roper, John

Bates, Alf

Heffer, Eric S.

Rose, Paul B.

Benn, Rt Hon Anthony Wedgwood

Hooley, Frank

Ross, Rt Hon W. (Kilmarnock)

Bidwell, Sydney

Hughes, Robert (Aberdeen N)

Ryman, John

Bishop, E. S.

Hunter, Adam

Sandelson, Neville

Bottomley, Rt Hon Arthur

Irvine, Rt Hon Sir A. (Edge Hill)

Sedgemore, Brian

Buchan, Norman

Irving, Rt Hon S. (Dartford)

Short, Mrs Renée (Wolv NE)

Buchanan, Richard

Jackson, Miss Margaret (Lincoln)

Silverman, Julius

Callaghan, Jim (Middleton & P)

Jay, Rt Hon Douglas

Small, William

Campbell, Ian

Jenkins, Hugh (Putney)

Spearing, Nigel

Canavan, Dennis

Johnson, James (Hull West)

Spriggs, Leslie

Carmichael, Neil

Jones, Barry (East Flint)

Stallard, A. W.

Cartwright, John

Kelley, Richard

Stewart, Donald (Western Isles)

Clemitson, Ivor

Kilroy-Silk, Robert

Stoddart, David

Cocks, Rt Hon Michael

Lamborn, Harry

Strang, Gavin

Cohen, Stanley

Lamond, James

Summerskill, Hon Dr Shirley

Colquhoun, Ms Maureen

Lipton, Marcus

Thomas, Ron (Bristol NW)

Corbett, Robin

Litterick, Tom

Thompson, George

Cox, Thomas (Tooting)

McCartney, Hugh

Thorne, Stan (Preston South)

Craigen, J. M. (Maryhill)

MacCormick, Iain

Tinn, James

Crawford, Douglas

McDonald, Dr Oonagh

Torney, Tom

Crowther, Stan (Rotherham)

McElhone, Frank

Tuck, Raphael

Cryer, Bob

MacFarquhar, Roderick

Urwin, T. W.

Davidson, Arthur

McMillan, Tom (Glasgow C)

Wainwright, Edwin (Dearne V)

Davies, Bryan (Enfield N)

Madden, Max

Ward, Michael

Davis, Clinton (Hackney C)

Mallalieu, J. P. W.

Watt, Hamish

Deakins, Eric

Marquand, David

Weitzman, David

Dean, Joseph (Leeds West)

Marshall, Dr Edmund (Goole)

White, Frank R. (Bury)

Dempsey, James

Marshall, Jim (Leicester S)

White, James (Pollok)

Doig, Peter

Maynard, Miss Joan

Whitehead, Phillip

Dormand, J. D.

Mellish, Rt Hon Robert

Whitlock, William

Douglas-Mann, Bruce

Mendelson, John

Willey, Rt Hon Frederick

Edge, Geoff

Mikardo, Ian

Williams, Alan Lee (Hornch'ch)

English, Michael

Millan, Rt Hon Bruce

Williams, Sir Thomas (Warrington)

Evans, Fred (Caerphilly)

Moonman, Eric

Wilson, Alexander (Hamilton)

Evans, Ioan (Aberdare)

Moyle, Roland

Wilson, Gordon (Dundee E)

Faulds, Andrew

Murray, Rt Hon Ronald King

Wilson, William (Coventry SE)

Flannery, Martin

Newens, Stanley

Wise, Mrs Audrey

Fletcher, L. R. (Ilkeston)

Orbach, Maurice

Woodall, Alec

Fletcher, Ted (Darlington)

Orme, Rt Hon Stanley

Wrigglesworth, Ian

Fowler, Gerald (The Wrekin)

Ovenden, John

Garrett, John (Norwich S)

Palmer, Arthur

TELLERS FOR THE AYES:

Ginsburg, David

Park, George

Mr. Donald Coleman and

Gould, Bryan

Pavitt, Laurie

Mr. John Ellis

NOES

Alison, Michael

Hutchison, Michael Clark

Penhaligon, David

Arnold, Tom

Jopling, Michael

Powell, Rt Hon J. Enoch

Bennett, Dr Reginald (Fareham)

Knight, Mrs Jill

Ross, Stephen (Isle of Wight)

Bottomley, Peter

Latham, Michael (Melton)

Rest, Peter (SE Derbyshire)

Boyson, Dr Rhodes (Brent)

Macfarlane, Neil

Sims, Roger

Buck, Antony

Maxwell-Hyslop, Robin

Skeet, T. H. H.

Cormack, Patrick

Mitchell, R. C. (Soton, Itchen)

Skinner, Dennis

Dodsworth, Geoffrey

Moate, Roger

Steel, David (Roxburgh)

Eyre, Reginald

Molyneaux, James

Winterton, Nicholas

Fookes, Miss Janet

Morrison, Hon Peter (Chester)

Gow, Ian (Eastbourne)

Nelson, Anthony

TELLERS FOR THE NOES:

Hampson, Dr Keith

Neubert, Michael

Mr. A. J. Beith and

Howells, Geraint (Cardigan)

Pardoe, John

Mr. Nicholas Ridley

Ordered,
That, at this day's Sitting, proceedings on any Bill set down for consideration at Seven o'clock by direction of the Chairman of Ways and Means shall, instead of being considered at that hour, be considered as soon as a member of the Government shall have signified his intention to move, That this House do now adjourn, for the purpose of bringing the sitting to a conclusion.

ORDERS OF THE DAY

  RETIREMENT OF TEACHERS (SCOTLAND) BILL [Lords]
  Order for Second Reading read.
  4.27 p.m.
  The Secretary of State for Scotland (Mr. Bruce Millan): I beg to move, That the Bill be now read a Second time.
  The main purpose of the Bill, by providing different arrangements for the retirement of teachers, is to make jobs available for newly qualified teachers who otherwise would be unemployed. The Bill is therefore part of the Government's effort to reduce teacher unemployment. I shall explain the clauses of the Bill in more detail later.
  The main effect of the Bill will be first to reduce the upper age of retirement of unpromoted teachers from 70 to 65 and, secondly, to withdraw the discretion at present in the hands of employers under the 1969 Act to continue to employ a promoted teacher for more than three months after he has passed the age of 65. The Bill reduces the length of time for which such a teacher can be employed to no more than three months. Thirdly, the Bill ensures that contracts offered to teachers after they have passed their 65th birthday are not for more than one year at a time.
  It is difficult to obtain precise figures for the number of teachers likely to be affected by the Bill. Apart from anything else, we are dealing with a commencing date of 1st January 1977, and a certain number of teachers will retire before then. Secondly, we normally take a survey of this sort only in September and the September 1976 survey is not yet available. Thirdly, there is a particular difficulty this year, because, in anticipation of the Bill, there may have been a number of retirements of teachers who would otherwise have stayed on beyond 1st January. However, I believe that on 1st January about 400 teachers in Scottish schools will be affected by the Bill in one way or another. That is the extent to which, by making room in the schools, we could be making jobs available for newly qualified teachers who at present find it difficult to obtain jobs.
  Mr. Malcolm Rifkind: Can the right hon. Gentleman say how many of those 400 jobs will be in departments where there is a shortage of teachers for the subjects concerned?
  Mr. Millan: I cannot, but I was going to say that the exact numbers likely to be asked to retire will depend on how the local authorities use the discretionary powers given by the Bill in regard to unpromoted teachers. We are removing from the unpromoted teacher the discretion about his retirement date up to the age of 70 and putting it in the hands of the local authority. 'That seems to us essential in the present teacher employment situation. The background to the Bill is the concern that was felt in the summer, and is still felt, about teacher unemployment.
  Mr. Teddy Taylor Mr. Teddy Taylor (Glasgow, Cathcart) rose—
  Mr. Millan: It would help if I could explain some of the background and the provisions of the Bill before giving way. I am always willing to give way, but I hope that my doing so will not unnecessarily lengthen my speech.
  Mr. Teddy Taylor: The Secretary of State referred to the September 1976 survey. It was to the September 1975 survey that Lord Kirkhill referred in the other place. Will the September 1976 figures be available before the Committee stage?
  Mr. Millan: I hope that it goes without saying that I shall make available all the figures that I can. As I have already explained, we cannot be precise, because even now some teachers may voluntarily retire before the end of the year. Without the Bill about 500 teachers might have been involved. The Bill and other measures have probably reduced that number to about 400. The numbers going will depend on how the authorities exercise their discretion.
  I was saying that the background to the Bill was our concern about the extent of teacher unemployment. In the summer it was estimated that about 2,000 newly-qualified teachers might not obtain teaching jobs at the beginning of the current session. The latest figures, those for September, show 625 teachers registered as unemployed in Scotland. That is 625 too many, but the number is not
  54
  nearly as big as some of us once feared. It compares with 143 in September 1975. There has always been a small number of teachers on the unemployed register.
  Although there has been a considerable increase in teacher unemployment, it has been affected by the fact that about 1,000 teachers are now employed in jobs under the Job Creation Programme, which has made a tremendous difference. However, those jobs are short term. We must take that into account as, part of the background to the Bill and to the figures for entry to colleges next year, about which I shall be issuing a consultative document—I hope within the next few weeks, but certainly before the end of the year.
  I am anxious to do everything open to me to reduce teacher unemployment, but I cannot do it by increasing the rate support grant or asking education authorities to employ more teachers than are needed generally to meet the staffing standards which they agreed with me last year. Those standards have already given us a better position in the schools than we have ever had. In September 1975 staffing ratios were 22·4 to 1 for the primary schools and 15·1 to 1 for the secondary schools, considerable improvements on the 1974 figures of 23·4 and 15·7 respectively. Incidentally, the September 1975 ratios were much better than the corresponding English ratios in January this year. It is difficult to make exact comparisons, but the respective English figures were 23·6 and 17—substantially higher.
  In the current session I have had no part-time education reported to me. Those of us who come from the Strathclyde Region will be aware of what a considerable improvement that is. In confirmation of the fact that our staffing is better than it has ever been, I was interested to see a report in last Thursday's Glasgow Herald of a statement by the Deputy Director of Education for the Strathclyde Region. He said that the region, which is the one that has had the most intractable teacher shortages, had a full complement of primary teachers and a shortage of fewer than 20 in secondary schools in the current session.
  That small shortage is a reflection of the fact that there are still particular subjects for which we should like to have more teachers available in the schools.

  55
  But overall we have a better staffing position in the schools than ever, despite the fact that we have had to ask authorities not to go beyond teaching standards which we agreed with them last year.
  Against that background, it is important to do everything we can to take care of the young teacher who entered training at a time when there was a teacher shortage and now finds, at the end of his training, that there is a changed recruitment position. That is the reason for this modest Bill.
  The existing legislation on the retirement of teachers is contained in Section 16 of the Education (Scotland) Act 1969, under which a promoted teacher must normally retire at 65—though he can be offered re-employment in an unpromoted post—and a non-promoted teacher must retire at 70. In both these cases the retirement ages apply
  "unless the employer otherwise determines",
  so that an employer may keep people on after the specified retirement age. We all know that until very recently there have been examples of teachers working on even beyond 70 years of age.
  The provision in the 1969 Act was perfectly understandable—I remember taking the Act through, and we did it with the co-operation of the teachers' associations—at a time of teacher shortage, but it is no longer relevant to a time of teacher surplus. In any case, most teachers retire before they reach the age of 65. In 1975, for example, 90 per cent. of all teachers who retired were aged 65 or under. Under the teachers' superannuation scheme, a teacher may choose to retire at or after the age of 60 and draw his accumulated pension benefits immediately. The Bill does not affect that. It simply deals with the situation post-65.
  In considering the Bill, and, I hope, in passing it, the House will in no way be criticising teachers who have chosen to stay on in the past beyond the age of 65. In many circumstances, without their help schools would have found considerable difficulty in continuing. I wish to put that on record. We are simply taking account of the present changing situation.
  I had consultations on the proposals in the Bill in June this year with both the
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  Convention of Scottish Local Authorities and the teachers' associations. COSLA said then, and this is its current view, that it is very much in favour of the Bill but wishes to make clear that in individual cases when a teacher may ask to be kept on beyond age 65 for reasons which he considers important to him—perhaps pension circumstances—it will look at such cases sympathetically. I have no reason to doubt that it will do so. Directors of education are well aware of the service which many over-65s have given in our schools, and I do not think that they will approach such individual cases in any unsympathetic way.
  I met the three main teachers' associations in June this year. There were not then any serious objections raised to what the Government were proposing, although there were reservations expressed quite strongly by one of the teachers' associations, the Scottish Secondary Teachers' Association. The other two associations did not raise any serious objections, as the Educational Institute of Scotland reported in its publication EIS News. I think that they took the view that, at a time when we have many qualified teachers unable to find work, this was a modest step which ought to be taken by the Government and be supported by the teachers' associations.
  Since then, the EIS and the SSA—if I may give it its old name—have confirmed that they support the Bill. The SSTA has criticised it on the ground that there could be potential hardship for individual teachers with a relatively short period of service who wished to go on beyond the age of 65 so that they could earn a better pension.
  Mr. Richard Buchanan: On the front page of The Times Educational Supplement of 10th September 1976 the General Secretary of the EIS was reported as saying, in one of his forays into the country, that the EIS did not oppose the Bill in principle but the local associations would have to argue with their local authorities individual cases of hardship which arose. Therefore, it is not wholeheartedly in favour of the Bill, as my right hon. Friend seemed to suggest.
  Mr. Millan: I do not think that I tried to convey more than that. My hon.

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  Friend has simply confirmed what I said, that the EIS supports the Bill in principle, and today we are discussing the principle of the Bill. I believe that the point made by the SSTA relates to circumstances in individual cases which can be dealt with between a teacher, or a teacher and his association, on the one hand, and the local education authority, on the other. I have heard nothing from the education authorities to lead me to believe that individual cases of difficulty cannot be solved in a sympathetic way at local level.
  To some extent—I admit this frankly, and the House has to make up its mind about it—we are inevitably by the Bill setting aside the interests of people over 65 in the interests of younger members of the profession. I believe that to be sensible at this time. We are not making it compulsory that everybody shall go at 65. We are giving the discretion to the authority rather than to the individual teacher, but, inevitably, we are setting aside some interests of older teachers in the interests of younger members of the profession. I repeat that I believe that to be sensible.
  Mrs. Bargaret Bain: Many of the older teachers now being asked to retire were themselves at one stage unemployed young teachers during the 1930s. Will special consideration be given to them since both ends of their careers have been affected by Government policy?
  Mr. Millan: Again, I am sure that individual education authorities will take all these circumstances into account. I think that the only substantial point of difficulty is the question of pensions, where, in an individual case, a teacher has a certain pension expectation and that expectation becomes rather less than the normal because he or she does not have the full length of service. I am sure that these cases can be dealt with by the individual authority.
  I come now to the clauses of the Bill. Clause 1 gives us the new substituted Section 16, removing Section 16 of the 1969 Act. The main effect of subsection (1) is to reduce the age of retirement for an unpromoted teacher from 70 to 65. The new retiring age will come into effect on 1st January 1977 and will affect teachers already 65 or becoming 65 after that date.
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  The new subsection (2) introduces an element of flexibility which can meet the needs of individual teachers and education authorities. Paragraph (a) enables an employer to re-employ a retired teacher but only in an unpromoted post and on a year-to-year basis. This will enable teachers to be dealt with sympathetically by local education authorities. It will also take care of teachers who are teaching in shortage subjects in secondary schools.
  Paragraph (b) allows an employer to, re-employ for up to three months a promoted teacher in the post from which he retired, again to give a certain element of flexibility and avoid an unnecessary retirement at a difficult time during the school session.
  Subsection (3) defines a post of special responsibility. This is a promoted post above the basic grades. About 35 per cent. of the 60,000 teachers in Scottish schools and further education colleges occupy such posts.
  Clause 2 is basically the citation clause and again includes the commencement date of 1st January 1977, which we have chosen as the earliest date on which the new provisions could reasonably come into force.
  This is a modest Bill which has been generally welcomed as a useful contribution in a difficult situation of teacher surplus. This situation will have to be dealt with also in a more fundamental way by the proposals which I have already made for the 1976 entry, which are now operative, and the proposals which I shall be making in due course for entry to the colleges of education in 1977 and subsequently.
  I took the action available to me in the current year to reduce entry considerably so that we did not have teachers taken into colleges without reasonable expectation of employment at the end of their training. I shall take whatever steps are necessary to achieve a similar objective in 1977 and subsequent years. That must be the main thrust of our policy in these difficult financial times when we cannot afford to keep improving the pupil-teacher ratio. We must get teacher supply and demand reasonably in balance.
  The Bill represents a modest but useful contribution towards that end. It has been generally welcomed and I gather

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  from the Shadow Leader of the House that the Opposition wish it well. I commend the Bill to hon. Members.
  4.51 p.m.
  Mr. Teddy Taylor: It is rather unusual to have a Bill of this importance presented at this stage of a Session. The Bill deprives individual teachers of rights which were available to them when they joined the profession. However, we accept that the circumstances of Scottish education are unusual and tragic and that, for the first time in decades, we have in Scotland a serious problem of teacher unemployment which seems almost certain to get worse.
  In these circumstances it would be difficult for the Opposition to vote against the principle of a Bill which is at least aimed at providing more jobs for teachers. However, by the time the debate is finished the Secretary of State will be aware that many of us are unhappy about aspects of the Bill and that there are many questions for the Government to answer before we give the Bill a Second Reading.
  There is no doubt that this is a panic Bill. I am in sympathy with the General Secretary of the SSTA, Mr. Docherty, who said in a circular to all hon. Members representing Scottish constituencies that the proper retirement age for members of any profession should be a matter for objective study, based on considerations of the efficiency of the service and justice to those who have devoted themselves to the service. This Bill is based on no such considerations. It has been introduced simply because of the problem of teacher unemployment in Scotland.
  Some people regard the Bill as a cosmetic measure, which will have no real effect. Others regard it as a rather nasty and spiteful Bill to deprive elderly teachers of rights that were promised to them when they entered or re-entered teaching.
  There are a number of questions which I hope the Secretary of State or the Under-Secretary will answer. What effect will the Bill have on the employment of teachers? Authority is being given to local education authorities to make up
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  their own minds on the employment of teachers over the age of 65. Presumably it would be possible for the Bill to have no effect if an authority decided to continue to employ all its teachers who are over 65.
  The Secretary of State has indicated that he hopes that local authorities will use sympathetically and not harshly, their new powers to dismiss teachers over the age of 65. Does the right hon. Gentleman intend to issue any guidance to local authorities about the criteria which they should bear in mind when using their new discretion? The hon. Members for Glasgow, Springburn (Mr. Buchanan) and Dunbartonshire, East (Mrs. Bain) have pointed out the kind of people for whom we think there should be special consideration.
  What will be the effect of the date of 1st January in the Bill in the light of changes in the Contracts of Employment Act, stemming from the Employment Protection Act? The latter Act has considerably affected the Contracts of Employment Act and has greatly extended the period of notice which must be given to teachers on dismissal.
  Will the "one week for one year of service" provision apply to teachers over the age of 65 and, if so, will notice be given on 1st January or will this be one of the periods that might result in a teacher losing his job?
  What assurances can the Secretary of State give us that the Bill will provide new jobs and ensure a reduction in teacher unemployment? There have been some horrifying reports in the Press and elsewhere recently about the prospect of a substantial number of teachers becoming unemployed because of the spending cuts that the Government have imposed on local authorities.
  A report in the Scotsman on 21st August said that cuts in spending in Lothian could lead to a reduction in teaching staff of 700 if the council were to achieve a reduction of £9·5 million in its 1977–78 budget. There was also a, horrifying story on the front page of the Sunday Mail about secret discussions at a remote hotel in the West of Scotland where the policy resources committee of the Strathclyde Regional Council met to discuss the consequences of cuts demanded by the Government.

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  It is acutely embarrassing for Opposition Members to be so badly briefed on the discussions with in this authority, but the Strathclyde Council runs its affairs in such a way that only Labour councillors may be members of the policy resources committee. As a result, the substantial minority of Conservatives and Scottish nationalists in the West of Scotland have no knowledge of what goes on behind locked doors in flash hotels when Labour members of the policy resources committee decide who to sack in which departments.
  Do the Government believe that the jobs that will be made available when older teachers are dismissed will be taken up? All the indications from reports of local authority discussions are that many councils will be faced with the prospect of dismissing teachers because of the cuts on which the Government are insisting.
  Some of my colleagues feel bitter and resentful because, while local authorities are being exhorted by the Scottish Office to reduce the number of staff in key areas, the number of staff at the Scottish Office has increased by 800 since the Government came to power. I hope that Ministers will bear this fact in mind when discussing the problem of teacher unemployment.
  May we have more information and an assurance that the Government have done their sums right in the calculations about recruitment and the intake of student teachers? Projections about the reduced number of pupils have been clear for about two years and I was sttaggered when, in October 1975, the Government increased the number of students going into the colleges by 11·6 per cent.
  I know that the Secretary of State must be ashamed of his record in this respect. No doubt that is why he is pretending not to listen to me on this point. He knows that in October 1975 he deliberately increased the number of students entering colleges of education and that many of them are now unemployed. It is because the right hon. Gentleman made a mistake that we now have this panic reaction, with the unfortunate effect that many youngsters who were hoping to take up teaching as a profession will not be able to do
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  so. I hope that the Secretary of State will give us more information and a reassurance that he has got his sums right.
  I hope that in reply the Under-Secretary of State will give us more information on the question of consultation. The Secretary of State said that, as always, he consulted the teachers' associations involved. That is not the information that has been given to us by at least one of the teachers' associations. Mr. Docherty, of the SSTA, with whom I had a meeting last week, said that on 6th July the teachers' associations received the outline proposals from the Government and were told that submissions on those proposals had to be at the Scottish Office by 12th July, so that the Secretary of State could give them the careful consideration that he assures us he always gives to the teachers' associations' recommendations.
  Those submissions were in by 12th July, but the Secretary of State was able to give them his careful consideration very speedily, because the Bill was introduced in the House of Lords on 13th July—24 hours after the date set for the submission of representations. Does the Secretary of State consider that fair and reasonable? Is it not insulting the teachers' associations to tell them to hand in their submissions by 12th July and then to present the Bill in the House of Lords on 13th July? I consider that to be a most shameful example of lack of consultation and almost an insult to the teachers' associations.
  I see that the Secretary of State is carrying on another important conversation. Again, he must be feeling very guilty, as he should be. I am sure that the hon. Member for West Stirlingshire (Mr. Canavan), who should be in another place, as he knows, will be interested in protecting workers and their rights.
  Since people have come back to the teaching profession at the request of the Government and on the assurance that they would be able to go on working until the age of 70 and thereby improve their pension entitlement, is the Secretary of State entirely happy that he is supporting a Bill that will deprive them of those rights? Does he not think that there might be a case for compensation for those whose rights are being taken away in that way?

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  We are not talking about peanuts or pennies; the amounts involved are considerable. A teacher with 15 years' service at the age of 65 now has a salary of £3,354. He would be entitled to retire with a pension entitlement of fifteen-eightieths of his current salary. If we do not oppose the Bill and he is allowed to go on working for another five years, his salary would increase to £4,149 and he would be entitled to twenty-eightieths on retirement at 70 years of age. That makes a difference of about £8 a week, according to my calculations. That is the kind of money that we are talking about.
  We are talking about a teacher being deprived of the right to work for five years and losing a pension entitlement of about £8 a week. That is a considerable change. Will the Under-Secretary indicate whether he thinks that compensation is justified in such a situation? I am sure that if this happened to dockers, miners, or anyone else, there would be loud protests from the hon. Member for Coatbridge and Airdrie (Mr. Dempsey) and others about the need for compensation for those who were being deprived of employment through legislation. I hope that the Minister will give some thought to that question and indicate whether a move can be made in that direction.
  Mr. James Dempsey: Will the hon. Gentleman tell me who assured those persons that they would be employed until they were 70 years of age?
  Mr. Taylor: The hon. Gentleman will be aware that, under present conditions of employment, teachers are entitled to be employed until they reach 70 years of age. They have the right now to stay on, but not in a promoted post. This Bill changes the situation. It provides that teachers will have that right only if the local authority wishes them to have it. Hon. Members should be aware of what is going on. Having got that information, the hon. Gentleman will no doubt take an even greater interest than he was taking before I mentioned that point. As I said, it makes a big difference. It can mean a difference of five years' employment and £8 per week in pension. Therefore, I hope that hon. Members will pay
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  special attention to the rights of employment.
  I should like the Under-Secretary of State to give a better explanation than was given by Lord Kirkhill, in another place, why the date of 1st January was selected? The hon. Gentleman will be aware that if a teacher retires at the end of a term, the normal practice is for him to be paid until the end of the holiday period after his retirement. That has been the practice of Strathclyde and other regions. I am not sure whether it is a legal right, but it always happens. By taking 1st January as the cut-off late, teachers are being deprived of 10 days' salary immediately.
  More important, however, is the effect on the pension. It is almost certain that a teacher retiring or being forced to retire on 1st January will receive a smaller pension increase on 1st December 1977 than someone who voluntarily retires on 31st December. Will the Minister tell us whether he thinks that it was entirely appropriate for the date of 1st January to be selected? Mr. Docherty and other teachers to whom I have spoken think that if one date had to be chosen, the date of 1st January was the worst possible from the teachers' point of view.
  I was disappointed that, in justifying the Bill, the Secretary of State made no reference to the educational effects of this change. If we are to make this change, which will have the effect of removing from schools between 300 and 400 dedicated teachers of advanced years, we should give a passing thought to the effect on the educational standards and character of our schools.
  There are many reasons why we are not happy about our schools. We are not happy about standards of attainment; we are far from happy about standards of literacy and numeracy; and we are certainly far from happy about examination results. We are also extremely unhappy about discipline in schools, as has been said by many hon. Members. Have the Government given any thought to the change that will take place in the character of schools by removing these teachers of advanced years who have made such considerable contribution to them?
  The Secretary of State made clear that the sole intention in introducing the Bill was to deal with the unemployment of

  65
  teachers coming from the colleges. Is it fair for the Government to bring forward this Bill instead of a package of measures that might provide other employment opportunities?
  We feel that the Government have got their priorities wrong. Recently we were told that expenditure of an extra £1 million was the cost of providing another 700 teachers in Scotland if we took into account the unemployment benefit that they would otherwise get. Yet the Government recently introduced a Bill in the Scottish Grand Committee which would allow an extra £1 million for the provision of school milk. That shows the extent of the Government's priorities. They certainly are not concentrating on providing confidence in schools and an adequate supply of teachers, bearing in mind the special problems in Scottish schools.
  In the present serious unemployment situation it would be irresponsible of the Opposition to oppose the Bill. However, for the reasons that I have indicated, we should not be put in the position of having to take panic measures. This is a panic measure. Having heard the panic reaction of the Secretary of State to this matter, the panic reaction of the Chancellor a few hours ago to the position of sterling, and the panic reaction of Ministers as a whole to the general situation in this country, I am sure that people are simply waiting for the day when a Conservative Government come back to office and they can again look to the future with confidence and hope.
  5.10 p.m.
  Mr. Richard Buchanan: I agree with much of what the hon. Member for Glasgow, Cathcart (Mr. Taylor) said. That is not surprising, as much of our source material is taken from the same place. How can he reconcile what he said today with his party's defined attitude on public expenditure? The Conservative Party wants to cut public expenditure even more, but here we are proposing an increase in public expenditure. In trying to employ-more teachers and compensating those who leave at 65, we seek to increase public expenditure.
  I declare an interest. I try to advise the Scottish Secondary Teachers' Association
  66
  in an honorary capacity. The association does not oppose the principle of retiral at 65. That principle permeates industry. In the railways, where I was once employed, the docks the mines and most of the professions 65 is the retirement age. People who enter these professions know the score before they go in. They know when they will retire. My criticism of the Government is that under the Bill they are changing the rules in the middle of the game. Teachers' retiral age has been used like a barometer. When there is a surplus of teachers, the retiral age is lowered, and when there is a shortage it is raised. That is not the way to deal with an honourable profession like the teaching profession.
  As the hon. Member for Cathcart said, we must establish a rational retirement system for the whole profession, including those who came in under the special recruitment scheme. My right hon. Friend said that the object of the Bill was to create jobs for newly qualified unemployed teachers. Lord Kirkhill said the same thing in another place. My right hon. Friend may have stumbled on a solution to the national malaise. He should toddle along to our right hon. Friend at No. 10, give him this solution—the one my right hon. Friend is applying to teachers—and ask, why not make it compulsory for people in industry to retire at 65? If unemployment still persisted, the age could be lowered by 10 years. That is not the way to deal with unemployment, and it is not the way to deal with teachers.
  There should have been no need for this measure. Employment should have been found for the newly trained teachers. We made promises to those teachers and gave them the prospectus of a stable career, and we are breaking our promise. Twelve months ago we were advertising nationally to bring more teachers into the profession. The intake to the colleges was increased. Even today, in The Times Educational Supplement and the Scottish Educational Journal, local authorities advertise for teachers throughout Scotland. Strathclyde and Midlothian are advertising for teachers. According to my right hon. Friend, Strathclyde is only 20 secondary teachers short. In my constituency there is a shortage of at least 20 technical and maths teachers.

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  There may be plenty of teachers, but there are some departments which are very short. Will the Bill do what its sponsors hope it will do? Will the young teachers replace the retired teachers or will the local authorities save the money in the present squeeze?
  My right hon. Friend said that he did not know precisely how many teachers would be affected by the Bill. On 3rd June he said there were 400. In the other place, Lord Kirkhill on 27th July said there were 300 teachers in this category. My hon. Friend the Under-Secretary of State in an answer to me on Wednesday said that there were 500 teachers in this category. Which figure are we to believe?
  I can understand the Secretary of State's being unable to get the figures before the reorganisation of local government when it was necessary to approach hundreds of local education authorities, but that excuse does not apply now. In Scotland there are only 12 education authorities and he should at least have been able to give approximately correct figures. If there is this difficulty in getting such statistics, it is not surprising that we made such a blunder over the intake to teacher training colleges.
  There are certain categories with which I am particularly concerned. My hon. Friend asked local authorities to do everything possible to recruit members of the public to go through the Special Recruitment Scheme and become teachers. Those teachers may have come into the profession with 10 years to go, perhaps hoping for 15 years, and now they are to be compulsorily retired. They were coaxed into the profession and came in with the highest ideals. They wanted to do a job, and they have done a job. Most of them have been teaching in schools where there has been a shortage of teachers and over-sized classes, and they have had to deal with the present-day vandalism and indiscipline which occurs in schools.
  Another category with which I am concerned is women who responded to the Government appeal to come back to teaching. These include widows who were forced by economic circumstances to reenter the profession. I am not trying to make a case for teachers who have served for 25 or 30 years and have earned a
  68
  good pension. I ask the Secretary of State to give consideration to those who came in under the Special Recruitment Scheme to help him out over the hump of teacher shortage. Those are the people who will be penalised by the Bill.
  I am informed that teachers will shortly be included in a scheme for improved redundancy and compensation payments if they retire between 55 and 65. I entirely support that. A teacher who has served 25 years and retires at 55 or 60 voluntarily with a reasonable pension will be given redundancy and compensation payments plus an enhanced pension. Negotiations are going on about this scheme. Yet the people who came into the profession to help us out will be compulsorily retired, without compensation, and without credit being given for the years that they hoped to serve. That is paradoxical.
  As has been outlined by the hon. Member for Cathcart, there are two dates in the year which are for teachers, the worst possible dates for retiral. One is 1st January and the other is 30th June. A teacher who retires on 1st January instead of 31st December loses 11 per cent. of his pension. That is unfair as well as unjust.
  I hope that my right hon. Friend will make the necessary adjustments to the Bill in Committee to permit a modicum of justice to be done to the teachers who came into the profession at the behest of both Governments. Justice is all I ask.
  5.18 p.m.
  Mr. Michael Clark Hutchison: I well remember the time when there was much concern about the shortage of teachers and we were all engaged in thinking out methods of getting people into the profession and, once in, keeping them there. Now the picture is entirely changed and we are engaged in discouraging teachers and inducing them to retire early. Why has there been this complete reversal in a comparatively short time? What has gone wrong with the forecasts and calculations in the Government Departments?
  Can the Minister explain to me—[Interruption] I doubt that he will be able to if he does not damn well listen. Can the Minister explain and tell me what arrangements are being made to get more accurate forecasts for the future?

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  This is important in view of the colossal sums we are spending on education and the necessity to avoid waste.
  I think that it is probably right not to vote against the Bill, but personally I am not greatly enamoured of it. It seems to me that cut-backs in local authority expenditure could well lead to cut-backs in respect of teachers over 65 with no corresponding increase in employment for new teachers.
  Secondly, like my hon. Friend the Member for Glasgow, Cathcart (Mr. Taylor), I believe that the Bill could lead to a reduction of pension for some non-promoted teachers. That could be unfair. In addition, the Bill could make it compulsory to retire early at short notice, and there might be some injustice in that. It is not clear to me how many newly qualified teachers will not find jobs this year, but I have heard a figure of 2,000 bandied about. Is that figure correct? It has also been calculated that the expenditure of £1 million covers the cost of 700 teachers provided we take into account the savings on social security. Is that right?
  It does not seem an entirely impossible task to employ those 2,000 teachers In doing so we would go a long way in helping the deprived areas to reduce the sizes of classes by giving added strength in certain departments where there are shortages, such as science and mathematics. The way in which I would deal with this problem is to scrap any idea of a Scottish Assembly. That absurd piece of nonsensical machinery is—
  Mr. Deputy Speaker (Sir Myer Galpern): Order. The Bill relates to the retirement of teachers and not to the retirement of a Scottish Assembly.
  Mr. Hutchison: Yes, Mr. Deputy Speaker, but I am giving my solution to deal with the teacher shortage and avoiding injustice. This Assembly will cost £10 million a year. Is that the top priority or is good schooling?
  5.23 p.m.
  Mr. Robert Hughes: The hon. Member for Glasgow, Cathcart (Mr. Taylor) was his usual spiteful carping self when he spoke a few minutes ago. The hon. Member has so much bile in him that when he is presenting a compassionate case to help people who have
  70
  to retire early, he sounds like the prosecuting attorney in a murder trial. I would certainly be the last person to ask him to put my case if I were seeking compassion from any hon. Member in the House.
  We know perfectly well why the hon. Gentleman has to take this blustering attitude. It is to cover up the fact that he wants greater cuts in public expenditure, which would produce more teacher unemployment. There would be more unemployed nurses, social and housing workers.
  Mr. Teddy Taylor Mr. Teddy Taylor rose—
  Mr. Hughes: The hon. Gentleman had no case to make when he was making his speech and was reduced to trying to bait Labour Members. I shall not be taken in by him.
  I was particularly pleased to hear the Secretary of State's statement about the number of teachers in employment this year, especially in the Strathclyde area. He will know more than most, since he has been in the Scottish Office previously, that the problem of teacher unemployment in Strathclyde was particularly difficult. I know the efforts made by previous Governments to encourage recruits into the profession in Strathclyde.
  I should be glad if the Minister would tell us exactly on what basis the Strathclyde returns are made, because he said there was a full complement of teachers in Strathclyde. Can he say something about the geographical distribution?
  He will remember the very difficult time we had with the Scottish teaching profession about designation payments and the way of attracting teachers into schools which badly needed them but could not get them. In some parts of the area there is an excess of staff over complement in certain schools, and that might be because Strathclyde has now taken over the eduction for virtually the whole of the West of Scotland and has been able to help in the redistribution of teaching staff within the global numbers available.
  Like many other hon. Members from Scottish constituencies, I have had approaches from people who misunderstand the purpose of the Bill and, indeed, misunderstand the flexibility in it. I believe that among certain teachers,

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  especially those over 65, there is a feeling that the Bill makes it mandatory on local authorities to compel teachers to retire at 65 and that, as soon as the Bill is passed, such teachers will automatically be out of a job.
  As I understand the Bill, that is not the position. The position is that the retiring age will normally be 65, but even in unpromoted posts—I think this is an advance—the teacher, at the discretion of the local authority, may be employed on a year-to-year basis. As I understand it, that is open ended. There is no age limit which restricts the temporary retirement. Teachers can still go on to 75 on a year-to-year basis.
  I understand that although promoted teachers may be employed for a period of up to three months, I can see nothing in the Bill to prevent a promoted teacher from retiring from his promoted post and then taking up a position as an unpromoted teacher. If that is the case, there is certainly a little concern about how many jobs will be free for unpromoted teachers. It does not seem right that someone can come out of a promoted post and go into an unpromoted post, because that will take up the slack. I hope that the Secretary of State will say something about how the discretion will be applied and whether in the circumstances it will be permissible to keep on in this temporary capacity teachers qualified for employment.
  The point has been made often enough that former teachers—particularly women—have come back into teaching at a later age having had to leave the profession, for instance, to raise a family. Once the family has grown up, she has returned to teaching, but her cumulative pension is affected. It is true that teachers have the facility of taking account of past service, but there is some anxiety about the effect of the Houghton Report on pensions.
  My right hon. Friend said that he had had consultations with COSLA about what criteria may be applied in employing teachers beyond the age of 65. COSLA gave assurances that its individual members would take hardship into consideration when looking at those falling into this category. I do not doubt the word of COSLA but I am not
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  so certain that individual members will carry out COSLA's agreement. I wonder how many individual members of COSLA were behind this idea to deal with hardship. I ask the Minister whether he will send out a circular giving the criteria and of other assistance and guidance to individual local education authorities.
  Has he considered for a limited period crediting teachers over 65, or teachers approaching 65 in the next few years, with, say, two years of increments in relation to pensions in order that they can get the benefit from the increased pension? This idea is perhaps worth considering, because it would help people in hardship.
  It might make more economic and educational sense to give the credits and allow teachers to give up teaching and let new people in at the bottom of the scale than to keep teachers on for longer. If at the moment only 400 teachers are involved—the figure would obviously rise if the concession were extended for five years—the economic cost might be worth while. I hope that my hon. Friend can tell us how he has looked at this and whether any estimate of the cost is possible.
  I had representations from my constituents when this proposal was first discussed. The measures seemed much harder on those over 65 and those about to reach that age than I at first thought. I am satisfied that my hon. Friend has gone a long way to introduce flexibility and protect individual teachers, but I hope that he will consider the alternatives with an open mind and be willing to go further in Committee.
  5.31 p.m.
  Mr. George Younger: It is very sad that we have come to this pass tonight, although I agree that the Bill should not be opposed. It is the result of the failure of the Government's economic policy. For the first time in the lifetime of any of us, the Government have run out of money to the extent that they cannot, even if there is a shortage of teachers, make use of all the teachers available to them, whom they have put through training college at public expense.
  I hope that all those concerned in education—whether parents or teachers—

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  will now be aware of the results of financial incompetence at the top on their own lives and service and on the education of their children. That is what we are discussing.
  The Secretary of State, I am sure unintentionally, made the misleading assertion that only 625 young teachers were registered as unemployed—after the concern we had all been expressing during the summer about figures of more than 2,000. A few sentences later, almost in an aside, he referred to the 1,000 young teachers involved in the job creation scheme.
  That is a useful scheme, which those taking part find much better than hanging around doing nothing, but we must be careful to avoid the error of categorising them as not unemployed. Although they are occupied, they are emphatically unemployed. The young teachers involved in the scheme will be most upset if they think that the House of Commons is writing them off as if their problems were over and they were now settled in a career, because they are not.
  So the true figure of young teachers who still do not have jobs, even after being trained to the pitch, is still 1,600, according to the Secretary of State. It is the Government's failure to provide money which is so tragic. It is the more so since all our political lives we have all been concerned about shortage of teachers and very large classes. Whereever this subject comes up, we have had to explain that the Government of the day would do their best to raise the numbers of teachers and that then class sizes would be reduced and teaching standards improved, particularly in deprived areas.
  Now we have a sufficiency of supply of teachers and, because of falling birth rates some time ago, a gradual decrease in the number of pupils. The tragic coincidence of circumstances is that now of all times the Government have failed to provide the money to make the improvements. I am sure that they also will agree that that is desperately sad.
  I hope that Ministers do not think that they are simply the victims of the incompetence of their colleagues on the financial side of the Government. They should also bear in mind the Government's priorities in the use of available funds. In his speech at Oxford a week ago, the Prime Minister said:
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  "The challenge to education is to exercise its priorities and to secure as high efficiency as possible by the skilful use of the £6,000 million of resources which are available."
  Those are very telling words. But in the opinion of many people, even within the money they have, which of course is too little, the Government themselves seem to have produced the strangest priorities. It is not as if the sum required to employ about 1,600 teachers is vast in relation to education spending, which in the United Kingdom, according to the Prime Minister, is £6,000 million and in Scotland is about £500 million. Only a tiny fraction of that would be required.
  My hon. Friend the Member for Edinburgh, South (Mr. Hutchison) referred to a report in The Scotsman which estimated that only £1 million would be required to employ 700 teachers if the consequent social security savings were taken into account. That may be a little optimistic, but even so the sums are not large in the total education budget.
  Educational spending in Scotland is running at about £101 per head per year. If the estimate in The Scotsman is right, we could employ nearly all those out of work for about £2 million or so—40p a year per head, or less than 1p a week. Put another way, since there are about 1 million pupils in Scottish primary and secondary schools, the cost would be £2 per pupil per year. That means 4p per week throughout the year or, if one cares to concentrate it on the school year, the weeks during which children are at school, little more than 5p a week per pupil would enable us to employ all these teachers.
  The Government's other expenditure priorities in education, which they seem to regard as sacrosanct in many ways, should be borne in mind. No one has addressed himself to the changing of priorities within the expenditure that we have already.
  The Under-Secretary will remember that we had long discussions in the summer about expenditure when we discussed the Education Bill in Committee. I draw his attention again to the fact that in the education budget he spends just over £23 million a year on school meals. Of course it is important to have school meals, and that they should be good and sufficient. However, all of us hear suggestions now

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  and again—certainly I often do—that in some respects school meals are over-extravagantly produced. Be that as it may, that is what we spend.
  Of course it is important, but is it the Government's view that it is more important to keep down the cost of school meals than to have enough teachers? Is it more important to reduce the cost of school meals by 5p than to have an extra teacher in a deprived area? Is it more important to reduce the cost of school meals by 5p, for example, than to have a smaller class and, thereby, better tuition for children, particularly difficult children or children in their last year at school?
  The Government have a wrong priority. I agree with anyone who feels that school meals are very important, but I cannot find it in me to see that they are more important than having enough teachers and more important than employing 1,600 young people the beginnings of whose careers are being blighted by their not being able to practise their profession.
  Does the Under-Secretary feel that it is more important to keep down the cost of school meals than to have more teachers—
  Mr. Deputy Speaker: Order. I have allowed the hon. Gentleman far too much latitude. We are still discussing the question of the retirement of teachers, not the employment of young teachers who are unemployed. The hon. Gentleman has developed that argument fairly fully.
  Mr. Younger: I shall try to obey your advice, Mr. Deputy Speaker. However, the purpose of the Bill was stated by the Secretary of State to be purely in order to give employment to young teachers. He said that in so many words. I have nearly finished my speech. Perhaps I may finish the last part, which is relevant.
  If the Under-Secretary will answer my question, I shall be happy. Perhaps he will go further and try another alternative. I make these points because some Labour Members have taken my hon. Friends to task and have accused the Opposiiton of always wanting cuts in Government spending while not being prepared to say where we would reduce it. I hope that I may be acquitted of that, if of nothing else. I am being perfectly open about where I think the money ought to come from to
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  employ these teachers. I have given one example. I shall give another.
  We have the provision for the giving of free school milk to children in primary schools. It is not given in secondary schools because a previous Labour Government withdrew it. However, there is a proposal for allocating a further £1 million—which has now been done—for extending that free milk provision to children at primary schools who are beyond the age of 7. That is what the Government have thought a proper priority for which to lay aside £1 million. They have laid £1 million aside for that while refusing to put that sum aside for employing young teachers. They have decided that it is more important to extend the provision of school milk to more pupils—many of whose parents are well paid—than to give jobs to young teachers.
  Will the Minister please answer straightforwardly why he thinks it is more important to extend free milk provision than to give these young teachers jobs, to have smaller class sizes and to have more teachers teaching in deprived areas, where teaching is difficult? No one on the Government side of the House has ever answered that question.
  I am sad about the Bill. However, it must be supported, because if we have to choose between allowing people at the end of their careers to carry on beyond what many of us regard as retiring age or giving young teachers who have never had the chance of putting their professional skills into practice the opportunity to start careers, we must come down on the side on which the Government have come down.
  This is a sad situation. It is a bad situation for education and an unhappy situation for many distinguished elderly teachers who could still have much to give to schools. It is all the result of the total failure of the Government's economic policies, which have made them run out of money. I hope to goodness that the Government will realise it.
  5.46 p.m.
  Mr. Dennis Canavan: The Secretary of State admitted in his opening remarks that the background to the Bill is the unemployment situation among young teachers. It is a particularly tragic situation in Scotland

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  today. Earlier in the summer it was estimated that about 2,000 student teachers had left Scottish colleges of education and were unable to find jobs teaching. The Secretary of State said that 625 were registered as unemployed in September. That is the latest figure. However, about another 1,000 are in job creation programmes. Many of these programmes do not exactly involve jobs in which teachers are using their teaching skills to the fullest degree.
  Of course, there are many others who are in other types of employment. I know several student teachers who have been forced to take jobs on building sites because they cannot get jobs teaching. Therefore, by anyone's measure, the total of student teachers who left the colleges in Scotland this summer and who have so far been unable to find jobs teaching is nearer 2,000 than 1,000.
  We have had several suggestions over the past few months about how these teachers can be employed and how we can alleviate the problem. I have made suggestions for smaller classes and for remedial classes and to compensate children who have in the past been receiving part-time education. Many of these children come from areas of multiple deprivation. We have heard suggestions that extra teachers could be used to cover for teachers who are absent through illness or who are on in-service courses. One disturbing feature is the growing number of composite classes. They are not always composite for educational reasons. There is concealment of the teacher supply situation by the abuse of composite classes in some circumstances. I also believe that adult literacy programmes would be helped a lot by a more adequate supply of teachers.
  So far, the Government's reactions have been, basically, to put forward three measures. The first is job creation. Although I recognise that 1,000 students have been found jobs by job creation programmes when they might not have found jobs otherwise at all—to that extent we are grateful for small mercies—nevertheless, the Secretary of State admitted that the Job Creation Scheme, essentially, is a stop-gap, temporary measure.
  I was partly responsible for initiating a job creation programme using student teachers in Lennox Castle Hospital in
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  my constituency, where they are in fact using their teaching skills. Lennox Castle Hospital is one of the largest hospitals in Scotland dealing with mentally handicapped patients, both children and adults. The education of the mentally handicapped is a very important feature of Scottish education, particularly since the new legislation came into operation in May 1975. However, it appears rather a pity that the General Teaching Council does not recognise the period of service that these young people are giving in the hospital schools under the job creation programmes as qualifying service for their probationary period.
  Mr. Deputy Speaker: Order. I hope that the hon. Gentleman will try to keep in order.
  Mr. Canavan: I shall move on to deal with another point. The Secretary of State said that measures had been taken to reduce the intake to colleges this session, and that further reductions would take place thereafter. But that will cause even more unemployment within the staffs of colleges of education. Now we have the third measure, namely this Bill.
  I am in favour of early retirement opportunities not just for teachers but for all workers, manual, skilled or semiskilled, and indeed for professional people, provided that there are adequate safeguards to maintain pension rights. It is not good enough to say in this instance that local authorities have discretionary powers to deal with hardship cases. Something should be written into the Bill to provide adequate compensation for teachers with less than, say, 25 years' service. Some of those teachers may be widows or married women who gave early service to the profession, who left for a period of time to bring up their family, and who returned to teaching on the understanding that they would be able to work until the age of 70, if they desired to do so, thereby qualifying for a good pension. That right now appears to be somewhat eroded. I should like to see more measures for adequate compensation written into the Bill and not left merely to a local authority's discretion.
  The date of operation of the Bill presents some difficulties. I understand that 1st January 1977 is also the date of qualification for pension increases. This

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  will mean a considerable difference for somebody who retires on 31st December 1976 compared with a person who retires on 1st January 1977—indeed, as I am informed, a difference of up to 10 per cent. in pension terms. I would welcome the Minister's comments on that matter. Perhaps he will be able to say whether it will be better to postpone the date of operation of the Bill, possibly to March 1977. I hope that there will be more consultation with the teachers' union on this and other matters.
  In his opening remarks the Secretary of State said that about 400 teachers would be affected initially by the Bill, but he was unable to say whether they were teachers of subjects in which there is still a shortage, such as mathematics and technical subjects, and whether the vacancies thus created by teachers leaving could be filled by young teachers who are looking for jobs. It will not help the situation if, for example, too many modern language or science teachers are leaving when at the same time it is discovered that most of the teachers on the dole have qualifications in English or modern studies. What efforts have the Scottish Education Department made to match the resulting vacancies that will be caused by the Bill with the qualification of teachers who are now unemployed? The job would not be particularly difficult.
  Reference was made to a figure of 800 extra civil servants employed at the Scottish Office. We know that Her Majesty's inspectors are wandering all over Scotland looking at schools and we also know that their advice and comments are often not highly respected by the teaching profession. Many inspectors have been refugees from the classroom with little in the way of actual classroom teaching experience. But surely they can at least count up to 400. Can we not use these inspectors or those extra civil servants to obtain adequate statistics about the effects of the Bill?
  Many teachers doubt whether the Bill will have any far-reaching effect in creating more vacancies for young teachers. I estimate that the effect will be minimal. I do not think that we shall see any radical change in the number of teachers employed, or in any other forms of employment in the public sector, unless
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  there is a radical change in the Government economic strategy in a more Socialist direction.
  The hon. Member for Glasgow, Cathcart (Mr. Taylor) made one of the most hypocritical contributions that I have heard for a long time. I do not know whether he was present in the Chamber this afternoon to hear the Conservative Shadow Chancellor of the Exchequer, the right hon. and learned Member for Surrey, East (Sir G. Howe), call for even more savage cuts in public expenditure—cuts that would make even the Chancellor of the Exchequer look like Santa Claus. It is not good enough for the hon. Member for Cathcart to say that he supports further savage cuts in public spending while at the same time appearing to disown the inevitable results of those cuts. The results undoubtedly would be fewer teachers and social workers, less housing and so on, as my hon. Friend the Member for Aberdeen, North (Mr. Hughes) made clear.
  I have a little more respect for the hon. Member for Ayr (Mr. Younger), apart from the fact that he is a constituent of mine. But he was being a little simplistic when he said that the solution to the problem was less milk and more teachers. The inevitable consequences of Conservative economic policy would be less milk, or indeed no milk at all, and very many fewer teachers. The hon. Member for Cathcart said that he looked forward to the return of a Conservative Government. Has he forgotten that on the last occasion when we had the misfortune to have such a Government even he himself resigned from it?
  I conclude by saying that I sincerely hope that this small measure will be accompanied by more important measures to provide more jobs for teachers and certainly better standards of education for the children of Scotland.
  5.57 p.m.
  Mrs. Margaret Bain: It is clear from the debate that there is little antagonism in the House towards this Bill. Most people accept its underlying philosophy, but everybody seems to have some reservations. We in the SNP are no different in that respect.
  Before I go on to make my specific reservations about the Bill, I wish to take

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  up one or two points made by the Secretary of State for Scotland in opening the debate. I, too, welcome the ending of part-time education in Strathclyde. I have a particular interest since I trained in Glasgow and spent several years teaching in the Strathclyde region. I remember the crowded classrooms and the dreadful conditions.
  I felt that there was a hint of complacency in the Secretary of State's remarks. We should not accept the situation that the Red Book and the Circular 819 standards should be the only ones that exist within our schools. We wish to see a reduction in class sizes and a general improvement in standards throughout our schools. I appreciate that this would involve extra expenditure. My party believes that it has an alternative solution to offer to the Scottish people, and we hope that they will opt for it.
  I am concerned about the slight atmosphere of complacency, particularly in regard to the Strathclyde area. I would refer the right hon. Gentleman to the first annual report of the Strathclyde Regional Council. Dealing with educational deprivation, the report stated that 85 per cent. of the population within the region had no recognised educational qualification. We must not perpetuate such a situation. The Under-Secretary of State for Scotland in an article in the Glasgow Herald of 22nd September admitted
  "… we have a new scourge: schools which have become the new ghettoes of education."
  I hope that he will not forget the commitment to try to eradicate those ghettos.
  Another worrying aspect for the whole of Scottish education lies in the decline in the number of working-class children going through university. The main sufferers are working-class males. I refer the Government to an article in New Society on 21st October this year which, referring to working-class males in Scotland, said:
  "… whereas they formed 24·6 per cent. of the univirsity student body in the earlier period, ten years later this had fallen to 18 per cent. This change affected both the ancient and new technological universities equally".
  There is no cause for complacency in these figures.
  I was struck by the Secretary of State's definition of the numbers of young unemployed
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  teachers and how many were likely to be employed as a result of the Bill. I cannot accept that job creation schemes are a creative and useful way of employing highly skilled and qualified people whose talents could be so well used in these areas to which I have referred. I accept that the job creation scheme is a temporary measure, but it seems a terrible waste of resources. I do not see how many of these youngsters employed in this way will be taken out of the job creation schemes into education as a result of this measure. There appears to be no guarantee that any substantial number of young unemployed teachers will gain employment. I feel that we are tinkering with the situation.
  What will happen next year? Shall we see a continuation in the reduction of the retirement age? Anyone who goes into a school at 4 o'clock on a Friday afternoon anywhere in Scotland will find most teachers willing to say "Let's retire at 40, as long as we can have our pensions" What are we planning to ensure that next year teachers find the opportunities within the school system? The Secretary of State made great play on this question of the discretion of local authorities in individual cases. I have no reason to doubt what COSLA was saying but I wonder how much freedom there will be for a local authority, given the current public expenditure background.
  The people who will be asked to retire under this measure will be higher up the scale in educational terms and will therefore be receiving higher salaries. It would seem to be one way of saving some money—not a great deal—to retire people who are on a higher scale and to employ younger teachers lower down the scale. I feel that this is a subtle pressure which may be put upon local authorities and which will militate against discretion being exercised in all cases. The local authorities will have to set against the employment of teachers the demands of social work departments and the pressures which they are facing.
  Since I am the only woman who has remained here through the debate I hope that the Under-Secretary will not think that I am speaking as a "Women's Libber" if I say that I feel that the Bill will adversely affect women teachers in schools. Many married women and widows came back to teaching through the

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  special recruitment scheme. Many women were away from teaching for 10 or 15 years, for obvious reasons. They want to use the extra four or five years at the end of their career to guarantee them an additional pension right. What kind of guarantee will be given to these women that they will have the pension they deserve when they retire? We must bear in mind that these are the women who most often did not seek promotion within the school system. They were the people who kept the schools going as assistant teachers and on whom our education system is totally dependent.
  Like others who have spoken, I have reservations about the dates that have been chosen. I will not reiterate the points that have already been made. The Under-Secretary is aware of the brief from which these comments came and of the arguments against the dates. Perhaps, in replying, he can give a commitment to the effect that he will look again at the dates and perhaps opt for a more sensible date, such as the end of February, which I understand is one which the teachers' unions seem to like. Can he tell us whether he will consider the question of compensation for those who will lose out on what they would have received for, say, five years' service? Will some kind of compensation for these people be accepted in Committee? Many of them would like to retire but they are worried about their pension level, and that is understandable with current inflation rates.
  6.4 p.m.
  Mr. Tam Dalyell: I shall confine myself to one factual question. It arises from a discussion I had at an excellent concert given by the Lothian School Orchestra, which played a Dvorak Symphony in the Music Hall in Edinburgh—following coaching at the West Linton Centre and many weeks of work by music teachers in the Lothian Region. How does this Bill affect music, in which subject in a number of schools there are still acute shortages?
  I realise that it would be awkward to pick out one subject and to say that the regulations cannot apply to it for certain reasons but I do ask my hon. Friend whether consideration has been given to how the Bill affects the supply of music teachers.
  6.5 p.m.
  Mr. Malcolm Rifkind: I listened with great interest to the speech of the hon. Member for West Stirlingshire (Mr. Canavan) and in particular his remarks about refugees from the classroom and the various posts they were occupying in the public interest at present. I share entirely his view that the quicker these refugees get back to the classroom the better it will be for the public, although I can understand that there may be some doubts whether it would be in the interests of the children as a whole so far as certain of these gentlemen are concerned.
  I agree with the general view that it is important that all should be done that can be done to promote the interests or teacher employment hi Scotland. What is extraordinary about the Bill is that the only measure which the Government seem interested in bringing forward aims at helping teachers at one end of the spectrum by making those at the other end unemployed. A system of compulsory redundancy or compulsory retirement is not the most appropriate or sensible way of pursuing the interests of teacher employment, even if it were to make a major contribution towards solving that problem, which all of us concede is not the case.
  Not simply in the sphere of education, but generally, I have great reservations about—indeed I am quite hostile to—the whole principle of compulsory retirement for all persons, irrespective of their individual desire to continue with their work and irrespective of the desire of their employers to continue with their services.
  I entirely accept the view of the hon. Member for West Stirlingshire that in general it is desirable that we should move towards a society where people can retire earlier. However, I add the rider—"If they want to". In many occupations people will be delighted to retire at the earliest date that will guarantee their pensions. But there are other cases, and teaching is one of them, where many persons find that they are at the height of their capabilities, thoroughly enjoying their work and making a major contribution, when they reach the age of 65 or even 70.
  That emphasis should be on compulsory entitlement to retire rather than an

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  obligation to retire irrespective of the circumstances prevailing at a particular time. What worries me about the Bill is that it insists that teachers—irrespective of their ability and the contribution they are able to make towards the good running of schools and irrespective of the desires of teachers, pupils and the public—will be forced to retire at a specific age. This will certainly apply to those in promoted posts. There may be a substantial net damage done to educational interests as a result of this compulsory measure.
  All Governments over the years have been guilty of using the age of retirement as an artificial way of boosting the employment figures for teachers in Scotland. If we look back over the past 20 years we see that in 1956, at a time when there was a shortage of teachers, the retiral age for promoted and non-promoted teachers was raised from 65 to 70. This was not because of what it might achieve in itself but simply because of the contribution it might make towards the retirement situation.
  In 1970 there was a relative increase in the problem of unemployed teachers. So the age of retiral for promoted teachers was brought down to 65 while for non-promoted teachers it remained at 70. Now the age of retiral for non-promoted teachers is also to be brought down to 65. There seems to be a rather arbitrary juggling with age of retiral. What we should be concerned with are the more substantial reasons why unemployment exists in the profession and what can be done to guarantee the livelihood of teachers.
  Another point relates to the problems to be faced by the 400 and more teachers to be affected by the Bill. Many of them will have been working, saving and planning on the assumption of at least another five years of employment—and a major factor, when approaching retiral age, is the length of time one can expect to continue in employment on full salary. Now, under the Bill, come 1st January next, unless the local authority wishes them to continue, they will find themselves on the street, with their pension entitlement reduced but without the benefit of the full salary which they had every reason to expect to be receiving for another five years if their health justified it.
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  This is a dangerous precedent. Many of these people came into the profession, or back into it, only because of enticement by the Government, urging them in the public interest to respond to such blandishments. Now, with the minimum of notice, they will find themselves unemployed without further prospect of employment. These are important problems and reservations about the Bill.
  One can say that these problems and reservations have to be accepted in return for the major benefits which the Bill will have. But what are the benefits? The maximum number of jobs which could be created as a result of the Bill is about 400. But we do not know how many of these 400 teachers are in departments where there is a shortage of jobs. I asked the Secretary of State earlier whether that had been taken into account, and what proportion of the 400 were in departments where there were job shortages. I was astonished when he replied that he was unable to give the information because, he said, it was not available, and that it would be up to the local authorities to decide whether they wished to continue with the employment of teachers because of shortages in, say, mathematics.
  Before they put forward the measure for compulsory retirement, the Government should have made some effort to establish how many teachers in areas where there were job shortages—in subjects and departments where there were people ready and willing to take these jobs—would continue as a result of the Bill. Surely the Government with all their facilities, should have been able to provide such information. If it turns out that a large proportion of the 400 will be asked to continue by the local authorities, we shall have been wasting our time with the Bill. All it will have achieved is to put into unemployment a small number of individuals without significant benefit in return.
  Finally, there is the question of flexibility in the Bill. The hon. Member for Aberdeen, North (Mr. Hughes) pointed out that in non-promoted posts teachers could continue indefinitely, if the local authority wished, for a year at a time, whereas in promoted posts, teachers could continue only for a maximum of three months. I have a letter on this aspect from Dundee High School. I am not sure

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  why it wrote to me, but it is a matter of general interest.
  The school has a rector who reaches his 65th birthday in November. It wishes him to continue as rector, because it employed him on that basis, until June 1977. He agreed to do so in advance of the Bill's publication. As a result of his agreement to continue until June, a programme of internal reorganisation of the departments was put in hand, to be organised by the rector in his final year to be handed over to a new rector as a completed project. The school informs me:
  "It will be extremely difficult for us to complete this particular project if the rector is forced to retire on 31st March 1977."
  The school authorities press for some flexibility which would allow, instead of the three months which the Bill provides, a period of six months, which is the term which would be required in this case in order to enable the present rector to complete the internal reorganisation which only he is capable of carrying out. The school and the pupils will suffer as a result of the unnecessary urgency in the Bill.
  However, when I wrote to the Under-Secretary of State, he replied:
  "To go beyond the period of three months would, in my view, tend to undermine the primary object of the Bill."
  That is an unfortunate answer. He is saying, in effect, that if there were discretion in the Bill for the authorities in very special cases, such as that of the Dundee High School, to allow, in the overwhelming interest of school and pupils, a certain individual to remain at his post for a mere 12 or 13 weeks longer, it would destroy the purpose of the Bill.
  I shall move an amendment accordingly in Committee, and I hope that the Under-Secretary of State will reconsider his answer and will be able to give a more comprehensive reply to these points and, if possible, allow greater flexibility to enable us not only to meet such cases but to welcome the Bill with slightly greater enthusiasm.
  6.16 p.m.
  Mr. J. M. Craigen: There seems to be general agreement on the principle of the Bill, which will allow for older teachers over the age of 65 to make way for younger men
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  and women to obtain employment in the teaching profession. However, so many figures have been bandied about that it strikes me that hon. Members are right to have some misgivings about certain of its practical effects.
  For example, in June, the Secretary of State advised me that the latest date for which information then available had been analysed was September 1974, when there were 264 and 126 full-time teachers in education authority primary and secondary schools respectively who, by 31st December 1974, would have reached their 65th birthday. He pointed out that information about the number of teachers who had reached their 75th birthday was not readily available. Yet many hon. Members have heard examples of people who are over that age and still teaching.
  A genuine problem seems to exist over the matching of subjects in our schools My right hon. Friend, in opening the debate, told us that the problem of the maldistribution of teachers throughout Scotland on a geographical basis has been largely overcome in recent years, but we still have a problem over the supply of teachers for specific subjects. How seriously is this problem being tackled by the Scottish Education Department? We have a shortage of mathematics teachers in our schools, and perhaps we could do with one or two more mathematicians in the Scottish Education Department to sort out some of these figures.
  My hon. Friend the Member for Glasgow, Springburn (Mr. Buchanan) said that special consideration should be given to those who came into the profession as a result of the Special Recruitment Scheme. I think that he is right. We have a duty towards those who very often left other employment in order to enter the teaching profession. They should be very sympathetically dealt with by the Scottish Education Department. At the same time, we are going to throw quite a burden on the local authorities, which will have to assess the future requirements. One of the things worrying many people, including those serving on local authorities who have to bear the brunt, is that natural wastage may be used instead of filling vacant posts with the younger men and women we would

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  like to see gaining employment in the profession.
  I hope that the Minister, in his reply to the debate, will give us some assurances that the effort now being made by this small measure will result in more jobs becoming available for younger entrants to the profession. Certainly the local authorities will be involved in a good deal of individual case work in ironing out some of the personal difficulties of teachers over 65 who for one reason or another feel that they are being unjustly treated.
  With regard to the problem of deprived areas, I was one who argued that the job creation scheme funds should be used for the employment of teachers. However, it was not in my mind that the funds should be used simply as a means of providing short-term employment. Rather I had argued, as the Minister well knows, that the funds, which at that time were available to the job creation scheme in Scotland, should simply be transferred to the Scottish Education Department for the purpose of providing additional jobs.
  I am bound to say that many of us at times despair about seeing any real improvements in some of our deprived areas. They are always at the end of the queue at the best of times, and in these lean days we should, if at all possible, be making many more efforts to ensure that at least they can nudge their way a little higher up the queue.
  6.22 p.m.
  Mr. Hector Monro: I am glad to follow the hon. Member for Glasgow, Maryhill (Mr. Craigen) because a number of the points that I wished to make are very similar to his.
  I am, like my hon. Friend the Member for Ayr (Mr. Younger), supporting the Bill because of the position we are now in, but the reason we are in this position is basically the fault of the present Government. Had the Government's economic policies not been such a miserable failure, and had we not to cut back expenditure in order to survive at all, we should not be introducing a Bill of this nature today, because the local authorities would be able to employ the vast majority of the teachers who have not a job at the present time. This argument applies to teachers themselves, school
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  building, education services generally, and to the auxiliary staff which could be employed. I feel particularly strongly about the fact that under the present Government we have never got off the ground at all with nursery education.
  As the hon. Member for Glasgow, Maryhill said, very poor resources have been made available for the deprived areas. But the Government are at the same time perfectly happy to increase expenditure on school milk and school meals. Therefore, while accepting the Bill, I emphasise that it is a culmination of the policies of the present Government.
  I hope that the Minister, in winding up the debate, will say something about the inclusion in the Bill of the grant-aided schools. The Minister is busily trying to phase out and abolish the grant-aided schools—an infamous policy, if ever there were one—yet he is including the grant-aided school teachers in the Bill. When will he complete the phasing out of the grant-aided schools? These schools would, of course, much rather have the substantial grants that they would be getting if there were a Conservative Government in power at the present moment.
  I should love to know what has gone wrong with the statistical department of the Scottish Education Department. I know that the computer was singularly unreliable and broke down at the first sight of a student grant or allowance, but why cannot we have simple statistics on the number of teachers either in employment or unemployed? Now that there are so few education authorities, surely it is not so difficult to produce the facts that all hon. Members would like to have when dealing with a Bill such as this.
  The right hon. Gentleman the Secretary of State indicated that the number of unemployed was about 450. There are also 1,000 teachers employed on a temporary basis, of course, under the job creation scheme, which we welcome. Some actions taken under the scheme are particularly valuable. But these must be regarded as only temporary jobs, and perhaps the Minister in winding up the debate will tell us whether in general he thinks that this position will continue for a few years to come. This in itself, of course, is a further condemnation of

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  his Government's economic policy, but it would be useful to know that 1,000 teachers are doing something worth while at the present time.
  The Government hope that some 400 teachers will retire under the Bill. I do not know whether this is possible for him without a calculator, but, in relation to the 400 teachers, will this retirement work out by subject? I am under the impression that a substantial number of the 400 are in mathematics and science, and that among the unemployed there are not very many in mathematics and science. Shall we, because of the Bill, end up with a shortage of teachers of mathematics and science?
  I am sure we all agree that many teachers in the latter stages of their professional life have done most excellent work in a period of great difficulty, when teachers have been in short supply. I feel particularly sad in regard to those teachers who were late starters and came in under the Special Recruitment Scheme. As mature students, they have been particularly valuable to education. Many of them had had experience of life in the professions or in business, and were able to add something to teaching in joining at 35 or 40 years of age. They will now find, unfortunately, that their careers have been shortened by the Bill, and no doubt their pensions have been reduced substantially.
  The Minister cannot dodge this issue, and I am sure that he will explain the reason for 1st January as the retirement date. It has been made abundantly clear by the teaching associations that 1st January is the worst possible date in the year. Had 2nd January been chosen, teachers would have had a better pension. Did the Department pluck 1st January out of the blue, or did the draftsmen do this? There seems to be some reason for the Minister going out of his way to cut the pension of these teachers, who are also having their employment terminated.
  I hope, too, that the Minister will explain whether he now has time, under the Employment Protection Act, to give the statutory notice to the teachers who will be unemployed on 1st January. As I read it, the teachers are entitled to so many weeks' notice for so many years'
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  service. I am not at all sure that the Minister will be able to fulfil his duty under the Act in respect of those teachers who will leave on 1st January. For the life of me, I do not know why he did not give them their pay at least until the end of the holiday. Each of these cases may well be a personal tragedy to the individual teacher concerned. I hope that the SED and the education authorities will be as sympathetic as possible over the coming months.
  I, too, feel that many of the teachers who will be retired compulsorily are those who have given extremely good service in single-teacher rural schools—posts which are supposedly difficult to fill, or so education authorities believe. However, with the number of unemployed teachers at present, I doubt whether that is strictly true. In any event, I feel extremely disturbed about the willy-nilly closure of rural schools despite the protests coming from parents.
  Will the Minister also say a little about whether this proposal affects List D schools? It is not clear from the Bill. We are extremely concerned about what the Minister is doing to the List D schools and the action that he proposes in the face of the Mitchell Report which is still not yet before the House—
  Mr. Deputy Speaker: We are not discussing List D schools.
  Mr. Monro: I appreciate that we are not, Mr. Deputy Speaker. However, teachers in List D schools may be retired compulsorily, and this is very important.
  Mr. Deputy Speaker: That is a different point. The hon. Gentleman was asking the Minister what he proposed to do about the running of the List D schools.
  Mr. Monro: I shall not pursue the matter, of course, but I am sure that the Minister has taken the point that we are gravely concerned about the position of teachers in List D schools now and if he carries out his threat to hand the schools over to the local authorities.
  I welcome the improvement in pupil-teacher ratios, both in primary and in secondary schools, which has in effect caused the surplus of teachers. However, as I have explained, this is also due in large part to economic circumstances. Looking back at the 1972 White Paper,

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  we are very much on course in terms of pupil-teacher ratios, teachers in post and pupils in school. Therefore, we must ask the Minister whether the real error here is not the number of students who have been taken into colleges of education, whether as primary students or as graduates. I take responsibility for those who went into colleges in 1973 on three-year courses. They came out qualified this year. However, thereafter it is the responsibility of the present Government, and I want to know why, in the face of the improving situation and in the face of the figures available in the White Paper and in the SED, the Minister apparently continued to allow an increase in the number of entrants to colleges of education, both of primary and of graduate students.
  The Minister must look at this position very seriously from the standpoint of graduates. Why was it that in 1975 he allowed in 300 more than 1974–75? Surely, 12 months ago, he could see what was happening. He must have been able to. I cannot believe that he was so remiss as not to look at the figures. Why did he allow in that substantial additional number? Was it the result of pressure from the teachers association or from the colleges, or was it that he did not know when to put on the brake? I am talking about secondary entrants a year ago—
  Mr. Teddy Taylor: It was the computer.
  Mr. Monro: It is very important that the Minister should answer this question. There is no doubt that the 1973 entrants who are coming out now would have had jobs had we not been in the chronic economic situation that we have today.
  Here is a Bill which we have to accept because of Government failure at a time when standards seem to be static and when we should be looking towards an improvement in education rather than a deterioration. Whether it be in discipline, in moral and religious education, in nursery education or even in sport and recreation, we do not seem to be keeping up our standards. All in all, we feel sad that such a Bill is necessary. It is because of the Government's failure to understand the economic facts of life that it is before us. However, in view of what has happened and in order to help the very large
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  number of teachers who are without work, we must support the Bill.
  6.35 p.m.
  The Under-Secretary of State for Scotland (Mr. Frank McElhone): If I were to attempt to reply to all the matters raised in this short debate, I should be speaking for an hour—
  Mr. Teddy Taylor: There is plenty of time.
  Mr. McElhone: As the hon. Member for Glasgow, Cathcart (Mr. Taylor) says, there is plenty of time. However, a number of Opposition Members have made positive contributions to the debate and have now left the Chamber. I am surprised that they have not had the courtesy to return in order to listen to the ministerial reply. However, they may yet come in. Time will tell.
  It is only fair that I should begin by thanking hon. Members for the interest that they have shown in the debate and for their many positive contributions to it. Of course, I do not agree with all that they have said. But they have shown a lively interest in the Bill and in Scottish education as a whole.
  There were a number of accusations made during the debate to the effect that we were forcing teachers out of schools and making life very difficult for them. That is quite untrue.
  Let me respond to the main points put forward in the debate. It has been suggested that the Bill discriminates against poorly paid teachers, widows, and others entering late who have short service. This criticism comes mainly from the Scottish Secondary Teachers' Association. Of course, the Government recognise that there are bound to be instances when teachers will need to stay in employment for personal reasons. That is why we have an element of flexibility in the Bill. If I may restate the main principles, a promoted teacher retires at 65 and may carry on for three months so as not to disturb a period within a term, and a teacher who is not promoted could go on to 70 prior to this Bill.
  The reorganisation of local Government, put forward by the Conservative Party following the Wheatley recommendations, stressed the need to give more and more responsibility and more and more decision making to local authorities.

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  That is what we are doing. We are following the process of Wheatley and local government reorganisation. We are saying to the local authorities that if for any reason they feel that a teacher who should now retire at 65 wishes to go on, he may be allowed to do so at the discretion of the local authority on a year-to-year basis. This will also apply to positions of subject shortage. Although we are glad to see the tremendous increase in teacher supply, we realise that there is a shortage in such subjects as technical education, science, physics and music.
  My right hon. Friend made the point that he had been given an assurance by COSLA that it would look at every case in a sympathetic fashion. Those of us who have spent some time in local government and have heard the word given by the local authority chairman of COSLA can be assured by that. The Government think that this is an assurance of great importance and are sure that they can rely on the good will and humanity of education authorities.
  There has been more than one reference to the Special Recruitment Scheme. The scheme was intended for applicants under 45 years of age, which means that those retiring now at the age of 65 will have at least 20 years' service. The booklet issued to those interested in the scheme indicated that a teacher could retire at any age after 60 and draw his accrued pension rights. Nowhere does it say that a teacher must stay on until 70 years of age. More than half of those affected will have more than 20 years' service on 1st January. They are those who came in under the late entry scheme.
  Mr. Dalyell: Is it correct to say that the Bill will not disadvantage teachers of music?
  Mr. McElhone: I regard music as an important part of the curriculum. It is as important as many other subjects. We are thinking about it and all I can promise is that music will get the same treatment as other subject in which there is a shortage.
  Mr. Iain MacConnick: In the present economic crisit can the Minister really be saying that the teaching of music is as important as the teaching of many
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  other subjects more closely related to the economic wellbeing of the country?
  Mr. McElhone: As he is a gentleman and a cultured Highlander, I would have thought that music was important to the hon. Member as part of his own culture. I do not wish to accuse him of being a Philistine, but I had imagined that he would regard music as part of the Celtic culture of Scotland.
  Mr. Teddy Taylor: The Minister has been most helpful but did he say that about half of those affected by the Bill had 20 years' service or more?
  Mr. McElhone: I was referring to the special recruitment scheme and those who came in as late entrants.
  It has been suggested that the period of three months allowed for the reemployment of promoted teachers is not good enough. In 1969, when the retirement age was reduced to 65, the teachers' unions and local authorities gave that move their unanimous support. In order to open up the promotion log jam the teachers' unions pressed the Secretary of State of the day to allow a reduction to 65. We recognise that today a 65-year-old teacher who is in a promoted post may be engaged to carry on in a non-promoted post if he specialises in a subject in which there is a shortage. It is possible that even a teacher in a promoted post will be a late entrant and get promotion.
  The hon. Member for Edinburgh, Pentlands (Mr. Rifkind) referred to the decision about the rector of Dundee High School. That situation has nothing to do with the Bill. The situation of a rector, which is a promoted post, was decided in 1969 when the teaching profession, unions and local authorities were unanimous in the view that a promoted teacher had to retire at 65. I do not believe that the teaching profession in Dundee in particular will say that a rector or principal is irreplaceable. There are plenty of deputies and others who could fill such a position.
  Several hon. Members said that teachers should be given compensation if they have not completed a certain length of service. But at present 90 per cent. of teachers voluntarily retire below the age of 65. The argument is that compensation should be paid for loss

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  of expectations. Section 82 of the Education (Scotland) Act 1962 makes it clear that a teacher holds his appointment during the pleasure of the education authority. Since there is no vested legal right that has been taken away, there can be no vested legal right to compensation.
  The most controversial issue which has been raised by all hon. Members is the starting date of 1st January. That date will leave only a few weeks between Royal Assent and the coming into operation of the measure. Several hon. Members have raised the question of a possible conflict with the Employment Protection Act—a matter which was raised by the SSTA in submissions to hon. Members. The issue is not one of losing a job or of redundancy. It is a question of the time of retirement—a subtle difference. There is no question of a school or factory closing down. All hon. Members will accept that 65 is a good age to retire and that it applies to nearly every job in the country.
  Hon. Members also questioned the teachers' contract' and asked whether teachers should be paid to the end of the school holidays. When a teacher decides to leave the service or voluntarily to retire, he normally gives four months' notice to the education authority so that his superannuation can be worked out. But hon. Members did not mention that teachers also get a lump sum after a number of years' service. The average figure last year for men was £6,000—a sizeable sum. The amount is justified but many people in industry who do heavy jobs most of their working lives do not have a job expectation until they are 70 years of age, or even until the next day. They certainly do not receive £6,000 in a lump sum when they retire.
  For the year ended 31st March the average pension for a male teacher was £2,165 or £40 a week, and for a woman teacher £1,354. The average lump sum paid to teachers in the same year was £6,158 for men—a sizeable sum by any standards. Many hon. Members who were unfortunate enough to lose their seats would be grateful if they could draw a benefit of that size. The average male pensionable salary for the year ended 31st March this year was £4,985 and for a woman, £3,430.
  The hon. Member for Dumfries (Mr. Monro) talked of List D schools, to which
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  this Bill does not apply. My hon. Friend the Member for Aberdeen, North (Mr. Hughes) asked about the distribution of teachers. During his period of office he worked hard on that matter. The director of Strathclyde Education Authority said on 21st October in the Glasgow Herald that in all six areas of the region the staffing was good. He said that the position was comparable with the best in any European country.
  We now have the best pupil-teacher ratio we have ever had in Scottish schools. Despite the financial difficulties, teachers' salaries during this Government's period in office have increased by 67 per cent., a sizeable increase by any standard. We must also accept that the primary school figures have been dropping consistently. Strathclyde's primary roll dropped by 7,000 last year, and between 1975–76 and 1979–80 it will drop by over 100,000.
  The hon. Member for Ayr (Mr. Younger) talked of the Government's not meeting their financial commitments and opting out. He must recognise that for the first time in 30 years we have no part-time education in Glasgow and West Scotland. That is an achievement.
  No one is happy about there being unemployed teachers. No one is happy about anyone's being unemployed. But a year or two ago in my area and other areas of Glasgow it was depressing to talk to young people, to find that they had left school with no grades, and to hear them explain "I had a teacher for only half a day". I do not wish to be provocative, but many of us who represented the poorer areas of the city thought that all too often teachers who were supposed to be teaching within the Glasgow Education Authority area opted for the less difficult areas. The East End and parts of my constituency suffered grievously because of the lack of vocation of certain teachers at that time. But I should not be churlish and deny teachers their lump sum and pension. They provide a tremendous service to Scotland, and we look to them to provide the better citizens for the future.
  To sum up, it would be wrong to think that we are chasing teachers out of schools, or forcing them to retire, when 90 per cent. retire before the age of 65. A promoted teacher will still have three months to finish the term and not disrupt a school curriculum. A teacher aged over

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  65 may, with the consent of the local authority, work from year to year—
  Mr. Neil Carmichael: Will my hon. Friend consider bringing out one or two points, at least in Committee? He has not mentioned the numbers likely to be affected and the important question, raised by my hon. Friend the Member for Aberdeen, North (Mr. Hughes), of a circular so that there is fairness between the education authorities with regard to those who stay on and those who are forced to leave.
  Mr. McElhone: I can tell my hon. Friend, who, I know, takes a great interest in education, that we shall consider any points raised. If I take the Committee stage, I shall consider any suggestion made by hon. Members on either side of the House.
  As for any question of lack of consultation, I have had three discussions with the General Secretary of the SSTA and two with representatives of other teachers' unions. Last Thursday I spent a considerable time with the President and General Secretary of the SSTA. We take very seriously all the matters that are raised. We do not have blinkered attitudes to the benefits of the Bill. We are not saying that we have a panacea for the problem of unemployed teachers, but we do say that the Bill is a useful step forward which we hope will take a fair number of unemployed teachers out of the labour exchanges and will continue to do so from year to year.
  Mr. Younger Mr. Younger rose—
  Mr. McElhone: I am coming to the very end of my speech. We are not blind to any sugegstions from either side of the House. Hon. Members will always find me very receptive to any worthwhile suggestions that do not cost a great deal.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. James Hamilton.]
  Committee tomorrow.

  RETIREMENT OF TEACHERS (SCOTLAND) [MONEY]
  Queen's Recommendation having been signified—
  Resolved,
  That, for the purpose of any Act of the present Session to make provision as regards Scotland with respect to the age of retirement of teachers it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the said Act of the present Session in—

  (a) the sums payable out of money provided by Parliament by virtue of the Education (Scotland) Act 1962, the Pensions (Increase) Act 1971 or the Superannuation Act 1972; and

  (b) rate support grant.—[Mr. Millan.]

VALUATION AND RATING (EXEMPTED CLASSES) (SCOTLAND) BILL [Lords]
Order for Second Reading read.
6.56 p.m.
The Secretary of State for Scotland (Mr. Bruce Millan): I beg to move, That the Bill be now read a Second time.
The Bill follows my announcement on 14th April that I intended to introduce legslation, first, to clarify the rating position of offshore oilfields, oil rigs and installations, and, secondly, to establish that the toll bridges continued to be exempt from rating liability.
With regard to oil installations, three North Sea oil fields lying many miles offshore have already been entered in valuation rolls by local assessors and the action of the assessors is being challenged by the oil companies in the courts. Since the question is sub judice I can say only that the seaward limits of local authority areas are not clearly defined. In consequence, the assessor can establish the rating position of a property only by entering it in his roll, and letting the courts decide the matter on appeal.
Whatever the outcome of the appeals which are pending on the offshore cases, or others which may arise, there is a strong risk that they will do nothing to establish the position generally. In other words, it is possible that, for the time being at least, the courts may have to decide the rating question field by field

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and pipeline by pipeline, without the benefit of the Bill. Moreover, local authorities might have differing ideas on the seaward projection of their boundaries and there might be conflict over who should collect the rates. Clearly, we must provide a sure and simple alternative to continuing uncertainty and the expense of litigation for local authorities and oil companies alike.
It is, I think, generally accepted—I know that the view is held in the House—that oil fields and installations should not be liable for local rates. Petroleum operators pay their fair share of taxes in the form of corporation tax and petroleum revenue tax which can amount to 75 per cent: of revenues. They also pay local rates on onshore installations.
The Government have also seen that the public interest is fully protected in offshore exploitation by the establishment of the British National Oil Corporation and by the arrangements made for public participation by BNOC in existing and future licences. Therefore, there is no question but that overall the offshore oil industry pays its fair share of taxation. If we find any defects in existing legislation on these matters, there is ample opportunity to put them right by amendments to corporation tax, petroleum revenue tax and the rest. It has always been my view, and it is certainly the Government's view, that rates should not be paid on offshore installations. The purpose of the Bill is, first, to put that matter beyond legislative doubt.
The exempting powers in the Bill are not limited to petroleum subjects. They will be exercisable in relation to property of any description which lies, at least in part, below low-water mark at ordinary spring tides. This means that the powers will allow the second purpose of the Bill to be implemented, namely, the correction of an error in the Local Government (Scotland) Act 1973.
Section 225(8) of that Act nullified all local Act provisians relating to valuation and rating and so deprived the Forth and Tay road bridges, which are local authority undertakings, of rating exemptions. That was not intended by the 1973 Act. It was one of those mistakes which sometimes happen, and it has to be rectified if we are not to find the Forth and Tay road bridges subject to local rates.
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I am sure that no hon. Member would welcome the effect which that would have on the tolls for those bridges. There is a good deal of agitation for the removal of tolls, and, so far as I am aware, no substantial pressure group either in the House or elsewhere for the increase of tolls. If the exemptions are not restored, the tolls might have to be about doubled to meet the rate bills which might eventually ensue. We do not want that to happen, and the Bill provides a vehicle to enable me to ensure that it does not.
I have explained the provisions of the Bill only briefy since it is, I think, uncontroversial. There may be points about the drafting and particular provisions which hon. Members will wish to raise in Committee, and my hon. Friend and I will be happy to deal with such matters then.
I come now to the general structure of the Bill. Clause I confers on me as Secretary of State the power to prescribe by order types of rateable property which are to be excluded from the valuation roll, with the result that they will be exempt from rates. In other words, it gives me a flexible power, but an order may affect only lands and heritages which lie wholly or partly on, over, or under the bed of the sea. Hon. Members will note that that definition covers not only offshore oil installations but the two bridges as well.
Mr. John Corrie: Would this cover an oil rig being built in a rig building yard out in deep water and so below low-water mark—at Hunterston for instance?
Mr. Millan: The normal process is that the initial stages of building, whatever kind of structure it may be, take place onshore, or certainly at the edge of the shore, and it would not be my intention that that would be excluded from rating liability. However, once the structure had been moved out, whether to be completed or to be installed eventually somewhere in the North Sea, it would be my intention that the structure should not then be rated. I am not trying to deprive local authorities of rates which they should legitimately have. The Bill is drafted to enable me, with the approval of the House, to deal flexibly with particular circumstances. It would be difficult to write all such matters into the Bill and

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be sure that we had the correct answer. That is why the procedure of prescription by order has been decided upon.
I was saying that I may make one of these orders for lands and heritages which lie wholly or partly on, over or under the bed of the sea. In the order I can also prescribe complete or partial exemption.
There has to be an element of retrospection in the Bill as the House will recognise, because there are oilfields already on the valuation rolls. They are subject to dispute, but they are there, and the order-making power will in the first instance, therefore, allow exemption to be extended to the year 1975–76, which means going back a bit. Subsection (2) adjusts the power to back-date exemptions to the power of the assessor to back-date valuation roll entries under Section 2 of the Local Government (Scotland) Act 1975.
The only other point I should mention about Clause 1, which I hope is reasonably self-explanatory, is that the exempting power is subject to strict parliamentary control under the affirmative resolution procedure. That is provided for under subsection (7).
Clause 2 contains a procedural provision which will allow me to direct assessors to refrain from valuing a property which might be covered by a proposed exemption. This is to prevent unnecessary complications arising by having property valued, and a whole lot of procedures gone through to nugatory effect because it is intended that there should be an exemption. Under Clause 2 I can give a direction to prevent that happening, but in so doing I am under a commitment, in the terms of the clause, as soon as possible after giving such a direction to tell the assessors whether an order is to be made; and, if no order is to be made, I have to revoke the direction. In other words, Clause 2 is a holding provision to prevent unnecessary work and to allow the question of exemption to be considered before matters have gone too far.
I think that the Bill has been generally accepted as a sensible measure. It will, I hope, put a complicated piece of valuation law on a firm footing, though doing it in a flexible way. I commend the Bill to the House.
7.6 p.m.
Mr. Teddy Taylor: Our view on this Bill is the same as our view on the Retirement of Teachers (Scotland) Bill—that we do not oppose it in principle, although, since it is a complicated measure, there are several questions to be raised.
No doubt, when right hon. and hon. Members heard reference to offshore structures, a good many had the word "hybrid" cross their minds. I am sure that this is not a hybrid Bill, but I want an explanation of Clause 1(8). This is a most unusual subsection. I imagine that there may be a precedent for it, but I should like to know, since it provides that, if an order is made exempting a particular category of oil rig, oilfield or bridge from rating, and that might well be within the category of private legislation which should be referred to a Private Bill Committee, whereas the subsection provides that, irrespective of that, the order would go through the Public Bill procedure.
In such circumstances—one recalls here what happened over the Aircraft and Shipbuilding Industries Bill—one side of the House might take the view that there was a case for suspending Standing Orders, and it seems unusual that we are, in effect, providing that Standing Orders are suspended in all such cases before matters are considered. Why do we have subsection (8)? Is it necessary, and is there a precedent?
Second, bearing in mind that the Bill covers a wide range of subjects, although the Minister said that he intends to use it only in a certain respect, it would be helpful to know the extent of the rateable value which could be affected by the Bill. Certain things which have been entered on valuation rolls will be removed. On the other hand, as my hon. Friend the Member for Bute and North Ayrshire (Mr. Corrie) said to me earlier today, it seems that the Bill could be used as a device for taking out of the valuation roll things which have been there for many years and about which there has been no contest or dispute—for example, moorings, wharves, quays and even salmon fisheries, to which we shall come later. It seems that this provision could be used as a means for taking out of the valuation roll things which are there now, and this could seriously

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affect the rate poundage in areas where such land or properties appear on the valuation roll.
I raise that matter with special force because there is a desperately serious rating problem in Scotland today. On Thursday last, the Secretary of State told me that the average householder in Scotland is paying £123 in rates this year compared with only £64 five years ago. The burden of rates per head of population has risen from £42 to £86, and all the indications are that this year there will be a further substantial rise. We know that the Secretary of State intends to exempt certain oilfields, oil platforms and bridges, but what other things, which are included in the valuation rolls, could be exempted?
It has been made clear both here and in another place that the object of the Bill is to ensure that the benefits of oil revenue accrue to the nation as a whole and not to particular areas of Britain or to particular regional or district authorities. I wonder whether the Secretary of State might not have a major problem in implementing the orders because of the Government's proposals to establish a Scottish Assembly. The congestion of parliamentary business has caused this possibility to recede a little, but the Government are committed to introducing legislation and I should like to know whether the Assembly will have to approve the orders. If the Assembly refuses to approve an order, would the Government have power to overturn that decision?
There are some people in Scotland and some political parties who do not believe that oil revenues should accrue to the benefit of Britain as a whole. If the people of Scotland are deluded into giving them substantial support in the Assembly elections, we might have misguided assessors and Scottish National representatives in the Assembly ensuring that the oil companies have to pay substantial sums in rates—which could cause considerable damage to the industry and to Scotland as a whole. Are the Government not creating a very difficult problem for themselves in view of the legislation which appears to be coming forward on the Assembly?
Are these orders entirely matters for Parliament and the Secretary of State or
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would the Assembly be involved? If the Assembly refused to approve an order, could Parliament or the Secretary of State do something about it? Serious problems might arise if a local assessor decided to rate all oilfields, platforms and associated works and the Government order to overturn his decision was rejected by the Scottish Assembly.
The Secretary of State said that the seaward limits of local authorities had not been closely defined. I was surprised to read in Clause 3(2):
"Nothing in this Act or in any order made or direction given thereunder shall be construed as extending the limits of the area of a local authority for any purpose."
How do local authority boundaries extend into the sea? Is this made clear in the Bill or in previous legislation? Some items in or partly in the sea are rated and will continue to be rated, but how do rate charges extend into the sea?
There are a number of possibilities. A straight line might be drawn into the sea from the ends of the local authority areas, or the boundary between areas could be extended into the sea. Some people, such as the Scottish nationalists, talk about the possibility of independence for Scotland, which many of my hon. Friends and I would resist bitterly, because we believe in a united Britain. However, the question of boundaries in relation to North Sea oil is very important. If the Scottish boundary with England were extended into the sea in a straight line rather than following the curve which the actual boundary follows, it would result in a different share-out of North Sea oil between the two countries. Have the Government got this problem of local authority areas sorted out? If not, will they make sure that it is done in Committee?
Do the Government intend to exempt fish farming? That would be possible under the Bill. The Secretary of State indicated that he would be exempting only oilfields and bridges, but there is a strong case for the exemption of fish farms. Because of the Government's inadequacy in protecting British and Scottish fishing interests, there has been a dramatic rise in the price of fish and there is the possibility of major problems in future. We have had to concentrate increasingly on fish farming in Scotland.

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I understand that it is now very big business. About 900 tons of trout a year are produced in Scotland by fish farming and one of these splendid companies is producing 200 tons of salmon by intensive methods.
More than £1 million has been spent by the Government on research into fish farming. I understand that these unfortunate fish have to live in floating cages or fenced-off enclosures. I should not like to live in such places, but fish is being produced in that way because it is considered to be a good way of providing food for the nation and food will be a major problem for us in future, as I have constantly warned my hon. Friend the Member for Dumfries (Mr. Monro) and others.
I understand that agricultural land and even agricultural dwellings have special treatment for rating purposes. When I visited the island of Luing, I found it very difficult to establish what was an agricultural dwelling. It seemed that almost every place on the island was an agricultural dwelling. No doubt the hon. Member for Argyll (Mr. MacCormick), who is not here at the moment, could explain this situation. If we give special treatment to agriculture, can we not make a similar provision for fish farming, which will be a major and expanding industry in Scotland and which should be safeguarded?
Although I am making what appear to be criticisms, I point out that no one on this side of the House will disagree with the principle that the oil industry has had about all it can take from this Government and that the imposition of an additional rate burden could do great damage. My hon. Friend the Member for Ross and Cromarty (Mr. Gray), who has spoken so eloquently about the oil industry on so many occasions, knows that the development of oil would have been improved, with more beneficial effects for Scotland, if the burdens and threats imposed upon the industry by the Government had been removed.
Oil companies have been working under the uncertainty and threat of nationalisation and participation. They have had a substantial petroleum revenue tax imposed upon them and also have to pay corporation tax. The net result has been that the people who believed that oil
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would be a cash and jobs bonanza now see that in some tragic instances there are oil platform yards without orders and a great feeling of anxiety among the oil companies about the future and about Government policy.
With all the uncertainties being faced by the industry, it would be wrong to allow another uncertainty by insisting that rates should be paid on oilfields and platforms. We support the Bill in principle, but there are many questions which we shall be hoping to ask the Government in Committee.
7.20 p.m.
Mr. J. Grimond: I have serious objections to the Bill as drafted. I agree with the Secretary of State that rating in the sea needs clarification. I also agree that oil platforms and installations far out to sea are already adequately taxed. But the Bill would appear to go far beyond that.
I understand that the long established principle of rating is that the general principle is laid down by Parliament and that the matter is then handled by the assessors as purely independent administrators, subject to the courts. The Bill gives power to the Secretary of State for a particular purpose. I ask the House to think very seriously whether we should overthrow a long established principle of rating because we run into difficulty in a particular matter. The repercussions may be great.
The Bill applies not only to lands and heritages which lie below the bed of the sea beyond low tide, but to lands and heritages which lie partly below the bed of the sea at low tide. Therefore, some of the Sullom Voe jetties in my constituency could be excluded from rating. Oil installations and oil-related installations which have pipelines and other parts below low water mark could also be exempted. For example, all the single buoy moorings and many other installations within Scapa Flow would be exempted.
The Bill is not only concerned with oil. Every pier and installation on or connected to that pier from a point above high water mark to a point below low water mark could be exempted from rating. I hope that the House will not think that it is all right because the Secretary of State says that he will not

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use his power in this way. We should be drafting precise legislation. Something unforeseen may happen. We know that experiments are going on with the use of the waves and tides for generating energy. These may extend below low water mark and come under the Bill as drafted. Fish farming has been mentioned. That, too, might come under the Bill. The provision that the Bill applies to heritages and lands which lie partly on the bed of the sea below low water mark is extremely wide and should be resisted.
We are told that any order will be subject to the affirmative procedure. But Parliament should not pass what I regard as sloppily drafted legislation aimed at a particular purpose, but going much wider and then get out of it by providing that it will be subject to the affirmative resolution procedure. That is a bad way to legislate. We know about the affirmative procedure—the Government put down a motion, puts on the Whips and that is the end of that. I am not reconciled to the Bill by that provision.
I understand that the Crown Commissioners charge a wayleave for oil pipes on the bed of the sea below low water mark. I do not know what happens above low water mark. In my part of the country, any operations above low water mark come under a udal law and the proprietors control the bed of the sea. I am informed that the Crown Commissioners levy a wayleave up to three miles and that three miles is accepted as the general jurisdiction, except in the matter of fishing rights as far as territorial waters are concerned. I think that the Government should have brought forward a Bill which exempted from rating the bed of the sea beyond three miles. That would have been perfectly satisfactory. It would exempt all the installations, platforms, pipes and deep water operations which they want to exempt. The only objection is that it might not cover the Forth and Tay bridges. However, I am informed that could be done by an amendment to local government Acts.
I beg the House to consider long before passing the Bill. It is extraordinary that the Bill should have been introduced at the end of July in the House of Lords. It introduces an entirely new principle in Scottish rating and will have a wide
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effect in my constituency and elsewhere. The Bill is badly drafted to achieve the purpose which the Secretary of State has in mind. I recommend that he takes away the Bill and reintroduces it in the next Session when it can be properly considered. It should be made much simpler to exempt installations beyond three miles or, if the Government wish, to make it two miles and make special provision or the Forth or Tay bridges.
7.27 p.m.
Mr. Peter Doig: I welcome the Government's intention in introducing the Bill. It is necessary that they should reassure the oil companies that they will not be further penalised for the gamble that they took which, at the end of the day, will probably be in the interests of all our people.
I welcome the Secretary of State's reference to the fact that the Bill will cover the rating of toll bridges. What puzzles me is the way in which the Bill is worded and its implementation by means of statutory instruments. It would have been simpler to have a straightforward Bill exempting these two matters. That would have been clear and easily understood by everyone. But this way it becomes complicated.
If the main purpose of the Bill is to reassure the oil companies that they will not in future be charged rates, why is it necessary in Clause 1(9) to provide that the Secretary of State shall have power to revoke or alter it in any way? That is not much of a reassurance to people who want to explore for, to find and to market oil. They may not be reassured by being told that there is a Bill exempting them from rates, but which can be revoked or changed at any time.
I was reassured at the thought of the remote possibility of rating the Tay bridge, for example. If the Bill can subsequently be revoked or altered by a statutory instrument, it does not seem a very clear assurance. We should make the matter clear beyond doubt and make it as simple as possible.
In Clause 1(4) we find:
"In this subsection 'rates' includes domestic water rates."
What is the purpose of that provision? If there is any danger of these people being charged for domestic water rates,

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it brings up the question: what happens now? I know some people near where I live who have garages with no water supply other than a rain water barrel. Yet they are charged water rates. If they can be charged in those circumstances—namely, that it is assumed that at some time they will use water to wash their cars—is it not an equally fair assumption that the people on an oil rig will use water? If we are to charge one group, why not charge the other group?
Everyone should get the same treatment. That does not happen at present. Some, places charge water rates and others do not. An oil rig probably uses quite a large amount of water which will, presumably, come from Scotland. Is the oil rig to get that water completely free of charge? The company to which the oil rig belongs might not pay rates anywhere in Scotland. Is it right that it should be completely exempt from water rates?
Far from making the Bill clearer and simpler, as it is supposed to do, the interpretation clause makes it more difficult. For example, I read in Clause 3(1):
"'the sea' means any area seaward of the lowest point to which the tide ebbs at ordinary spring tides and includes any estuary, arm of the sea and the waters of any channel, creek, bay or river seaward of that lowest point".
I wonder how many people understand that and know what it means in any given area.
During the passage of the Freshwater and Salmon Fisheries (Scotland) Bill I asked a similar question. No one seemed to know where the tide started and where it stopped or about high tide, spring tide and any other tide. I doubt whether anyone knows what the interpretation clause means. Lawyers might be able to settle differences of opinion in court, but the legislation we produce should not make it necessary for lawyers to be engaged and money to be wasted in going to court. That is all very well when something unforeseen arises but the purpose of the interpretation clause is to make matters easily understood, and hardly anyone understands it.
If we exempt from rates oilfields and toll bridges, why not go the whole hog
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and exempt from rates all buildings in Scotland? The Government already pay 75 per cent, of the total rates, and it costs a great deal of money to administer the rating system, which is in any case unfair. A person who leaves his car in the street pays no rates but if he builds a garage to take it off the streets he has to pay rates on the garage. A person who installs double glazing to save fuel, as the Government want, has to pay higher rates. Why not go the whole hog and abolish rates? The Government's contribution to the rates has crept up from 50 per cent, to 75 per cent. Will their contribution have to reach 99 per cent, before they decide to abolish rates and thereby make greater savings?
Property owned by the Government is exempted from rates. For instance, hospitals pay no rates—at least that is the theory. They make a contribution in lieu of rates. The only difference is that the contribution in lieu of rates is not fixed by an assessor and cannot be appealed against if it is thought to be unfair. In my constituency the Treasury valuer calculated that the contribution in lieu of rates made by Ninewells Hospital should be on a rateable value of 3 per cent, of the capital cost. The rateable value is £405,000 and the amount paid in rates is £660,000. That works out at £20 per patient per week. This is a serious disincentive to building new hospitals or other buildings. If a building is replaced by one of better design which will make savings, those savings are wiped out by the rate increase. There is no incentive to replace old buildings.
I give an example. A laundry was built in Ninewells Hospital to cater for all the big hospitals in the area. The rateable value of the laundry alone was £15,000. The total rateable value of the Dundee Royal Infirmary—comparable in size to Ninewells Hospital—was only £11,000.
It is high time that the Secretary of State examined the entire rating system with all its anomalies and, not necessarily in this Bill but in another rating Bill, removed the anomalies and made the rating system fairer. The easiest way to do that is to abolish the entire rating system.
7.37 p.m.
Mr. George Younger: I suppose that this is the best time to enter my

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protest that the Bill should come to us so late in the Session. I cannot recall a Bill starting its way through the House of Commons at the tail end of the Session. It might have happened before but I have not found a precedent. If the tables were reversed between the two parties, there would be no chance of a Conservative Government's being allowed to put through a Bill, however beneficial, if it were introduced at this late stage in the Session, because Scottish Labour Members would make sure that they were not. We are being remarkably accommodating in agreeing that this measure should go through. Those few sentences in future years may be useful for me to quote to Labour Members if ever the situation should be reversed.
Like the right hon. Member for Orkney and Shetland (Mr. Grimond), I am unhappy at the circumstances of and the principle behind the Bill, although I appreciate that its narrow purpose is desirable and that we must therefore help it on its way.
With the Government's being in their present position with the financing and taxation of the North Sea oil, there can be no question of our allowing a great extra burden of rating to be put on oil companies and oil rigs. By introducing petroleum revenue tax and other fiscal measures, the Government of their own choosing have put such a large burden of taxation on the oil companies that there can be no question of our agreeing to increase that burden by allowing them to be rated.
By their sweeping taxation policy on the oil companies the Government have pre-empted to themselves all the available revenue from the oil drilling rigs at sea so that there is nothing left for the nearby local authorities. This may be the right principle but we have not arrived at it in the right way. We have arrived at it because the Government have imposed all the taxation they can on these oil installations and there is nothing left for the local authority, even if we should all decide tonight that it was right that some form of rating should take place.
We have got here the wrong way, but having got here I feel that they cannot be expected to pay heavy sums in rates as well. The conclusion I draw from
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this, which I hope the Minister will note for future reference, is that the Government—having now pre-empted to themselves all the available blood which could be sucked from the oil companies in their drilling operations—have all the greater obligation to provide assistance to local authorities who have exceptional types of expenditure in connection with oil development. This gives us a very strong moral argument to use on the Government if there is any question of their being laggard in the provision of extra special assistance to local authorities who have vast housing problems to deal with or extra road problems or whatever. I hope that the Minister will note that he can expect to receive pressure from us from time to time, and I shall use this as evidence.
Nor am I happy about the principle, mentioned by the right hon. Member for Orkney and Shetland, of openly bringing in this legislation with the intention of applying it only, as far as I can make out, to very limited categories. I have made clear how I feel about the oil rigs and I entirely agree that the Forth and Tay road bridges, and the Erskine bridge, should be exempted because we never intended that they should have to pay rates. It is not a happy way to proceed. Why should we introduce legislation to exempt particular installations which are on or above the sea and include many others in the rating system? I cannot see that, as a matter of principle, it is proper to exempt bridges or oil rigs and still expect fish farms, for instance, to be rated, because they are just as much over or under the waters of the sea as other installations.
Moorings have been mentioned. Moorings in certain parts of the country—perhaps not to the same extent in Scotland but certainly in many places south of the border—are heavily rated. They are very expensive. What is the position regarding houseboats? Although we do not have many boats in Scotland, there are some, and people who live in houseboats, or make a boat their permanent home, are certainly on or above the water. One hopes that they are also above the low water mark if they want to float satisfactorily. They will have cause to think that they are being discriminated against if the big, powerful oil companies, or the Government themselves, should

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exempt themselves while a few small people who inhabit houseboats find themselves having to pay rates.
The same goes for the fish farmers, some of whom are doing very well, and are reasonably prosperous, but others of whom may not be doing so well. Why should they have to pay rates while their neighbours, because they are big and powerful and part of the oil industry, do not? Why should they be picked on in this way?
I do not know whether the Minister has thought through the question of bridges and whether these toll bridges are the only bridges involved. Are there any other bridges in Scotland which are not owned by the local authority, or whatever, but are privately owned and rated? I can think of some circumstances in which there could be, and I wonder whether these bridges, if they are over water, which is tidal, will be exempted or not.
I hope that the Minister will also make the position quite clear regarding piers. Legislation affecting piers is already in a muddle. Every pier in Scotland seems to be affected by a different Act of Parliament. During my time at the Scottish Office I was anxious to see whether I could do something about it but the number of different Acts was very great and it was a massive job. I hope we can now get some clarity from the Minister about whether piers are likely to be included in an order under the Bill or whether he has decided that no piers will be included. Perhaps he could also indicate to us what a future Secretary of State, who may be somebody quite different, will be able to do under this Act in respect of piers. Would he be able to pick on certain private piers and make them pay rates and exempt all those which are publicly owned, or vice versa?
This legislation is riddled with small questions of detail and I wonder whether it has been properly thought out. I would also express my concern at the point made by the right hon. Member for Orkney and Shetland about the matter of principle involved. I have never been a great friend of the rating system. I have always thought—and still think—that the rating system has reached a stage
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where it is unrealistic and difficult for ordinary people to understand and that it is time it was brushed aside.
That apart, I think that to tamper with the impartiality of the system is something which should be carefully undertaken and only after very careful thought. Surely the role of Parliament in this respect is to lay down the general principle that properties domestic, properties commercial and properties industrial will be rated under certain principles. To introduce legislation without the most careful thought, and to pick and choose certain types of installations which will be differently treated, or not rated at all, seems to be a major interference with that principle. Once the general law is laid down, the assessors, and those who work with them have a completely impartial role to perform. As a result of this legislation we are now likely to have assessors, or their local authority masters, looking through the installations in their areas trying to find installations which might be rated. Other interests press the Secretary of State to exempt further particular types of installation under this legislation.
I am certain that in the short time we have had to debate the Bill tonight we shall not have thought of all the examples. We have thought of houseboats, moorings and fish farms but I am sure many others will crop up. We ought to have some idea from the Minister whether he has looked into this in depth and whether he has satisfied himself that he can limit this legislation, or the effects of it, to the relatively small number of items he has outlined to us. It is a dangerous idea to produce broad legislation like this to deal with specific detailed problems. It should not be done unless it is thought through.
I would end on a slightly less sour note and hope that the long delay in coming to the House is because the Government have taken all this time to think the Bill through. I should be optimistic to think that.
7.48 p.m.
Mr. J. M. Craigen: I can see the Government's point in trying to clarify the valuation and rating position of the oil companies. After all, it is important that there should not be a plethora of tax-collecting bodies

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dealing with those companies. None the less I sense that we are feeling our way in talking about bad valuation problems.
Although we tend to talk about oil companies at the moment, there is little doubt that in the years to come, with the discovery of more mineral deposits on the seabed, this problem will grow. At the moment the South of Scotland Electricity Board is already looking for uranium deposits near the Orkney coastline. My hon. Friend the Member for Dundee, West (Mr. Doig), with his knowledge of local government finance matters and his past experience as a city treasurer, put his finger on the very real problem by asking when are we to embark on the reorganisation of local government finance?
That inspires one of the three points that I want to make. Unfortunately, no oil has yet been discovered in the Firth of Clyde, where it could obviously have a beneficial effect on industrial prospects. However, in the areas which have onshore installations there is considerable pressure on the rating system and on the infrastructure, which must add to local authority costs. If local authorities, mainly on the eastern seaboard, face increasing costs for this reason, it must follow that there will be less money for areas like Clydeside on the western seaboard.
At the best of times, the division of the rate support grant among regional and district authorities is a mystery. Local authorities coping with problems such as those I have mentioned should have some financial recompense.
My second point concerns jurisdiction. The Secretary of State said that there had been some disputes or uncertainties about the areas for which the assessors might be responsible. As an official of the region, an assessor comes within the same authority as the police. What about the burden placed on the rates because of extra calls by police forces to deal with incidents on North Sea installations?
My third point relates to the changes taking place in the law of the sea. Presumably there will be additional calls on the police and various local services when the territorial waters are extended from three to, presumably, 12 miles. Minerals and other deposits of wealth on
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the ocean bed form an important economic zone around these shores which must be policed. This will put more pressures and responsibilities on local authorities. The Minister should therefore say something about how some revenues from the ocean bed will find their way into local authority finances. This will become a much bigger problem in future than many of us now realise.
7.55 p.m.
Mr. Hamish Gray: The hon. Member for Glasgow, Maryhill (Mr. Craigen) was right to say that this is an important Bill. My hon. Friend the Member for Ayr (Mr. Younger) was even more right when he said that the reason for its late introduction was the congested state of the Government's programme. I associate myself with those remarks.
If the Bill is important today it was equally important six months ago; the only reason that it was not introduced then is that the Government had totally congested their legislative programme with vile legislation which is only now receiving its just desserts in another place. One can only hope that the Government will learn their lesson on this occasion and that next Session they will restrict their legislation to important Bills such as this.
It has been the custom in the past for valuations to be made by assessors. The Bill probably came about because one or two assessors decided to include on the valuation roll some oil-related offshore features. The matter could have been decided only by legislation or by a court, and the Government are probably right to choose the legislative course.
The Continental Shelf is a very difficult subject and will no doubt be discussed here many times in future. We note with interest that the Bill will be virtually controlled by affirmative resolution procedures. I sympathise with the queries of the right hon. Member for Orkney and Shetland (Mr. Grimond) about this procedure.
When it comes to oil fields and platforms, the oil industry is already well provided with taxation. I took part in debates on the Bill which introduced the

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petroleum revenue tax. The oil companies also face corporation tax and 12½ per cent, royalties. It would have been outrageous to subject them to yet another tax in the form of rates. I therefore agree with the principle of the Bill.
When we talk about oil companies, we think mainly of multinational concerns which have very little interest in the country in which they operate. But that has not been our experience in Scotland. The companies which have explored the North Sea so far have played a vital role in not only the repopulation but the rejuvenation of Scotland. Many jobs have been created—not only by the British National Oil Corporation or any nationalised body but by private enterprise. That trend should be encouraged. I hope that later tonight hon. Members will join me in an attempt to achieve the investment of £150 million of private capital in the Highlands.
The companies which have so far set up in Scotland and played their part in developing North Sea oil have brought benefits to a considerable area of the country. However, the hon. Member for Maryhill was quite right when he said that it was all very well for us to accept what these revenues are at a national level but that when people know that oil is being discovered and extracted not too far away from their coastline, they naturally like to see just how much of the benefit of that is reaching their part of the country.
While I have sympathy with the hon. Gentleman when he says that no oil has so far been found in the Firth of Clyde—I am sure that we hope it will not be too long before that area participates as well—we must realise that at the same time the demands of ratepayers in areas in which oil has been discovered are considerable. The Government do not always contribute as much to those authorities' overheads as we should like.
We must also accept that the areas most affected in this way have very often been sparsely populated rural areas. Therefore, the amount per capita that they have had to contribute has been that much higher. We must bear that in mind when talking about the rates in oil-related areas.
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Like other hon. Members who have spoken in the debate, I am disappointed that the Government did not use the opportunity presented by this small Bill for covering the much maligned fish farming projects in Britain. There is no doubt that fish farming is accepted by the national farmers' unions and by practically everyone other than the Government as similar to agriculture, and why it should be penalised as it is is beyond our reckoning.
I want to ask the Minister some questions. The first is about platforms under construction and their rating. When a platform from, for example, Kishorn in Wester Ross is floated out, at what point does it cease to be liable for rates? In the event of a steel platform being floated out from Nigg Bay to a point a few miles offshore and being completed at that point, is it free from rates from the moment that it goes offshore? Perhaps the Minister will deal with the question of the three-mile, 12-mile, 50-mile or even 200-mile limit that has been discussed.
The right hon. Member for Orkney and Shetland referred to jetties at Sullom Voe. In my constituency we hope in due course to have jetties of a similar nature. It would be interesting to hear the Minister's comments about those.
I broadly welcome the Bill. We accept that it was necessary. I reiterate that it is a pity that the Government were not able to introduce it some months ago However, basically we welcome the principle of the Bill.
8.3 p.m.
Mr. Gordon Wilson: I welcome in particular the part of the Bill dealing with the exemption of toll bridges from valuation. There was quite a shock to those users of the Tay and Forth road bridges when it became apparent that the assessors intended to try to ensnare those two bridges and those who use them within the rating framework, because that would undoubtedly have led to an increase in the tolls. Admittedly, the money raised would have gone to the local authorities on either side of the bridges, but, in view of all the pressures placed upon them, there is no guarantee that the money collected would be put back into the same account and would

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thus keep the toll charges at the pre-valuation figure.
I am, however, rather more unhappy about some aspects of the Bill relating to offshore constructions. I can accept that there is no logic in trying to extend the valuation system to mineral deposits such as oilfields or the platforms that are exhausting those oilfields or, indeed, to submarine pipelines—although I admit that the nearer a pipeline gets to the shore, the more it is arguable that that pipeline should or could be included in the valuation roll as a heritable subject. The reason why I accept that the subjects should not be included in the rolls is that they are serviced very distantly from the land. Those local authorities which, if they were lucky in pressing their cases, managed to get them on their valuation roll might be getting a benefit for which they had provided no service.
Let me take as an example the Forties oilfield That can be serviced from Dundee, as it is, yet by being nearer to some other region, perhaps, the benefit from the rating could go to a region that had no connection whatever with that field. That would lead us into all sorts of peculiar circumstances and, as the Seccretary of State has rightly said, into problems of demarcation.
One of the problems is that each assessor would attempt, perhaps at different times, to carve out a share of the action for his or her particular local authority. These cases would come before the lands valuation court at different times. It might not be possible for that court to consider all the cases at the same time and lay down the rules under which the oilfields or platforms concerned could be equitably shared among the regional councils concerned. Therefore, I accept the first part of the intention of the Bill.
Assessors, however, are very enterprising people. They conduct a continual war to get as many subjects as they can on to the valuation roll. It is not often appreciated that they are independent officers. Indeed, in the past assessors have tried to take into the roll subjects that local authorities would have been perfectly happy to have seen excluded. Here I take the example of the two toll bridges, where the local authorities concerned were horrified at the prospect of
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these bridges being on the valution roll and of getting additional revenue, because they could see the lunacy of that business.
On the other hand, the assessors have the job of interpreting the valuation Acts. If they are up to the job, they should try to get what can be defined as "heritable" placed on the roll. When the news first broke in the Press that oilfields and the huge platforms beside them would possibly be rated, many folk immediately thought that here was a bonanza. We are all paying very high rates these days. The thought that a substantial source of new revenue could come to a local authority must have lifted many a heart just as the bills for last year's rates were being paid.
However, I should have thought the main attempt of the assessors to include these subjects on the roll doomed to failure. We may find out that they were capable of being included if the assessors maintained the entries in the rolls and the cases were fought through. However, I think that these cases will be abandoned now in view of the Bill. We shall never know whether those subjects could have been included. I have serious reservations about that.
My principal doubts about the effect of the Bill are in relation to the definition that has been employed. I accept the view put by the hon. Member for Dundee, West (Mr. Doig) that the simplest way of tackling the two road bridges would have been to have a specific exemption by name of those two structures. Had that been done, it would probably have been of help to the parliamentary draftsmen when trying to deal with the other subjects that the Government had in mind.
I suspect that trouble could ensue when we come to deal with the word "partly". It is a word on which assessors and courts will latch in a flash. It is similar to the word "reasonable". Once lawyers come into the picture, the meaning of such words can be argued in many different ways. A similar problem arose in the 1930s over the Workmen's Compensation Acts and subsequently when dealing with the law of reparation there were difficulties of interpretation over the word "reasonable".
I give a few examples of the difficulties involved in the use of the word

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"partly". What is "partly under water", "partly on shore", and "partly off shore"? Many piers and jetties have already been rated, so far with little objection. This may be a Committee point, but I hope that the Government will seriously examine the possible effects of the word "partly".
The word may have been included in the Bill to take care of the situation involving the two bridges. But if the subject of the two bridges is dealt with specifically, the word "partly" may be capable of omission. If the word exists in the Bill for some other reason, it behoves the Government to explain why and to say what sort of property they hope to catch under the Bill. I presume that the word must have been included for a reason, and therefore the answer should be readily available.
A genuine point has been made concerning the benefits to be given to regions which have to deal with the problems involved in catering for the build-up of the oil industry. Some benefit is given by means of additional employment gained in certain regions, but it is also true that a number of regions are adversely affected by some developments. For example, Tayside until recently has not done well in employment terms, and, indeed, has suffered because of the incidence of heavy traffic rumbling through the area and carrying materials to northern areas. That traffic follows the Perth-Forfar route, despite gallant efforts by the Scottish Office to steer it in other directions. The roads in question have not been trunked, and therefore the cost of repairs has been met by the regional council. That will mean a heavy cost to be borne by ratepayers.
There are other examples of extra costs, such as policing and the build-up of housing. At least the Government must be given credit, because in certain instances they have channelled additional resources through the SSHA to cover some of the extra expenditure. There are many other aspects related to oil development where the benefits do not return to the residents and where help could be afforded by specific Government grants. In these circumstances some thought should be given to assistance being afforded by the Government.
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I wish to refer to structures which are—I shall not use the word "partly"—marginally offshore. I am not thinking of platforms which have been completed in a loch, such as on the Sound of Raasay, which will only be in position for a short period. I am referring to installations of a more permanent nature that will be in position possibly for more than a year.
A floating dock may be moored to the sea bed offshore and be serviced from a base, again offshore. Additional expense could be caused to the local authority by the existence of that feature offshore, and it is only right that part of the cost of servicing that object should be borne through the raising of additional rates by inclusion of such a structure on the valuation roll.
The principle of rates when first evolved was to allow local authorities to meet the cost of local services, but as local government has become more sophisticated that first principle has been left behind. Nevertheless, in valuation questions that is still a sound approach.
I wish to draw attention to Clause 2(1) the provisions of which could be considered to be unacceptable. Normally, Acts lay down specific definitions, powers and terms of which the subject is aware. Frequently such provisions are not capable of easy explanation or understanding, but the principle has been accepted that Acts of Parliament should be as specific and detailed as possible so that the individual citizen may be aware of his rights. However, I fear that Clause 2(1) is intended to be a blanket clause, so that if any new subject emerges that is not covered by the legislation, the Secretary of State may enter immediately, slap on a directive, and follow it later by an order. I do not think that is the best way of tackling legislation.
I turn to costs in respect of the oil companies. I suspect that if this Bill had not appeared, the oil companies would not have ended up by paying rates on the major part of their installations. The Government have rushed in in an attempt to tackle the situation. If rates had been payable to the local authority, I am sure that they would have been capable of being set off against a company's petrol revenue tax, corporation tax, or whatever it may be. The loser

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at the end of the day would probably be the Treasury.
Perhaps the Bill is intended not to protect the oil companies, which are well able to defend their own interests in the courts, so much as to protect the Treasury from having to pay out more money to local authorities at a time when, unfortunately, their plans are being cut back because of the Government's failure correctly to manage the economy.
8.18 p.m.
Sir John Gilmour: As the southern end of the Tay bridge is in my constituency, and as every time I conic to Parliament I cross the Forth bridge. I am delighted that the Government are taking steps to ensure that rates are not to be paid. However, I join in the protests made by other hon. Members about the way in which this is to be done.
We are now engaged in the operation of trying to cut down unnecessary administrative work involving the recruitment of more civil servants. But the main part of this Bill lies in Clause 1(1) which refers to
"an order made by the Secretary of State under this section"
This will mean that people will be required to undertake the work of making such orders which are to be laid before Parliament, and all the rest of it.
Some hon. Members suggest that all that is necessary in regard to the bridges is to pass an Act providing that the status quo should be resumed. They suggest that that would put the situation right in one stroke. But will the Government have to pay large sums of money to subsidise uneconomic passenger transport crossing a railway bridge? That seems to be an anomaly.
Other hon. Members have spoken about fish farming and other areas of activity. My hon. Friend the Member for Bute and North Ayrshire (Mr. Corrie) mentioned platforms built under the water. I have visted a rig building yard and have seen one construction being built below high water mark. I should have thought that such a construction would qualify, whereas the construction in my area at Methil built by Redpath Dorman Long well above high water mark and floated out would be outside these provisions. I hope that consideration
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will be given to this question and to what happens if oil is found onshore as opposed to offshore.
We already hear of oil being found fairly close inshore off Brora and there seems to be no reason why, in a few years' time, we should not be finding oil below the surface of the land. If we get exemption from rating for those installations offshore, will the same thing apply to them on the land? I hope that in Committee the Government will be receptive to the idea of making alterations to the Bill which will do everything possible to cut down the administrative costs stemming from its present wording.
8.20 p.m.
Mr. Iain Sproat: I welcome the final words of my hon. Friend the Member for Fife, East (Sir J. Gilmour) and I was pleased to see that at least we are not to have any more public expenditure or extra civil servants as a result of this Bill. These days that is always welcome.
In welcoming the Bill broadly, like all my hon. Friends, I emphasise two points. First, of course we support the Bill because not to do so would be to place yet a further burden upon the oil companies. That might well be the final straw to break their backs or it might discourage others. They have had a lot to put up with from the Secretary of State for Energy.
Rating would be an intolerable burden for the companies because of the financial measures which have already been placed upon them by the Government. My hon. Friend the Member for Ayr (Mr. Younger) made a good point when he said that the effect of all this has been to centralise financial control in Westminster. As some hon. Members may know, I intend to oppose the proposals for a Scottish Assembly when they come along. I would have preferred to see an act of genuine decentralisation here which might have been effected by giving to local authorities the power to spend the revenue raised by rating rigs and so on—had this been possible, which of course it is not because of the economic burdens already placed upon industry. If it had been possible, it would have been an act of genuine decentralisation and devolution which would have taken the power from Whitehall and nut it back into the regions, which is what we

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ought to be striving for. In other words—decentralisation, yes; Scottish Assembly, no.
This Bill would have been an opportunity for the Government to put flesh on that principle of decentralisation. But yet again we are centralising in Westminster the financial apron strings by which the industry is to be controlled. This point has particular application to my own constituency and to the Grampian Region in which it lies. Grampian is extremely short of money. No other region in Scotland runs its economic affairs better than Grampian but we all know that at this time everyone is short of money and particularly Grampian, with all that it has to provide by way of infrastructure to support the oil industry.
The region could have used extra revenue, and who better to provide it than those who were the cause of the revenue being needed, namely, the oil companies? The hon. Member for Dundee, East (Mr. Wilson) mentioned the problem that arises with the roads, and related that to Tayside. I know that he would not deny that this continues into Grampian. If the hon. Member has been in Aberdeen recently he will know that there are certain areas of the city through which it is impossible to travel at any reasonable speed because of juggernauts, oil-related traffic and so on. Yet the city of Aberdeen and the Grampian Region have not been able to deal with these problems because the cash is not available. We are talking not just about roads but about housing, schools and all of the social problems that spring from a sudden influx of people whose roots are not in the community.
These issues create problems for the police whom the hon. Member for Glasgow, Maryhill (Mr. Craigen) mentioned. We have a severe problem in Aberdeen. For a long time the chief constable has been responsible for maintaining law and order on the oil rigs. This places an enormous burden upon the Grampian police force. It is coping extremely well, but this is a burden which extra finance could have lessened. Yet the finance which the Government are providing to oil-affected areas is derisory.
I am sure that my hon. Friend the Member for Ross and Cromarty (Mr. Gray) would agree. He has exactly the
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same sort of problem in his rural areas as I have in the rural areas of the Grampian Region. We also have the urban problems in Aberdeen and in places such as Peterhead where, often, the problems ssem greater in comparison with the calm which preceded them. That is my first point—the financial non-implications of this Bill.
Secondly, my hon. Friend the Member for Glasgow, Cathcart (Mr. Taylor), with his characteristic lucidity, pounced on the point, as is his wont, that if the Scottish Assembly were to be set up, it would be possible for it to reverse what we are doing here and say that instead of the money coming to Westminster it should go to a Scottish Assembly. [Interruption.] There we have the voice of confusion speaking. [Interruption.] I was referring in that comment to the hon. Member for Western Isles (Mr. Stewart) and not to my hon. Friend the Member for Cathcart. I spoke of my hon. Friend's characteristic lucidity. I was referring just now to the mutterings coming from a sedentary position from the Leader of the Scottish National Party who said—if I heard him right, and if I am wrong I shall give way to him—that of course it would be the object of a Scottish Assembly to take these revenues to itself.
Here is a classic example of precisely the confusion which will reign if this or any other Government were stupid enough to set up a Scottish Assembly on the lines at present proposed. One of the first things it will do—I have no doubt of this—is to try to take these revenues. Westminster will oppose it and there will be a constitutional row. The people of Scotland will somehow be given the impression—no doubt by means of the eloquent persuasion of the SNP, helped by the media—that they are being done down. The hon. Member for Western Isles is nodding his head. I do not see how this House—would that it were fuller—can shut its eyes to this. This is what we mean when we speak of the classic recipe for confusion and constitutional division which will follow as night follows day as a result of the setting up of a Scottish Assembly.
Here we have what in normal circumstances would be a perfectly straightforward Bill. I would have liked to see more revenue going to the affected areas. We welcome the Bill. But what is, in

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effect, a simple Bill in normal circumstances becomes a red rag to the SNP bull. We are, in effect, challenging the SNP to take this revenue away from the House of Commons. Its leader has admitted that that will be the aim.
I ask the Under-Secretary of State, therefore, to comment on how he proposes to see that such conflict does not arise, since we have already had evidence from the SNP that it will make it its business, if a Scottish Assembly is set up, to see that it does arise. I hope that all hon. Members, and not least the two Front Benches, will take note of this factor and will reconsider the question of a Scottish Assembly, which the Government hope to bring before us, since such an Assembly will undoubtedly lead to constitutional divisions and rows between this House and the Assembly, which, if carried too far, could lead to the break-up of the United Kingdom.
8.30 p.m.
The Under-Secretary of State for Scotland (Mr. Frank McElhone): This is a short but important Bill, and its importance has been underlined by the many contributions we have had to the debate, especially from hon. Members opposite. I have a large pile of papers containing priceless information, and I hope that I have the skill to translate that information to hon. Members opposite and to satisfy everyone on the many questions that have been put to me.
Primarily the Bill has been introduced to deal with two particular problems. The first is the derating of the Tay and Forth bridges—and I think that the Government have the full support of all hon. Members in the view that these bridges should be derated—and the second is the derating of the oil pipelines and oil rigs and other parts of the oil industry which lie out to sea. That is surely not in question.
Mr. Younger: I hope that the order, when it comes, will include the Erskine bridge in case someone should have the bright idea of rating that as well.
Mr. McElhone: The Erskine bridge is Crown property, vested in the Secretary of State, and therefore does not enter into this matter. The hon. Gentleman will know that the Secretary of State does
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not pay rates for the undertakings under his control. As I was saying, the two main parts of the Bill deal with the Tay and Forth bridges and the derating of the offshore installations and pipelines. No one in the debate has doubted that proposition.
The hon. Member for Glasgow, Cathcart (Mr. Taylor) asked many questions, including one about hybridity. That is an important and complicated subject which caused a great deal of trouble with the Aircraft and Shipbuilding Industries Bill. As it is so important, I shall give as full an answer as possible.
Clause 1(8) is precautionary. It is intended that the order should describe installations in general terms. The possibility of affecting private interests differentially is remote, but cannot be ruled out altogether. The idea of subsection (8) arose from the Government's experience with the definition of what is a ship. With the possibility that the exemption of a stated type of property might affect different private interests in different ways, it is necessary to allow time for people who might be affected to make representations when an order is laid, but there must be a limit to possible delays, so subsection (8) allows 20 days for that purpose. We are allowing 28 days for the order to lie on the table, as it were, in order that people who think that they have a particular private interest may make representations and we can sort out the problems before we run into difficulties such as those we have experienced in the past.
The right hon. Member for Orkney and Shetland (Mr. Grimond) has great experience and knowledge of the oil industry. The most important of his questions was, "Why not cut off at the three-mile limit?" With oil exploration moving nearer to the coast, such a move would create unevenness. More and more, technology is moving oil exploration nearer to the coast and partly, indeed, even on to the land. That is the reason for the inclusion of this provision. He objected to the exemptions created by order—a reasonable argument—but the power to exempt under order involves the most stringent parliamentary control. On any order 1½ hours is given to debating the subject, so it can be gone into in great detail. The affirmative resolution

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procedure in both Houses is a guarantee that nothing will escape the notice of hon. Members, who are particularly vigilant in these oil matters. The right hon. Member will, I am sure, accept that these are reasonable precautions.
The right hon. Member also objected to the exemption of property only partly below the low-water mark—that again could be a convincing argument—but it is necessary for the two bridges and for pipelines. The Zetland County Council Act 1974, with which the right hon. Member is very familiar, provided such an exemption. The matter came up at that time in relation to a similar problem, and the Zetland County Council Act 1974 was put through for that purpose.
I could not, obviously, agree with my hon. Friend the Member for Dundee, West (Mr. Doig) at this stage that we should abolish the whole rating system. There may be some merit in his suggestion, but I remind him that we already have the Layfield Report with 500 pages of evidence. I know that my hon. Friend is an expert, having been a very distinguished treasurer in Dundee Corporation. He has great knowledge of rating and valuations and of the manner in which the system works. I believe that he still has until November to submit views to the Layfield Committee. If he wishes to see the abolition of the rating system, I hope that he will have some alternative to put forward.
I understand his argument about the addition to rating value if central heating is installed in a home. I have experienced that myself. I am also familiar with his argument concerning Ninewells Hospital, although I am somewhat alarmed at the cost per bed. I hope that my lion. Friend will put his views on paper and submit them to the Layfield Committee in the hope of converting the members to his way of thinking. I accept some of his contentions, but I cannot accept what he said about the abolition of rates.
Mr. Younger: I think that the Layfield Committee has already reported. I hope that what the Minister means is that representations on the Layfield Report can still be made to the Government.
Mr. McElhone: Perhaps I was not as clear as I should have been on that point. I gather that my right hon. Friend the
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Secretary of State is taking views on the report. If my hon. Friend the Member for Dundee, West cares to submit his views to my right hon. Friend, they will be most welcome in the light of his skill, knowledge and local authority experience.
With regard to the points made by the hon. Member for Ross and Cromarty (Mr. Gray), the facts are that a petroleum production platform has been under construction at a site on Loch Kishorn, a specialised and very large construction site with dry dock, workmen's accommodation, storage facilities and so on. There is, as far as I am aware, no doubt that the site as a whole is rateable. The rateability of the production platform, which has been removed to Loch Carron, is another matter. It is for the assessor and, in the last resort, the courts to consider whether the platform is rateable, but I am prepared to state my view of it.
In spite of the platform's great size, it is clearly moveable. No one will deny that. I would not expect the question of valuation to arise until it is brought to a permanent location within a valuation area—and then only if Parliament declines to approve the making of an order affording an exemption which would cover it.
Rating is a very complicated subject, but a great deal of skill and knowledge has been aired in this debate, and perhaps I may deal shortly now with some of the specific matters put to me. First, what is rated and what is not rated? Hon. Members have mentioned jetties, moorings and various other pieces of apparatus which may be partly under the sea or sitting on top of the sea. How does a local assessor decide whether a subject is rated? They can be broken down into two categories: normal subjects which are only incidentally wholly or partly offshore, and subjects of a martime character which do not usually lie much above low-water mark.
I hope that I can include in this section of my remarks the subject of fish farming. I am astonished by the number of hon. Members who have raised questions about fish farming. When I saw the list, I was most surprised. I did not think that there was such a great interest in fish farming in Scotland.
The first of the categories includes piers, docks, harbours, jetties, coal mines whose

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shafts extend beyond the low-water mark, quays, wharves and so on. The Government have stated that they have no intention of using their powers under the Bill to confer an exemption on any of these subjects. That takes in a fair number of subjects and should make the position clear.
In the second category, there are a number of lands and hereditaments which in the past have been held to be rateable and which, similarly, the Government have no present intention to exempt. These include yacht moorings, recently held to be rateable by a decision of the Land Valuation Appeal Court, fishings and the right to them as vested in private individuals, and oysters and the right to fish, drag or dredge for them. It goes on to mention dredging for sand and other matters.
So right hon. and hon. Members may take it that the Government have no wish to de-rate fish farming. The House will be aware that there was an attempt to move an amendment during the recent Agriculture (Miscellaneous Provisions) Bill which was rejected. It was also tested in the Scottish courts to try to make fish farming analogous to agriculture. Again, it was lost. For these reasons, the Government cannot accept fish farming to be a de-rated subject.
Mr. Teddy Taylor: Shame.
Mr. McElhone: It may be a shame, but we have to make a judgment, and I think that that is a fair one.
The hon. Member for Dundee, West (Mr. Wilson) asked how I made an assessment of the word "partly". He went on to say quite fairly that lawyers had made a great deal of money putting forward cases in court about how the words "reasonable" and "partly" should be interpreted. I accept that, and I accept his condemnation of his profession.
Mr. Gordon Wilson: If it is a condemnation of my profession, it is probably one of my profession now as a Member of Parliament, because it was parliamentarians who first employed the language which caused the trouble.
Mr. McElhone: My views on lawyers are well known. I share George Bernard Shaw's view that they are the Devil's
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disciples. All my experience as a Member of Parliament dealing with constituents' problems has done nothing to change that view.
The hon. Member for Dundee, West then asked about the power of the Secretary of State to direct an assessor not to assess. This is regarded as a limited delaying power. The hon. Gentleman questioned that. I should perhaps tell him that there is a close liaison between the Scottish Office and assessors. This is only a delaying subsection. It is a precautionary measure until such time as the customary informal consultations have taken place. There is constant consultation between officials in the Scottish Office and the assessors. Therefore, I think that the hon. Gentleman can rely on the good relations between these different bodies. It has never been disputed that in their discussions they can always get agreement. Assessors will know that this Bill is going through the House, and they will not go to the great trouble of putting forward subjects which the Secretary of State will obviously reject.
Mr. Gordon Wilson: Does the Minister accept that although these consultations took place, if they had been as effective as he suggests, there would have been no effort by certain regional assessors to put oil-related installations on the valuation roll? If they find that there is a subject which is heritable under the definition of an Act, they might feel bound to proceed, regardless of consultation.
Mr. McElhone: One of the reasons for the Bill is that two assessors were taking the law into their own hands and putting the various parts of oil platforms and pipelines on to the valuation roll. Now it will be done by order. Constant consultation takes place between the Secretary of State's officials and the assessors and if the Bill goes through I believe that there will be a reasonable working relationship between those two groups.
Great stress was laid on the word "partly". The best example that I can give is of a pipeline, because that can be partly above and partly below the water line.
Mr. Teddy Taylor: The Minister has made no effort to answer questions about

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seaboard boundaries or about whether the orders will go to the Assembly if it is set up. Will he please drop a note to hon. Members on those subjects before the Committee stage?
Mr. McElhone: I shall be delighted to do that. Seaboard boundaries have in the past been related to the old parish boundaries and although there has been no difficulty in the past with the new technology, there could be difficulties in future. I shall write to hon. Members more fully about that matter.
Rating and valuation is a complicated subject and I do not advance myself as an expert on it. I have had discussions with assessors and I find them to be skilled. I hope that I have answered hon. Members' questions satisfactorily and I assure them that my officials, who will read Hansard carefully, will ensure that any matter which I have not covered will be dealt with by letter. I hope that hon. Members will give the Bill a Second Reading.
Question put and agreed to.
Bill accordingly read a Second time. Bill committed to a Committee of the whole House.—[Mr. Coleman.]
Committee tomorrow.

SEXUAL OFFENCES (SCOTLAND) BILL [Lords]
Order for Second Reading read.
8.49 p.m.
The Lord Advocate (Mr. Ronald King Murray): I beg to move, That the Bill be now read a Second time.
The Bill consolidates in relation to Scotland the Criminal Law (Amendment) Acts 1885 to 1928 in their entirety, the Immoral Traffic (Scotland) Act 1902 and other closely related enactments. The Bill does not seek to consolidate certain provisions to be found in the Burgh Police (Scotland) Acts relating to sexual offences, or similar provisions contained in local enactments, since those provisions do not apply throughout Scotland, or the Incest Act 1567 as that field of law does not readily lend itself to consolidation.
The Bill has been referred to the Joint Committee on Consolidation &c Bills in the usual way, and that Committee has reported that it considers that the Bill, as amended by it, is pure consolidation and represents the existing law. I would underline that finding, for it means that it would be wrong for anybody to take the view that restatement of the law in this or any other consolidation Bill in any way upgrades, modernises or gives added force to the old statutory provisions which are consolidated. The Committee also reported that there was no point in the Bill to which the attention of Parliament should be drawn.
In the ordinary course of events, that would be conclusive in a consolidation Bill. However, this Bill has been criticised in certain quarters for re-enacting in Clause 7 the provisions of Section 11 of the Criminal Law Amendment Act 1885 relating to gross indecency between males. These critics make no secret of their desire to reform the law of Scotland in that regard. They object to Clause 7 because, instead of reforming the law, it restates it unchanged. In my opinion this criticism is misplaced. The Bill is not intended for any purpose other than consolidation. Enthusiasts for any particular reforms will rapidly destroy the consolidation procedure if they abuse or bend it to promote their own special reforms.

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As the Bill seeks to consolidate the whole of the Criminal Law Amendment Acts in regard to Scotland, it would be wrong to omit from the consolidation this single provision, Clause 7. Not only would it be wrong from the point of view of the principle of consolidation but it would be misleading to the public. People turning to this measure would expect to find all the Criminal Law Amendment Act offences in it. If they did not find one—gross indecency between males—they might be misled into thinking that that offence had been entirely eliminated which would be incorrect.
The Scottish Law Commission is responsible for consolidation proposals. This consolidation was included by the Commission in its second programme of consolidation and statute law revision in 1973. In the Commission's view the Bill represents a desirable and useful consolidation. The omission of Clause 7 would, in the Commission's view, result in an incomplete and unsatisfactory consolidation. The Commission considers that the desire to reform the law should not be allowed to affect the content of a consolidation Bill such as this. In giving that view, the Commission makes it clear that it expresses no opinion on the merits or demerits of homosexual law reform. I would respectfully agree.
A main social purpose of the Acts here consolidated—the Criminal Law Amendment Acts—is to give adequate protection against abuses of a sexual nature which may be imposed upon young people, both male and female. An element of that enters into the other Act that I mentioned at the outset. It would be undesirable in terms of this social purpose to have the enactments relating to young females consolidated in the Bill whilst an important protection for young males was left to stand alone in the 1885 Act.
The point of consolidation is to bring together in one Act the statute law as it is, not as some people would like it to be. Consolidation does not prejudice reform. I would underline that to my hon. Friend the Member for Edinburgh, Central (Mr. Cook). Indeed, it may be a prelude to it in that it may highlight areas of the law which may be thought to need review. But in an area such as
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that covered by the Bill, and by Clause 7 in particular, there is bound to be controversy in any reform that is proposed and deep moral feelings for and against. Controversy of that kind is alien to the consolidation process. The proper vehicle for it is not a consolidation Bill but a Private Member's Bill. Indeed, that was the channel used to achieve reform in England in 1967.
Perhaps hon. Members will accept that, but some will say that the enactment of the present Bill might be taken as an illiberal act, as a hardening of the law against homosexual behaviour. I can give a categorical assurance that there is no legal basis for that view. Equally, it does not imply any change in prosecution policy. Crown Office policy under successive Lord Advocates for many decades—I stress "many decades"; it is not a recent development—has been and remains that there should in general be no prosecutions for homosexual acts carried out in private between consenting adults. Before qualifying for such consideration, both parties must be over 21, each must have clearly and freely consented, and the place must be private in the sense that the public have no right of access to it and what is done there cannot be observed by the public.
In conclusion, I stress the dangers, however laudable the motives may be, of using consolidation Bills to raise points on the merits or demerits of the law as it is. The essence of the consolidation procedure is that Parliament voluntarily forgoes discussion on the merits of the law to be consolidated and refers consolidation Bills to a Joint Committee of both Houses of Parliament, which goes through each Bill line by line primarily to ensure that it does not alter the pre-existing law as it was enacted.
If the Joint Committee has done its job properly, there ought to be very little call for amendment of the Bill, and, of course, it is contrary to the whole spirit of consolidation that there should be amendments directed, however subtly or deviously they are framed, to the merits or demerits of the law to be consolidated. If Parliament allowed itself to be seduced by such temptations front its self-denying ordinance, the advantages of the consolidation Bill procedure would rapidly evaporate.

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I hope that the House will consider that matter with the seriousness it deserves, and that this consolidation Bill can be given a Second Reading tonight—and in due course its other stages—without the introduction of a note of controversy alien to the consolidation procedure.
Mr. Robert Hughes: I apologise to my right hon. and learned Friend for missing the first 30 seconds or so of his speech. Why is it necessary to have consolidation of the law into this comprehensive form?
The Lord Advocate: Perhaps my hon. Friend will do me the honour of reading the report of my speech in Hansard tomorrow. I referred to the Scottish Law Commission, which dealt with the matter comprehensively in its second programme on the consolidation of Scottish statute law.
8.58 p.m.
Mr. Malcolm Rifkind: As the Lord Advocate said, this is a consolidation measure, and, clearly, it will be of some use to those whose job it is to practise the law and to advise the public on its implications. So far as I am aware, however, there has been no substantial demand in the legal profession for a consolidation measure of this kind.
I do not deny that the Bill will be of some limited benefit to lawyers, but I must say, as a preliminary comment, that if the Government found they had sufficient parliamentary time for consideration of this Bill, there are hon. Members on both sides, I am sure, who would have preferred them to use that time for legislation to modernise the Scottish law on sexual offences instead of merely consolidating it. Clearly, whatever one's view about what those offences should be, modernisation is necessary and is desired. One need only look at the present Bill to see that it includes within its provisions everything from the white slave traffic—that is Clause 1—to a whole series of sexual offences and various other matters.
I wish to direct attention to Clause 7, to which the Lord Advocate made special reference. I speak for myself here, since this is not a matter on which views are
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held by political parties as such, but I consider that Clause 7 should not be included in this consolidation Bill, and in saying that I make no comment on the merits or otherwise of the law as it presently stands. Clause 7 repeats the provisions of Section 11 of the Criminal Law Amendment Act 1885. Among other things, that section provides that homosexual activity in private between consenting adults is a criminal offence, and it refers to various other matters relating to homosexual activity. Irrespective of past, present or future policies of Lord Advocates it has been, is and will remain a criminal offence in Scotland for homosexuals to conduct their activities, even though they may be adult and consenting and though their activities take place in private.
Mr. Michael Clark Hutchison: Quite right.
Mr. Rifkind: My hon. Friend may be right, but the question is whether it is appropriate for the Government to ask Parliament to approve in a consolidation measure provisions which the Government have no intention of enforcing. It would be different if, as my hon. Friend the Member for Edinburgh, South (Mr. Hutchison) might prefer, the law were enforced. The Government would then be entitled to ask the House to include such provision in a consolidation measure.
But we have the remarkable situation in which the Lord Advocate has told me in a Written Answer that he has not changed the policy adopted by previous Lord Advocates of not prosecuting cases of homosexual activities between consenting adults in private. In his reply the right hon. and learned Gentleman stipulated the special circumstances which applied when a Lord Advocate decided not to prosecute. If the House approves this consolidation measure, we shall have on the statute book activities which will continue to be a criminal offence although the Lord Advocate has categorically stated that he has no intention of treating them as a criminal offence. This is unprecedented.
This provision should not be included in a consolidation measure. The Bill, as a whole, deals with heterosexual offences This is the only part which does not deal with such offences and that, apart from any other argument, is a strong reason

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for not including it in a consolidation Bill.
The Lord Advocate has said that removing this controversial aspect would endanger the whole consolidation process. This is a spurious argument. The right hon. and learned Gentleman has admitted that the Bill does not consolidate the law on all sexual offences in Scotland. If it were a comprehensive Bill covering all sexual offences, it could be argued that it was illogical and unsound to exempt some activities from its provisions. However, the Lord Advocate told me in a Written Answer last week:
"The main statutory provisions concerning offences in Scotland with a sexual connotation which are not included in the Bill are the Burgh Police (Scotland) Act 1892, Sections 380, 381, 401 and 403; the Vagrancy Act 1824, Section 4, as applied to Scotland by the Prevention of Crime Act 1871, Section 15; and the Incest Act 1567. Local Acts are also excluded from the Bill."—[Official Report, 18th October 1976; Vol. 917, c. 265.]
We thus have a consolidation Bill which merely consolidates the law on certain sexual offences. There would be nothing unsound in eliminating certain provisions from the Bill. That would not threaten its purpose.
The whole purpose of a consolidation Bill is not to make any difference to the public, but to benefit only those who have to make constant reference to legislation. Surely it would be logical to include in the Bill those offences which are still treated as offences. They are the only ones with which legal practitioners are concerned.
A consolidation Bill is of no benefit or hindrance to the community as a whole. Its benefit, if it has one, is to lawyers—people who must regularly refer to legislation and to whom it is more convenient to have a single measure rather than a dozen measures to which to refer.
If an activity is no longer treated as a criminal offence, irrespective of still technically being a criminal offence, it is of no benefit to lawyers or to anyone else to have it included in a consolidation measure. It is an interesting anachronism which rests on the statute book and can quietly be ignored if the Lord Advocate so wishes.
The Lord Advocate: The hon. Gentleman is focusing the little advantage
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that there might be in having this consolidation measure on the basis that there are other sexual offences outside its ambit. What possible benefit would there be in dropping Clause 7?
Mr. Rifkind: I am happy to answer that question, because I was coming to that point. I accept that we cannot seek to amend the Bill to change the law. The law must remain as it was before the consolidation Bill was introduced. Therefore, the Lord Advocate is right to put that question to me. The right hon. and learned Gentleman, who appears to concede that there does not appear to be much benefit in including Clause 7, asks what is the advantage of leaving it out. The Lord Advocate indicated how, for many years, it has been the practice of successive Lord Advocates not to prosecute homosexual activities between consenting adults in private.
Clearly this is still a sensitive subject. Many people, including my hon. Friend the Member for Edinburgh, South, believe that it ought to be a criminal offence and be treated as such. Others believe not only that it should not be treated as a criminal offence, but that it should be removed from the statute book, as in England and Wales.
It is one thing to overlook or not to insist on a provision in an Act of Parliament which is almost 100 years old, but it is quite a different matter for both Parliament and the public to ask Parliament in 1976 to include in a statute a provision which the Minister categorically stated he had no intention of enforcing in circumstances which he described. It is unsound. It does Parliament and the public a disservice, because we have the continuation of uncertainty. It would be preferable, if the law cannot be changed at the moment, to leave this as a section of a 100-year-old Act than to ask Parliament to indulge in gobbledegook.
It is an insult to Parliament to ask it to approve legislation which will be treated not as legislation but as if it had never existed on the statute book. It is doing Parliament a disservice, it is not doing practitioners of the law any good service, and it is causing grave concern among those sections of the population who fear that they might be affected by it.

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As a lawyer, I understand—no doubt others in the House also understand—that a consolidation measure does not change the law. But when members of the public, especially those who might be subjected to prosecution, see that Parliament appears to be restating its belief that homosexual activities between consenting adults in private is a criminal offence, it is not unreasonable for those who are not lawyers or parliamentarians to assume that Parliament has decided that this should not only continue to be a criminal offence, but, like all other criminal offences, be treated as such. That is the problem.
I accept that the Lord Advocate's statement, that there is no change in policy, is completely sincere. But that is not sufficient. With respect, his tenure of office will be temporary—however long temporary might be—and he cannot bind, nor seek to bind, his successors.
The Lord Advocate: Surely the hon. Gentleman accepts that the Lord Advocate in Scotland has discretion whether to prosecute. I imagine that he would not wish to dismiss that discretion. Surely he would not want the prosecutor to prosecute every charge brought under every statute which made something criminal. In that situation, does he accept that it is desirable, if he wants the certainty that he claims, to change the substantive law?
Mr. Rifkind: I accept that it is desirable to change the substantive law. But the Lord Advocate is not seeking to do that, and there is no opportunity for the House to do what he suggests.
I entirely accept that it is desirable that the Lord Advocate or the procurator fiscal should have discretion to decide whether in a particular case brought to his attention a charge should be made, but that is not what we are talking about here. In this matter we have something unique in the law of Scotland. In advance of the circumstances being brought to the attention of the Lord Advocate he has stated a general policy. He does not say that he will consider each case as it is presented to him and in some cases might decide not to prosecute. To be fair, he is trying to reassure the public by saying that cases of homosexual activities
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between consenting adults in private will not be prosecuted—
The Lord Advocate: If the hon. Gentleman is quoting me, he had better quote me fully.
Mr. Rifkind: The Lord Advocate said:
"I have not changed the policy adopted by previous Lord Advocates not to prosecute cases of homosexual activities between consenting adults in private.… Before qualifying for such consideration, both parties must be over 21, each must have clearly and freely consented, and the place must be private in the sense that the public have no right of access to it and that what is done there cannot be observed by the public."—[Official Report, 18th October 1976; Vol. 917, c. 264.]
The Lord Advocate has presumably given a binding assurance that he will not prosecute cases of homosexual activities between consenting adults in private in any situation brought to his notice where these criteria apply. I accept that the Lord Advocate's predecessors gave exactly the same assurance, but it must be unique for a prosecuting authority to say that, irrespective of the facts, as long as the participants conform to these criteria, no prosecution will follow, although the activity is and remains a criminal offence.
The Lord Advocate must accept that in the public eye—the public not being knowledgeable of the technicalities of these matters—Parliament in 1976 appears again to reaffirm that this is criminal behaviour, and the public naturally expect it to be treated as such. I hope that the Lord Advocate will give this matter reconsideration and that he will listen to the arguments put forward from both sides of the House.
This is not a party matter. No doubt some of my hon. Friends disagree with my point of view and some of the Lord Advocate's hon. Friends disagree with his. This is a matter which has caused significant public concern. There is no benefit, other than of the most minimal type, to anyone from the inclusion of the provision in the consolidation measure. There has been no pressure from any practitioner of the law for the change to be made. No harm would be done by leaving this measure as part of a 100-year-old Act rather than for us to appear to approve it in this 1976 Bill. On that basis, I hope that the Lord Advocate will reconsider his position.
9.13 p.m.
Mr. Robb F. Cook: I intend to make only a brief intervention, as this is a matter to which we shall have the opportunity to return next week. It would be wrong to let this Second Reading debate pass by without impressing on the Lord Advocate that the anxiety expressed so persuasively by the hon. Member for Edinburgh, Pent-lands (Mr. Rifkind) is shared by at least some Government supporters.
There are two aspects to the problem we face in Clause 7. The first is the situation of those who are liable to prosecution under the terms of Clause 7. No one has been prosecuted for homosexual acts in private in recent years—for some decades now, as the Lord Advocate said—quite properly so. Apart from any change there may have been in the social climate over the past decade and a half, it would be intolerable if an act which took place in private and affected only the private life of those taking part were to be subject to criminal action in Scotland after it had ceased to be a criminal act in the greater part of the United Kingdom. So long as we remain one country, it would be intolerable if what is a perfectly legal private act in the greater part of the country should be subject to criminal proceedings in the lesser part.
My right hon. and learned Friend the Lord Advocate repeated his assurance that so long as he is Lord Advocate the Crown will not prosecute for homosexual acts between consenting adults in private. I invite him to reflect on the purpose of that assurance. Surely, a large part of that assurance was intended to relieve the anxiety felt by those who find themselves liable to prosecution under a statute which the Crown is not prepared to implement. If that is at least part of the purpose of the assurance, I can tell him that it has been largely undone by the introduction of this measure and the inclusion of Clause 7. It has created a great deal of alarm among those liable to prosecution under that clause.
The hon. Member for Edinburgh, Pentlands, the Lord Advocate and I know that the introduction of this consolidation measure does not change the law. But quite frankly I doubt whether 1 per cent. of the population, apart from professional
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politicians or professional lawyers, understand what consolidation law is all about. Indeed, having spent the greater part of last week talking to Members of Parliament about the Bill I can tell the Lord Advocate that I believe that only 1 per cent. of Members of Parliament understand consolidation law. I am not necessarily including myself in that 1 per cent. It is therefore not surprising that the introduction of this measure has caused a great deal of alarm—perhaps needless alarm—on the part of those liable to prosecution under Clause 7. It is not surprising that even among those with a greater understanding of legal matters, and with a knowledge of what consolidation law is about, it has created alarm, I believe with some foundation, that the ordinary policeman on the beat may not appreciate that when Parliament passes an Act in 1976 it does not intend him to implement that Act.
That brings me to the second aspect of the situation which concerns me. This relates to the position of the Lord Advocate and of this House. It seems to me hardly calculated to encourage respect for the office of the Lord Advocate to come to the House of Commons and lay before it a measure, and invite us to pass that measure, while at the same time telling us that he does not intend to prosecute under one particular clause in that measure. It is hardly calculated to encourage general respect for this House, or the legislation we pass, if we are asked to pass laws which at the same time we are explicitly told will not be implemented. To the ordinary man in the street this will look like a choice piece of evidence that Parliament lives on the other side of the looking-glass.
Even on the most objective view it is a curious precedent that as a Parliament sitting in session, we as Back Benchers are being invited to pass a law which the member of the Executive responsible for that law tells us he does not propose to implement. In practice, I welcome the assurance that the Lord Advocate is not prepared to implement it but as a Back Bencher I find it a worrying precedent that we are in a situation in which the Government are presenting us with a Bill, and asking us to endorse it, and we are told that whether we do or not the Government do not intend to prosecute or carry out the Bill.

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For all those reasons it is highly regrettable that this measure was brought forward with Clause 7 included. I do not myself share the view of the Lord Advocate that had the Government omitted Clause 7 it would have been seen as prejudging the issue of reform. After all, if Clause 7 had not been included, the matter would still have remained the law of the land under the 1885 Act. There would have been no change in the law and at least Parliament would not have been put in the position of appearing to endorse the view that homosexual acts in private between consenting adults should be a criminal act.
Having looked through the Bill in general I cannot see what the case is for this Bill having priority as a consolidation measure. It was said that the Scottish Law Commission had requested consolidation in this matter, but it is difficult to see what relevance much of the mumbo jumbo in the Bill has to modern life at the end of the 20th century, or why it should require priority in consolidation. For instance, Clause 11 provides the courts with the powers to divest the authority of a master or mistress with a maidservant under 16 if it discovers that master or mistress to be immoral. Quite apart from the use of the terms "master" and "mistress" in 1976, if there is a master or mistress employing a maidservant under the age of 16, there are already ample laws to prosecute under the Employment and Education Acts without making it subject to a sexual offences Bill.
Again, Clause 1 is quite explicitly concerned with stopping the white slave trade. There may well still be some vestigial remnants of white slave traffic in Scotland. It may be that we should not throw aside the protection offered in nineteenth century statutes, but I very much doubt that it is of such pressing importance that it requires consolidation for everyday use in the courts.
I attempted to discover how relevant some of these clauses were by putting down a Parliamentary Question to the Secretary of State to ask how many prosecutions there had been under certain of these clauses. I am sorry to say that most of the information does not appear to be available. For example, I was told that there are no statistics available about the number of prosecutions
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under Clause 2(2) which provides that:
"A man who induces a married woman to permit him to have sexual intercourse with her by impersonating her husband shall be deemed to be guilty of rape."
I am not surprised that there are no statistics available for prosecutions under this clause, because I suspect that there have been gey few in the past 30 years. I suspect also that there are more pressing anxieties in the minds of the women of Scotland than the likelihood that the man next door might impersonate their husband in order fraudulently to obtain sexual intercourse. There are more pressing problems requiring legislation than the re-enactment of this Victorian sex fantasy.
However, the Scottish Law Commission has apparently said that it would be useful to have this legislation consolidated and I cannot argue with that. For all I know, cases of this nature are going through the courts every second day. My right hon. and learned Friend brings forward the Bill at the request of the Scottish Law Commission. Well and good—but at the very least we cannot allow Parliament to affirm the view in 1976 that private acts of homosexual activity between consenting adults should be criminal acts. I shall therefore be supporting the hon. Member for Edinburgh, Pentlands in Committee in his attempt to delete this clause, and I hope that we shall have support from all quarters of the House.
9.21 p.m.
Mr. Michael Clark Hutchison: I should like to congratulate the Lord Advocate on bringing in the Bill and I hope that he will not give way over the 1885 Act. I am not one who wishes to pursue homosexuals but we should retain the power to deal with very disagreeable cases. I am in favour of having this provision in the Scottish criminal law and I think that the English made a great mistake when they abolished it. It is said that these things are done in private or that no one can see. What will we do about wife beating, which is also in private and which nobody sees? It is also said that the provision was enacted in 1885 and therefore is old. Does that matter? I am in favour of the Act of Union, which was a great deal older.
9.22 p.m.
Mr. Leo Abse: Having heard such vigorous condemnation of the Bill for which I was responsible, I cannot remain silent. I presume therefore to intervene in a debate relating to Scotland.
But the debate relates to all humanity. It relates to my people who will go to Scotland, whether they come from my constituency, from Wales, from England or anywhere else. Since, fortunately, Scotland is still a part of the United Kingdom, I cannot allow a reaffirmation of a law replete with humbug and hypocrisy in 1976.
A consolidation measure means what it says—that it wishes to consolidate the law, to reinforce it, to buttress it, to cement it—
The Lord Advocate The Lord Advocate indicated dissent.
Mr. Abse: The Lord Advocate should look at the Oxford English Dictionary before he shakes his head and see that the word does mean to cement. I do not have the modesty of my hon. Friend the Member for Edinburgh, Central (Mr. Cook) who said that he did not understand consolidation measures. Heaven help me, I have served on consolidation Committees. I repeat: such legislation is intended to reafirm the law, to consolidate it in the dictionary sense of buttressing and cementing it.
Mr. Robert Hughes: Since I was not in the House a decade ago when my hon. Friend introduced the Bill for which he is responsible, may I ask him why he did not include Scotland in the Bill?
Mr. Abse: It was not easy a decade ago to persuade everybody in the House of the rationale which is now generally accepted throughout Britain. Consequently, as a parliamentarian, I had no wish to provoke more trouble than I already had on my hands. That was the first reason, but it was not the only one. The other was that there is a wide difference between the law of Scotland and that relating to England and Wales. If that had not been the case, I should have been prepared even then to take on the backwoodsmen of Scotland, of whom I see there remain quite a number.
The reason was that there was an evidential rule in Scotland which indicated
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—as I recall it at a moment's notice—that in the case of confessions, it needed corroboration before a case could be adjudicated with a guilty finding being brought in. A homosexual offence was a very difficult offence to prove already in England and Wales without having the confessions which, at that time, were obtained from those who fell into the hands of the law charged with this offence.
It was clear over a decade ago that in Scotland, because of the nature of the law, what was occurring in England and Wales was not being enforced there. I was agreeably surprised because I know of the progressiveness which is characteristic of Scottish legal affairs. I was pleased to see that a decade ago Scotland was well in advance of the law in England and Wales, and that in Northern Ireland, and was rarely having prosecutions for this offence.
It is bound, therefore, to be most dismaying to me chat whereas a decade ago Scotland was so much in advance, today, after a decade in which England and Wales have long ceased to have a law so barbaric and primitive as was formerly the law in this country, those whose destiny it is to be homosexual, whose fate it is to be denied the boons and blessings of family life, who are already estranged from the community and isolated, all those people—perhaps 1 million men in Britain—are to be made permanent outsiders. We altered that. I find it dismaying that the Lord Advocate comes along with a proposition that an 1885 Act should be so consolidated that those who commit offences of gross indecenecy will, despite what he may say, be stigmatised as criminals.
I understand the sensitivity of those homosexuals who are already denied so many blessings that come to those of us who have our children and families. I understand how alienated they can be. I understand, too, the great difficulties of trying to get a cohesive society. What-every may be the sexual patterns or behaviours of some, if we are to have a cohesive society, a society free of humbug and cant—of which we are having a pretty poor exhibition tonight—we must have a law that enables these estranged men not to be treated by the law as criminals, pariahs, but to be integrated in our society.

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The Lord Advocate now makes his presumption from what he says is his position of neutrality. I do not think much of that position. At the time I was putting forward the 1967 Bill, the Home Secretary came off the neutral perch. The Attorney-General went into the Lobby, and the Home Secretary actively helped me. The overwhelming majority of the then Government showed that they were prepared to be identified with a social reform, a reform that was followed throughout Europe in the years that followed.
However, the Lord Advocate comes along with this curious neutral approach. Who is he? He is only a Lord Advocate. He says that he has decided not to prosecute. It is not this Parliament; not the legislature. At the Lord Advocate's whim, he is going to lay down, as has rightly been said, a general blanket ruling, and he says that in his discretion prosecution will not take place.
What is the utter hypocrisy and humbug that could bring the House of Commons to consolidate Acts and then give a firm assurance that they will not be implemented? What will the general public think about that? What sort of law is unenforceable law? The Lord Advocate is a splendid lawyer and a jurist of distinction. He knows that there is nothing worse than having unenforceable law, whether it is unenforceable because it is impracticable to enforce it or because the highest legal officers of the land are saying that they intend never to implement what is being carried through the House.
I believe that those who have made representations, those who are homosexual, and who say "Why should we be burdened with this barbaric Act?", are right to ask us why we should corroborate and reaffirm provisions of this kind.
I found the Lord Advocate's arguments on this occasion entirely lacking in logic and in humanity. He intervened with the question, "What good will it do if we throw Clause 7 out of the Bill?" I shall tell him. It will mean that people in Britain will realise that in Scotland there is at least a tentative step to bring in a more civilised law on sexuality. People are not prepared to put up with
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something that has been repudiated by most of the civilised world.
The omission of this provision would not bring Scotland into disrepute, but would have the opposite effect. There is nothing distinctly Welsh, English or having the brand of any other nationality to the condition of homosexuality, and if we take action on these lines it will mean that the people of Britain will feel that they have a Parliament that understands. We cannot alter the formative influences which put people into this mould. Therefore, we must show that we do not lack sensitivity, compassion or humanity.
It has been said that this matter could be dealt with at another stage of the Bill. I hope that Scottish Members will see that action is taken at another stage. However, I hope that the Lord Advocate, rather than allowing the matter to be driven to a vote, will reconsider the matter.
I do not think that he will do himself personally or Parliament in general any good if it is seen that action has to be wrenched from him, instead of his deciding of his own volition that he is no longer prepared to continue this charade. Let him not act as previous Lord Advocates in other Governments have acted by not having the guts or the courage to ensure that barbaric provisions of this nature are not re-enacted. Let him not perpetuate this fake situation any longer. I was grateful for what was said by my hon. Friend the Member for Edinburgh, Central. I will continue to give his views all the support which I can mobilise on the next occasion that this matter comes before the House.
9.34 p.m.
Mr. James Dempsey: I paid close attention to the Lord Advocate's remarks on this con solidation measure, but I should be grateful if he would give me some further guidance.
I gained the clear impression from what he said that this was a measure that sought to consolidate a number of Acts of Parliament. I gathered that even ambiguities could not be excluded from the consolidation process. That situation surprises me. I thought that if a consolidation measure was unclear it could be clarified and that, for example, bad grammar could be corrected.

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However, the Lord Advocate gave the impression that the Goverment were being inflexible in re-enacting the previous Acts of Parliament which this Bill is about to consolidate. Does that apply to provisions which lay persons such as myself find difficult to understand?
Clause 4 says that any person who has an unlawful sexual association with a female aged between 13 and 16 is committing an offence. It goes on to say that it would be a defence if that person could prove that he had reasonable cause to believe that it was his wife with whom he was committing the act. I do not think that that makes any sense at all. I am not a legal man and I have no associations with the legal profession. Surely, if we are consolidating something, we should correct these wrong impressions.
I paid close attention to the speech of my hon. Friend the Member for Edinburgh, Central (Mr. Cook), who asked questions about Clause 2 and the man who fraudulently impersonated a husband and had a sexual relationship. I was thinking that he might stand a better chance of getting something—
Mr. Speaker: Order. This is very interesting but we cannot go into the details of the measures. We can discuss only the question of consolidation.
Mr. Dempsey: In Clause 14 we see that if an individual who has the care and custody of a young girl aged from 4 upwards allows her to frequent an immoral place—some den of iniquity—upon conviction he may be fined only £25. Is it not possible in this consolidation process to bring penalties into line with present-day values?
Mr. Speaker: Order. I am sorry to interrupt the hon. Gentleman again, but we cannot deal with the contents of the various Acts. We can discuss only whether they should be consolidated.
Mr. Dempsey: I thank you for that ruling, Mr. Speaker. I wish that you had been in the Chamber a bit earlier when we discussed homosexuality from A to Z. However, you are always kind and courteous to me and I accept your guidance. I merely ask the Lord Advocate
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whether provision cannot be made to increase these penalties to take account of present-day values.
9.33 p.m.
Mr. Norman Buchan: I support the compelling argument put forward by my hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey). The Lord Advocate has told us that this Bill is not consolidating the law on all sexual offences. Therefore it is plain that a judgment has been made as to which offences should be included. The activity we are discussing in Clause 7 is the only offence not related to heterosexual offences. There is, therefore, since we have avoided other examples of this kind, a reason for leaving this one out, too.
A number of the other clauses deal with offences involving an under-age person. The homosexuality clause does not deal with this. It is a different type of clause altogether. For these reasons it seems that there is a good case for the Lord Advocate to say that, since not all sexual offences are being brought under this umbrella, homosexuality ought also to be left out.
Secondly, it cannot be too strongly emphasised that not all the people of Scotland are lawyers. If the Government introduce a consolidation measure in such terms as these, it is subject to all the penalties of attitude which the hon. Member for Edinburgh, Pentlands (Mr. Rifkind) and my hon. Friend the Member for Edinburgh, Central (Mr. Cook) have described.
Thirdly, my right hon. and learned Friend asked us to look at this question in the light of the parliamentary situation—that is to say, of consolidation. He is now in the position of taking the voices of the House. Would it not be better for him to listen to those voices, raised from very varied quarters in the House, and to withdraw this provision in face of the basic arguments put to him? If he cannot do that because of the relationship between him and the Law Commission in the context of consolidation measures, can he not return to the Law Commission and ask it whether it would agree that it would be to the betterment of everyone if this provision were withdrawn?
9.41 p.m.
The Lord Advocate: By leave of the House, Mr. Speaker, perhaps I may make a brief reply. I hope that I have not in this brief debate been guilty of any hypocrisy. I hope that I made my position clear and that I shall not be convicted of lack of humanity in this matter.
I shall sympathetically consider all the points that have been made, but the most significant, as I said earlier, is that consolidation does not prejudice reform but may, indeed, be a prelude to reform in that it may highlight areas of law which may be thought to need review. It is obvious that some of my hon. Friends feel strongly about this, but I am in the strait-jacket of consolidation procedure, and, sympathetic though I may be to some of these points on a personal basis, it is not in a consolidation Bill that these objectives stand to be sought and pursued.
Question put and agreed to.
Bill accordingly read a Second time.
Bill committed to a Committee of the whole House.—[Mr. James Hamilton.]
Committee tomorrow.

SPORTS GROUNDS (SAFETY)
9.43 p.m.
Mr. Hector Monro: I beg to move,
That an humble Address be presented to Her Majesty, praying that the Safety of Sports Grounds (Designation) (Scotland) Order 1976 (S.I., 1976, No. 1285), dated 5th August 1976, a copy of which was laid before this House on 13th August, be annulled.
Mr. Speaker: I think that it will be for the convenience of the House to take the following three motions, which also stand in the name of the hon. Member for Dumfries (Mr. Monro) and the names of some of his hon. Friends:
That an humble Address be presented to Her Majesty, praying that the Safety of Sports Grounds (Scotland) Regulations 1976 (S.I., 1976, No. 1300), dated 5th August 1976, a copy of which was laid before this House on 13th August, be annulled.
That an humble Address be presented to Her Majesty, praying that the Safety of Sports Grounds (Designation) Order 1976 (S.I., 1976, No. 1264), dated 31st July 1976, a copy of which was laid before this House on 12th August, be annulled.
That an humble Address be presented to Her Majesty, praying that the Safety of Sports
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Grounds Regulations 1976 (S.I., 1976, No. 1263), dated 3rd August 1976, a copy of which was laid before this House on 12th August, be annulled.
Mr. Monro: We all know the history of the regulations we are discussing, which stem from the Wheatley Report following the Ibrox Park disaster. Subsequently, three Bills came before the House. The final one become the Safety of Sports Grounds Act 1975, which had all-party support. I am glad to see such a sound Government team here, including the Minister of State for Sport and Recreation and the Under-Secretary of State for the Home Department. This motion is intended as a probe to give the opportunity to the Government to explain progress and to give some publicity to safety aspects.
My first question is why the designation order has been delayed so long and does not come into effect until 1st January 1977. Throughout the passage of the Act, and in subsequent Press releases, Ministers were talking in terms of "as soon as possible", but they hung tire for over a year, during which time the clubs have not really known what to do and have been awaiting events and guidance. In view of the good summer we have just had, it is a pity that so much time has been wasted for new construction work, because next summer such work will certainly be more expensive.
I hope, too, that the authorities will bear in mind that, however much the Home Office order indicates that these improvements should be carried out next summer, some grounds such as Wembley will have extreme difficulty. Soccer internationals will be played into June next year, and the stadium will be wanted again in August, and therefore some latitude will be needed, despite the great wish to get on as quickly as we can,
Constantly throughout the passage of the legislation the Government and all others concerned said that the clubs to be designated would include the English First and Second Divisions. That was made quite clear, with no ifs or buts about it. This can be confirmed from the Second Reading debate, and particularly the Committee proceedings. In Committee the Minister made quite clear on 1st July 1975—col. 11 of Hansard— that First and Second Division football clubs would be the first to be included.

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There may be a very good reason why this has not been done, and the House is entitled to know the reason for the change. Is it solely on account of finance, or is it because the gates have been lower than expected? Last Saturday, in the English Second Division, the maximum gate was 18,000 and the average gate was 14,000. The falling gates of one Saturday do not make a season, but this may be the reason for the exclusion of the Second Division.
If it were to be said that it is entirely on account of the gates, we might well ask why the Scottish Premier Division is included when last Saturday the average gate in Scotland was only 11,000—but we have to bear in mind, of course, the occasions when Glasgow Rangers or Celtic are playing one of the other better known clubs.
It is very important to consider how regulations are to be carried out in relation to cost. The two systems advocated by the Government were the Lotteries Act and the Football Grounds Improvement Trust. The hon. Lady the Undersecretary of State for the Home Department, on Report stage of the Lotteries Bill on 30th April 1975—col. 666 of Hansard—anticipated that about an additional £2 million for football would come from lotteries. This sum was expanded by the Minister of State on the Second Reading of the Bill in June 1975 when he said that he thought it might be £2 million to £3 million a year more. I shall be interested to know whether this is happening and whether the clubs are better placed to implement these regulations.
The regulations would be helped in financial terms by the offer—for which we were all very grateful when it was announced—of the Pools Promoters Association in setting up the Football Grounds Improvement Trust. The Secretary of State then mentioned a figure of £650,000 a year. I hope that it is now nearing £1 million. If the hon. Lady can tell us anything about how this sum will be disbursed towards improvements, we shall be grateful. If we take the figure at £1 million, an average of £25,000 per designated club under this regulation would not go desperately far.
We should also like to know whether all grounds are included in this figure. I understand that Wembley, for one, is
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excluded. This would presumably apply also to grounds such as Twickenham and Murrayfield, which are not soccer grounds.
The regulations indicate that the local authorities can charge an economic fee for the issue of a certificate. Paragraph 7 of Home Office Circular No. 130/76, which is equivalent to Section 14 of the Act, indicates that 17 man-days' work would be a fair fee. This is all very complicated, and it may be that the hon. Lady will think it much better to have a fixed sum—£100 or £150—paid to one authority. I think that that would be very much more satisfactory than this open-ended opportunity at a time when we are trying to keep down costs as much as possible.
Then we all want to hear the hon. Lady's views about a matter about which all the grounds involved in designation schemes are concerned. They hope that flexibility will be the watchword of the local authorities. Throughout our constructive debates during the passage of the Bill we all warned that the green code must not become a Bible and that there must be a great deal of flexibility in the implementation of the regulations.
During her speech on Third Reading the hon. Lady was good enough to say that she would see that the Home Office circular brought home to local authorities that the green code did not have the force of law. I am pleased to see that she has done this and gone even further. I hope that all local authorities read very carefully what the annex says about the maintenance of the maximum of flexibility. It says in this regard that it should also be noted that the Act provides that the terms and conditions should be as necessary or expedient to secure reasonable safety and that it would be unreasonable, even if it were practicable, to seek the absolute safety of everyone attending the sports stadium. That is very fair, and I am grateful to the Home Office, provided that that theme is carried on by the local authorities implementing the regulations.
If the green code were implemented too strictly, clubs might be let in for excessive expenditure. I have in mind, for example, terrace gradients, which have to be 1 in 6. A little leeway one way or the other would not seem to me

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of the greatest importance. In the same way, we must have flexibility in the division of spectator accommodation.
I want to press the hon. Lady about the safety certificates which have to be issued under the regulations. It is clear that every stadium in this order has to have a safety certificate and that the local authority, which cannot refuse a certificate, can lay down the conditions.
I know that there are certain clubs like Manchester United and Liverpool which have very near to maximum gates every other week. They are concerned that suddenly the local authority may cut their maximum gates by, say, 10,000. We want careful consideration here and not too strict an interpretation in the early days.
I hope that we can also have some clarification on the special certificate. This is rather important. In the annex to the Home Office circular, it is made clear that only those grounds which have a safety certificate can obtain a special certificate. That does not exactly tally with what the right hon. Gentleman said on 1st July 1975 when we were discussing the position of a major club like Manchester United meeting a non-League or Fourth Division club in a cup tie. Will the special certificate procedure apply in such cases? I should like the Minister to spell out where we stand with the special certificate, because if it is to apply only to designated grounds, it cannot apply to smaller grounds where cup ties might have to be replayed at short notice. We want the procedure under the regulations to be as simple as possible for clubs and local authorities.
What would happen if important grounds like Hillsborough and Stamford Bridge, which are used in cup replays or semi-finals and which are not designated, were required and had not got safety certificates? We want to see great flexibility in the implementation of the regulations. I should like confirmation, as I have had from the Scottish Office, that it is a top-tier responsibility involving regions in Scotland and counties in England. There is anxiety in Scotland that the district authorities are involved when the matter should be a top-tier responsibility. However, it is accepted that the building authority has
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also to be consulted, along with the police.
Strathclyde has issued a new application form subsequent to the original form recommended by the Scottish Office which appeared to be perfectly adequate. The Home Office circular explains the failure, somewhere in the drafting of the Bill, in relation to Regulation 7 and interested parties. We must live with the Act as it is. It will cost more money for the local authorities and the football clubs if changes in certificates have to be advertised so that any interested party has an opportunity to object. That may happen infrequently, but one would hate to think that it would open the door to all sorts of objections from people who have their knives into a particular football club.
By and large, I welcome the regulations, provided that the clubs are given fair opportunity in the next year to implement them as soon as they can. I hope that the Minister will give help and guidance on how the available money will be disbursed. If she does that, she will help to allay the fears of the clubs.
You might become concerned, Mr. Speaker, if I delved into the reasons behind the Act and the regulations—
It being Ten o'clock, Mr. SPEAKER interrupted the Business.

SPORTS GROUNDS (SAFETY)

  BUSINESS OF THE HOUSE
  Ordered,
  That at this day's Sitting the Cromarty Petroleum Order Confirmation Bill may be proceeded with, though opposed, until any hour.—[Mr. Bates.]

SPORTS GROUNDS (SAFETY)
Mr. Monro: The Opposition will give the Government the fullest support in stamping out football hooliganism, a matter which is very much allied to the Safety of Sports Grounds Act and the regulations. If the hon. Lady feels that she does not have the powers to enforce sufficient discipline within the grounds or outside them, she can count on our support, as we believe that strong, stiff custodial sentences are probably among the quickest ways to bring the hooligans to their senses.
If the hon. Lady can at an appropriate time answer some of my questions, that will help the clubs to prepare the way for this important step forward and make football grounds safer for all those who attend matches in them.
10.2 p.m.
Mr. Graham Page: Under two of the motions there appears on the Order Paper the rubric:
"The Joint Committee on Statutory Instruments have not yet completed their consideration of the Instrument."
As Chairman of the Committee, perhaps I may explain that it is a very simple point that it has put to the Home Office. In the case of the Scottish designation order, the grounds are set out in the schedule merely by a description. In the England and Wales order the schedule sets out the name of the ground and alongside it the occupier—"Arsenal Football Club" or whatever it may be. If the occupier changes, perhaps even by a change of name—becoming the Arsenal Football and Athletic Club or something of that sort—does that take the ground out of the order? Why put the occupier in the schedule? It seems to cause some confusion rather than elucidation of the order.
I want to refer to something far more fundamental. To carry out the orders, the designated clubs will require to carry out expenditure. The whole Act under which the orders are made requires the clubs to spend money, and quite properly so. The clubs, the Under-Secretary and the Minister of State for Sport and Recreation hope that the clubs may obtain some of the money from lotteries. My hon. Friend the Member for Dumfries (Mr. Monro) mentioned two ways in which the money could be raised—lotteries or a certain fund.
The hope that the clubs might raise money from lotteries has fallen to the ground. Therefore, I cannot see how they will carry out the provisions of the order unless further finance is assured to them. We have waited for the Lotteries Act to come into operation. It was passed at the same time as the Act under which the orders are being made, yet, because the regulations under that Act have not been made, nobody can earn any money to pay for the sort of expenditure required under the orders. Indeed, one
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expected that the regulations would come in before this season started so that the clubs designated under the orders could have had the benefit of raising money by the larger lotteries to be allowed under the Lotteries Act.
The regulations have not come in, and the clubs are now faced with a reduction of income as a result of the statutory instruments now before us. As far as I can understand, clubs will be prevented in future from running the most profitable lottery which they have run in the past, that is, instant bingo, the lottery whereby the little sealed bingo card, fruit card or "golden goal" card is opened and at once the person who has bought it knows whether he or she has won a prize.
The objection to that is that the winning numbers may not all have been sold and the lottery promoters may retain some of the prize money. A solution to that has been put to the Home Office, and I believe that it is acceptable. But now the Gaming Board has scraped the barrel on the interpretation of the Lotteries Act in order to say that it will not register instant bingo as a lottery.
If it is the Government's intention to kill instant bingo for football clubs, let it be remembered that the clubs are not gaining some £2 million or £3 million under the Lotteries Act but they are losing about £5 million, because their instant bingo will be killed and they will not be allowed to use it in future with an increase from the £5,000 per lottery, which can be used now, to £10,000 under the Lotteries Act. There will thus be a loss to the clubs of at least £5 million a year.
I ask the hon. Lady to consider this carefully. She brings these orders and regulations before the House to carry out an important and commendable Act, the Safety of Sports Grounds Act, but the clubs whose grounds are designated will need a far greater income than they have at present to meet the terms of the Act. They hoped for that greater income out of the Lotteries Act. They are being denied that now, 14 months after the Act was passed, and, as one can see from the letter from the Gaming Board to the clubs saying that it will not register instant bingo when the regulations come out, the clubs will not only not make money under the Lotteries Act but will lose millions of pounds if the regulations are brought in.

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If the hon. Lady wants her regulations to succeed and she wants the clubs to make their grounds safe, she has to ensure not only that their existing lotteries may continue but that they will have the benefit—it was intended to be a benefit—of the Lotteries Act and have more finance available to them in that way.
Mr. Neil Macfarlane: I give an initial welcome to the regulations and orders and assure the Under-Secretary of State that brevity will prevail. I am concerned, however, about one omission, and this relates to the categories to which reference was made on Second Reading of the Safety of Sports Grounds Bill, which were, of course, the pillars of what Lord Wheatley presented in his report which formed the platform for the legislation which the House then passed.
I remind the House that on page 14 of his Report of the Inquiry into Crowd Safety at Sports Grounds, Lord Wheatley recommended as follows:
"I would accordingly recommend that the introduction of the licensing system for grounds where money is charged for admission should be restricted and phased as follows"—
and he then gave various categories. Category 1 had two subheads:

"(a) all International Grounds i.e. Hampden Park, Ninian Park, Wembley Stadium, Cardiff Arms Park, Murrayfield and Twickenham.

"(b) all English 1st and 2nd Division Football League grounds and all Scottish 1st Division Football League grounds"—

though we know that the latter are now the Premier Division. This was endorsed by the then Minister of State at the Home Office who said on Second Reading:
"It is intended, accordingly, that only those grounds in Lord Wheatley's category 1, which are mentioned on page 14 of the report, should be dealt with first, that is to say, the international grounds, the English First and Second Divisions".—[Official Report, 19th June 1975; Vol. 893, c. 1745.]
The regulations make no reference to provision at Second Division grounds. It is against the backcloth of a desire for safety that I introduce this aspect. It is essential that these grounds are prepared for the regulations for which they were intended. Many clubs in the Second Division will have been relegated from the
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First Division or will be expecting promotion.
Yesterday's papers carried statistics of attendances at Second Division matches. There were 18,000 people at Fulham, more than 10,000 at Bristol and 15,000 at Blackburn, Nottingham, Oldham and Wolverhampton. All these attendances were in excess of the figure of 10,000 referred to so frequently in the Act.
I hope that the Under-Secretary will make specific recommendations and refer to the timetable for introducing Second Division grounds into the category proposed by the former Minister of State at the Home Office and included in the Wheatley Report. Many of these grounds will be staging cup ties in the next few months and their omission could be serious.
There are many other grounds not necessarily required to be graded as category 1, including multi-purpose stadia. One example near my constituency is Wimbledon, which would not qualify for categorisation but which has crowds of well over 10,000 and is used for a wide range of sporting activities including greyhound racing, speedway and stock-car racing. White City may be in the same category.
It would make many families much happier if the hon. Lady indicated that these stadia were to be included in the categorization.
10.12 p.m.
The Under-Secretary of State for the Home Department (Dr. Shirley Summerskill): I thank the hon. Member for Dumfries (Mr. Monro) for his general welcome for the Act, the orders and the regulations.
The Safety of Sports Grounds Act 1975 was brought into force with effect from 1st September 1975. From that date county councils and the regional authorities have been empowered by Section 11 to enter and inspect sports grounds and to apply to a magistrates' court for an order under Section 10 prohibiting or restricting the admission of spectators to a ground when they consider the risk to be so great as to justify such action.
The main instrument of control under the Act, however, is the safety certificate which will enable the local authority to impose such terms and conditions as are

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necessary to ensure a reasonable standard of safety at the ground in question.
Lord Wheatley in his report recommended that a system for licensing grounds should be introduced in phases and that the first phase should cover the international grounds, the English First and Second Division Football League grounds and the Scottish First Division grounds. There has been a significant fall in attendance figures at football matehes since Lord Wheatley reported. Risks are at their greatest when large crowds are present and densities are high. In these circumstances, it was thought right to restrict the first designation order, in the case of England and Wales, to the international grounds and the grounds of the clubs in the First Division of the League.
However, the designation of Second Division grounds has been deferred until we have reviewed the effects of the first order. They will be designated in due course.
Mr. Macfarlane: Is there any possible timetable that the hon. Lady could include? Presumably everybody must be hoping for a resurgence of attendance at football grounds in the Second Division.
Dr. Summerskill: That aspect will be taken into account if and when there is a resurgence. The hon. Gentleman hopes that there will be a resurgence. At the moment, the risks have gone down because attendance figures have dropped. This matter is in abeyance. Certainly Second Division grounds will be designated, but the matter will be reviewed when the first order has been implemented for some time so that we can see its effect.
Mr. Macfarlane: Is it not mandatory as the Act specifically refers to those grounds capable of holding in excess of 10,000 spectators?
Dr. Summerskill: The expectation was that Second Division grounds would be designated. That expectation was based on high attendance figures, which have now fallen. When circumstances change, Second Division grounds will be subject to an order.
Regarding the timing of the order, there is a requirement under Section 18(4) of the Act that the various interested
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bodies must be consulted before any order is made. We consulted the football and local authorities concerned over applications and appeals procedures and the fees to be charged to the clubs. That took time. We decided that it would be for the benefit of the clubs generally to time the designation order so as to enable them to carry out the more major works in the close season. Therefore, the order was made in July to come into operation in January next.
It has been suggested that local authorities should defer making safety certificates until August—that is, after the next close season. By 1st January 1977 designated clubs must have applied for safety certificates if they wish to continue to admit spectators to their grounds and conform with the requirements of the Act. As I have said, the issue of safety certificates will be deferred until August 1977. That will not only give clubs the opportunity to carry out ground improvements up till then, but enable more funds to accrue to the Football Grounds Improvement Trust and be available to clubs to meet the cost of the safety measures which may be required of them.
By far the greatest help to clubs in meeting the requirements of the Act will come from the Football Grounds Improvement Trust. I understand that £1½ million may be available by the time clubs carry out the necessary work. The trust is independent, so it will decide how the money should be disbursed. I understand that trust funds will be available to meet the cost of safety measures car-tied out before the grounds concerned were designated. Therefore, clubs will not be penalised for having made an early start on ground improvements.
The hon. Member for Dumfries specifically asked about Wembley Stadium. Wembley Stadium Limited has written to the Minister of State for Sport and Recreation indicating that it will not have time to carry out major ground improvements during the close season of 1977—namely, May until the end of July—as the stadium's sporting activities do not cease until mid-June. It will be unfortunate if Wembley Stadium has a shorter close season than do the League football clubs in which to carry out ground improvements, if that should happen, Wembley Stadium may have to have the necessary ground improvements

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carried out in stages and to limit the number of spectators admitted to the ground until the work is completed.
I understand that the stadium authorities also said that the Greater London Council is not being flexible in its approach and is applying the "Guide to the Safety of Sports Grounds" as statutory regulations to be adhered to in every respect. The Government have taken every opportunity provided by seminars and circulars to impress on local authorities the need to be flexible in their approach, as was urged by the hon. Gentleman, and to treat the advice in the "Guide to the Safety of Sports Grounds" for what it is—guidelines only. If any club or stadium authority considers that its local authority is requiring unreasonable safety measures to be carried out, it may appeal to the Secretary of State against any requirement which is made a condition of a safety certificate. The terms and conditions in question are suspended until the appeal is determined.
I was asked about the difference between the Scottish designation orders and the others before us tonight. Both the Safety of Sports Grounds (Designation) Order 1976 and its Scottish counterpart designate football grounds which require safety certifications under the Act. However, the schedules to the designation orders differ and their dissimilarity is marked. That covering England and Wales names the occupiers of the stadia, while that for Scotland does not. The reason for including the occupiers' names in the schedule covering ground south of the border is that Old Trafford, Manchester, is the address of both the Manchester United Football Club and the test match cricket ground. To ensure that there can be no confusion as to the ground designated, it was decided to name the occupiers of the ground. No similar confusion can arise when only the addresses of the Scottish grounds are given.
I was asked what happens when a ground which is not designated attracts a team with a large following—for example, Manchester United for the FA Cup—and therefore expects a maximum crowd. If the local authority felt that there was an extreme risk to the safety of spectators attending the game, it could apply to the magistrates' court for an
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order under Section 10 prohibiting or restricting the admission of spectators to the ground.
Only clubs which have been designated can obtain a special certificate following the issue of a general safety certificate. The strict timetable provided in the regulations for a local authority to consider each stage of an application for a special certificate and for the Secretary of State to consider appeals is necessary because a special safety certificate is required for a specific occasion and any appeals must, therefore, be completed in advance of the date on which that event is due to take place. However, we have tried to ease the burden by advising local authorities and football clubs that every effort should be made to ensure that all activities are included in the general safety certificate, the aim being to eliminate the need for special safety certificates.
Mr. Monro: I thank the hon. Lady for the trouble she is taking. When a small ground is visited by a major club, conditions are laid down as a result of consultation between the club, the police and the local authority, and a special certificate does not apply.
Dr. Summerskill: The purpose of a special certificate is to deal with a specific occasion such as a pop festival or religious gathering. The general certificate deals with ordinary football matches.
The right hon. Member for Crosby (Mr. Page) referred to the lottery regulations. I am aware of the point that the right hon. Member raised about the letter from the Gaming Board. I am writing to him on this matter, which came to my attention recently. As the right hon. Gentleman will know, the legality of instant bingo is very much in doubt. I have a copy of the letter from the Gaming Board and I shall certainly write to the right hon. Gentleman and enlarge on what I have just said.
Mr. Graham Page: Can the hon. Lady give any hope to the House that it will be possible for clubs to raise finance from lotteries? She has just mentioned that they can raise £1½ million from the fund, but they could raise much more from lotteries if she brings them into operation and allows clubs to continue with instant bingo.
Dr. Summerskill: Certainly the Lotteries Act will be of great help to the clubs, but the subject of instant bingo is another matter about which I shall write to the right hon. Gentleman.
With reference to the Strathclyde application form, the regulations specify that the application should take the form contained in the schedule to the regulations or a form to the like effect. I am satisfied that the Strathclyde form is to the like effect. It asks for certain additional information, such as plans to a specific scale, which it is open to the local authority to require under Section 3(4) of the Act.
There has been great concern about the cost to clubs of these measures and we are very aware of the financial difficulties facing the football world at the moment. But hon. Members will be aware of the established policy that occupiers of premises should take whatever measures are necessary for the safety of their customers while they are on the premises and should finance such measures themselves. However, we have restricted the first designation order to 27 grounds in England and Wales—in order to do everything we can to help in the financing—and to 12 grounds in Scotland. We have limited to the minimum the number of clubs to which the fund of the Football Grounds Improvement Trust will be available in the first instance. We have arranged the timing of the designation order and its operational date.
With the suggestion to local authorities that the issue of safety certificates might be deferred until the 1977–78 season, the need for clubs to incur expenditure on safety measures will be delayed as long as reasonably possible so that as much funds as possible will have accrued to the Football Grounds Improvement Trust. Furthermore, we have emphasised to local authorities that there must be flexibility in their approach and that only reasonable safety measures should be required.
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Taxation relief should also be of help to the clubs. The total expenditure on fixed plant and machinery may be offset against taxable income in the first order. This will cover such items as sprinklers, fire alarm systems, floodlighting, remove-able seating and so on. Moreover, taxation relief is available in respect of expenditure on structural works required under the Safety of Sports Grounds Acts and there is a right of appeal to the Secretary of State against any requirements of the local authority thought to be unreasonable.
I think I have covered all the points that were raised. On the general very serious topic of the incidence of football hooliganism, I can assure the hon. Member for Dumfries that the Secretary of State is extremely concerned about the matter. He is working with my right hon. Friend the Minister for Snort and Recreation, with chief constables and with the Scottish Football Association.
There is to be a working party under the chairmanship of the Minister for Sport and Recreation to look into this whole matter and the Lord Advocate is to consider whether it might be arranged for higher penalties to be attracted, for example, by instructing that charges of hooliganism are taken before the sheriff court rather than the district court and by ensuring that breaches are taken on the most serious charges that may be justified. For example, some cases now taken as breaches of the peace might be taken as rioting.
Question put and negatived.

PUBLIC LENDING RIGHT BILL [Lords]
Motion made,
That, during the proceedings on the Public Lending Right Bill [Lords], Standing Committee A have leave to sit twice tomorrow.—[Mr. Bates.]
Hon. Members: Object.
Mr. Alf Bates Mr. Alf Bates (Bebington and Ellesmere Port)rose—

CROMARTY PETROLEUM ORDER CONFIRMATION BILL (By Order)
Order read for resuming adjourned debate on Question [21st October], That the Bill be now considered.
Question again proposed.
10.32 p.m.
Mr. John Wells Mr. John Wells (Maidstone)rose—
Mr. George Younger: On a point of order, Mr. Deputy Speaker. I seek your guidance on a minor technical point. The motion on the Order Paper says:
"As soon as a member of the Government shall have signified his intention to move, That this House do now adjourn, for the purpose of bringing the sitting to a conclusion:"
I was not aware of that motion having been moved.
Mr. Deputy Speaker (Sir Myer Galpern): I think that that requirement was carried out by the Whip, the hon. Member for Bebington and Ellesmere Port (Mr. Bates).
Mr. Wells: When I was on my feet last week the pound stood at a very different figure from the one at which it stands tonight. That is almost entirely due to the ineptitude of the Labour Party, Her Majesty's present Government. We are tonight, as we were last Thursday, discussing the expenditure of £38 million of Government money on the building of an oil refinery which is totally unneeded, totally unwanted and completely undesirable—
Mr. Hamish Gray: Rubbish.
Mr. Wells: My hon. Friend the local Member says, "Rubbish." I trust that I may have the opportunity of dealing with his arguments which we heard last week.
The argument for this Bill was bad last week. It is even worse this week. I hope that it will be rejected, for a number of reasons. First, it is almost incredible that a British subject should
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be compulsorily expropriated by the Government in order to give his land to a £100 company formed in London, which is no more resident in Cromarty—
Mr. Gray: Than my hon. Friend's constituent is.
Mr. Wells: I wish that my hon. Friend on the Opposition Front Bench would contain himself. Many unkind and untrue things were said about my constituent last Thursday. I rightly contained myself in his defence until I heard the arguments. But it is important that the House should be acquainted with the facts about the good works which Mr. Michael Nightingale has perpetrated in and around his estate at Cromarty.
The Highland Fabricators Unit is compelled to run a ferry from Cromarty across the neck of water because of the lease that my constituent gave. My constituent is primarily interested in the well-being of the neighbourhood. He may not live there the whole time, but no more did the people who built Cromarty House. No more did the people who laid out the town of Cromarty. They, too, were people who attended the court of the King in their day, be it in Edinburgh or in London.
Therefore, there is a great deal of humbug on the part of the substantially absentee Scottish National Party and on the part of the totally absent Liberal Party. We should be clear about what is going on there.
During the recess, I visited that part of the United Kingdom and I was greatly impressed by the local councillors I met—people of all parties and no party. But I believe above all that these local people want solid local employment found, and I do not believe that this refinery will be a provision of solid local employment, by which I mean something that will provide jobs now, this year, next year and in 10 or 20 years' time. This refinery will be a great mushroom. There will be an upsurge in employment and then it will decline. What is needed is not 1,400 jobs for building the refinery, to be followed by 300 or 400 jobs for running it, but a lot of small firms, well based and well founded, providing continuing employment.

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I speak with great diffidence in the presence of the local Member, but I know from my own researches that there are men and women there who are travelling some 70 miles to work each day. Who in their senses wants to travel 70 miles to work each morning and 70 miles back home at night? It is madness. A reasonable man might want to go 10, or 20, or at the most 30 miles to work, but one is worn out if one commutes more than that.
Mr. Gray: I feel that my hon. Friend is exaggerating this point. The number of people who travel 70 miles to work is very small indeed there. It is perhaps not an exaggeration to say that some people may do a round trip of 70 miles, but those who actually travel 70 miles each way are very small in number.
Mr. Wells: Of course the number travelling 70 miles each way is very small, but I assure my hon. Friend that some people are coming from further north than Golspie, which is about that distance. But the point I am putting is that it is madness to base the argument for the refinery on the great criterion of jobs. Last Thursday, we heard of this, that and the other great national or Scottish or Highland body wanting more jobs. Of course they all do, but they want them in proper proportion. If we are to have another refinery, it should be where jobs are scarce—the Clyde, for example, a centre of high unemployment—and not where there is full and over-full employment. Compared with Clyde-side, there is over-full employment in the Cromarty area.
If we put in the further 1,400 jobs required for the refinery construction, the people who will come in will be the oily men from all over the world—I mean "oily" in the best sense—and they will not be the unemployed and unemployable people from my hon. Friend's constituency. They will be incomers; they will find it a delightful place to live, and they will live there expecting houses and schools and university places and infrastructure of ail sorts. Then, when the refinery is built, and 1,000 of them are out of work, they will expect this House to find more money to find new jobs for them. Clearly that is absolute nonsense. I believe that the whole argument on jobs falls by the wayside.
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I turn to the situation of my constituent, Mr. Michael Nightingale, about whom many unkind and hurtful things were said last Thursday in the House.
Mr. John Biffen: Before my hon. Friend reaches the issue of his constituent, will he clear my mind on one point? Was it the view of Mr. Nightingale that there should be no refinery at Nigg, or that he was in favour of a refinery provided that it could proceed in circumstances that were acceptable to him? My hon. Friend has been arguing as though there were a case for no refinery.
Mr. Wells: I am grateful to my hon. Friend, and I shall seek to deal with that matter in a few moments.
My constituent, Mr. Michael Nightingale, who has been the proprietor of the Cromarty estate for 12 years and who since the recent sad death of Colonel Ross is now the outright proprietor of the entire estate, has taken the view all along that there should be a suitable increase in local employment. In the Highland Fabricators development he was careful to see that local jobs and amenities were protected. He has taken the view all along that, if there is to be a refinery, it should be properly protected and that local people should be properly protected.
When I first came into this debate as a Kent Member of Parliament, some 600 miles away from Nigg Bay, at first sight totally ignorant of it, I came into the matter to protect the interests of my constituent. But since then I have taken a much broader interest in the matter, and indeed I visited the place during the Summer Recess. The view I now take is that there should be no refinery. My constituent takes the view that if a refinery is to come against his judgment, at least local people should be protected from its worst effects. I think that answers the point made by my hon. Friend the Member for Oswestry (Mr. Biffen).
Mr. Biffen: I think it does, but is not my hon. Friend saying that Mr. Nightingale was quite prepared for a refinery to be established at Nigg Bay, provided that certain conditions were observed?
Mr. Wells: Yes, of course he was, provided that certain conditions were

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observed. But that is where I part company from my constituent, Mr. Nightingale. He, being an even more reasonable man than I am, is prepared for there to be a refinery provided that certain conditions are observed. I take the view, which I shall elaborate shortly, that there should be no refinery at all, but Mr. Nightingale, being a more reasonable man than I, says "If the damned thing has to come, let us have it on our terms."
Mr. Robin Corbett: Does the hon. Gentleman appreciate that in a BBC1 interview with Mr. Vincent Hannah on 19th October, his constituent was reported as saying
"I would consider selling them the land in return for a small share in the company."?
That sounds slightly different, does it not?
Mr. Wells: No, I think not. Surely the point is that Mr. Nightingale is prepared for there to be a refinery, provided that he is in a position to dictate the terms on behalf of himself and the local people.
I do not know whether the hon. Member has visited the site and seen the great natural beauty of the Sutors Peninsula, the southerly peninsula, or Easter Ross. There is no doubt that Colonel Ross, who was the previous owner, and Mr. Nightingale have taken a great interest in preserving local amenities. Mr. Nightingale was awarded the OBE not long ago for his work in maintaining areas of natural beauty. He is a man who has this very much at heart. He has said that he would be willing for the refinery to go ahead if he had some degree of control, either by having a share in the company, which would give him a seat on the board, or by him granting a lease.
My hon. Friend the Member for Fife, East (Sir J. Gilmour) who was one of the Parliamentary Commissioners who heard the case in Edinburgh, pointed out that if Mr. Nightingale's land was to be dredged away there would not be much of it left so that a lease would be somewhat inappropriate. I accept that. The fact remains that Mr. Nightingale will get quite a lot of money out of this whatever happens. Therefore, the monetary consideration has no bearing. What does have a hearing is Mr. Nightingale's
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true and genuine concern for his friends and neighbours in the vicinity.
This is why I, as Mr. Nightingale's Member of Parliament, hope that I have progressed from a rather narrow, protectionist outlook concerning my constituent's interests to a broad interest in the subject. Mr. Nightingale does not care how this is controlled provided that it is controlled. That is the point. We do not much care how it is controlled as long as it is not handed over on a plate to a £100 company controlled by a Swiss-American whom nobody knows. Some say that he is richer than Paul Getty or Howard Hughes. Who cares? They are both dead. This gentleman is still with us. We want to know, first, that the local residents and their amenities will be protected and, secondly, my hon. Friend the Member for Ross and Cromarty wants to know that there will be a plentiful supply of jobs for many years ahead for his constituents. I do not believe that this madcap scheme will provide jobs for my hon. Friend's constituents over a period of 20 or 30 years.
I have the privilege of representing Maidstone and before that I had the privilege of being the unsuccessful Conservative candidate in the great town of Smethwick. These two places have one bond in common. Their strength and prosperity is built up on a lot of small, local industries. I will not bore the House with what we have in Maidstone and, indeed, were I to do so I would be out of order.
A local economy built up on a number of small firms employing 10, 20, 50 or 100 people is far better than a Government-based load of rubbish with 1,400 people, to be cut back to 500 in a year's time. Basically, local people want steady jobs on which they can rely. Dad wants to be able to tell Little Willy that he can follow him in 30 years' time.
This is where we are going wrong in so many of our development districts. What has gone wrong with the Scottish economy is that successive Governments have put in big concerns instead of building up from small beginnings.
Mr. Gray: My hon. Friend's assessment of the situation is wrong. It is because of the obvious lack of knowledge of the area that is being expounded by

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him that the Scottish Conservative Party is so poorly represented in Scotland. It is only now that Scottish Conservative candidates are realising that they must be identifiable with the people in their areas that we are beginning at last to improve our situation.
I draw my hon. Friend's attention, further, to a very interesting document which was produced by a Leverhulme research fellow of the University of Stirling, Mr. T. M. Lewis, a Master of Science, and a member of the Institute of Civil Engineers, entitled
"Some Comments on a Potential Refinery Development in the Cromarty Area."
I commend it to my hon. Friend because it takes a totally different view and projects a very much greater number of jobs than has been claimed by anyone so far and a very much healthier future for the area as a result.
Mr. Wells: One must bow to the local knowledge of the local Member. However, the fact remains that a healthy economy is built up on many firms and not on one. My hon. Friend has the smelter, Highland Fabricators and the town of Inverness. A more healthy economy would be built up on lots of little businesses, as we all know and, despite the learned academic—I take learned academics with a very big grain of salt—if I were a potential workman in my hon. Friend's constituency, I would be very much happier to know that there were 100 companies each employing 10 people than to know that there were 10 companies each employing 100 people. But let us leave that alone.
I have sought to make a number of points. I now want to come to the national requirement for refineries. We are already oversubscribed. There is already too much refining capacity. The hon. Member for West Lothian (Mr. Dalyell) spoke about his interest in British Petroleum, at a very distant stage. He had the courtesy to declare that, which I thought was quite unnecessary. In Kent, where I come from, a number of my constituents work at the local BP refinery. In the same way that the hon. Member declared an interest, I suppose that I should do so on behalf of my constituents.
Let us, however, be frank about this matter. Britain has too much refining
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capacity. To put up another refinery must be absolutely mad at the present economic stage. As I said in my opening remarks, the situation has altered radically since I was on my feet in this Chamber late on Thursday night. The Government would be mad in any way to give their support to spending on this project £38 million of your money, Mr. Deputy Speaker, and the Clerk's money and even the Under-Secretary's money—assuming that he pays his tax. We are mad as a nation to go spending £38 million of your money, Mr. Deputy Speaker—
Mr. Deputy Speaker: I have no money at all.
Mr. Wells: Even the people in the Gallery pay their taxes. It is mad to spend their money on such a project at this juncture. It is not needed. It will not provide jobs, which are needed. There are no "jobs" needed of this magnitude.
The Under-Secretary told us last week of all the worthy bodies concerned. I forget all thenames, but they are all set out in Hansard. They are a load of codswallop civil servants who produced these requirements. We should forget what these people told us. I believe that the Secretary of State for Energy and the Secretary of State for Scotland have been taken for a ride on this, and that we should look at the real situation.
I am sure that this gentleman, Mr. Ludwig, is a kind father and all the rest of it. Perhaps he is not a father but I am sure he is an excellent chap. I invite the House for one moment to consider this. Mr. Ludwig has a £100 company in London, with a very doubtful ancestry. We have been told nothing about it by the parliamentary agents, who have been extremely idle over the whole thing. They have not consulted hon. Members in any way. They have given us minimal advice and help, and are not even represented in the Official Box tonight. That is deplorable.
The fact remains that Mr. Ludwig owns a fleet of Liberian tankers, and I invite hon. Members to consider in their minds the map of the North Atlantic, from the Gulf of Mexico round to Holland, right round the United Kingdom, to the north of us, up the Atlantic and down the North Sea. I suggest to the

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House that Mr. Ludwig, who is interested in lifting raw oil with his fleet of tankers from some place or other and keeping his tankers continually on the move, is a bit worried about the North American pollution lobby. He is frightened of the attitudes of the North American antipollutionists, and I believe that he does not give a tuppeny damn whether he sets his refinery down at Nigg or in Shetland. I am sorry that the right hon. Gentleman the Member for Orkney and Shetland (Mr. Grimond) is missing. He was here on Thursday but perhaps it is difficult for him to come twice in a fortnight.
Mr. William Small: The hon. Member says this with his attendance record!
Mr. Wells: It is not a bad record. I do not know what is the attendance record of the hon. Member for Glasgow, Garscadden (Mr. Small). I am here most days, one way or another, so do not let us get too excited about that. I cannot remember when the hon. Member was here last.
But the serious point I am making is that this Mr. Ludwig owns a fleet of tankers on which he pays Liberian taxes. He flits from nation to nation, shifting oil from place to place. If it is not oil it is anything else that is shiftable. I believe that he or his advisers are fundamentally worried about the North American anti-pollution lobby. If he could get his foot into the United Kingdom he would find that the Gulf of Mexico is very little further from Nigg than it is from the north-east American seaboard. It is a little further but not that much further. The potential for him would be that much greater.
This gentleman, with his advisers, is totally footloose in the world and prepared to put his nasty, smoky pollutants down anywhere, and the Under-Secretary of State for Scotland is perfectly happy, it seems, to have one of the finest parts of the Scottish eastern seaboard ruined by pollution. He already has full employment but he is prepared to upset the existing fisheries, farming and small shop-keeping community by putting in a short-term extra booster of jobs.
It seems to me that Her Majesty's Government have been taken for a complete
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ride on this. I therefore invite my colleagues on the Opposition Benches and hon. Members on the Government side to oppose the Bill at this stage. If by any unlikely chance my hon. Friends and I, who oppose the Bill, are defeated, I trust that we shall be supported in our amendments at a later stage tonight.
11.0 p.m.
Dr. Oonagh McDonald: Like other hon. Members have in this debate, I begin by declaring an interest. My interest is in the welfare and employment prospects for workers in Thurrock at the two refineries of Cory-ton and Shellhaven. I am concerned about the prospects of employment for them if we allow this development at Nigg to take place with the assistance of Government funds amounting to at least £40 million, although a formal application has not yet been received from the company. It is only natural that those of us with workers in our constituencies in oil refineries should be concerned at the prospect of another refinery being developed, because we know that our present refining capacity is not yet being used; it is only up to 64 per cent. at the moment.
The proposal to build a new oil re-finery has serious implications for the future of the oil refining industry and for job prospects. This Bill gives us an opportunity to take serious account of the views—
Mr. Biffen: The hon. Lady is advancing an interesting proposition. Would she care to extend it one stage further? At the moment, we have a capacity to produce electricity which is well ahead of current levels of consumption. By analogy, would she also argue, therefore, that it would be unwise to build further power stations?
Mr. Deputy Speaker: I do not think that arises in this debate.
Dr. McDonald: The hon. Member for Oswestry (Mr. Biffen) has not given me time to develop my argument. This I shall now continue to do.
The figures about our oil refining capacity speak for themselves. In 1975, our output was 86 million tons. Our total capacity is 147 million tons. The accepted estimates expect this to rise to

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about 156 million tons a year, even without the building of the Cromarty Petroleum refinery. Much more speculatively, we can look ahead to the 1980s and expect that we shall need to refine about 110 million or 120 million tons a year. In other words, excess capacity will continue not just through the 1970s but into the 1980s.
Cromarty Petroleum claims that the real capacity of United Kingdom refineries is only 120 million tons a year and that, by 1980, when its own refinery is completed, there will be no spare capacity at all. These are unusual estimates, to say the least, and Cromarty Petroleum gives no evidence to back up these estimates. They seem to be merely figures plucked from the air to give substance to the argument whenever this is necessary.
Mr. Gray: If what the hon. Lady says is correct, perhaps she will comment on this item from the business section of the Aberdeen Press and Journal of 20th March 1976 which carries the headline:
"Now Forties oil goes to Canadian refinery."
She will see these words:
"The first shipment of Forties Field oil for Canada has been delivered to a Montreal refinery."
Dr. McDonald: This is a commercial decision. It is true that the Department of Energy would like all North Sea oil to be refined here, but it cannot enforce this obligation on the oil companies at present.
The existing refineries have the capacity to refine the light North Sea oil and, where they have not, the Government are at present giving up to £20 million to enable existing oil refineries to adapt or to expand their plant to deal with it. Within the last few months it has been announced that Mobil Oil will receive £10 million for the Coryton Refinery. The Total Petrofina refinery will receive between £5 million and £9·5 million to upgrade and extend its refinery plant.
Those grants have been made by the Government to ensure that we have all the capacity that we can possibly need to refine North Sea oil. I ask the Secretary of State for Energy, given such grants, what part does the Cromarty Petroleum refinery play in the scheme? It seems that with £20 million already committed, we have all that we need and that a
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further £40 million to build a new refinery altogether is unnecessary. We already have everything that we can conceivably need.
It may be true that we can risk investing in refinery capacity and justify Cromarty on those grounds, but if we offer that as a justification there are various things that we must take into account. For example, many other countries, such as those in the Middle East, have projected oil refineries which will come into the market to sell refined products. Other countries have excess capacity and prefer to import crude oil rather than refined products. They would prefer to import North Sea oil as a crude oil and not as a refined product.
If we put further capacity into Cromarty Petroleum we put money into an extremely risky investment which will remain that into the 1980s. I accept the need for public investment in jobs, in viable projects to provide secure jobs in a market where we can reasonably expect to produce a good export trade. But this seems to be a risky project which is bound to waste public money.
It is not surprising, as a result of discussions with the Transport and General Workers Union, that the Secretary of State for Energy asked for certain assurances from the Cromarty Petroleum Company. They concerned four main areas—that North Sea crude oil would be used, that the refinery would be export oriented, that it would produce petrochemical feed stock and that it would give additional, not new, employment with no adverse affect of employment elsewhere. Assurances were received from Cromarty Petroleum in a letter published last week.
Let us examine some of the assurances. We are told that Cromarty anticipates entering into long-term contracts with North Sea oil suppliers, although it cannot be sure that a decision to use North Sea oil only will not be revoked in the future. That assurance was given in October. Last March in a Press statement about the future of Cromarty we were told that it would involve 50 per cent. North Sea oil and 50 per cent. Gulf or African oil. This represents a change of heart over a few months. Have agreements with African and Gulf companies broken down or have wonderful offers been made by other crude oil companies?

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If so, by whom have these offers been made and can Cromarty name them? The Scottish Office has been unable to find any company with which Cromarty has an agreement to refine oil.
The refinery is supposed to be export-oriented, but where is the market to be? Cromarty has not replied. We are told that the managing director and other senior staff at Cromarty are not experts in the European market. Where, then, do they hope to sell their oil?
The next assurance is that the refinery will be producing petrochemical feed-stocks suitable for sale in the United Kingdom. But ICI, Shell and BP already have their own arrangements to produce petrochemical feed-stocks. One wonders what the sources that Cromarty will use are, and where it expects the market to be.
We are not offered additional employment, but only new employment. There is an important difference. New employment could mean that people in Cromarty get jobs at the expense of workers in Thurrock—hence my interest.
Mr. Iain MacCormick: Does the hon. Lady agree that the whole basis of her speech is that she does not want people in the Highlands of Scotland to have the jobs because this might affect her constituents in England?
Dr. McDonald: No. The basis of my speech is that public money is being spent on an insecure project which is not likely to produce jobs in the long term, or possibly even in the short term. Public money is being wasted. It will not create additional employment in the United Kingdom, which is what is required. Our concern is that money should be spent on viable jobs.
I talked about money being spent on a viable project which we could be sure would produce jobs. Let us look again at the history of the company. It is ultimately owned by Mr. Ludwig. If we delve into his past we shall no doubt find many interesting things. Among them we shall find that in 1957 he purchased land near Milford Haven. He first offered an iron ore refinery. That did not materialise, and ultimately the land was transferred to Gulf Oil. With that kind of history, how can we be sure—
Mr. Hugh McCartney: Does my hon. Friend know that the reason for the project's not being proceeded with was a planning condition which still applies to Gulf Oil?
Dr. McDonald: The point is that the jobs did not materialise. The land was purchased in a speculative manner.
Mr. McCartney: Is my hon. Friend implying that the jobs did not materialise through the fault of Cromarty Petroleum or of some other party?
Dr. McDonald: I was not referring to the Cromarty Petroleum Company. As far as I know it did not exist in 1957. It was referring to the past activities of Mr. Ludwig and pointing out that promised jobs did not materialise. Jobs which are currently being promised by the company may not materialise. That is the point with which I am concerned.
We have here a company which is entirely foreign-owned. No British interests are represented in it. It wishes compulsorily to purchase a piece of land, and proposes an oil refinery for which we can see no need or use at present or in the early and mid-1980s. We have no guarantee that jobs will be provided if Cromarty Petroleum obtains the land or that they are needed there in that sort of industry. There is no guarantee of what will happen if Government money is handed out in the way proposed.
11.10 p.m.
Mr. Roger Moate: The hon. Lady the Member for Thurrock (Dr. McDonald) has emphasised again how doubtful are many of the aspects of this whole affair and how uncertain are the propositions upon which the Bill is presented. If anyone had doubts before about the validity of the propositions put before us, those doubts will now be entrenched following what has been said in this and previous debates.
Before dealing with the wider questions of refineries and refining capacity, I shall refer to some of the harsh and unfair things that have been said about Mr. Nightingale. I am sorry that the right hon. Member for Kilmarnock (Mr. Ross) is not here. I am sure that he has valid reasons for his absence, but he has admitted candidly that he was the cause of the whole problem. I do not criticise a person for taking a courageous decision and

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overriding the views of a reporter or a planning inspector, but some of the remarks in his recent speech on this Bill were not of the calibre one would expect from the man who has occupied such a senior position in the Government.
I took particular exception to this reference to Michael Nightingale by the right hon. Gentleman:
"All the rest of the land has been bought, but one absentee landowner, for reasons best known to himself, said "No" … But he is prepared to lease the land for 99 years or take a share in the action. In other words, he wants out of it as much as he can get."—[Official Report, 21st October 1976; Vol. 917, c. 1783.]
That put together most of the abuse directed against Mr. Nightingale and I thought that they were despicable remarks and totally at variance with the truth. I wish that the right hon. Gentleman were here so that he could withdraw what he said.
In any long-drawn-out argument there will be many contradictions and, after a few years, it is hard to untangle the facts about who is right and who is wrong. However, I have seen a vast amount of material and I am convinced that Mr. Nightingale has acted properly in every respect, that he has at heart the welfare and well-being of the people of Cromarty, that he wishes to ensure a higher quality of life for that area and that he is not, as the right hon. Member for Kilmarnock suggested, trying to get as much as he can out of it. That was a pretty poor thing for the right hon. Gentleman to say. If Mr. Nightingale had wanted to extract the maximum amount of money from the land, he could have sold it at a much higher price. But that has never been his intention.
Some hon. Members have referred to Mr. Nightingale saying that he was prepared to take a share of the action or some such words. I wish that someone could refine the vast amount of paper which I have received on this matter. Mr. Nightingale's remarks have been misquoted time and again and it is only fair to put the record straight.
I have here a copy of the letter which has been quoted on television and by the Cromarty Petroleum Company in an advertisement. The letter reads:
"You have said nothing further about my possible wish to participate in any project that goes forward."
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The letter was dated 11th January 1974 and earlier in it Mr. Nightingale writes:
"I have been waiting to receive a copy of the project proposal which you promised when we met on 7th December … I note that it is now in the hands of several other bodies, but I cannot give sympathetic consideration to the proposal without the facts."
At that time, Mr. Nightingale had no information about the proposal. His only information was that it related to a marine terminal project.
I have a copy of the letter from Cromarty Petroleum's solicitors dated 12th November 1973, which states:
"The company … wishes to purchase your property on Nigg Point … Cromarty Petroleum Company Ltd. would like to purchase your Nigg Point land for use for marine terminal and associated facilities along with tanks and other storage uses and intends to submit an application for planning permission in principle to Ross and Cromarty County Council in the next few weeks."
I have a copy of that planning application, which confirms what is contained in the letter.
At that time the talk was about not a refinery, but a marine terminal project.
Mr. Nightingale, in a letter to me, said:
"I have made it quite clear since my letter to The Times on 13th September 1971 that I am opposed to the idea of a refinery at Nigg Point but have also made it clear that if the Government wishes it to be"—
presumably that will be the final decision of this legislation—
"then I would co-operate but in such a way that the development could be of benefit to Cromarty Estate and thereby to the town of Cromarty itself. As I think I have explained to you the estate owns a number of important public buildings in Cromarty, such as the beautiful eighteenth century town hall and the Gaelic Chapel. All these buildings require large annual injections of money if they are to be maintained properly, but the estate income is minute."
It should be emphasised that Mr. Nightingale has not received one penny piece out of the Cromarty Estate and that it has expended considerable sums of money on planning inquiries which have taken place. Therefore, any question of Mr. Nightingale seeking to get what he can out of it, as was suggested by the right hon. Member for Kilmarnock, is totally disproved by some of these points.
We are primarily concerned today with the purchase of 47½ acres of land. That is the proposition in the Bill. But it is

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not as simple as that. The House has been given a rare opportunity to discuss many other matters directly concerned with this proposition. The purchase of the 47½ acres is the tip of the iceberg, so to speak, which gives us an opportunity to consider all the different matters relating to it.
It is unusual, but welcome to be able to debate a major planning decision. It is also unusual, but welcome, to have the chance to discuss at such length where the refinery should be sited.
I have found this debate illuminating and helpful. I am sure that other hon. Members welcome the opportunity to discuss the conservation implications of a major decision of this kind. It is certainly a welcome, but rare, opportunity to discuss the way in which Government money is spent on investment projects of this kind. The very nature and automaticity of the investment grant system means that we seldom get a chance to consider whether it is the right or the wrong way to spend public money. We might say that is a defect in the system. Perhaps we should have greater opportunities of scrutiny.
Some hon. Members have said that we are talking about 47½ acres of land, not the investment grant system. I should have thought that the House would welcome the opportunity to consider: is this the right time to invest such money; is this the best place to put the refinery; is this the best way to spend £38 million of the taxpayers' money? We should be grateful that the procedures of the House allow these debates to take place. I hope that the House will be grateful to my hon. Friend the Member for Maidstone (Mr. Wells) and others who have helped to ensure that we can debate these matters.
We can now examine these proposals in detail. If the Government's answers are not satisfactory—they have not been so far—I suggest that hon. Members might feel justified in saying that the Bill should not be considered.
The question that the House must ask itself is: has it been established that there is an overriding national interest for this project at this time? That is the sole justification for saying that this refinery should go ahead. If there is not an
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overriding national interest, no one can argue strongly in favour of a refinery on a beautiful piece of British coastline. The overriding criterion in the jobs versus conservation argument is an established and clear requirement for development in that place. But the Government have not said that they need a refinery there. A private company says that it wants to build a refinery there. Far be it from me to suggest that private companies should not invest their own money for the benefit of the United Kingdom—
Mr. Tam Dalyell: What bothers me is that the private company is not investing its own money. Very little, if any, money from the Ludwig organisation is going into this project. I understand from merchant bankers I consulted over the weekend that the only equity that is going in is £36 million, £38 million or many millions more of the taxpayers' money. Attempts are being made to raise the rest in the City. Whatever else it is, it is not the private company's own money. Some of us would be far happier about the project if a percentage of the company's money were going into it. We should get away from the idea that vast foreign funds are being injected into this country, because that is far from the reality.
Mr. Moate: I do not think that I can be accused of inaccuracy. The hon. Gentleman has anticipated what I was about to say. If we are to sacrifice beautiful coastal areas, it has to be clearly established that there is an overwhelming need for the development.
Mr. Gordon Wilson: Is the hon. Gentleman trying to establish the proposition that industrial development should be kept in areas of England where development has occurred in the past and not in areas of Scotland badly in need of industrial development?
Mr. Moate: That is too big a question to answer in that way. It has to be established that a refinery is needed there. There is a logical case for saying that refineries should be established as close as possible to the markets that use them in the normal course of events. Therefore, there is not the strongest possible case for developing a refinery in Nigg Bay. On the other hand, I concede that it is argued that this will be an export refinery,

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although that has yet to be established. That qualifies my answer to some extent.
In terms of conservation, it has to be proved that we need a refinery there before we carry out the development. We also have to establish that it is in the overwhelming national interest to spend £36 million of our money on a refinery in that part of the world. That has not been done. Unless that is proven it would be wrong for the House to go to exceptional lengths to give to this private company—which has not yet proved itself to be of any substance—such extraordinary powers. The company seeks a Private Act of Parliament. To give to a private company power compulsorily to purchase the land of another citizen would be to grant a rare privilege. It is a rare privilege for the country to give £36 million or £38 million to a private company.
Mr. J. W. Rooker: The position is worse than the hon. Gentleman suggests. The company has written into the order the tax exemption clause—Section 8—a matter which normally the Treasury and the Inland Revenue would take care of. This private company has taken upon itself the right to exempt from tax all the costs relating to the order.
Mr. Moate: Nothing about this company amazes me. It is a remarkable example of enterprise to establish a £100 company and ask for £38 million of the taxpayers' money. The proposition at this moment in time is that the company is asking for powers of this Parliament compulsorily to acquire land. Flowing from that will be all the other matters that we are discussing. We should not grant that power lightly. We should not grant it unless we are satisfied that this project is needed in the national interest.
I wanted to say another word about conservation because some of us are so accustomed to the argument of jobs versus conservation that we think it hardly worth arguing the case. It has become a cliche. It is a situation with which we are all familiar in our own areas. We take the view that there is a conservation argument but we do not think about it much more.
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I was glad that my hon. Friend the Member for Pudsey (Mr. Shaw) made this point in his speech the other day when he quoted the case of the Royal Society for the Protection of Birds. It is worth recalling the point that the Society made in its letter dated the 7th October. It said:
"The RSPB's opposition to the development arises from the fact that the Cromarty Firth is recognised by the Government's own conservation agency, the Nature Conservancy Council, to be of international biological importance due to its large bird population."
It added:
"Following the advent to North Sea oil, the RSPB has accepted the overriding need in the national economic interest to construct bulk oil handling terminals in Orkney, Shetland, the Firth of Forth and at Teesside. We believe that no such overriding need has been demonstrated to justify this major threat to the Cromarty Firth."
It is important to establish that there are strong conservation arguments against a refinery. Other hon. Members will argue that the case for jobs is real. My hon. Friend the Member for Ross and Cromarty (Mr. Gray) has clearly concluded that this is the case.
Mr. Giles Shaw: In dealing with conservation will my hon. Friend also take note of the fact that the preservation of wildlife is an international obligation? Will he also note that, so far as I understand, this is the first time that such a project has been going ahead, or is likely to go ahead, when an application has been made for two reserves of international significance within the Firth itself?
Mr. Moate: It is incumbent on the Government to say what their policy is in this respect. If one is planning to establish two nature reserves on the one hand, and planning to build an oil refinery on the other, it indicates a conflict of thinking which requires more clarification.
Mrs. Margaret Bain: Would the hon. Gentleman accept that many of us in Scotland feel that on many occasions animals and wildlife have been put before people? If we look back through history it happened during the Highland conservation when sheep became more important than the people in the area. Is it not time that people, and employment for the people, were put

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first? That is what we in the SNP are fighting for in respect of this legislation.
Mr. Moate: I am glad the hon. Lady said that that is what she is fighting for because the SNP has been sitting so long on the fence that it was not clear which way it would come off.
Mr. Gordon Wilson: That has always been clear.
Mr. Moate: The hon. Member for Dundee, East (Mr. Wilson) says that that has always been clear. A number of us have listened to the speeches from the SNP Bench and they were anything but clear. Their earlier speeches indicated that they did not know what to say or think. Apparently they are now in favour of it. That is fair enough but it is a bit late. No doubt they also voted against the Joint Committee of Inquiry which was suggested by a number of hon. Members. That would have been in the interests of Parliament and of Scotland.
I was talking about conservation versus jobs. What we have to establish is whether it is worth sacrificing the bird life, or whatever, in such an area for the sake of jobs. Of course, if there is an over-riding national need for the jobs the case is conceded. What I was going to say about my hon. Friend the Member for Ross and Cromarty (Mr. Gray) is different from what I have just said about the SNP. While I disagree with my hon. Friend's conclusions, I do admire the courage he has shown in coming down firmly and clearly on one side of the argument.
Mr. Robert Hughes: Would not the hon. Member concede that it is a great pity that we are put into this dilemma of having to choose between conservation and jobs on the application of one company? Would it not be better to accept nationalisation of the land in Scotland and the Socialist policy of forward planning?
Mrs. Bain: When?
Mr. Moate: I need not pursue that line of argument. However, much as I am against the nationalisation of land and the State's involvement in these matters, I prefer compulsory purchase powers to be used only in the interests of the State. They are powers that should be exercised
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very sparingly, but there are occasions when they need to be used, times when the Government have to purchase properties compulsorily. I am much more hesitant about the argument that these powers should be used to transfer property to another private company. Perhaps the hon. Member for Aberdeen, North (Mr. Hughes) and I can go a little way along that road together.
We can all envisage a situation such as this in our own constituencies. If someone wished to establish an oil refinery on the Isle of Sheppey, in my constituency—and it may surprise hon. Members to know that, although it is in the South-East of England, it has an unemployment rate of more than 10 per cent.—no doubt there would be conflicting arguments between those who wanted jobs and those who wanted to preserve the coastline. My hon. Friend the Member for Ross and Cromarty has had the courage to say that he would go for jobs, and who would blame him? But there will be those who will blame him and who support the conservation interests. They will be upset by what he has done, but I hope that he and they will agree to differ on this issue and that they will respect my hon. Friend for having the courage to fight this project all the way through, for having welcomed these opportunities for parliamentary debate, recognising that this is a matter of immense national importance.
I wish now to say a few words about the company itself. If the company were putting in its own money, we should welcome this massive investment of foreign money, and that would be a strong argument in the company's favour. One of the arguments for the proposition is that the Ludwig empire has such vast resources that one need have no doubts about its ability to invest this amount of capital. But if it is so vast and has such resources, why is it seeking these funds in the London market? It is not Mr. Ludwig's money. He has a fund raiser who is raising money. Why is not Mr. Ludwig's money only going into this project?
It seems clear that we are talking about a project of up to £200 million and, according to the Daily Telegraph of 30th September 1976, the British Government will be supplying £36 million and of the balance of £144 million it looks as though

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some $62½ million, or some £40 million—changing rapidly as the day progresses—
Mr. Robert Hughes: The exchanges are now closed.
Mr. Moate: —is to be found by Mr. Ludwig. The rest is being raised in the London money market, so that it is simply resources already available for investment in the United Kingdom.
The Daily Telegraph of 30th September had a leading article saying:
"If a visitor from Mars were seeking to understand why a great industrial and trading nation such as Britain is obliged to call in the receivers from the IMF, he could do worse than mull over the saga of the Nigg petroleum refinery".
I expect that both opponents and supporters of the project would agree with that. It goes on:
"This is a project of such commercial improbability that it may very well, like its previous manifestations, turn out to be stillborn. Nevertheless it tells us much about the management of the nation's affairs over the past 10 years.
For it is not a new idea. On the contrary, this is the third time over the ground. On each occasion there has been a scheme to build a refinery on the Cromarty Firth involving a prospective outlay in tens of millions of pounds from the taxpayer in grants, to create a handful of jobs at the rate of £70£80,000 per job. Each scheme has been marked by a total absence of identifiable markets."
That is the key point. The company has switched its emphasis from the import of 50 per cent. North Sea and 50 per cent. Middle East oil: now it is talking about 100 per cent. North Sea oil. But in the 1980s, the problem will not be finding sources of oil in the North Sea. The company will probably get the oil it seeks. The problem then will be where it will market its oil. We have been told that it has contracts lined up. If so, we should be told, because the viability of the project depends on those contracts being real.
Mr. Gray: My hon. Friend is being naive. Surely he would not expect any company to advertise publicly at this stage where its market will be. If the project did not go through, the market might be taken by competitors.
Mr. Moate: That is a fair point. But we also have a fair point. If the company is asking for £38 million of our money, we are entitled to know that the project
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is viable. But accepting that point, I should be prepared to go along with confirmation by the Secretary of State that he is satisfied. If he would say that he has seen these contracts and that the markets exist, that would help the House.
The Secretary of State has been asked to confirm that there is an over-riding national need for a project of this kind in the Cromarty Firth. Reasonable questions were put to him by representatives of the Transport and General Workers' Union. When asked to satisfy the House and the people on these matters, the right hon. Gentleman wrote to the company asking for assurances that the project would not take jobs from anywhere else, that there would be a net gain of jobs, that the company would be handling North Sea oil and exporting its products.
Surprise, surprise—the company quickly gave the assurances that the right hon. Gentleman sought. It did not take long to consider these matters, even though there was a change of emphasis from its original plans. Within a couple of days, we are told, the assurances had been received and satisfactory replies given—by telex. The company did not waste time on long explanations and research documents.
It is not good enough for the Government to lend their weight to a Bill asking for this kind of compulsory purchase power for a project of such dubious viability. The hon. Member for West Lothian (Mr. Dalyell) was absolutely on the nail in saying that, if the Government would say that this project is urgently needed in the over-riding national interest, that would alter the situation. Until that has been established, the case for this compulsory purchase has not been proven.
Mr. Dalyell: I would support the hon. Member's argument on markets by saying that when, in formal session of the Energy Committee of the European Parliament, I asked the Director-General whether there was any realistic possibility of markets such as were suggested from a green-field refinery paying interest on the capital which would be required—markets into Rotterdam, into Germany, with their Wilhelmshaven problems, and into France with their problems—he said that it was inconceivable. That is an official opinion of the European Commission. It may not be definitive but it should be mentioned.
Mr. Moate: That is the crux of the matter. Unless this refined oil is to find markets, and unless investors are satisfied that those markets will exist, I do not believe that the company will get the money to proceed.
Mr. Robert Hughes: This is a curious proposition. First we are told that the project is not viable and that there are no markets, and then that the company is having to raise finance capital in the City. It the hon. Gentleman is right, the capital will not be forthcoming and the project will not take off. All we are doing is discussing a Bill for the purchase of the land to make it possible that the project might proceed further. If we refuse the Bill tonight, however, we stop the possibility of the City, the company or anyone else providing jobs in the area.
Mr. Moate: I dispute that. There are other ways of settling the matter. I ask the hon. Gentleman to reconsider his first point. Does the hon. Gentleman think that, if the project is so unsound that the company will not raise the capital, it can be right for Parliament to pass a Bill transferring land compulsorily to an organisation whose credentials are so thin?
Mr. Robert Hughes: I am sorry to interrupt the hon. Gentleman again and so carry on the debate even longer than is necessary. Surely the point is that if the company, in the prospectus that it must issue to the people from whom it wishes to raise money, cannot show that it owns the land, how can it raise the capital?
Mr. Moate: If the House decides that the Bill should be considered now, we shall come to the question of leasing. I am satisfied that a lease can be arranged, that it would be a satisfactory arrangement, and that it would meet the requirements of any investor. But that is a different point.
I do not think that the Bill should be considered because I do not think that a case has been made out at this stage. This is not just a matter of a few objectors tonight who believe that a case has not been made out. It is the decision of the former Secretary of State for Scotland in overturning the findings of his reporter that has brought this situation about. A
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whole body of opinion at that time said that there was no case for a refinery there. There was a massive inquiry and the reporter said that there should be no refinery. The report of the Community and Resources Planning Unit—CARPU—said:
"The Cromarty Inquiry involved five Queen's Councillors, ten barristers, two professors and seven doctors of medicine and science. Ninety-one individuals gave expert and articulate evidence and over five hundred individuals produced written representation to the applications.
The cost of the Inquiry is difficult to assess with any accuracy, but our conservative calculations produced a total of £650,000. This figure does not include for all the background and organisational work necessary by all representatives, neither does it take into account the cost of preparation of Mr. Maycock's report …."
Mr. Gray: It is only right to point out that that report has been discredited. The Chief Executive of the Highlands Regional Council has written to the professional bodies concerned complaning about the way in which the survey was carried out. Many peculiar methods were used to gather evidence. In addition, I should point out that the principal group of objectors was known under the name of "CROW", and that the chairman and secretary of "CROW" have dissociated themselves from the CARPU document.
Mr. Moate: I cannot understand why my hon. Friend intervened. All I was doing was quoting an extract from that report, which I felt to be unobjectionable. It was a factual statement. If my hon. Friend is saying that the figures are wrong, I should be interested to hear him say why he feels they are wrong. The report tried to assess the costs of the inquiry.
It is a very good report. One might disagree with its conclusions, but it is a massive production and looks highly professional. According to Press reports—and I have no other source of information—it was clear from the beginning that it could not be guaranteed that the outcome would be satisfactory to the objectors. I was merely seeking to emphasise that this was an enormous inquiry involving a great deal of expense and that the report came to the conclusion that the final cost could exceed £650,000.

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It is interesting to note that the Secretary of State, following the inquiry, overturned the objections of the reporter on the grounds of job content. What is the point in going through a vast inquiry of that kind, at massive expense, when the factor that determines the final outcome was known before the inquiry began. What is the point of all that effort when the Secretary of State has already decided that the overriding consideration was the need for employment in the locality?
Mr. Giles Shaw: My hon. Friend is now dealing with a most important point. Does he not agree that the conservation policy of the United Kingdom is thrown into the melting pot by such decisions, and that it is vital that conservation policy should be worked out in accordance with what the Government believe to be their priorities? He is right to suggest that where jobs are held to be of the maximum priority overriding any other consideration, the sooner that is made clear the better. If that happens, we may bring some orderly planning into conservation matters. Until we do so, no conservation policy will be worth anything.
Mr. Moate: The Government owe us an explanation on this matter. The reporter made clear that there was no overriding national interest proved for a refinery in that situation. He said:
"There is no evidence of a need for development in this location in either national or local interest sufficiently great to warrant overriding the preceding objections."
Therefore, the proposition that is held before us tonight runs contrary to the weight of informed opinion collected and considered at the inquiry.
I have heard nothing to suggest that this company is so sound and well-financed that the project could go ahead with its own money. I have heard nothing to say that these people have such guaranteed markets that the project could command finance from the City. Furthermore, I have heard nothing to prove beyond doubt that we need a refinery in such a way as to override the strong conservation arguments. Perhaps if this were my constituency and the argument involved the existence of 400 jobs, I could understand the pressures, but I think that this is a dubious project.
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Although it is right to put forward constituency interests I shall be surprised if this project ever goes forward.
If that is the situation we have raised false hopes. Admittedly, we shall have saved ourselves £36 million or £38 million which would be a welcome saving. On the other hand, this land will have been transferred to the company and we do not have control over what it does with the land. It can transfer the land to another company or it can sell the land. It has industrial planning permission. It may be that the refinery will not proceed. The case for the Bill then falls. Presumably it is justified only in terms of the refinery.
We have no control over what the company does with the land. The hon. Member for Birmingham, Perry Barr pointed to limited articles of association of the grandparent company, which has as one of its major objectives, the dealing in land.
Mr. Dalyell: Is it not a fact that the financial strength, so-called, of this group rests on the "Ludwig legend" and not on the publication of any financial balance sheet or declaration of public asssets?
Mr. Moate: I agree that that is the case. I have already raised the question of the 1974 accounts. It is a serious matter when accounts of this kind are incorrect. We have Price Waterhouse & Co., one of our most eminent and respected firms of accountants, saying categorically that in the opinion of the directors the ultimate holding company was the Ludwig Institute for Cancer Research which was incorporated in Liberia. It turns out that it is incorporated not in Liberia but in Switzerland. I would have thought that Price Waterhouse & Co. would make a statement, writing to me explaining the situation, saying that it had been misled. If the company cannot check on a simple, elementary fact like that, I wonder that it has the gall to come to Parliament and ask for £36 million to £38 million.
Mr. Dalyell: Is there not one person who can put us right on this, namely the hon. Member for Ross and Cromarty (Mr. Gray) who has said:
"I have made exhaustive investigations about the activities of the company."—[Official Report, 21st October 1976; Vol. 917. c. 1788.]
If he has made exhaustive investigations,

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he is the only man in Western Europe who has and we look forward to hearing from him.
Mr. Moate: I do not doubt that my hon. Friend has satisfied himself, as far as he feels it is possible or necessary, that the company can obtain the funds it needs. To a certain extent this is a matter of commercial judgment because I suspect that even the company cannot be totally certain that it can raise the money. Otherwise it would have already told us.
Mr. Rooker: I have great respect for the fight which the hon. Member for Ross and Cromarty (Mr. Gray) is putting up, but the Home Secretary, as Deputy Leader of the House, said today that the hon. Member was in charge of the Bill.
Mr. Moate: The right hon. Gentleman was undoubtedly in error. This is an odd Bill. It is subject to some odd procedure. It does not seem to have anyone responsible for answering for it in this House.
I want to keep my remarks brief because I know others wish to speak. I conclude by—
Mr. Gray: I corrected this matter this afternoon. I think it must have been a slip on the part of the Home Secretary. He had elevated me to a position I had no right to assume. I am certainly not in charge of the Bill. I am acting as a constituency Member of Parliament in my Back-Bench capacity and I support the Bill.
Mr. Dalyell: Why does the hon. Member not speak from the Back Benches?
Mr. Gray: The hon. Member for West Lothian (Mr. Dalyell) is being offensive, as usual. I have been given a copy of a letter from the Chase Manhattan Bank dated June 1974. It was sent to the Ross and Cromarty County Council of that time. I quote only from the last paragraph of the letter:
"We understand that the subject is considering constructing an oil refinery in the Cromarty area which may involve total capital expenditures of approximately $250 million. Based on our experience and favourable impressions of the company and its management, we feel that Universe Tankships Inc. has the capacity to undertake the financing of this
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project. We believe that the company may be considered entirely responsible for its commitments."
Mr. Dalyell: What was the date?
Mr. Deputy Speaker: Was that a brief intervention or was it a speech?
Mr. Moate: I am grateful to my hon. Friend for his intervention. He is anxious to be helpful, but that letter was dated 1974. That is two years ago. A lot of water has flowed under bridges since then. That is not the sort of evidence that the House should need in order to come to a clear decision.
As I have said, I understand my hon. Friend's position and his desire to fight for jobs for his constituency. However, the House is being asked to give unusual powers to a private company. That company has not proved its credentials or given us the necessary evidence. We, have not had the evidence to support the case for an oil refinery based in that particular part of the British countryside. The case has not been made out.
That is not just my view or that of a few of us. It is borne out, almost word for word, by what Mr. Maycock said only in December 1975—not so long ago. He said of the Cromarty Petroleum Company:
"Their reticence extends to any marketing arrangements that they have in mind for the refined products."
Of Dr. Fells, Mr. Maycock said:
"He has failed to explain what these plans are, or to demonstrate their credence."
Mr. Maycock went on to say,
"I therefore conclude that the need for additional refining capacity based on the operation of such vessels at Nigg is to be questioned."
Speaking about the direct relevance of the Bill and relating it to compulsory acquisition of the title, he said:
"Their motive for taking that action is to be questioned, bearing in mind they have been offered a 99 year lease of that land should planning permission be granted for the development the life span of which is almost certain to be less than that term."
He goes on to say—this strengthens me in my attitude of opposition to the measure—
"I am not satisfied that there is evidence of a need for the development in this location in either the national or the local interest sufficiently great to warrant over-riding the preceding objections."

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I hope that the House will concur in that view and not give further consideration to the Bill.
12.4 a.m.
Mr. Robin Corbett: I should make clear that British Petroleum has a national computing and accounts division within my constituency, and that within about 100 yards of my constituency boundary four major oil companies have a terminal, though not a refinery. However, it is not for that reason that I intervene in the debate.
We are talking about the subsequent spending of at least £36 million of public money. When money is hard to come by for other purposes, it is right that the House should be very careful and weigh the advantages and disadvantages of what is proposed.
Incidentally, less than one-tenth of this money, on the right terms, would keep in business the Observer newspaper and would preserve those jobs, let alone others that one could mention.
There are three principal questions about this matter. First, do we need this extra refining capacity, looking at matters in the context of the total energy situation? Secondly, if we do, is Nigg the most suitable place for it? Thirdly, is this the wisest way in which to spend taxpayers' money at this time?
For the answer to the first question we should go, so to speak, straight to the horse's mouth. The answer on that point, given voluntarily, and not under intervention, to this House last Thursday, is that no case has been made out for extra refining capacity. That is not just the view of the oil industry itself but a view made plain by the Minister of State, Scottish Office, who told the House that the Secretary of State for Scotland
"accepted that no overriding national need for further refining capacity had emerged at the inquiry."
That view was echoed by my hon. Friend the Under-Secretary of State for Energy, who said later in the debate that
"Our present refining capacity is more than sufficient for our present national demands."
In case that message did not get home, my hon. Friend went on to say:
"That means that there is no overriding case for the refinery in terms of present United Kingdom needs."—[Official Report, 21st October 1976; Vol. 917, c. 1735, 1780.]
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I hope that those listening to the debate will accept that that certainly disposes of the argument in terms of the refining capacity assertions put forward by the promoters of the Bill.
Mr. Richard Buchanan: What my hon. Friend has told the House is typical of the story of British industry. Is he not aware that we have never attempted during a depression to train people for the skills that will be necessary when we come out of the depression? The tale he has given to the House of capacity, capacity, capacity, takes no cognisance of the upsurge in industry which will come about if our policies are pursued.
Mr. Corbett: I have no quarrel at all with my hon. Friend in what he says in terms of investing for the future at a time of low economic activity, and I particularly agree with him concerning training. I know that Cromarty Petroleum disputes this, but I am advised that the present state of use of refinery capacity is 64 per cent. When we acid to that figure the closing down of existing refineries for maintenance and repair, and matters of that sort, we still have a situation now-and it will last well into the 1980s—that there is more than enough refining capacity for our crude oil.
I quite take my hon. Friend's point. We have been caught with our pants down too often on these things, but I do not happen to believe that it applies in this case. The best estimate which can be made—and, Heaven knows, it is difficult enough to plan into the future—is that we do not need this extra refining capacity for as far as can be seen ahead into the 1980s.
The principal case argued by the promoters of the Bill is not for refining capacity in terms of the need of the United Kingdom market. We have some divergence of views whether it will be 50-50 use of North Sea oil or whether, as my right hon. Friend the Secretary of State for Energy said the other day, it will be the bulk of it. But it is certainly not the company's case on this and that needs to be taken into account.
It would be quite ironic—my hon. Friend the Member for Thurrock (Dr. McDonald) made this point—if this House were to pass a measure which meant that we were to spend £78,000 per job to

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create 450 new jobs, and then, in the areas of the existing refineries, working at only two-thirds capacity, we were to see redundancies. That would be the economics of Bedlam.
I well understand the concern of the hon. Member for Ross and Cromarty (Mr. Gray) about getting new jobs in his area. I mean that quite genuinely. But, regrettably in that sense, these decisions cannot be taken on a narrow constituency basis. We have to look at where we are putting our resources.
To be fair to my hon. Friend the Under-Secretary of State for Industry, he went on to say that all the evidence suggested that the proposed project was not mainly directed at the United Kingdom market and that it was intended to produce substantial quantities of petro-chemical feedstock, of which we are net importers. That is a very attractive argument. But it is my information that, regrettably it does not stand up to examination.
I am advised, for example, that North Sea oil, which the Under-Secretary said would provide the bulk of the refinery's throughput, is not the most suitable for the production of ethylene and other petrochemical feedstocks. My information is that the more paraffin-based crude oil from the Middle East is far more suitable, is less difficult to work with and is less expensive for this enterprise.
We have to look at this in the context of where these petrochemical-based feedstocks are to come from, in the context of where they are getting the crude oil for the refineries at which they are to be produced. To put it no higher, I think that there is at least a question-mark over this assertion by the company because of the nature of what we know so far about North Sea oil itself.
Even for a moment accepting the export intention which I believe is a thin one, I wonder what is the need to have this refinery at Nigg Bay. At most, on the information that we have had, it is only 50 per cent of North Sea oil which will be used for the throughput of the refinery and for a market the bulk of which, we are told, is not within the United Kingdom.
I am advised that the economics of the oil industry dictate that it makes far better sense to have a refinery as near as
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possible to the centre of distribution, rather than where the oil is produced. In other words, it is cheaper to pump the crude oil to where it can be processed near to where it will be used, assuming, as the company does, that it will have any sizeable market for that processed oil within the United Kingdom—and there is a very big question-mark over that, on the company's own admission.
If this is to be mainly an export refinery, which again is what the company is claiming, aimed at winning exports, what other alternative sites either in Europe or outside Europe have been looked at? As I have said, it makes sense to have these refineries near to the markets in which one wants to sell.
I accept that these matters are not directly for the Government because they have responsibility to put this before us, but these are some of the questions which have remained unanswered in the long and troubled history of this proposition.
I come, then, to my third question: is this the best use of the taxpayers' money? The proposition is that, inevitably, as a consequence of passing this measure, we shall be asked to pay about £78,000 per job for 450 new jobs in this area—and not permanent jobs, at that, because no one predicts that North Sea oil will be with us for ever.
Mr. Dalyell: My hon. Friend mentions £78,000. Perhaps I might quote the CARPU report, to have it either confirmed or denied:
"In the development of the Nigg refinery inevitably this figure is likely to exceed £100,000 per job created. Initial per capita costs will be high in the beginning as roads, social facilities and housing are provided in advance of a fully operative industry rate base, which in total are forecast as £40,000 in current values. The cost to the state of each one of the likely 100 local jobs created is £400,000."
If that is true, it makes my hon. Friend's case even stronger.
I might also draw my hon. Friend's attention to the fact that representatives of the Inverness Labour Party whom I met on Friday night were of the view that for very much less money they could create far more jobs, for instance, in their school cleaners' dispute in, for instance, road repairs which are desperately needed, and in all sorts of other activities in the Highlands.
Mr. Corbett: I am grateful to my hon. Friend. I was using a basic figure and, clearly, the more factors one adds to it, the bigger it becomes.
I am sure it is agreed that the cost of providing these 450 short-term jobs is substantial. It is even greater if one adds to its costs of infrastructure.
About 2,500 British Petroleum refinery workers—members of the Transport and General Workers' Union—at refineries at Grangemouth, Kent, Llandarcy and Belfast have come out against the Cromarty proposal. They say:
"With surplus refining capacity the building of a new refinery anywhere in the United Kingdom is not economically viable. It would be a gross waste of human and industrial resources."
One might say that that is an exercise in self-interest. If any hon. Members feel that that is so, I must add that they went on to say that if we are talking of spending £40 million of public money for the provision of jobs, there are many other ways in which it could be spent in many other parts of the country and that it could be spent in a way which would provide many more jobs on a more stable basis.
Mr. Gray: Can the hon. Gentleman give an instance of any other project at present where £150 million of private capital is available and where grants would be attractive?
Mr. Corbett: In all honesty, I cannot do that off the top of my head.
In conclusion, I was about to say that, on the serious ground whether for the foreseeable future we now need this extra refining capacity, the case for the measure is patently not made out. The Government and hon. Members from all parts of the House have said that.
We are then left with the question whether this is the wisest way of spending the money. At the very least there is a big question mark over that. I can see the argument for the short term, but is it not cruel to pretend that the project will be of long-term benefit? The case for the measure is clearly not made out.
12.19 a.m.
Mr. John Biffen: In a real sense this is a House of Commons occasion in that it is Private Business. In his intervention on Thursday, the Under-
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Secretary prefaced his comments by saying that he had a watching brief—and no more. I emphasise that my intervention merely underlines my own personal interest in the debate because it raises issues which will have whetted the appetite of the powers that the Government possess under the Petroleum and Submarine Pipe-lines Bill and which cover the whole range of matters which concern the House tonight.
I shall make my few points briefly as I sense that the House wants to come to a speedy decision. I shall resist the temptation to indulge in character assassination. The reputations of Mr. Nightingale and Dr. Ludwig have been tossed around in a light-hearted fashion. I sometimes wonder whether the House is going through a period when its reputation is so spotless that it should engage in such debate.
Mr. Wells: Much as one deplores character assassination, at least two people have been present to attest to the good qualities of Mr. Nightingale—his own Member of Parliament and his near-neighbour, my hon. Friend the Member for Faversham (Mr. Moate). Nobody has been here to say anything good about Mr. Ludwig. The parliamentary agents, who have been able to send us fairly uninformative bumf, have not put forward one good thing to say about this chap or his company. Therefore, I do not believe that Mr. Nightingale, who is an honourable British citizen, who has been well defended and whose attitudes have been well defended, can begin to be in the same category as this foreign gentleman with his £100 company.
Mr. Biffen: The very terms in which my hon. Friend put that intervention will stand examination in tomorrow's Hansard. I prefer to remain close to my original remarks, that character assassination, from whatever quarter, was wholly out of keeping with what should be the standard of this debate.
I turn to the more weighty issue—the whole question of the balance that must be struck between conservation and the development of the resources of the North Sea. I do not think that the people of Scotland need a stream of itinerant Englishmen to instruct them on the problems of conservation and all that attends exploitation of the Noth Sea resources.

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The same problem arose over the question of the establishment of the production platform construction sites. The same problems will arise over oil terminals or the establishment of petrochemical plants. If the gas-gathering scheme proceeds, as I have no doubt it will, many of these issues will again come before the Government and the House. I am certain that the issues of conservation are regarded in as lively a manner in Scotland as in any other part of the United Kingdom.
I welcome the interest that has been shown by my hon. Friend the Member for Pudsey (Mr. Shaw), but I felt that the hon. Member for Dunbartonshire, East (Mrs. Bain) had a point when she recalled that there were some periods in Scottish history when the balance seemed to have been somewhat overdrawn in another direction.
One aspect of the Cromarty Petroleum Company which has not been much referred to is that without any doubt it is something of a buccaneering outfit. I do not thing that that is in any sense a pejorative description. But is there not a role for a buccaneer in an industry which is very much dominated by the trans-national companies? [An hon. Member: "With taxpayers' money?"] I have no doubt that if a trans-national company were seeking to establish a refinery in Nigg it would receive just as much taxpayers' money. Let us not draw a distinction. The intruder, the outsider, is not particularly welcome to many of the trans-national companies. Although I would not describe Mr. Ludwig as a Cinderella, he is certainly not one of the seven sisters.
I come next to the question whether the proposed enterprise would be viable. For a great deal of this evening some hon. Members have been acting somewhat like merchant bankers, as though they were being asked to judge whether this was a viable scheme and whether they would advance money which the company would have to raise before there could be any advance of public funds. There has been no shortage of assertions about the future pattern of oil supply and demand on a global scale. I do not know the answer. I have no desire, and no qualification, to enter my judgment on what will be the balance of
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world supply and demand three or four years hence, and certainly not during the period for which the company hopes to operate. All I do know is that there have been recent beneficial developments in the exploitation of North Sea oil which underline rather more optimistic assessments of the resources available there. I am glad to have the nodding acquiescence of the Under-Secretary.
The present under-fulfilment of the American objective of a high degree of self-sufficiency in energy supplies makes it appear that the American market will be particularly attractive for energy from the North Sea. I am pleased to have the Under-Secretary's nodding acquiescence again.
We can all make forecasts of likely levels and whether we have the appropriate refining capacity but when our remarks are read in Scotland, there will be the feeling that there has been a certain amount of closely-argued special pleading from the South-East, not least from the hon. Lady the Member for Thurrock (Dr. McDonald) who made a perfectly appropriate and fair constituency speech. Some English Members have been remarkably insensitive to feelings in Scotland.
Mr. Corbett: It is part of the United Kingdom.
Mr. Biffen: I am grateful to the hon. Member for Hemel Hempstead (Mr. Corbett) for that lesson in geography. The hon. Gentleman's speech, matched that of the hon. Lady the Member for Thurrock in its insensitivity to Scottish opinion.
Mr. Dalyell: Rubbish.
Mr. Biffen: Does the hon. Member for West Lothian (Mr. Dalyell) wish to intervene?
Mr. Dalyell: I am surprised that the hon. Member for Oswestry (Mr. Biffen) sets himself up as the arbiter of Scottish opinion. I listen to him on many matters, but not on this.
Mr. Biffen: The hon. Member for West Lothian has the grave disadvantage of the privilege of a Scottish birth which was flawed by a distinctive English education.
If there are substantial oil resources being exploited off Shetland and North-East Scotland, there will be a natural

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expectation that when this House makes a judgment it takes account of the natural desire on the part of the Scots to see that a great deal of refining capacity will proceed in Scotland—yes, even at Grangemouth.
Perhaps because this has been a matter of Private Business the House has brought a most welcome sceptical detachment to the question of the best use of public funds to promote employment. One theme running through the debate has been the anxiety that sums of this magnitude would have employment consequences which would mean, as the hon. Member for Hemel Hempstead said, a cost of £78,000 per job. That is fair criticism and it takes us on to the much wider question of how appropriate it is to have a subsidy on capital investment when it will often not be particularly rewarding in terms of the number of jobs created. However, we shall mislead ourselves if we suppose that this is distinctive, unique or confined to the application by the Cromarty Petroleum Company Ltd. It goes very much wider than that.
I have no wish to prolong the debate. The House has had an opportunity to consider a tangled and tortuous subject on which arguments have been sincerely and zealously advanced. In previous debates on the Bill I have been happy to vote with my hon. Friend the Member for Ross and Cromarty and I shall do so again tonight.
12.30 a.m.
Mr. Hugh McCartney Mr. Hugh McCartney (Dunbartonshire, Central) rose—
Mr. Deputy Speaker: Is the hon. Member for Dunbartonshire, Central (Mr. McCartney) sure that he wishes to speak?
Mr. McCartney: I am quite certain, Mr. Deputy Speaker.
The hon. Member for Maidstone (Mr. Wells) invited someone to stand up in support of a certain gentleman whose name has been bandied around by those who oppose the project. I am not here to give support to that gentleman or to any other, but I can state a few reasons why he or any group of gentlemen, or gentlewomen for that matter, who wish to engage in the kind of investment in which the Cromarty Petroleum Company Ltd.
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is prepared to engage should be commended and supported.
We are all aware that for many years commitments have been made—certainly within the Labour Party—to people in the Highlands regarding the regeneration of the Highlands.
The hon. Member for Dunbartonshire, East (Mrs. Bain) referred to some of the earlier history which has been the cause of much continued suffering because of the rundown of job opportunities and the depopulation of the Highlands.
If this House does not pass the Bill and Cromarty Petroleum is unable to proceed with this project, it will not only wreck the project but undermine the opportunities for diversification by companies, such as Highland Fabrication Ltd. and others, which are established in that area, so reducing the opportunities for holding and extending job opportunities in future.
It will also be a serious deterrent to investors—both United Kingdom and foreign—to move into the Highlands in future. Who will take the risk? Who will hazard money without any hope of return because of the filibustering processes which have been adopted in this House? Who will want to take the risk of being kicked around and eventually having their objectives negated and frustrated? If that happened, it would be to the grave disadvantage of people in the Highlands.
What does the project mean in real terms? The current estimate is that it will cost £180 million to build the refinery and the marine, storage and associated facilities. Of that, £120 million will go on plant, equipment and materials. The balance of £60 million will be spent directly on wages, salaries, and so on, for the building work force.
It is estimated that £80 million worth of the cost for plant, equipment and materials can be supplied by Scottish business and industry. The company has also stated that its policy is to purchase as much as possible within Scotland and the United Kingdom as a whole.
The plant, when completed, will provide jobs for 450 employees directly, indirectly for another 450 employees, and 1,800 employees will be engaged in construction.

211
It is estimated that in the first three years of operation £33 million in operational costs will be injected into the United Kingdom's economy.
These figures are evidently known to those who are in opposition to the project, but they choose to ignore them. The vested interests which have conducted the campaign against this project—not only Mr. Nightingale, but others—have chosen to ignore statements made publicly throughout the whole operation by the company.
Mr. Wells: Will the hon. Gentleman give way?
Mr. McCartney: I think that the hon. Gentleman had more than sufficient time, both on Thursday and tonight, to state his case.
Mr. Wells: Will the hon. Gentleman give way?
Mr. McCartney: No, I shall not give way to the hon. Gentleman.
Mr. Wells: Disgraceful.
Mr. McCartney: I have no intention of giving way.
Mr. Wells: Because the hon. Gentleman cannot answer.
Mr. McCartney: The hon. Gentleman had more than sufficient time to express himself. Some comments were made on Thursday night which, in my view, should be answered. My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) referred to the company as "a bucket-shop company", He failed to specify what he meant by that term, out it was clear from his remarks that the term was derogatory, and at the very least be doubted the viability of the company and the integrity of its executives.
There are various kinds of buckets. In the steel works there are huge ladles for carrying molten metal. It is necessary to put a considerable amount of material into those buckets before getting anything out of them. In Glasgow a whisky measure is a bucket. The contents of the buckets in the bars here would not dirty the glass in one's hand. Nevertheless, the bucket is a measure and it is possible to get out of it only what is put in.
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It is important to consider what the company proposes to put into the project. I am sorry that the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) is not present. On Thursday evening he made several statements which his hon. Friend the Member for Faversham (Mr. Moate) supported tonight. I am surprised that the hon. Member for Cirencester and Tewkesbury had the gall to make those statements. As a business man and a former Tory Minister he must be aware of the way in which money is brought together in a package. He has probably been engaged in similar operations. The way in which the Cromarty Petroleum Company has stated that it will bring together the money for this investment is similar to the way in which money is brought together for any operation of this kind. The company stated publicly that it intended to invest in the project £40 million of its own money.
Mr. Wells: Does the hon. Gentleman believe that?
Mr. McCartney: The balance would be found in hard currency—perhaps German marks, United States dollars or some of each—through British banks in the way that is done in similar operations.
Mr. Wells: Will the hon. Gentleman give way?
Mr. McCartney: I am not giving way. The hon. Gentleman has had sufficient time in which to express his views. It is notable that those who seek to protect one party involved from personal attack used most of their time on Thursday and tonight indulging in personal attacks on hon. Members—
Mr. Wells: On a point of order, Mr. Deputy Speaker. I was interrupted four or five times when I was seeking to defend my constituent and I gave way on each occasion. Is it not deplorable that the hon. Gentleman—
Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. The hon. Gentleman has enough experience to know that is not a point of order.
Mr. Wells: Will the hon. Gentleman give way?
Mr. McCartney: I am not giving way, but I shall reply—
Mr. Wells: Disgraceful.
Mr. McCartney: I did not intervene in the speech made by the hon. Member for Maidstone. I am not attacking the gentleman he was defending and I have no intention of doing so. What I said was that those who are opposed to the proposal sought to defend the gentleman concerned during the whole course of the debate on Thursday and today, and engaged continuously in innuendo and personal attack. It is on record.
The investment in North Sea oil is an example of how package deals of this sort have been organised. Who will suggest that the oil companies have been responsible for the total investment in North Sea oil, except in the sense of organising it? I understand that $14½ billion has been spent on the development of the North Sea, $4 billion of which has come from the oil companies themselves.
On Wednesday night my hon. Friend the Member for West Lothian (Mr. Dalyell) stated that the members of Transport and General Workers' Union were opposed to this project. He listed the names of the sites at which those members were employed. My hon. Friend also referred to a Mr. Neil Boner, who happens to be convener at the Grangemouth works. Mr. Boner and I happen to be members of the TGWU. I know that Mr. Boner is a highly respected trade union member. He is certainly highly respected not only within the industry in which he works but also within trade union circles at large. Perhaps my hon. Friend the Member for Birmingham, Perry Barr would remind my hon. Friend the Member for West Lothian of our experience of the Dock Work Regulation Bill in Committee. We experienced exactly the same kind of campaign from hon. Members opposite, from their friends outside this House and from the national newspapers. They tried to turn worker against worker, union against union, factory against factory and employer against employer in order that their purpose of destroying that Bill could be achieved.
That campaign was carried on inside and outside this House. I put it to my hon. Friend the Member for West Lothian—is there not a possibility that this is a similar campaign being conducted by vested interests who do not wish to see this project proceeded with?
214
I would tell my hon. Friend what the actual policy of the TGWU is in connection with the proposed development in Ross and Cromarty. I am in day to day, week to week, contact with Transport House on matters affecting our members in every industry. Not one single member of our group has received a complaint from the membership or a request from Transport House to intervene against this proposal. I went to Harry Urwin, the deputy general secretary of the TGWU and put it to him straight. I asked him: "Harry, is the TGWU officially opposed to the development at Ross and Cromarty?" He told me: "I am unaware of any decision made by our union and no suggestion has been made to me that the Transport and General Workers' Union is opposed to this policy."
I telephoned the regional office in Glasgow and spoke to the regional officer who among other things is responsible for this industry. I was informed by him that, so far as the region was concerned, he had no knowledge of any decision being made by the TGWU to oppose this project.
We are all aware that the Scottish Trades Union Congress unanimously supports this project. Sitting on the STUC General Council are officials of the Transport and General Workers' Union. We also know that the Highland Regional Authority, and others, are in support of the project as is the Scottish Council (Development and Industry).
On Thursday night I heard some astonishing remarks made about the Scottish Council (Development and Industry). There are very few members of that organisation who would agree with me politically. I do not know of many occasions, when they have entered the political battlefield, when I agreed with them. But no one can deny the role that Council has played in the efforts to regenerate Scottish industry. No one can take that from the Council.
It is unlikely that those who have been in opposition to the Scottish Council would want to be on that Council—except with a view to destroying it from within. The Council has done a magnificent job, not only on its own, but in co-operation with other bodies in Scotland endeavouring to introduce new and develop existing industries.
Mr. Buchanan: I apologise to my hon. Friend for interrupting his flow. Is he aware that the Chairman of the Highlands and Islands Development Board, Professor Alexander, moved in the Scottish Council (Development and Industry) that this project should be supported and that that proposal was unanimously adopted?
Mr. McCartney: My hon. Friend has anticipated what I was about to say.
Hon. Members have received a letter from the Ross and Cromarty constituency Labour Party, whom no one could accuse of supporting politically the hon. Member for Ross and Cromarty. That letter categorically supports the project. I remind not only my hon. Friends from Scotland but my hon. Friends from England and Wales that for many years at successive annual conferences of the Scottish Council of the Labour Party and the Labour Party we have given commitments to the people of the Highlands, to our colleagues and the people they represent, and we have endeavoured to honour those commitments. Our commitment to the Highlands and Islands Development Board has been an example. I am sure that my right hon. Friend the Member for Kilmarnock (Mr. Ross), who is not here tonight, is very proud of the rôle that he has played in the setting up of that board.
Mr. Hector Monro: Where is he?
Mr. McCartney: The hon. Members who are opposed to this project are the very hon. Members who were opposed to
Question accordingly agreed to.
that. I had hoped that they had learned their lesson.
More recently the setting up of the Scottish Development Agency, which acts in co-operation with the Highlands and Islands Development Board, has helped to improve the present situation and the potential of the Highlands, and that has been another example of our honouring our commitments.
Bearing all that in mind, I ask my hon. Friends to support the proposal that this project should go ahead. A service would be done to hon. Members and to the public at large if some of the Press comments on this issue were referred to the Press Council. Never before have I read such gutter rubbish from journalists in the newspapers that have written about these matters. Seldom in industrial issues, when people's livelihoods are discussed, have there been such racial overtones denigrating those thought to be a danger to those represented by the writers. Mr. Ludwig was described as a mid-European gentleman although he was born and brought up in America. We have heard talk about "an Anglo-Indian gentleman" and about the fund raiser being foreign, in a way calculated to influence people.
It is imperative that this project be allowed to go on and that the House should reject any attempt to delay the process further. This will affect not only present workers but future generations of workers who will be brought into the area because of the promises made.
Question put, That the Bill be now considered:—
The House divided: Ayes 43, Noes, 9.

Division No. 341.

AYES

[12.51 a.m.

Bain, Mrs Margaret

English, Michael

Ross, Rt Hon W. (Kilmarnock)

Biffen, John

Gilmour, Sir John (East Fife)

Small, William

Brown, Hugh D. (Provan)

Gray, Hamish

Stewart, Donald (Western Isles)

Buchan, Norman

Hamilton, James (Bothwell)

Summerskill, Hon Dr Shirley

Buchanan, Richard

Harrison, Walter (Wakefield)

Tinn, James

Canavan, Dennis

Hughes, Robert (Aberdeen N)

Wainwright, Edwin (Dearne V)

Carmichael, Neil

McCartney, Hugh

Watt, Hamish

Cocks, Rt Hon Michael (Bristol S)

MacCormick, Iain

Weatherill, Bernard

Cook, Robin F. (Edin C)

MacKenzie, Gregor

Welsh, Andrew

Corrie, John

Millan, Rt Hon Bruce

White, James (Pollok)

Craigen, J. M. (Maryhill)

Monro, Hector

Wilson, Gordon (Dundee E)

Crawford, Douglas

Oakes, Gordon

Cunningham, Dr J. (Whiteh)

Penhaligon, David

TELLERS FOR THE AYES:

Dempsey, James

Reid, George

Mr. Jim Lester and

Doig, Peter

Rodgers, George (Chorley)

Mr. Ian Campbell.

Douglas-Hamilton, Lord James

Ross, Stephen (Isle of Wight)

NOES

Corbett, Robin

Moate, Roger

Crowther, Stan (Rotherham)

Shaw, Giles (Pudsey)

TELLERS FOR THE NOES:

Dalyell, Tam

Skinner, Dennis

Mr. J. W. Rooker and

McDonald, Dr Oonagh

Spearing, Nigel

Mr. John Wells.

Marshall, Jim (Leicester S)

Bill considered accordingly.

Schedule

  CROMARTY PETROLEUM
  1.2 a.m.
  Mr. Moate: I beg to move Amendment No. 2, in page 2, line 25, at end add 'by way of long lease'.
  Mr. Deputy Speaker: With this amendment we shall also take the following amendments:
  No. 3, in page 3, line 22, leave out from beginning to end of line 35 and insert—
  '4.—(1) Subject to the provisions of this Order, the Company may require the owners of the lands delineated on the deposited plan and described in the deposited book of reference to grant a 99-year lease of the said lands at an annual rental to the Company solely for the purpose of establishing the marine terminal facilities and crude oil refinery and associated storage facilities mentioned in the preamble to this Order or for any purpose connected therewith or ancillary thereto.
  (2) The terms of the lease which shall include a landscaping clause by default of agreement between the Company and the owners shall be settled by an arbitrator appointed by the Professor of Conveyancing at Edinburgh University.
  (3) The powers of the Company to requisition a lease under this section shall not be exercised after 31st December 1978.
  (4) The costs, charges and expenses of obtaining the lease shall be met by the Company.'
  No. 5, in page 3, line 35, at end insert—
  '(4) The Company shall not dispose of by any means the lands acquired under this Act prior to 31st December 1978, provided that if the powers under this section have not been activated by 31st December 1978 the Company shall return ownership of the lands to those who were the owners prior to this Act.'
  Mr. Moate: Now that the House has decided that the Bill deserves further consideration, I hope that hon. Members who have taken a different line on the principles of the matter will now consider that amendment on its merits and decide that it deserves their support.
  It has been maintained all along that it is not necessary compulsorily to purchase this land or transfer the freehold of the land to the company to enable the oil refinery to proceed. The whole purpose of the amendment is to provide for the company to receive the land, but on the basis of a 99-year lease.
  218
  Earlier I quoted an extract from Mr. Maycock's report in which he cast doubt on the reasons for the company proceeding in this way because they had been offered a 99-year lease by Mr. Michael Nightingale on behalf of the trustees of the estate. He was satisfied that a lease was a valid proposition. Not even the most optimistic of us expects that the lifetime of the oilfield will be as long as 99 years. One lives in hopes, but 99 years is surely far beyond the lifetime of oilfields as considered by most of us.
  In the normal course of events the matter would be negotiable on the basis of a 99-year lease, and it will be argued that this was a matter that was considered by the Parliamentary Commission. My hon. Friend the Member for Fife, East (Sir J. Gilmour), who was one of the Parliamentary Commissioners, made the point that he regarded a lease as an unsatisfactory arrangement principally because much of the land would have to be dredged away and a lease would not be appropriate in such circumstances. I draw attention to the headings of a draft lease sent to the company which would have covered this point. That presented no problem. The draft lease said that if there were any variation in the plan which had the effect of reducing the solid land owned by the landlord at the end of the lease the tenant would transfer an equivalent acreage of his own land adjoining the northern boundary to the site at no charge. It may be that that is not a satisfactory offer. I make the point that the dredging aspect had been considered fully by the owner of the land and was not an insufferable objection.
  In that respect I regret to say that the Parliamentary Commissioners did not give the fullest consideration to this matter. This question of the lease has been a source of great argument over the years. I cannot see why a genuine offer of a lease could not have been accepted by the company. Had it gone in with a will to negotiate a lease the whole matter could have been settled a long time ago. I believe that the company has rejected genuine offers of a lease for one reason. I have been given a considerable amount of the correspondence between Mr. Nightingale and Cromarty Petroleum or its solicitors. This suggests that genuine offers have been made and that the company has been determined from

  219
  the beginning not to accept a lease. It has stated its objections, which may or may not be valid. Personally, until such time as the company advances rather stronger reasons it will seem to me that the main reason must be that a leasehold arrangement reduces in many respects the resale value of the land. That is the only overriding objection I can see. If the company accepts the lease it would strengthen its case for the acquisition of the land.
  The amendment says that the land shall be acquired by lease and it lays down the terms on which it should be done. The company said that it would be hard to negotiate appropriate arrangements, for landscaping, for example. It said that it would be difficult to negotiate agreeable terms when the owner of the land was avowedly against the concept. The amendment makes it clear that these matters can be settled by an arbitrator:
  "appointed by the Professor of Conveyancing at Edinburgh University."
  What could be more reasonable than that? If Parliament decides that the project should proceed the owner of the land, or the man acting for the trustees, has said that he will reluctantly accept that. He has said that he will negotiate a lease in good faith.
  Mr. McCartney: Will the hon. Gentleman tell the House when these alleged leases were offered to Cromarty Petroleum and what were their terms? Is he also suggesting that in these amendments the landlord and Mr. Nightingale should retain feudal rights over what should take place on the land?
  Mr. Moate: I do not wish to bore the House by reading all of the leases. I shall refer briefly to them because there seems to have been some misleading of the public and the House by the company. It may even be that the hon. Member has not been as fully informed as he ought to have been if he has been in contact with the company, and I gather from his earlier remarks that he is fairly well informed on this.
  Mr. McCartney: I was one of the Commissioners.
  Mr. Moate: I did not appreciate that. I am glad that the hon. Gentleman made the point.
  220
  I said that there has been some misleading. I refer to the advertisement published in many newspapers. I quote the Ross-shire Journal of 8th October:
  "No actual lease has been offered to the company by the landowner."
  It went on to quote matters that I have already dealt with.
  Frankly, it is almost untrue. It is certainly a half-truth. Technically, no actual lease was offered. But when does one go into negotiations offering a complete lease? One starts with the heads of agreement and proceeds from there. That normal procedure was adopted.
  Mr. Wells: As I understood it, Mr. Nightingale offered a lease to the company immediately before the hearing.
  Mr. McCartney: On a point of order, Mr. Deputy Speaker. Is it in order for another hon. Member to intervene when the hon. Member for Faversham (Mr. Moate) is answering a question put to him in a previous intervention?
  Mr. Wells: Of course it is.
  Mr. Deputy Speaker: When I need some help from the hon. Member. I shall be prepared to ask for it, Mr. Moate.
  Mr. Moate: I give way to my hon. Friend the Member for Maidstone (Mr. Wells).
  Mr. McCartney: On a point of order, Mr. Deputy Speaker. For verification, may I ask whether you were speaking to the hon. Member for Maidstone (Mr. Wells) or to me? I was not giving you advice, Mr. Deputy Speaker. I was asking you a question.
  Mr. Deputy Speaker: To answer the hon. Member's point, I was addressing the hon. Member for Maidstone (Mr. Wells).
  Mr. Wells: I am grateful to you, Mr. Deputy Speaker. The point I was seeking to make was that I understood that Mr. Nightingale offered a lease before the hearing in Edinburgh in front of the Commissioners, in general terms, but then, as on all subsequent occasions, the company and its agents were most cavalier in their treatment of Mr. Nightingale, as they have been most cavalier in their treatment of this House.
  Mr. Moate: No doubt my hon. Friend can and will elaborate that point. I shall not disagree. However, I should like to feel at present that one could help to bring the parties together. When one tries to retread the ground in such disputes over the years, one has great problems about who started the dispute, and so on. This matter has an unfortunate history of unnecessary conflict which could and should have been re solved earlier—that is, assuming the good faith of the company, which let us assume in the absence of evidence, although the company could have produced greater evidence of its financial credibility.
  The hon. Member for Dunbartonshire, Central (Mr. McCartney) asked when the lease was offered. I have one letter dated 30th April 1976, which I presume—the hon. Member will correct me if I am wrong—would follow fairly soon after the meeting of the Commissioners in Edinburgh. It is a three-page letter. It would be unfair to read the whole of the letter. However, it set out 11 headings for a lease. It offered a 99-year lease. It talked about a rental of £7,500 a year—10 per cent. of the capital sum—and said,
  "but if this is not acceptable to you, would you accept any figure put forward by a mutually accepted arbiter."
  Is that unfair? Only a few weeks ago the company said that it had never been offered a lease. This letter gives the lie to that statement.
  The letter mentions a rent review clause, which is again a very fair point, and a guarantee. It mentions assignment, use and plans. I quoted earlier the clause about the dredging effects on the foreshore. The letter mentions termination of lease, and the landscape—a clause that has given grounds for comment.
  I suppose that technically it is not a lease. Mr. Nightingale, who is only one of the trustees, had to say that it could not be a legal offer. But those were sensible requirements that he had to put into his letter. In no way did that detract from the fact that this was a genuine and very reasonable offer.
  1.15 a.m.
  I think that the company has been misleading in its statements. As far back as 1974 there is a letter from Mr. Nightingale saying that should the company be
  222
  successful in obtaining planning permission for this project, then
  "under these circumstances we should be prepared to consider granting a lease for 60 years".
  Subsequently that offer was increased to 99 years. The letter goes on to mention that any such lease would have to exclude two areas of land which already form the subject of a lease to Highland Fabricators. The letter concludes:
  "May I say, finally, that our reason for not wishing to sell is that this land has formed part of the Cromarty Estate for hundreds of years and we wish it to continue this way."
  Here are two examples where Mr. Nightingale made genuine offers to the company to arrange a lease, but the company, in response, has never come forward and said "Yes". Quite categorically, it has said "No". If anybody has prevented a lease being signed, it is not Mr. Nightingale but the company.
  My hon. Friend the Member for Ross and Cromarty (Mr. Gray) is not here, but I know that through his good offices he tried to arrange a meeting recently to negotiate a lease, and a few weeks later the company said quite categorically why it could not accept a lease, I do not think its reasons are very convincing.
  The first reason is that no reasonable company could, except in exceptional circumstances, make itself subject to the vagaries of a lease to a private landlord who now declares himself adamantly opposed to the use to which the lease is to be put. That does not stand up, because once the landlord has accepted the use to which the land is to be put, I do not think that a properly negotiated lease will allow the landlord to be unreasonable in its operation.
  In this House we are quite accustomed to objecting to something in principle, but once we have lost we try to produce more satisfactory arrangements. Once the principle of the refinery has been accepted, a lease can be negotiated.
  Then the company refers to Mr. Nightingale's insistence on retaining in any lease an authority which would enable him deliberately to construct in a critical area of the project. This is just not true, because the planning conditions or any other landscaping conditions could be settled by arbitration, as offered in the amendment.

  223
  The last one is hardly an objection at all, because the company refers again to landscaping, and landscaping clauses which are not unreasonable could be settled by arbitration.
  I have no wish to labour the point. The evidence is there that there have been genuine offers by Mr. Nightingale for a lease to be negotiated. Assuming that it is finally decided that the refinery should go ahead, I fail to understand why the company has not operated in what I would describe as a sensible commercial manner by endeavouring to negotiate. Apparently it has jeopardised the whole project through these parliamentary processes, and brought upon itself great publicity which cannot have been welcome to it, simply because it failed to negotiate a lease. It could have done that. The manner in which it has behaved does not create in me a very good impression of its skills in managing its affairs. If it were a subsidiary company of mine, and if I were in Mr. Ludwig's position, I should be rather displeased with the way in which the matter has proceeded. I should be wanting to ask "Why did you not negotiate a lease a couple of years ago when you could have done?"
  But now the qunestion is for the House, because we are concerned with what happens to this land after the refinery has been completed—or, indeed, if the refinery should not proceed. This arrangement for a 99-year lease would allow some degree of control not over the refinery project itself—although no doubt that could be negotiated—but over what happens if the landlord does not proceed, because the landlord could say that it shall not be used for a chemical works or any other industrial project without proper agreement. At the end of the 99 years, the land would revert—
  Mr. Dalyell: Is not it a fact that if a lease were negotiated in these circumstances, the value of the land in the event of anyone wanting to sell it would be greatly diminished if it were a lease rather than an outright sale?
  Mr. Moate: That is one of the doubts in one's mind about the intentions of the company. It could well reduce the value of the land for further industrial projects. But we are giving special powers in this
  224
  case for a refinery, and it is to that that we must limit this sanction.
  Mr. Dalyell: On a point of order, Mr. Deputy Speaker. Is it not very unsatisfactory on these delicate and important issues that there is no one present representing the promoters of the Bill? I do not think that it is right to ask an Under-Secretary of State for the Environment to answer for this. He has no responsibility in the matter. It is very unsatisfactory that there is no one representing the sponsors of the Bill. Will you consider suspending the proceedings until they return?
  Mr. Monro: Further to that point of order—
  Mr. Deputy Speaker: May I deal with one point of order at a time, if it is a point of order? The hon. Member for West Lothian (Mr. Dalyell) will be well aware that it is not a matter over which I can exercise any control.
  Mr. Munro: Further to that point of order Mr. Deputy Speaker. The hon. Member for West Lothian (Mr. Dalyell) is being a little unreasonable. My hon. Friend the Member for Ross and Cromarty (Mr. Gray) has been away getting some papers. Having got them, he is now back with us and ready to go into action again.
  Mr. Dalyell: Further to that point of order. I realised that the hon. Member for Ross and Cromarty (Mr. Gray) may have had to go out. That is why I asked for the suspension of the proceedings until he had an opportunity to come back.
  Mr. Moate: The views of my hon. Friend the Member for Ross and Cromarty are very important in this respect because, although the Bill has no promoter in this House, he is the man whose views count and carry a great deal of weight, apparently, with both Front Benches. I have always considered him a man of considerable influence and power. We were informed today that he was the important man in all this, and quite rightly. I regret, therefore, if he was not in the Chamber to hear me say that there had been genuine offers of leases in recent years. I shall not reiterate my arguments for his benefit, but I have the feeling that he may well decide to

  225
  answer them without actually having heard them, which is rather unfortunate.
  Perhaps I might reiterate for my hon. Friend's benefit the simple point that a genuine offer of a lease was made, not technically a lease but the fair headings of a lease, and I quoted the date of 30th April 1976. It is because of that that this latest statement by my company is way off the truth.
  In my view, a lease would not prevent the refinery going ahead. A satisfactory lease can be negotiated between Mr. Nightingale and the company. In fact, if this amendment is passed, it will have to be negotiated, because the amendment lays down the arbitration conditions, and so on, on which it can be done. In this way, the House would be producing a satisfactory conclusion to this matter which would meet the needs of all the parties. It would give back to this House that degree of control which is necessary because of the many anxieties which must exist in the minds of opponents and supporters alike.
  In the interests of the people of the area and those of all the parties, I hope that this amendment will be supported.
  Mr. Dalyell: In unvituperative terms. I wish to ask the hon. Member for Ross and Cromarty (Mr. Gray), since it should be addressed to him, one question against the background of what appears to some of us to be the fact that Mr. Ludwig and Cromarty Petroleum are putting very little, if any, of their own money into this project. My question is this: Is it not a fact that in the event of something going wrong about the project and a refinery not materialising, if there is not a 99-year lease—and I have no brief for Mr. Nightingale—the value of the land at sale would be significantly more than if there was a 99-year lease and that it could be said to be a financial encumbrance in the event of the sale of the land in certain circumstances? The hon. Member for Ross and Cromarty has an obligation to comment on that, if not to answer the question.
  Mr. Gray: I shall give the hon. Gentleman the best answer I can. I am advised that it is a clearly established principle of compulsory purchase law that where land is authorised to be compulsorily acquired by statute for some particular
  226
  purpose it cannot be used for a purpose other than that for which it was acquired.
  Mr. Dalyell: Let us get the matter absolutely clear. If that is the case, if a refinery for some reason or other did not go ahead the land could not be sold for other purposes. Is that what it amounts to?
  Mr. Gray: As I understand it, yes. But I must make it clear that I am not an advocate or solicitor. I have been advised by the Parliamentary Agents in this instance because I raised the same query myself.
  Mr. Dalyell: The hon. Member for Ross and Cromarty should not have been put in the position of having to answer such a question. Whatever one's view on the subject, I refuse to believe that the Private Bill procedure is the way in which the House should deal with such an issue. The Minister might say that he has no responsibility for the matter, and I accept that that is probably true, but heaven knows that Governments of all parties have access to all sorts of legal advice and one of the Law Officers should be on the Front Bench to advise on and answer such questions. I invite the Minister to comment on what I have said. He may say that he has none to make, and in the present circumstances I cannot quarrel with him if that is his attitude.
  Mr. Wells: I rise with a degree of sorrow because the only defence for Mr. Ludwig and the company during the debate on the amendment has come from the hon. Member for Dunbartonshire, Central (Mr. McCartney) who has left the Chamber. He was unwilling to give way, unwilling to answer questions and followed the tradition of Parliamentary agents in such matters in that he was totally unforthcoming with information. My hon. Friend the Member for Ross and Cromarty (Mr. Gray) was lucky to acquire some information. The hon. Member for Dunbartonshire, Central was most discourteous in his unwillingness to give way when other hon. Members have given way. It appeared to me that he was speaking for the company from a company brief and, like the company, he lacked the courtesy and common sense to give way.

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  1.30 a.m.
  Ministers have shrugged their shoulders, or perhaps I should say that they have drawn them in to try to appear a little more slender and less responsible in the matter, saying that it is private legislation, that they know nothing about it and so on. Yet they have forced it upon the House.
  It is my faint hope that even at this hour the House may come to its senses and support Mr. Nightingale's plea that there be a lease. He offered that from the beginning. My hon. Friend the Member for Ross and Cromarty said that he understood that land compulsorily purchased could be used only for the purpose for which it was compulsorily purchased.
  I know that the cry "I told you so" is seldom popular, but I believe that in a year or two, or perhaps three, those of us who have opposed this matter will be saying to Ministers of the day "We told you so". We believe that Ministers have been taken for a ride by a £100 company trying to expropriate a substantial land owner, a man of good taste and good sense who has offered leases and has offered to meet the company in any way. The hon. Member for Dunbartonshire, Central has exactly exemplified the company's attitude—dictatorial, unwilling to meet us, unwilling to listen to the arguments, and then going home or whatever.
  This is a late hour to be arguing. I sincerely hope that the House will accept the amendment in favour of a lease. I hope that the amendment will be pushed to a vote, because I believe this to be our last chance to make some common sense out of this very sad measure. If we are carried away by the crass folly of the Scottish Office, and if the payroll vote comes in yet again to vote down common sense, I hope that in two or three years' time those Ministers on the Front Bench tonight will look as silly as I think they are now.
  Mr. Rooker: I wish to address a few remarks to my Amendment No. 5. I must declare no interest. I have never met Mr. Nightingale or had correspondence with him or discussed with him or his agents the content of the amendment. It is on the Order Paper for the reasons given by the hon. Member for Maidstone (Mr. Wells) and my hon. Friend
  228
  the Member for West Lothian (Mr. Dalyell).
  There is great doubt about whether the company intends to proceed, or will be able to do so, once it has the powers in the Bill. If it does not, what happens to the 47 acres in question? The powers to acquire the land expire on 31st December 1978. That is a very short time for such a project, which has now been going on for about four years. My amendment says that if the powers are not used by then the land should, in all equity, be returned to the present owner. That does not seem a matter to argue about.
  It might be said that it will be easy for the company to proceed in the next two years. If it proceeds, that is fine, but here we come to the nub of the problem. My hon. Friend the Member for Dunbartonshire, Central (Mr. McCartney) said that the project was like any other project of a large company. He is wrong. Built into the order is a requirement that the company must obtain all the required capital of £180 million before moving on to the 47-acre site. This requirement is buried in Section 16 of the Land Clauses Act 1845.
  Mr. Wells: I do not wish to quarrel with the hon. Member for Birmingham, Perry Barr (Mr. Rooker) about Amendment No. 5, but may I put to him the problem which Mr. Nightingale will face if his land is returned having been bought from him for a sum on which he will have had to pay capital gains tax? With inflation at its present rate, Mr. Nightingale would have to buy back in 1978 at a new district valuer's valuation when the money which he had received had been eroded. Amendments Nos. 2 and 3, which propose leasing, are surely more attractive because Mr. Nightingale would be on all fours. Taxation and inflation would put him in grave danger if we followed the procedure outlined in Amendment No. 5.
  Mr. Rooker: Many of my amendments were probing amendments to give me the chance to make points which I have not been able to make during our other debates. If nothing else, the hon. Gentleman has shown that there has been no collusion between me and the hon. Members opposite—although we may have discussed the sort of amendments which could be moved, having been told originally that it would be difficult to table amendments

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  which would be selected. I could not find a form of words to enable the guy to get his land back without being financially crippled for the rest of his life.
  Mr. Gordon Wilson: If I read the hon. Gentleman's amendment without any special interpretation, it seems that on 31st December 1978 the company would have to return the land to Mr. Nightingale without any payment at all. There is no reference in the amendment to an offer back to Mr. Nightingale or to anything relating to compensation.
  Mr. Rooker: Perhaps I drafted it better than I thought. My intention has been to highlight the fact that the company must, before December 1978, have secured all the capital required and have certified it with a sheriff in Scotland as being available.
  There is a good chance that this may not happen. Mr. Nightingale will be fully protected because even when the Bill has gone through Parliament, it has no effect until the company has secured the capital and obtained the certificate.
  The company may say that it is unable to meet the requirements of this legislation which is more than 100 years old. Therefore it seems reasonable that if the company does not or cannot proceed it should not be left owning a large block of land, including 47 acres giving access to the foreshore.
  Acquisition of an access point always makes land more valuable. Sometimes a piece of land just wide enough for a lorry can increase the value of a whole site by 10 or 20 times. I do not believe that this company should be put in that position because it has not been able to raise the necessary capital.
  Mr. Dalyell: I should like to draw my hon. Friend's attention to a point which he made earlier regarding the Ludwig Institute for Cancer Research. I have this on the authority of Mr. Phil Durham, of Scotsburn, Ross-shire, who says:
  "Apart from the incorrect assertion on the company returns that this institute is incorporated in Liberia, it is most interesting that the articles of the institute in Zurich allow the funds to be used only for cancer research with the one notable exception that it can buy land. It is not allowed to rent land, nor, as far as can be discovered, can it become the holding company for Cromarty Petroleum Company Ltd."
  230
  I think that someone ought to clear up this matter, because it pertains to the issue being raised by my hon. Friend. Perhaps the hon. Member for Ross and Cromarty (Mr. Gray) will clear up this point which has been made before in the House.
  Mr. Rooker: Clearly the hon. Gentleman has no intention of doing that. I am surprised, considering some of the accusations that I made last Thursday, that, before the debate, that charge, notwithstanding all the others that I made about the structure and articles of association of the organisation in Zurich, has not been refuted in any way, shape or form by the promoters of the Bill. There has been no letter, circular, or statement to the Press.
  I pointed out on Thursday that the articles of association of the Ludwig Institute for Cancer Research in Zurich enable it to carry out medical research and to buy and sell land, not to run a tankship company or an oil refinery. Therefore, that organisation cannot be operating legally under either Swiss or British law.
  No one seems to be bothered about finding an answer to that assertion. It may be thought not to be a serious point. But I think that it is a serious point. For example, by the end of December 1978 the company, for reasons beyond its control, may not be able to build the oil refinery. Therefore, it is not fair or equitable that, because of a vast increase in land value, the effect of inflation, a drop in the value of sterling, and having an access point to 47½ acres of foreshore, it should make a fantastic profit. I do not care whether the owner of the 47½ acres is a co-op, a trade union or an absentee landowner. The fact remains that it would not be fair if that situation were to arise.
  That is why I put down Amendment No. 5. I accept that in many ways it is defective, if put into the Bill, could cause considerable problems. Therefore, if there is to be a Division on Amendments Nos. 2 and 3, I shall gladly vote for them as alternatives to my suggestion.
  No one has given any answers to the questions which I have posed. The company is not prepared to make a statement. Ministers have kept far away from the Bill. Indeed, I should be the first to ask for their heads on chargers, because,

  231
  when this proposal fails—there is a good chance that it will—they will not be able to say that they were not warned about all the problems which would arise.
  If there had been no history of companies being formed and going defunct in connection with this land and different personalities becoming involved, there would be no basis for the charges that I have made. But we need go back only 10 years to see the personalities involved. If this project fails it will show a high degree of incompetence on the part of the Parliamentary Agents, the company, the managers, the people in the area who support it and the Government. No Minister has said that the Government will support the objects of the Bill or that the facilities to be provided are required in the national interest. An amendment which has not been selected would have required them to do that as part and parcel of passing the Bill.
  1.45 a.m.
  The Government will not be able to get out of it in future if the project collapses. I hope that it does not. I hope that the oil refinery is built and that it is of benefit to the national economy, but all the evidence suggests that there will not be a refinery and, if there is, that it will not benefit the economy. If the project does not materialise there will be a hell of a row. Ministers will not be able to say that they were required to do nothing but bring this private legislation before the House. More than 18 months ago the Scottish Office was warned of certain matters behind the Bill, before it reached the House, but they took no action. Ministers from the Scottish Office, the Department of Energy and the Treasury have all been warned, but no action was taken.
  It is nothing short of a scandal that this legislation can be passed by the House without a Minister saying that he approves of it. If a Division is called I shall have no alternative but to vote to insert in the Bill a safeguard to ensure that it is fair to the people in the area, land owners and the House. The people who are sitting around in areas I am not supposed to mention regard the House as a laughing-stock because of what happened here tonight. They will continue
  232
  to laugh as the Bill passes through the House of Lords and becomes law.
  One day there will be an outcry when the company collapses because it cannot get the capital to go ahead, but, bingo, the company has the land. It is incumbent upon the House to accept the amendments, which contain nothing to wreck the Bill's aims. The oil refinery will last for only 40 to 50 years. How can an amendment providing for a 99-year lease be said to be a wrecking amendment? If my amendment is not accepted I shall seriously question the motives of those who promote and support the Bill inside and outside the House.
  The Minister of State, Scottish Office (Mr. Gregor MacKenzie): I would not have intervened but for the criticism of the Government for their attitude to this private legislation, made by the hon. Member for Maidstone (Mr. Wells) and my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker). In my intervention on Thursday I tried to make clear the nature of the Government's stand. The Bill comes to the House under the Private Legislation Procedure (Scotland) Act 1936. My hon. Friend and the hon. Gentleman may not like that, but we are all presumed to have an intelligence and can make our own judgment. The simple duty of the Secretary of State for Scotland is to lay the Bill before the House after it has been fully examined by the Commissioners—two from each House. My hon. Friend and the hon. Member may not like the procedure—I must confess, having endured all of this over the last few months, that I am not sure that I am wildly enthusiastic about it myself—but that is the procedure under which this Bill comes before the House of Commons.
  Amendments Nos 2 and 3 seem to be the whole purpose of the Bill itself. We have had a wide ranging discussion about refinery policy, money, and everything else. I suppose that if the promoters of the Bill had found it acceptable they would not have found it necessary to go before the Commissioners and object. It is therefore for the promoters to say whether or not they regard such amendments as acceptable.
  The whole purpose of the Bill is concerned with the way in which land is to be obtained. The arguments for compulsory acquisition have been examined

  233
  fully by the Commissioners from both Houses. I can only conclude by suggesting that the Commissioners, having found these arguments acceptable, have put them forward through the form in the Bill.
  Hon. Members are also concerned about what will happen if the company does not carry out its intention to build the refinery. Would it be able to sell the land with the benefit of planning permission? It is an argument that I well understand from my own days in local authorities. However, I am advised that the conditions attached to the planning permission ensure that if work on the refinery does not start, and is not continued steadily, the planning permission will lapse—the company will still have the land but it will have no planning permission.
  I want to refer to some of the conditions. A master plan of the development showing its phasing, must be submitted within six months, but because of delays caused by the Bill the company has had to seek an extension of this period from the local authority. When the master plan has been approved a contract for the design and construction of the refinery must be placed within four months. Plans and elevations showing the details of the buildings, jetties, piers and the process plant must be submitted within 10 months and final details showing exterior finishes and so on, within a further nine months. Work on the underground storage—an important feature of development—must be started within 12 months of planning permission and the construction work must be continuous.
  A breach of any of these conditions would result in the lapse of the planning permission. It is therefore not possible for the company simply to sit on the land, do nothing and resell it with the benefit of planning permission.
  I intervene only to indicate what I understand are the facts of the matter.
  Mr. Deputy Speaker: Amendment proposed, page 2, line 25—
  Mr. Moate Mr. Moate rose—
  Mr. Deputy Speaker: Order. If the hon. Gentleman wishes to speak again he will have to ask the leave of the House.
  Mr. Gordon Wilson: On a point of order, Mr. Deputy Speaker. Do I understand that the Question was being proposed by yourself and that it was too late for any other hon. Member to take part in the debate?
  Mr. Deputy Speaker: I had not, in fact, completed putting the Question. If I see any hon. Gentleman wanting to speak before I have taken the voices it is my duty to call him. If the hon. Member for Faversham (Mr. Moate) wants to speak again he will have to ask the leave of the House.
  Mr. Gray: The Minister dealt with the points fairly well. I want to answer the point raised by the hon. Member for West Lothian (Mr. Dalyell). I have been able to get the answer on this. The situation, as I understand it, is that the institute is permitted to buy and own land in order to enable it to set up whatever laboratory and technical establishments are necessary to conduct its medical research. But it must, by definition, also be able to raise and have access to funds to carry out its research. That is implicit in its purpose as a medical research body.
  The institute draws its funds from the beneficial ownership of shares in a large international company—Universe Tank Ships Incorporated—as do many charitable bodies and trusts in this country and elsewhere. The Ludwig Institute does not operate a tank ship company any more than the Nuffield Foundation or the Ford Foundation operated the car firms when they were set up in a similar way.
  Mr. Dalyell: I appreciate the hon. Gentleman's courtesy, but may I be clear on one thing? Is it right or wrong to say that no Ludwig money is going into this project of Cromarty Petroleum? I am genuinely hazy about this. As I understand it, no Ludwig money is being put into this project. If I am wrong, I should be told so.
  Mr. Gray: That is a difficult question to answer. As I understand it, some money from Ludwig companies is going into the project. In other words, Universe Tank Ships is certainly putting money into the project.
  Mr. Dalyell: How much?
  Mr. Gray: I am not in a position to say exactly how much, but I think that

  235
  the original amount was about £62½ million. I am not in a position to confirm that at the moment. The company is providing a large amount of the capital and the remainder is being arranged in the way that the hon. Member for Dunbartonshire, Central (Mr. McCartney) described, and in a way common to merchant banks in this country when arranging a package of this nature.
  The Parliamentary Agents have given me information or guidance on the amendments. It has been pointed out that Amendment No. 5 could not be accepted. Perhaps the amendment proceeds on the assumption that the powers under this provision are powers for the construction of the marine terminal facilities, but that is not the content of paragraph 4 of the order, which is not directed to authorising this development. The company is already authorised in the main by the grant of planning permission empowering it to acquire compulsorily the 47½ acres of foreshore land which it has been unable to acquire on such terms by agreement. If the powers under this provision have not been activated by 31st December 1978, the company will not have any land to return to the ownership of those who were the owners prior to the order becoming law.
  The hon. Member for Birmingham, Perry Barr (Mr. Rooker) spoke with strength, but in these matters we have to be guided by the parliamentary draftsmen, who can interpret the amendment and advise us whether it is a practical proposition.
  2.0 a.m.
  Amendment No. 2 is a lead-in to Amendment. No. 3.
  The company would not be prepared to accept such an amendment. I am in considerable sympathy with the company on this point. It is to invest a considerable sum, and there will be a great deal of Government money attracted as well. It feels that it could not invest this kind of money without ownership of the land.
  The company could not enter into a lease with the present owner, for several reasons. First, in his petition to the House earlier this year the landowner said that he was strongly opposed to the concept of an oil refinery or oil storage of any kind at Nigg Point. He
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  later qualified that by saying that in the event of planning permission being granted he would try to procure the granting of a lease. But the company feels that the conditions that he would insist upon would not be acceptable to it. Except in exceptional circumstances, no reasonable company makes itself subject to the vagaries of a lease with a private landlord who declares himself adamantly opposed to the uses to which the land will be put.
  The landlord does seem to chop and change on this subject. At one stage we hear that he is totally opposed to the project, at another that he accepts it on the terms of a lease, and on yet another that he might be interested in participating. My hon. Friend the Member for Maidstone (Mr. Wells) rightly defended his constituent, but he was less than fair in some of the things that he said, and certainly some of the things that he insinuated, about the company.
  Mr. Dalyell: The hon. Member has said something very important—that the company is putting in massive sums of its own money. He knows me well enough to know that I would never laugh at anyone's name—heaven knows, my own is complicated enough—but on 1st October, in the Daily Telegraph, whose political views I do not share, one read this:
  "A fund-raiser sent from New York is working 'semi-permanently' in London to raise the other £144 million required.
  He is Mr. Steve Stavrides, described to me last night as 'a financial expert'.
  He is employed by Universe Tankships, the American parent company of Cromarty Petroleum, set up by three Americans three years ago with the sole purpose of building and operating the refinery in Scotland."
  If this is inaccurate, and he is not raising the £144 million, it would be useful to be told that.
  Mr. Gray: It is not my job to outline the company's financial policy on this project. I have merely said that the company is putting a substantial amount of its own money into the project and that a package is being arranged through merchant bankers, as every other similar project over the years has been arranged. The hon. Member knows how these matters are financed in the City.
  The company has made it clear to me that it would obviously like to own the land. That is its first object. Second, it is not prepared to accept a lease from

  237
  Mr. Nightingale because it does not consider that relations in future would be such that it would be possible to operate without continual interference. The company and the landowner are not likely to come together and we are wasting time thinking that they might.
  But the company has told me that the third possibility would have been the regional authority acquiring the land and then arranging a lease with the company. The company would be prepared to accept that. Naturally, its first desire is to own the land in which it is to invest its money.
  I have tried to represent the case fairly. I wanted merely, as politely as I could, to explain the relationship between the company and the landowner.
  Mr. Wells: My great anxiety in this is simple. Mr. Nightingale and his friends and neighbours, who take a view similar to his, have been at pains to let every hon. Member in any way interested have all the paper help and support required, while the company has done absolutely nothing except send out a very inadequate circular last Thursday. I am glad to know that my hon. Friend has received some useful information from the company in the last 20 minutes, but no other hon. Member has had any communication whatever from the company. It is this extremely cavalier treatment of the House by the company that has aroused my suspicions.
  Mr. Gray: It was not in the last 20 minutes that I was given this information. I accept that I went to the Official Box for some clarification.
  Any hon. Member who cared to ask the company for information would have been able to get it. I certainly had no difficulty. I did not have to visit the
  offices of the company. It was to suit my convenience that the company came to see me at the House. I went to the company's offices to see whether there was any truth in the allegations in some Press articles. I found the company in an extremely attractive office block—modern but modest. Indeed, the Department of the Environment could do worse than have a look at those offices and see how they are furnished, inexpensively compared with some of its offices. I was very impressed. I got satisfactory answers to all my questions and I am sure that other hon. Members would have done so.
  These amendments would not be acceptable to the company.
  Mr. Dalyell: The hon. Member has again said something very important and new. Do I understand that if the project were allowed to go ahead and the regional council became, in a sense, the company's landlord, the company would enter into a leasing arrangement with the regional authority?
  Mr. Gray: The hon. Member has misunderstood. I said that the company wished to proceed with this order to enable it to purchase the land. However, in the event of the House refusing to allow the company to have this compulsory purchase order, if the Highland Regional Authority decided compulsorily to acquire the land, the company would be prepared to enter into negotiations for a leasing contract with the Highland Regional Authority.
  Mr. Moate: By leave of the House—
  Hon. Members: No.
  Question put, That the amendment be made:—
  The House divided: Ayes 2, Noes 28.

  Division No. 342.]

  AYES

  [2.09 a.m.

  Canavan, Dennis

  Skinner, Dennis

  TELLERS FOR THE AYES:

  Mr. J. W. Rooker and

  Mr. John Wells.

  NOES

  Bain, Mrs Margaret

  Cocks, Rt Hon Michael

  Doig, Peter

  Biffen, John

  Cook, Robin F. (Edin C)

  Douglas-Hamilton, Lord James

  Brown, Hugh D. (Provan)

  Craigen, J. M. (Maryhill)

  English, Michael

  Buchan, Norman

  Crawford, Douglas

  Faulds, Andrew

  Buchanan, Richard

  Dempsey, James

  Gray, Hamish

  Harrison, Walter (Wakefleld)

  Monro, Hector

  White, James (Pollok)

  Hughes, Robert (Aberdeen N)

  Reid, George

  Wilson, Gordon (Dundee E)

  McCartney, Hugh

  Ross, Rt Hon W. (Kilmarnock)

  MacCormick, Iain

  Summerskill, Hon Dr Shirley

  TELLERS FOR THE NOES:

  MacKenzie, Gregor

  Welsh, Andrew

  Mr. Jim Lester and

  Millan, Rt Hon Bruce

  Mr. Ian Campbell.

  Question accordingly negatived.
  It appearing on the report of the Division that forty Members were not present, Mr. DEPUTY SPEAKER declared that the Question was not decided, and the business under consideration stood over until the next Sitting of the House.

MR. JORGEN THORSEN
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Walter Harrison.]
2.20 a.m.
Mr. Patrick Wall: I believe that the whole House will condemn the attempt of a Mr. Thorsen to make a film which he entitles "The Sex Life of Jesus Christ". This film is not only, as he admits, pornographic, but—and this I believe to be far more important—it is blasphemous. That is to say, it will be deeply resented not only by Christians, who believe that Jesus Christ was the Son of God, but by all decent-minded people who object to objects of veneration to large sections of the community being subject to violent and unprovoked attack.
What, then, is Mr. Thorsen's objective? First, it is money; and second, as an anarchist, it is to undermine the basis of our society by degrading the sacred and by mocking the Established Church.
Support of those of the Jewish faith for their coreligionists persecuted in the Soviet Union is widespread. There has been strong support of the Sikhs in their battle to wear turbans when riding motor cycles. But because Christianity is the established religion of this country, there are some who believe that by attacking Christianity they are attacking the Establishment, and that is always considered fair game. What a row there would be if this film had been about the sex life of Abraham or Moses, Mohammed, Buddha or even Karl Marx.
The Minister will know that I first raised this matter at Question Time way back in July. The script, a copy of which I have with me, is a strange mixture of
240
Bible and blasphemy. It has been condemned publicly by the Prime Minister, by the Deputy Leader of the Opposition—with the support of my right hon. Friend the Leader of the Opposition—and by Church leaders of all denominations. I know that the postbags of many hon. Members have been full of letters of protest. In my own constituency I have received many protests, ranging from that of the Beverley Borough Council to that of the South Hunsley High School, adjacent to my home, which was accompanied by a petition, which I would stress was organised by the pupils themselves. Yet we still have not received the assurances that we need.
Let me briefly examine what has happened in other countries. In Denmark the Director of the Danish Film Fund gave a grant of 900,000 kroner for making this film. This caused an uproar among the people, the church and the Press. After a long study it was decided that the film would violate Danish copyright law and the moral copyright of the four Evangelists in that it would distort the character of their work, and the filming was then declared illegal. So much for Denmark.
In Sweden I understand that a special law on film production was passed leading to a close co-operation between the Swedish Film Institute and the Swedish Broadcasting Corporation. Both partners had to support any fictional film production and the Swedish Broadcasting Corporation turned Mr. Thorsen down, so the film was not able to be made in Sweden.
In Italy Mototov cocktails were thrown at the Danish Ambassador's residence in Rome in protest, and the film was turned down. France, Spain and Germany have also refused permission. I ask the Minister, why not Britain?
I understand from a short debate in the other place that the Government maintain that they have no power to control the production of films in this country, but there is power to refuse entry to an EEC national on the grounds of public policy, public security or

241
public health. If they have no power to stop the making of blasphemous films, let them follow the example of the countries that I have named and change the law. My hon. Friend the Member for Gainsborough (Mr. Kimball) has already introduced a Private Member's Bill for this purpose, a copy of which I have with me.
I do not believe that the Home Secretary will allow this man in for the purpose of making the film, but one must consider the possibility of his entering for another purpose. He may even sneak in through the open door that exists with the Irish Republic. Why cannot the Minister now declare that Mr. Thorsen will not be allowed into this country, and so settle this controversy before it increases to a dangerous extent?
People have differing views on pornography, and there is no question but that the script is pornographic. The scenes purporting to describe Jesus in a brothel, the homosexuality, the orgies, the violence and the sadism, make this only too clear.
But what is far more serious, I believe, is the blasphemy. I believe that Jesus Christ was the Son of God. Mr. Thorsen makes Him a drunk and a lecher. Mr. Thorsen makes Him allow St. Mary Magdalene to commit unspeakable insults to his person as a man. Mr. Thorsen presents Him as having sexual intercourse with St. John while the disciples are singing, drinking and guzzling.
I wonder what Mr. Thorsen would have said if someone had proposed to make a similar film about the sex life of his own father. Yet he purports to make a film about the Son of the Father of mankind.
In the past the Home Secretary has excluded from this country leaders of a certain cult and also notorious gamblers. Why cannot he undertake to act in a similar manner on this occasion?
What do public policy and public security mean? Must the Home Secretary be assured that a breach of the peace will be committed if this man comes to this country? I can certainly give the Minister that assurance. There will be violence if he comes to this country. There is no doubt whatever about it. The film is a direct attack on all that
242
Christians hold sacred. God's laws come before man's laws, and if man's laws cannot protect the fundamentals of one's faith, one has no other option.
If Mr. Thorsen can now be told that he will not be admitted into this country, that is the end of the matter, and everybody will be delighted. If, however, the Home Secretary waits until he attempts to enter, anger will grow and public disquiet will increase. The hon. Lady will agree with me when I say that public disquiet has already manifested itself throughout the country. Mrs. Whitehouse, to whom I pay tribute for all she has done to expose this evil man, is to start a vigil outside the Home Office today. These demonstrations will spread.
As I have already said, the Minister has a good precedent. Let her end the matter now. Above all, when considering this obnoxious film, let the Minister remember the First Commandment:
"Honour the Lord thy God. Thou shall not take the name of the Lord thy God in vain."
2.28 a.m.
Sir Bernard Braine: I am very glad to support my hon. Friend the Member for Haltemprice (Mr. Wall) in all he has said. The Minister will know that I first raised this matter with the Home Office nearly four months ago and was shocked to learn that the then Home Secretary had no intention of stopping Thorsen from entering this country, despite the fact that the film is pornographic—those who have seen the script know that it is filthy and obscene beyond belief—despite the certainty that it will give grave offence to millions of our own people, as it has done on the Continent, despite the fact that it may give rise to disorder, as it did in Rome, and despite the fact that if such a film is made and exhibited here it will offend against our own laws of blasphemy.
I protested vigorously, as the hon. Lady knows, and was supported by thousands of people up and down the country, Christian and non-Christian, young and old. In my 26 years in this place I have never known such a volume of protest from the usually silent majority.
The well-known permissiveness of the former Home Secretary was a virtual invitation to Thorsen to come to this country to do what he had been unable to do elsewhere in Europe. The hon. Lady

243
will know that at that juncture I appealed to the Prime Minister over the head of her Department. To his eternal credit, the right hon. Gentleman replied to me on 4th September saying that Thorsen would be a most unwelcome and undesirable visitor to this country. One would have thought that that would have been the end of the matter. But, for weeks after, Home Office officials were sending out letters to protesters which evaded the issue and were even misleading.
In August, I had managed to wring out of the Minister of State the admission that no EEC national had a prescriptive right to enter this country. It was admitted that such a person could be excluded on grounds of public order, public safety or public health. Protesters are still being told that it would be possible to exclude Thorsen on grounds of public order should he present himself at a British port, but that the Home Secretary will not make a formal decision until such a need arises.
What is the authority for the term "public order"? It does not appear in the Treaty of Rome. The term used there is "public policy", which is much wider in its implications. It does not appear in our own immigration rules. The words used there to justify exclusion are
"where this is conducive to the public good."
That is even wider, and quite sufficient to stop an unwelcome and undesirable visitor from entering.
It is perfectly true that if Thorsen entered this country there might well be a threat to public order, because vast numbers of people are outraged and very angry at the thought. But if the Prime Minister, in his wisdom, thinks that the man is an undesirable, and if his purpose, which he has announced in advance of coming here, is to break our law, why cannot the Home Secretary say quite firmly that this man will not be allowed in? Home Secretaries are quick enough to deport unwanted immigrant children. Why are they so tender about a pornographer who seeks to make money out of filth and lies and who cares nothing for the distress that he causes to all who find solace and inspiration in the example set by Jesus Christ?
The Home Secretary should summon up a little courage. There is a precedent
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in the case of Yvonne van Duyn, who was very properly refused entry into this country as an undesirable and whose exclusion was upheld by the Court of Justice of the European Community. Any nation has the right to keep out undesirables and to do so openly. Why not in this case? I hope that the hon. Lady can tell us.
Mr. Tam Dalyell: The hon. Gentleman may be interested to know that I have had more letters on this subject—and understandably so—than on any other since I became a Member of Parliament. I welcome this. I think that it is extremely undesirable that such a man should be admitted.
2.33 a.m.
The Under-Secretary of State for the Home Department (Dr. Shirley Summerskill): I understand fully and sympathise with the motives of the hon. Member for Haltemprice (Mr. Wall) in raising this matter and of the other hon. Members who have contributed to this brief debate.
As the hon. Member for Haltemprice said, Mr. Thorsen and his plans for a film on the life of Jesus Christ have led to an outcry which cannot often have been paralleled. My right hon. Friend and I have received several thousand letters and petitions of protest; indeed, my Department has probably received more correspondence on this issue than any other for several years. The strength of public feeling on the question is therefore very clear. Nevertheless, we have always to bear in mind that any action that we can contemplate must be within the law, and I hope to make clear the constraints imposed by the laws within which we must work, however repugnant we may find Mr. Thorsen's project.
A preliminary matter to bear in mind is that Mr. Thorsen has neither applied for permission to come nor, to our knowledge, made any firm arrangements to do so.
There are two suggestions for dealing with Mr. Thorsen. The first is that he should be prevented from entering the country. The second is that, if he does enter, he should be prevented from making the film here. I should like to deal with these suggestions separately.
As to Mr. Thorsen's entry into this country, it has to be borne in mind, first,

245
that he is a national of an EEC member State. This means that in the normal way he would be free to come here to work, to look for work, or to set up in business. If he is admitted, no restrictions can be placed on activities of this kind. Nationals of EEC countries are normally admitted into the United Kingdom with the minimum of formality at the port, and most of them are not questioned about their reasons for coming here.
Although the grounds on which a national of an EEC member State may be refused entry are slightly more restricted than those applying to other foreigners, nationals of EEC States are still subject to the provisions of the Immigration Act 1971 and the immigration rules made under it. They may therefore, subject to our treaty obligations, be refused leave to enter the country within those provisions.
What does the Treaty of Rome allow? Article 48, which deals with the free movement of labour, says that the right to move within the Community for this purpose is
"subject to limitations justified on grounds of public policy, public security or public health "
The exercise of these limitations is the subject of a directive issued in 1964, under which measures taken on grounds of public policy or public security must be based exclusively on the personal conduct of the individual concerned.
In other words, an EEC national, even if he is seeking to come here to work, may be excluded on public policy grounds if his personal conduct justifies it—always provided that there are appropriate powers of exclusion in our domestic law. And, of course, there are. The immigration rules do not themselves use the phrase "public policy" but they provide that a person who requires leave to enter this country, as does Mr. Thorsen, may be refused it on the grounds that his exclusion is conducive to the public good. The relevant rule is Rule 65 of the Rules for Control on Entry of EEC and other non-Commonwealth Nationals: HC 81.
It is one thing to have powers of exclusion. Whether there are grounds for exercising those powers in a particular case is a different issue. The burden of many of the representations that are being
246
made to my right hon. Friend is that he should decide now—and say now—that Mr. Thorsen will not be admitted to this country. My right hon. Friend has made it clear that he is not disposed to do that. In the first place, there is really no definite evidence that Mr Thorsen will seek to come here. He has been talking about making this offensive film since as long ago as 1970, and he has stated his intention to make it here. Everything that we know about him suggests that he thrives on publicity, and he is certainly getting plenty of it from the great amount of attention that is being paid in this country to his ideas. I am not at all sure that it would be sensible, even if there were not other objections, to give Mr. Thorsen additional publicity by solemnly banning him—and perhaps providing an incentive to try to prove his point by seeking to come here when he might otherwise not have done so. Indeed, he has not tried to do so up to now.
But this apart, I remind the hon. Member that the admission of a would-be immigrant, however distasteful he may be, is a matter in which my right hon. Friend and the Home Office have to be seen to act fairly, with discretion and, indeed, quasi-judicially. It is the more important that my right hon. Friend should do so when a refusal of entry may become the subject of an appeal or even of proceedings in the European Court or before the European Commission of Human Rights. What my right hon. Friend is being asked to do is to say that in what is now a hypothetical situation—Mr. Thorsen's arrival at a port—we shall refuse him entry whenever he comes.
My right hon. Friend has said that he does not consider it right to act in that way. He has not, let me make it crystal clear, said that Thorsen will not be denied admission. All that he has said—and surely the hon. Member will accept that it is a perfectly sensible thing to say—is that a decision, if one has to be reached, will be reached in the light of all the facts and circumstances as they appear at the time.
Mr. Andrew Welsh: How does this attitude compare with that of those countries which have definitely refused permission for such a film ever to be made?
Dr. Summerskill: I am coming to that. I think I have anticipated most of the points that will be raised.
The great weight of the opinion expressed about Mr. Thorsen's activities, and the substantial risk that if he were to come, at any rate in the immediately foreseeable future, his presence and conduct might be damaging to public order, will weigh very heavily in the scales.
A watch is being kept for the arrival of Mr. Thorsen, and my right hon. Friend has arranged for it to be reported to him by the Immigration Service.
A number of people, including hon. Members, have suggested that Mr. Thorsen has been prevented from making his film in other European countries. The implication is that he has been refused admission to enter them. From inquiries that we have made this does not appear to be the case. As far as we know, he has not been formally refused entry to any other European country, but he has been refused financial support from public funds to assist him in making a film. This certainly happened in both Denmark and Sweden. I should emphasise that it is hardly likely that Mr. Thorsen can be expecting to obtain such financial assistance in the United Kingdom.
I now turn to the question of the power to prevent Mr. Thorsen making his film and the allied question of censorship. Neither my right hon. Friend nor anyone else has powers to control the making of films in this country, whether to prevent production or to interfere with the content of films while they are being made. There is nothing to stop anyone making a film in the privacy of his own home, for example. However, if, in the making or showing of the film, criminal offences should be involved, it would be for the prosecuting authorities to decide what action should be taken.
Blasphemy has been mentioned. There is an offence of blasphemy at common law. Although the Home Secretary has no responsibility for the institution of proceedings in particular cases, I have
248
no doubt that the prosecuting authorities would look carefully into any alleged offence at the relevant time.
Whether a film is made in this country or elsewhere it can be publicly shown here only with the approval of the film censorship authorities. The Government play no part in censorship matters. The final decision on the showing of any film rests with the local cinema licensing authority—in London the Greater London Council and elsewhere the district councils. Although these authorities are normally guided by the advice of the unofficial British Board of Film Censors, they will commonly insist upon seeing films of a particularly controversial nature which they can consider in the light of their knowledge of local opinions and feelings. The question whether a particular film should be allowed to be shown publicly can, of course, be considered only when the completed film is submitted for censorship. I believe that Mr. Thorsen said at one stage that even if the film were made here he did not expect it to be allowed to be shown in this country.
I have seen it argued that because of the agitation that Mr. Thorsen and his film have caused and the publicity that he has received it is now more likely that he will get the financial support he is seeking to make his film. I can only say that I sincerely hope that this will not prove to be so and that the outcry has not helped him in any way. I hope, indeed, that he will recognise the strength of public feeling that has been expressed here and not outrage it further by trying to come here and make his film. As I have said, if he does so we shall decide what to do on the facts then before us. I can assure the House that the views that hon. Members have expressed in this debate and those in the very many letters sent to the Home Office will be borne fully in mind.
Question put and agreed to.
Adjourned accordingly at fifteen minutes to Three o'clock a.m.

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Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Salisbury.
The Lord Tollemache—Sat first in Parliament after the death of his father.

RHODESIA: UK PASSPORT HOLDERS
Lord AVEBURY: 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 it is their policy to remove to Zimbabwe (Rhodesia) holders of United Kingdom passports who flee to the United Kingdom from Zimbabwe with a view to avoiding conscription into the Armed Forces of the illegal reéime.
The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich): My Lords, Her Majesty's Government have no fixed practice in circumstances such as these but give careful consideration to each case on its merits.
Lord AVEBURY: My Lords, surely this is a matter of principle. Are the
2
Government really saying that there are circumstances in which individuals will be sent back to join the Armed Forces of the illegal régime of Rhodesia and thereby, if the negotiations which we hope will be successful are not successful, prop up the continued existence of that régime which for 10 years we have been trying to put down? Particularly in the case of Mr. Desai last weekend, whether or not evasion of the draft was the principal motive in his coming here, do not the Government think it was grossly unfair to him to send him back to face what may be severe penalties for coming here in the first instance and evading the papers which were served on him?
Lord HARRIS of GREENWICH: No, my Lords; I do not think we take the same view as does the noble Lord on the last point in his supplementary question. So far as general practice is concerned, the situation is this. We will look at every case on its merits, but we cannot ignore the potential size of the commitment to admit anyone who applies to come here because he does not wish to serve in the Rhodesian Armed Forces.
Lord BROCKWAY: My Lords, is it the case that the Government consider every case on its merits? Is it lot the case that they consider it only when it is referred to the Home Office by a Member of the other place or this House? Is the Minister aware that I have recently taken up a case which had been refused entry at Heathrow, but upon consideration the

3
Home Office accepted it? Before a decision is reached at Heathrow, would it not be desirable that cases will be referred to the Home Office?
Lord HARRIS of GREENWICH: My Lords, the immigration officers act on the basis of immigration rules. If any approach is made by a Member of either House, then either my right honourable friend the Home Secretary or one of his colleagues will look at the circumstances of the case. So far as this narrow issue is concerned, until May of this year we had received no applications from Rhodesian citizens to enter or remain in this country on the grounds of wishing to avoid military service.
Lord SHINWELL: My Lords, is it not a something of a misnomer to describe Rhodesia now as an "illegal régime", when in fact Her Majesty's Government are sponsoring a conference and recognising the existence of Rhodesia?
Lord HARRIS of GREENWICH: My Lords, that is a rather wider question.
Lord AVEBURY: My Lords, the noble Lord has said that he had received no case of a person who wished to remain here in order to avoid a call-up. If that is so, will he look at the case of Mr. Archie Coleman and Mr. Selwyn Quarrie who originally arrived here in May and who have been on IS96s ever since, reporting regularly to the police every week? Will the Minister consider the possibility of testing the bona fides of people who say they are conscientious objectors by bringing in the United Nations High Commissioner for Refugees, notwithstanding the fact that these people are not de jure refugees?
Lord HARRIS of GREENWICH: My Lords, as I have indicated, until May of this year we had received no applications of this kind. I will look at the two cases that the noble Lord has raised and will study the suggestion that he has made or will ensure that my honourable friend the Joint Minister of State will do so. What I have said indicates that we are prepared to look at every case on its merits. We consider that that is the appropriate way of dealing with these matters.
Lord BEAUMONT of WHITLEY: My Lords, is it the policy of Her Majesty's Government not to discourage recruitment to the Forces of a régime in rebellion against the Crown of this country?
Lord HARRIS of GREENWICH: My Lords, what I have indicated is that we are not prepared to indicate that we will admit anyone who wants to come here simply because they do not wish to serve in the Rhodesian Armed Forces. Such a commitment would be a very substantial one and I do not think we could lightly enter into it at the present time.
Lord BROCKWAY: My Lords, appreciating what the Minister has said, that the immigration officers at Heathrow are given rules to act by and that their task is very difficult, may I ask whether it is not clear in cases of this kind—and I have knowledge of the two cases raised by the noble Lord, Lord Avebury—that the immigration officers should consult with the Home Office before they decide to send a person back rather than wait for a Member of Parliament or a Member of your Lordships' House to raise the matter with the Home Office?
Lord HARRIS of GREENWICH: My Lords, I think it would be going too far to say that no immigration officer should take a decision on his own account, for this would slow down the administrative processes by which it is decided whether or not to admit a person. I hope that I have indicated that the Government are prepared to look at cases on their merits and that we will do so in the future as we have done in the past.

SUMMER TIME: EEC SYNCHRONISATION
2.40 p.m.
Lord BEAUMONT of WHITLEY: 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 propose to take steps to synchronise the dates of changes into and out of Summer Time with those proposed for France and the Benelux countries.
Lord HARRIS of GREENWICH: My Lords, proposals for the harmonisation of Summer Time dates within the European Economic Community in 1978 and 1979 are under consideration. In the meantime, France and the Benelux countries are understood to be making their own arrangements for a period of Summer Time next year which will be substantially shorter than the period of British Summer Time. We have made it clear to our partners in Europe that any change in our arrangements would have to be acceptable to Parliament.
Lord BEAUMONT of WHITLEY: My Lords, while thanking the noble Lord for that encouraging Answer, may I ask that the Government should take into consideration when negotiating that this is a matter which is of considerable importance within the travel industry and other areas where the present difference of dates causes extreme confusion, and that to concede to our partners would be a concession to European opinion which would be as rare as it would be welcome?
Lord HARRIS of GREENWICH: My Lords, we will take that into account.

LIGHT BULB SAFETY STANDARDS
2.46 p.m.
Lord AIREDALE: 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 it is true, as stated in recent Press Reports, that the Department of Prices and Consumer Protection has more than once had to warn the public to examine new light bulbs for dangerous protruding wires; and if so, whether they do not consider that the safety standards being applied by the light bulb industry require investigation.
Lord ORAM: My Lords, public warnings about potentially dangerous light bulbs with protruding wires were issued by the Deparment of Prices and Consumer Protection on 1st and 11th October. The British lamp industry has informed the Government that stringent testing and
6
inspection procedures are already used but that further measures are now being taken to ensure that only safe bulbs are released for sale. It is already a contravention of the Electrical Equipment (Safety) Regulations 1975 to sell or possess for sale any light bulbs in this dangerous condition, whether British-made or imported.
Lord AIREDALE: My Lords, I am very much obliged. Are the Government satisfied that the sanctions are sufficient to prevent manufacturers and importers from releasing these dangerous bulbs on to the market? Is it not the case that you cannot expect busy wholesalers mid retailers to inspect every single item, nor can the Department be expected to get the message through to every member of the public that they must inspect every single light bulb that they buy?
Lord ORAM: My Lords, I would not claim that we are satisfied with the situation. We have asked the British Standards Institution to call their committee together to reconsider the matter of standards. Such a meeting is due to take place on 19th November. I can assure the noble Lord that the Department's views about the inadequacy of the present standards will be conveyed to that meeting.
The Earl of KIMBERLEY: My Lords, is the noble Lord in a position to say how many thousands—if it amounts to that figure—of these light bulbs have been imported from Europe, and whether they are still in this country? Are they going to be sent back, and is the money we spent on them going to be repaid?
Lord ORAM: My Lords, it is not possible to say how many defective bulbs have been imported. I believe eight million bulbs altogether are imported. This should be seen against the 240 million British made bulbs.
Lord WYNNE-JONES: My Lords, is there no general testing of e electrical equipment that comes into this country? Is my noble friend aware that the magazine Which? constantly calls attention to the failure of imported electrical equipment to satisfy regulations? Is it not proper that all imported electrical equipment should be subjected to at least spot testing, even if every single item cannot be tested?
Lord ORAM: My Lords, since my noble friend refers to imported electrical equipment, perhaps I should make it clear in relation to electric light bulbs that the second release from my Department made it clear that both British and imported bulbs are subject to the defect that has recently been revealed. As to the question of testing, I think some system of spot testing is desirable. I am not fully acquainted with the present position, but I will write to my noble friend.
Lord AUCKLAND: My Lords, regarding the last part of the noble Lord's answer, is he aware (as I am sure he is) that Czechoslovakia and the COMECON countries are large exporters of these bulbs? Will the noble Lord say what consultations have taken place with the Governments of those countries to encourage them to test the articles at source?
Lord ORAM: My Lords, the attention of manufacturers in the Eastern European countries concerned has been drawn to the defects found in their bulbs, and they have assured us that the procedures for testing are being reviewed in their countries.
Lord SLATER: My Lords, regarding checking procedures of imported bulbs, my noble friend may be surprised when I tell him that just last week my good lady purchased a light bulb of English manufacture, and as she put it in the light bracket the bulb came to pieces. I looked at it but I could not give you the name of the bulb manufacturer. Therefore, if there are to be spot checks I hope they will be carried out on British manufactured bulbs as well as imported ones.
Lord ORAM: My Lords, the hazard to which my noble friend refers is a different one: the exploding bulb. We do not want to get into an argument as between imported or home produced light bulbs; our anxiety is to see that all are subject to safety tests.
Lord CLITHEROE: My Lords, could the noble Lord tell us how we can tell when a light bulb is "dud"?
Lord ORAM: My Lords, it is not a case of a light bulb being a "dud"; these bulbs will light but they are dangerous. The question was about the hazard of protruding wires. They can be readily
8
recognised because the wire is easily seen. The wire is in danger of being bent over to touch the cap of the bulb, and that would electrify the whole system. That is the danger. I have an example of such a bulb in my room and I shall be glad to show it to the noble Lord.

BAHAMAS: WORK PERMITS
2.50 p.m.
Lord TREFGARNE: 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 reciprocal arrangements exist between the United Kingdom and the Bahamas in respect of the issue of work permits to our respective citizens and, in particular, what fees are payable in each case.
Lord JACQUES: My Lords, there are no reciprocal arrangements between the United Kingdom and the Bahamas for the issue of work permits. No fee is charged for a work permit by the United Kingdom. Fees charged by the Bahamas vary according to the category of job and range from 25 to 5,000 Bahamian dollars per annum.
Lord TREFGARNE: My Lords, I am grateful to the noble Lord for that reply. Would he not agree that, despite the absence of any formal reciprocal arrangements, there really ought to be some form of equality? If he is unwilling to introduce fees for Bahamian citizens applying for work permits in this country, will he use his influence with the Bahamian Government to see that the fees charged there are more equitable?
Lord JACQUES: My Lords, the fees charged by the Bahamian Government are a matter for the Bahamian Government. As regards the question of our charging fees, I would say, first, that very few countries charge fees for work permits; so far as we know, there are only three in the world. Secondly, there were only 11 permits issued in the United Kingdom to Bahamian citizens last year, so that very little would be raised. Thirdly, if we are to have fees for this, I should hope that they would be on a better basis than tit-for-tat.
Lord TREFGARNE: My Lords, I thank the noble Lord for that further answer. Could he then revert to the second suggestion that I made; namely, the possibility of making representations to the Bahamian Government to reduce the fees there or make them more in line with the benefits granted?
Lord JACQUES: My Lords, we have no evidence that the fees charged by the Bahamian Government cause hardship to any resident of the United Kingdom.
Lord HAILSHAM of SAINT MARYLEBONE: But surely, my Lords, if this were done by us it would be denounced universally as blatantly racist.

THE POUND STERLING
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m. my noble friend the Leader of the House will repeat a Statement on Sterling.

ROYAL COUNTY OF BERKSHIRE (PUBLIC ENTERTAINMENT) PROVISIONAL ORDER CONFIRMATION BILL
Lord HARRIS of GREENWICH: My Lords, I understand that no Amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript Amendment or to speak in Committee on Recommitment. Therefore, unless any noble Lord objects, I beg to move that the Order of Recommitment be discharged.
Moved, That the Order of Recommitment be discharged.—(Lord Harris of Greenwich.)
On Question, Motion agreed to.

EDUCATION BILL
2.53 p.m.
Report received.
Clause 1 [The comprehensive principle]:
Lord ELTON Lord ELTON moved Amendment No. 1:
Page 1, line 19, after ("pupils") insert ("of compulsory school age").
The noble Lord said: My Lords, there is one procedural matter to which your Lordships may like me first to draw your attention, though I believe it is not my proper place so to do. But I understand that the order of the Amendments on the Marshalled List is different from the order in which it is proposed to lake them. The noble Lord, Lord Donaldson, will correct me if I am wrong, but I understand that we are first to have an Amendment No. 1, then Amendment No. 4, then Amendment No. 3 and then Amendment No. 2, because that is the order in which they strike in the Bill. But as your Lordships may have differing interests in different parts of the Bill, I wonder whether the noble Lord would care to confirm or otherwise what I believe to be the case.
The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Lord Donaldson of Kingsbridge): My Lords, this has not been suggested to me. It sounds to me in no way objectionable, and if the noble Lord wants to do it in this order I will be very happy to do so. But the order in the Marshalled List is the order which I was proposing to take, unless otherwise asked.
Lord ELTON: My Lords, plainly I have been misinformed. I understood that this was the order in which it had been intended to take them. I have no wishes in the matter at all. I shall now proceed as though nothing had happened.
We return, therefore, at the outset of our debate on this Bill to an Amendment which we tabled and discussed in Committee. The original intention of the Amendment was to secure that sixth form colleges could be run as academic institutions suitable for pupils of comprehensive schools who had academic gifts. It is in no way aimed at destroying or curtailing the operation of the comprehensive principle at any point in the career of schoolchildren of compulsory school age. It was framed, in fact, as a means of making it easier to overcome what, to all of us, is seen as being one of the undesirable side effects of the introduction of the comprehensive principle in one of its forms, and I refer to the generation of schools of very considerable size.
I submitted at Committee stare that one widely accepted way of reducing the

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size of such units was to set up sixth form colleges and the Minister pronounced himself in favour of them. I suggested that they would operate far more effectively if they were permitted to select their entry on grounds that were academic—that is, grounds that were based on ability and aptitude—and I tried to make it clear that the pursuit by school pupils of academic excellence, upon which the whole future of excellence of the administration and industrial performance of this country depend, is made very much easier and more profitable in an atmosphere where that pursuit is recognised as the dominant aim of all those participating. Whatever the social advantages of non-selective education up to the age of 16, the educational advantages of selective education from that time onwards are considerable and have a close bearing upon the future prosperity and cohesion of this country.
However, in his reply, the noble Lord, Lord Donaldson, said at col. 1331:
"The Government are perfectly clear that they want to eliminate selection at all stages of secondary education, and the Government … see no reason to make an exception for sixth form education."
A little further on he went on to say:
"It has always been the Government's view that the sole criterion for admission to a sixth form course should be the pupil's ability to profit from that course."—[Official Report, 6/10/76.]
In accepting that the ability of a pupil was a criterion for admission to a course, he emphasised that it could not, under the Bill, he a criterion for admission to the school in which the course was held.
While I did not in any way accept the wisdom of the noble Lord and his Party in making this decision—and that is a matter of political choice on which we on this side disagree, differ from them fundamentally—it became clear almost immediately afterwards from an intervention by the noble Lord, Lord Alexander of Potterhill, that there were other reasons of an entirely pragmatic and non-political nature that must be taken into account before such a choice can be endorsed by this House, whatever its political complexion may be. If I may summarise, they are briefly as follows. First, there already exist a number of routes by which pupils over compulsory school age can pursue their education beyond the fifth form,
12
and they can do so without remaining at school. Some of these routes are part-time and provide an area for the development of exactly that interrelation between employment and learning that the Prime Minister, in a speech to which I shall have occasion to refer again later, warmly encouraged. Others are full-time and involve institutions of education other than schools.
The second consideration is that the traditional and essential function of the sixth form has hitherto been to provide an extension of education beyond compulsory school age for the specifically academically able up to university entrance level. They are the proper institutions to provide this service and, if they do not provide it, it will not be adequately provided at all in the foreseeable future. If noble Lords opposite want to widen this function and take in an extension of non-academic schools careers, that is an addition to that vital function and not something to replace it. There is scope for such an extension and it will be for them to see that it is not done at the cost of the prime function. Whether or not they can do so is a question that may be open to doubt, but it is not the question to which I am now asking noble Lords to address their attention.
The third consideration is that in present economic circumstances, to quote the Prime Minister again,
"There can be little expectation of further increased resources being made available, at any rate for the time being."
This, I take it, was a euphemistic way of saying that the resources that we are sampling at present already taste very strongly of the bottom of the barrel. If that is so, the 15 sixth form colleges, which the Minister has already told us operate selectively, and any new colleges which may be subsequently opened under the auspices, or perhaps I should say the blight, of this Bill, cannot be expected in any realistic way to deploy any resources beyond the performance of their essential functions; and that is especially the case where such a deployment would merely be in duplication of some of the other resources in other institutions of further education and polytechnics to which I have already referred.
The fourth consideration brings me back to the very valuable intervention of

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the noble Lord, Lord Alexander of Potterhill, at an earlier stage. It is this: as the noble Lord, Lord Donaldson, said, it has always been the Government's view that the sole criterion for admission to a sixth form course should be the pupil's ability to profit from that course. But the criterion for admission to the college is no more than the sum of the criteria for admission to the courses it offers; and as the noble Lord, Lord Alexander of Potterhill, said, obviously if a child is going to take A-level he must have O-levels in order to pursue the course satisfactorily. That is one measure of ability to which the Minister referred. The Minister was quite clear, and rightly so, that there should be no question of pupils entering upon courses from which, by reason of lack of ability, they could not profit. But if the sixth form college offers only academic courses, it will be forced to admit selectively on academic grounds: that is, on grounds of ability or aptitude.
However, the Bill expressly makes clear in Clause 1, on page 1, lines 17 to 20, that this will disbar the local education authority from placing students in that college. Existing selective colleges will then be faced with the alternatives of closure or of a considerable deployment of scarce resources in needlessly duplicating facilities already available to their potential pupils elsewhere. That is an anomaly in this Bill and it is one quite clearly which, from the tone of the remarks made by the noble Lord at Committee stage, was not foreseen when the Bill was drawn up. In his concluding intervention at Committee stage, in col.1336 of the Official Report, on 6th October 1976, he said:
"Though I do not want to look at the principle involved"—
and he meant the comprehensive principle as applied to post-O-level education—
"I am quite prepared to look at the point the noble Lord—"
and he was referring to the noble Lord, Lord Alexander of Potterhill, to whom I should perhaps apologise for having followed him so closely in this argument—
"has raised, which we can deal with, or otherwise, at a later stage."
That later stage has arrived and as it was our Amendment originally we have tabled it again to provide an opportunity for an explanation of the point; and upon what that explanation is and what
14
evolves from it will rest our decision on what to do at the conclusion of the debate. I beg to move.
Lord ALEXANDER of POTTER HILL: My Lords, since I have been referred to so frequently perhaps I should make my position quite clear. When this point was raised in Committee the Minister was kind enough to say that he would look at the point, and he has been kind enough subsequently to write to me, which I very much appreciate. In his letter he gives an assurance that there is no intention of interfering with the operation of sixth form colleges. I hope I have not misinterpreted the letter. Naturally I accept the sincerity of that assurance without any reservation of any kind, but I have to tell the noble Lord the Minister that that assurance can be fulfilled only if this Amendment is accepted by the Government.
The position is as follows. There are three types of operation at sixth form level emerging increasingly. There are tertiary colleges which, as your Lordships know, I personally favour very much, which protect the comprehensive principle and offer the full range of courses. There is no problem there because they operate under further education regulations and are therefore excluded from the provisions of this clause. There are sixth form colleges which have a policy of open admission: that is to say any child of appropriate age can come, and they seek to provide a course which is appropriate to the ability of the child. They do not affect Clause 1. But there are a. number of colleges to which the noble Lord, Lord Elton, has referred which are deliberately designed to provide sixth form courses essentially for A-levels and which therefore necessarily require as a condition of admission appropriate evidence that the course can be pursued satisfactorily.
It is true, of course, that normally young people who do not want to pursue these courses can go to an institution of further education in the area and pursue other courses, so that the full educational opportunity is not barred. These colleges are run under schools regulations. As such, such a college is a school. If therefore any parent, teacher or body of teachers makes a complaint, say, under Section 68, to the Secretary of State against such a

15
college the Secretary of State, in my judgment, would necessarily rule against the authority and the college under this clause. If in his endeavours to fulfil the undertakings the Minister has given he did not so rule, then any parent taking the Secretary of State to court must win because the words of the clause are perfectly clear. This is a school. Its admission policy is on the evidence of academic aptitude, as evidenced by passing certain examinations at the necessary level. I would appeal to the Government, in order to secure that these undertakings are fulfilled, to accept this Amendment. That would resolve the problem and I do not believe it would in any way harm the impact of the Bill.
Lord DONALDSON of KINGS-BRIDGE: My Lords, when we discussed this Amendment on the first day of the Committee stage I made the Government's position quite clear. We wish to eliminate selection at all stages of secondary education, and see no reason to make an exception to those aged 16. But both the noble Lord, Lord Belstead, and the noble Lord, Lord Alexander of Potterhill, raised one particular point. In essence they wished to know whether a sixth form college would be in breach of the comprehensive principle if it were not able to provide for pupils of lower ability who wished to pursue certain practical and technical courses normally found within a further education college. On that occasion I said that although I did not want to look again at the principle involved I was quite prepared to look at this specific point. I did in fact correspond with the noble Lord on that point, as he has been kind enough to say. He pointed out on that occasion that where an authority's provision for the 16 to 19 age group is in tertiary colleges students of all abilities and aptitudes would be catered for within one institution.
It has never been envisaged that sixth form colleges should provide the same breadth of courses. To duplicate un-necessarily the courses provided in the local further education college would be a waste of time and money. The Government wish to encourage close co-operation between the schools and colleges providing for 16 to 19 year olds in
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any area; and for two main reasons. The first is that they want to see the most efficient use of teachers and equipment. Secondly, they want to ensure that between the school and further education sectors a full range of courses is offered for students of all abilities. I can assure noble Lords that there is no question of a sixth form college contravening the comprehensive principle because it could not cater for a pupil wishing to follow a course which it did not provide and which in any case was either already being offered or could be provided more satisfactorily at the local further education college. I hope this will go some way towards satisfying the noble Lord, Lord Alexander, but he shakes his head and so it seems I am unlucky.
I have looked at our latest information. Of the 72 sixth form colleges and two sixth form centres in operation in September 1976, only three still operated selective admission procedures; and of these, two are moving towards becoming open access colleges. By "open access" we do not mean that any student can control for any course. Clearly anyone wishing to study for A-level in a particular subject will need the entrance requirement set by the tutors for those who wish to follow that course. What it does mean is that no general entrance requirement—for example, passes in five O-levels—will be required before a young person can enter the college. Thus there is no entrance requirement to the college but only entrance requirements that are relevant to the course or courses the pupil wishes to take.
Nor does open access mean that a sixth form college must provide every conceivable course which, if I understood the noble Lord aright, is what the noble Lord, Lord Alexander of Potterhill, appeared to be saying. A sixth form college will provide only those courses for which there is a demand, for which it has resources and which are not readily available elsewhere. This clause will bite only on those colleges with a general academic standard for admission, such as five O-levels. It will be perfectly permissible for open access colleges to set standards for admission to particular courses. That is the Government's position and I am afraid I cannot accept the Amendment.
Lord BEAUMONT of WHITLEY: My Lords, I am afraid that this is a very difficult situation. One sees the virtues of the arguments on both sides, but my judgment must come down on the side of the Government. More young people are staying on at school after the compulsory school leaving age and we wish to encourage this trend. I should have thought that taking into account the present very large unemployment problem everybody would wish to encourage this trend as much as possible. It is far better to be learning than to be idle.
When it comes to a choice of what kind of education they are after, there may be very good reasons why young people will want to stay in the school atmosphere rather than move to tertiary colleges, even if academically they are not of a very high standard. Although I say this, I am very much in favour of tertiary colleges; they encourage these young people who feel that they wish to move out of the school atmosphere and go on to tertiary education. Nevertheless, we must take account of the fact that there are young people who wish to stay in the school atmosphere, and parents also who wish them to stay in that atmosphere. I understand that parental choice is still an important feature of Conservative Party policy. Therefore, where there are sixth form colleges I think it is important that young people should be allowed to go to them.
Nor do I see that there is a very great academic difficulty about this unless young people wish to pursue a course which is not offered at a sixth form college. If they do, we have the assurance of the noble Lord, Lord Donaldson of Kingsbridge, that these young people do not in any way lay themselves open to the law. Where, however, they can be accepted, surely this is a situation where, almost more than anywhere else, the comprehensive system and the mixed ability teaching system work. We tend to think of mixed ability teaching, if we approve of it at all, as working only at a fairly low age level, but of course that is absolute nonsense. The older one is, the better the system can work.
One of the great vices of the present debate is that we tend to think of the selective system and the comprehensive system as entirely opposed to each other.
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They are not. The ideal of the best educationalists in both system is that every child shall be taught individually according to his or her abilities. When you get to sixth form level and to the academic children, plus the children who have voluntarily chosen to stay on, and when you get to the usually higher ratio between staff and pupils, you are most able to take the individual pup I, whether he be very bright or not so bright, and teach him individually: set him or her to do his own job in the school library, with film strips, or what have you. The sixth form colleges and the sixth forms are much more able to take care of mixed ability groups than are certain classes in middle schools, particularly these which are situated in difficult and crowded social situations. Therefore I see no difficulty and I think, on balance, that although there are difficulties the Government are right to resist the Amendment.
Baroness MACLEOD of BO RVE: My Lords, the noble Lord, Lord Alexander of Potterhill, said that a college is a school. May I ask the noble Lot d whether a sixth form college is to be treated as a school? So many of the following clauses hang on this question that I should be grateful if the noble Lord could clarify the point.
Lord DONALDSON of KINGS-BRIDGE: My Lords, I understand that the answer is, Yes.
3.15 p.m.
Viscount ECCLES: My Lords, I cannot feel satisfied with the answer of the Minister and I support the arguments of the noble Lord, Lord Alexander of Potterhill. If we had infinite resources, then I suppose one could build as many non-selective sixth form colleges as there might be children who wanted to stay on until they were 18, but we have not. We are in for quite a long period wren it will be necessary to make the very best use of the courses which can be provided, using the highly qualified teachers that we have in a restricted number of colleges, which number none of us sees much chance of increasing in the near future. Therefore we ought to look at the sixth form college problem more from a practical point of view, given the organisation of secondary education as envisaged in the Bill.

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The fact is that secondary education cannot be organised on the principles of Clauses 1 to 3 without doing educational damage. That is mainly because a limit will have to be put upon the size of all but a very few exceptional comprehensives, not for educational reasons but for reasons of administration and in order to create that sense of community without which a school is not a school and is sometimes a bear-garden.
Public opinion will not for much longer accept the chaos which now characterises some of our large comprehensives. The Soviet Union found that out years ago and limited by decree the general run of schools to a maximum of 800 pupils. Whether or not the limit has been observed I do not know, but at the time Mr. Khrushchev told me that this limitation was necessary because many teachers had no liking or gift for administration. Is the same true here? That is a question which requires very careful investigation and we have put down an Amendment asking for such an investigation to be made. However, we do know now that a great many local education authorities have come round to the view that most comprehensives must be limited to five-or six-form entry if they are to reach the best standards (I think particularly the best standards of discipline) of which their staff is capable.
A price has to he paid for this limitation on size because in four cases out of five the comprehensives will be too small to develop a strong sixth form. That will happen only in some very favourable neighbourhoods. Then what happens? Limitation of size forces selection, either between a group of comprehensives, or from comprehensives to a sixth form college or to some other such institution. The local education authorities will have to decide which is the less unsatisfactory course: either children dawdling, running or being transported from one comprehensive to another in search of the courses that they want to take and therefore wasting time and probably getting up to mischief, or selecting children at 16 to go on to a sixth form college where the courses that they want are taught by qualified teachers. Noble Lords will notice that either method requires selection.
My noble friend's Amendment is necessary to give the sixth-form colleges as they
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are now a chance to do the best they can for able children. If they do not select they are not going to attract highly qualified teachers to teach the less well-known subjects, or, indeed, some well-known subjects, like mathematics and the more difficult languages. Therefore, I support this Amendment but with a heavy heart, because sixth-form colleges will decapitate so many comprehensives. The highly qualified teachers will not like teaching in the small comprehensives and many bright children will never arrive at the point where A-levels are within their grasp. Their talents will either be underdeveloped or undiscovered, and the loss of the A-stream all the way from 11 to 17 will deprive the country of leaders in a great many walks of life.
I should like to make two further points. As I have said, in most comprehensives linked to a sixth-form college a strong sixth form can never be developed in the school. At 16, or even before, the bright children will have moved on. This will be a great loss. A sixth form gives a sense of responsibility to the whole school. It is a status to aim at and to work hard for; it encourages staff and pupils to do their best all the way up the school. It helps the head teacher to organise discipline inside the school. Take all that away and substitute a sixth-form college in a different, building with a different staff who will not know any of these young adolescents until they arrive at the age of 16—and then they will be pretty difficult to know—and you have lost something very valuable indeed.
I am astonished that the universities have not seen what is happening and have not demanded changes in this Bill long before it came to your Lordships' House. The consequences of going comprehensive in the manner proposed in the first three clauses of the Bill will damage education for the able children, will be had for industry and will be extremely bad for the universities. If my noble friend presses his Amendment to a Division, I shall be with him.
Baroness BACON: My Lords, I think some noble Lords are making a mountain out of a molehill over this Amendment, because from what I can see there would be very few pupils affected by this. As we have heard from my noble friend Lord Donaldson of Kingsbridge, most of the

21
sixth-form colleges are what he calls "open colleges", and it seems to me that few pupils would opt to go into a sixth-form college where most of the children had O-levels and were going to take A-levels; but if they do want to do that, then I think they should be encouraged to do so and not prohibited. While this Amendment looks as though it is doing something positive, in fact it is doing something negative, because it is giving the local authorities the power to exclude such pupils from the sixth-form colleges. I agree with the noble Lord, Lord Beaumont of Whitley, when he says that surely they could be catered for.
I agree with the legal interpretation put on this matter by my noble friend Lord Alexander of Potterhill, when he says that if a child were excluded, then the parent would probably (though we never know in view of recent rulings) be able to pray in aid Section 68 of the 1944 Education Act—but we all know where that has led some people lately. That aside, it seems to me that so few pupils will be affected by this provision that those who are affected should be welcomed into the sixth-form colleges and we should not seek to exclude them.
Lord ALEXANDER of POTTERHILL: My Lords, by leave of the House, may I say that there are 85 sixth-form colleges, of which 17 would be in breach of this clause. If those 17 have to satisfy the clause they will have to extend the range of their courses and their staff. In fact, they would become virtually tertiary colleges to meet the needs of the whole range of ability, which is a major problem and therefore would necessarily call for considerable resources. As to how they would operate, I may say that I was recently in Solihull, and it is perfectly true, as the noble Lord the Minister said, that they operate very closely indeed with the further education college which is nearby, so that those who do not go to the sixth-form college go to the further education college. It is a fact that last year they won 20 scholarships, so I think it would be a pity if they had to depart from their present purpose.
Lord DONALDSON OF KINGS-BRIDGE: My Lords, it is important that we should not turn a Report stage into a Committee stage argument but I should
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just like to say to the noble Lord, by leave of the House, that I do not agree with his figures.
Lord ROBBINS: My Lords, may I say that when I heard my noble friend—if I may so call him—Lord Eccles, say that he confronted this question with a heavy heart, I completely agreed with him. I am personally out of sympathy with the intention of the Government to do everything at once and to enforce on the educational system changes which will involve years of reorganisation when a slightly slower pace might have enabled us to reach the wished for goal with much less dislocation. I imagine that I shall be almost alone in this House when I express my deep conviction that the true target in this connection is not the existing organisation but the influences which have paused the existing organisation to come into being.
I am totally out of sympathy with the general policy of the universities South of the Border to inflict upon school education before the age of 18 a sort of imitation of university education as it used to be in my young days. think the Scottish system, which provides for greater versatility and for more superficiality, perhaps, up to the age of 18, is a much superior system, and it is no accident at all that where in the rest of the world the education in this island has been imitated, it is the Scottish system and not the system South of the Border—with one or two notable exceptions—which has been imitated. I have no sympathy at all with the pride in the specialisation w rich is en-enforced in the sixth form colleges, whatever designation they may enjoy. I have no sympathy at all with the system which enforces on my grandchildren at the tender age of 14 or 15 the choice whether they should be scientists or humanists. I think in this Amendment we are completely on the wrong track and, therefore, whatever Division takes place, I personally shall remain glued to my seat.
Baroness BROOKE of YSTRAD-FELLTE: My Lords, I wish to make only a brief intervention at this point. We have heard about the administration, we have heard about the different types of sixth-form college, we have heard about the large comprehensive schools and the small comprehensive schools: what we have not heard about are the children

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themselves. Never have children wanted more to have the confidence of those people who are teaching them and have been looking after them from the age of, possibly, eleven onwards, than they do now. With broken homes, with increasing crime figures, the one place where there is a possibility of stability is in the schools where members of the staff have been teaching children—and I am particularly thinking of girls—from an early age. I would beg noble Lords to consider the child through its school years when they are considering the way in which they are going to vote on this Amendment, with which I have very great sympathy.
3.31 p.m.
Lord BELSTEAD: My Lords, this first Amendment of the Report stage of this Bill demonstrates a problem which, it has struck me throughout the Committee stage, plagues the Bill despite the excellent and thorough arguments and replies which the noble Baroness, Lady Stedman, and the noble Lord, Lord Donaldson of Kingsbridge, have given us in answer to our Amendments. As I see it, the problem is the inflexibility of the provisions of the Bill.
I would assure the Government that this Amendment was not originally put down again on Report with any intention on the part of my noble friend, Lord Elton, or myself that we should press it to a Division as a matter of principle, but because the needs of children differ, as the noble Baroness, Lady Brooke of Ystradfellte, has said so pertinently. We now find, having listened to the debate, that there are very deep considerations to be taken into account as to what should be done with this Amendment, and not least the technical imperfections of the drafting of the Bill which have been shown up by the speech made earlier in this discussion by the noble Lord, Lord Alexander of Potterhill.
The simple effect of this Amendment, if it were to be pressed, would be to allow local authorities to have regard to ability and aptitude in providing sixth-form education. Even the Minister in charge of the Bill could not believe that the choosing of pupils for the sixth form should not pay some regard to their ability to profit from the courses offered;
24
yet that is the really incredible effect of this Bill. Because he was a reasonable man the noble Lord, Lord Donaldson of Kingsbridge, took that view before he read the Bill in any detail. Because he is, as we all know, an honest man, he stood up and said, "To me, 'sixth form' has an academic meaning, whereas it has not in secondary education now, nor should it have".
Let us just look for a moment at his opinion and the really extraordinary reason which he gave in Committee for its correction. I would guess that the noble Lord, Lord Donaldson, being a totally reasonable man, before he read the provisions of this extraordinary Bill took the view that sixth forms should, as far as possible, open their entry to any pupils who had any chance at all of tackling the courses offered. I have no doubt that the noble Lord, Lord Donaldson, would have taken into account that the raising of the school-leaving age was designed to encourage more pupils to to stay on longer at school. I am sure also that the noble Lord was armed with the knowledge that many people want to see a broader sixth-form curriculum—only this afternoon we heard the noble Lord, Lord Robbins, speak again on this particular point on which he has expressed his views trenchantly and forcibly on previous occasions in this House. But to move from all that to the assumption that it should therefore become the law of the land that every single sixth form must admit every single pupil to every single course without any regard at all to either aptitude or ability is really a very large assumption indeed. It will lead to problems of the type which my noble friend Lord Eccles has outlined.
This coercion in the Bill leads the Government into a second problem which plagues the Bill, namely, obscure drafting, a fault which in no way should be laid at the door of the Parliamentary draftsman but which is evidence of the impossibility of translating the intentions of Ministers with regard to this subject into a draft which can take account of the practicalities of life. In the real world, where young people reach the stage when they want to choose courses suitable to their abilities and aptitudes, what are they going to do? They will look around to find where those courses are offered.

25
The noble Lord, Lord Alexander of Potterhill, has reminded us of the problem as he sees it with regard to the drafting of the Bill on this point. Having listened to the noble Lord speaking, I think it is clear that if a sixth-form college can exclude some pupils because it does not offer certain courses, this is bound to be selection by ability and aptitude. I have listened to what the noble Lord, Lord Donaldson of Kingsbridge, had to say and I would ask the Government this question, and perhaps, as this is Report stage the noble Baroness, Lady Stedman, will be able to reply. If the Government are saying that the noble Lord, Lord Alexander of Potterhill, is wrong, then I hope they will explain the distinction between a college which refuses admission on the grounds that it does not offer the necessary courses and an institution which includes courses of such a standard that some pupils might then be refused admission?
I know perfectly well that the Government will tell me that the second option is completely prohibited by the terms of the Bill. Why is it that the first option cannot be prohibited too? I am driven to the conclusion that the noble Lord, Lord Alexander, is right; that the drafting of Clause 1(1) will lay a duty on authorities to see that their sixth-form colleges can admit any pupil for any course. May I offer the Government a word of warning on this, of an entirely practical kind? I do not know whether the noble Lord has seen the report of the Head-masters' Conference some three weeks or so ago, in which Mr. Dance, Head-master of St. Dunstan's College, Cat ford, and formerly the head of the Luton Sixth-Form College, said that he was concerned whether sixth-form colleges were desirable at all, because at Luton he found that too much—and I quote his words—"remedial work was needed when pupils arrived". He added that it had been a relief to him to return to a school where there was a sense of continuity. That was a very significant statement, because the Luton Sixth-Form College is one of the seventeen selective sixth-form colleges in the country. Presumably the state of affairs on which Mr. Dance was expressing an opinion would have been less marked at the college of which he was then the head than it would have been at colleges which were totally open.
26
My Lords, I am bound to put it to the Government that they are laying a very formidable burden on local education authorities. Even if the legal advice given to the Government on this Amendment is that this is not so, undoubtedly the Bill is going to continue the practice of spreading sixth-form teaching resources ever more widely, rather than concentrating them, a point on which my noble friend Lord Eccles spoke.
A week ago the right honourable gentleman the Prime Minister made his speech at Oxford, expressing his concern about the results of our education system. He expressed his view in terms of the skills which should be acquired by school-leavers and he was specific. The right honourable gentleman said:
"Is there not a case for a professional review of the mathematics needed by industry at different levels?".
The Government will remember that the right honourable gentleman went on to ask why there were 30,000 vacancies for science and engineering students last year while the humanities courses in higher education were full. These are wholly reasonable words. But what is the Bill doing? It is busy ensuring that the answers to questions which the Prime Minister put are never going to be provided. By removing the discretion of local authorities to provide education as they think best you arc going to be hard put to it to provide, for instance, the sort of maths teaching we want. We shall be discussing this point in more detail when we come to the Amendment of my noble friend Lord Eccles.
My Lords, at col.1342, of Hansard for 6th October last, during the Committee stage of this Bill, the noble Lord, Lord James of Rusholme, put the matter more clearly than I could when he said that if the rare resources for teaching maths up to Advanced level are going to be deployed properly, selection is inescapable. This is precisely what this Bill is aiming to prevent, and that is the point to which this Amendment is directed. The Bill will also work against the expressed desire of the right honourable gentleman the Prime Minister for a swing towards science and engineering, because the total imposition of comprehensive education is absolutely bound to destroy schools which have a science and engineering staff, facilities and traditions.

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I remember well the Birmingham proposals in 1973 for reorganisation. There were schools which bear the name of the noble Lord, Lord Kings Norton, and because they do, they have a very strong engineering side to them. I remember how anxious and concerned the noble Lord on the Cross Benches was that those schools were to be turned into mini-comprehensives within a consortium of schools. I remember well the reorganisation proposals for Harrow Secondary School. By common consent, including views given in letters written to the Department at the time by Members of Parliament on the Labour Benches, that school had almost the finest science department of all the maintained schools in the country. It was literally going to be destroyed and dismantled in order to turn the school into an 11 to 16 comprehensive. I am not arguing for a return to the technical schools of the tripartite system, but having listened to my noble friend Lord Eccles I am driven to the conclusion—and I would hope the Government are, too—that if you pull up good sixth form teaching by the roots in this way you cannot hope to achieve the declared objectives of the Prime Minister, when he said that what was needed was a more technological bias in science teaching that would lead towards practical application in industry.
Whether in the light of the Prime Minister's Oxford speech the Government are prepared to write some flexibility into the Bill I suppose we are now going to discover, for a new Secretary of State is saddled with a Bill on which the Government have so far refused to make one concession. Surely this could be an opportunity to recognise that a degree of flexibility for local education authorities is necessary. In addition, I hope the Government will take on board the fact that authorities are genuinely worried that the wording of Clause 1(1) as it appears will lay a duty on them to provide courses at any standard for any pupil who may be admitted. It will be for my noble friend Lord Elton to decide what we ought to do about this Amendment. There is no wish on this side of the House to breach the general principle of the Bill in this respect. As I said when I started, we put down this Amendment for a second time purely to find out what the effect of the wording of
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the Bill will be in regard to sixth form teaching.
I am bound to say that, in a clash of opinion between the Government and the noble Lord, Lord Alexander, I believe that the noble Lord, with all his experience, is right. The effect of the wording of Clause 1(1) will be to make every sixth form open. There are questions to be answered when the noble Baroness, Lady Stedman, comes to speak. Is the noble Lord, Lord Donaldson, right in saying that you may not refuse admission to an institution because it is an institution but you may refuse admission to an institution because a pupil has not got the correct qualifications for a particular course? Why is it that the wording of this Bill, in distinction to the wording of the 1970 Bill when it was introduced by the last Labour Government, outlaws selection in sixth form colleges but will allow sixth forms in schools to be as highly selective as they wish. We shall hear the answers to these interesting questions in a few moments; then it might be right to have some discussion between the Government, the Opposition and the noble Lord, Lord Alexander, and other noble Lords, and maybe we can return to this matter again on Third Reading.

THE POUND STERLING
3.44 p.m.
The LORD PRIVY SEAL (Lord Peart): My Lords, with the leave of the House, I shall repeat a Statement which has just been made in another place by my right honourable friend the Chancellor of the Exchequer. His words were as follows:
"The sterling dollar rate declined sharply when business began this morning. At one point, it was more than 7 cents down on its closing rate in London at the end of last week, a week in which sterling held up well in active trading conditions.
"I understand that the whole of today's pressure has stemmed from the story in yesterday's Sunday Times which suggested that the IMF and the United States Treasury have agreed on a set of conditions, including a lower exchange rate, for the projected United Kingdom drawing from the Fund.
"This story has been denied in the most unequivocal terms both by the International Monetary Fund and by the United States Treasury. The House will have seen that Mr. William Simon, the United States Secretary of the Treasury, has described the story as—I quote his words,
'irresponsible and patently untrue'.
"Mr. William Dale, the Acting Managing Director of the IMF, said that the reports—I quote again,
'have absolutely no basis in fact as to either the Fund's method of procedure or the particular nature and size of the terms. The Fund does not, and cannot, determine its views on detailed measures until after a careful examination of the economic indicators on the spot'.
"These are Mr. Dale's words. In fact, the mission from the IMF staff will not be arriving in London for discussions with Her Majesty's Government until next month.
"It will not form a view on what terms are appropriate until it has been able to assess the prospects for the British economy in the light of Treasury forecasts which will then be available".
My Lords, that concludes the Statement.
Lord CARRINGTON: My Lords, the House will be grateful to the noble Lord the Leader of the House for having repeated that Statement. I think on this sort of subject we must be very careful what we say. Certainly it is not the wish of anybody in your Lordships' House to say anything which would make a difficult situation more difficult. I would only say—and I think the noble Lord the Leader of the House would agree—that above all what is needed now is confidence here and abroad. If that confidence existed I think we need not fear what other people think. I hope the Government will address themselves to that aspect, and quickly.
Lord BYERS: My Lords, I should like to endorse what the noble Lord, Lord Carrington, has said. This ought to be a lesson to all of us. If a massive wave of selling of sterling can be sparked off by one newspaper article it shows how fragile our credibility overseas has become, and sterling will presumably be at risk until negotiations have been completed
30
with the IMF. Therefore, I would ask the Government whether it would not be wise to try to hasten these discussions so that the period of risk is shortened.
Lord PEART: My Lords, I would say how grateful I am to the noble Lords, Lord Carrington and Lord Byers, for their responsible attitude. I expected that. I remember that my first baptism here on a similar matter led to a debate, but today I believe it is right to exercise a measure of restraint although it is right for noble Lords to ask certain questions. I agree so much with the question of confidence and how important it is. On the question of talks with the International Monetary Fund, they will begin in November but there have already been soundings between officials.
Lord ROBBINS: My Lords, speaking from the Cross-Benches, may I say how much I personally agree with the attitude which has been adopted by the Leader of the Opposition and the Leader of the Liberal Party. Speaking as one who in the past has had something to do with the national Press, I was a little shocked at the cocksureness and irresponsibility of the article referred to. On the other hand, may I say to the noble Lord that I hope the reputation which he has been able to convey to the House of the alleged information conveyed in that article will not lead to any complacency on the part of the Government with regard to the measures which need to be taken if we are to be saved from the fate which was perhaps foreshadowed in that article. One has only to travel abroad as I have been doing in the last few weeks to realise with a sense of humiliation the compassion with which our ability to manage our affairs hitherto is commonly regarded by people of good will and of all political persuasions.
Lord PEART: My Lords, I naturally thank the noble Lord. May I say that Mr. Simon, the United States Treasury Secretary, said that we have taken some rather courageous measures and I believe that we have to.

EDUCATION BILL
3.49 p.m.
Report stage resumed.
Lord DONALDSON of KINGSBRIDGE: My Lords, by leave of the House I should like to make two comments, both factual, on what has been said. The first is that the noble Lord, Lord Belstead, referred to Luton in a sense which suggested that it was selective. It is not selective at the moment. Secondly, the difference between the figures quoted by the noble Lord, Lord Alexander, and mine were so wide that I must repeat my figures, which come from the Department. Of the 72 sixth form colleges and two sixth form centres in operation in September 1976, only three still operated selective admission procedures and, of those, two are moving towards becoming open access colleges. This being a Report stage discussion, I shall not resume the argument.
Lord SLATER: My Lords, I rose to my feet prior to the Statement of the noble Lord the Leader of the House in regard to the serious situation in which we find ourselves, in order to follow Lord Belstead. I listened to his opening speech and also to the speech he made later on the Amendment. What was noticeable was that he quoted from an ex-Minister of Education, in the person of Lord Eccles, and he also praised Lord Robbins on the Cross-Benches. He played with the noble Lord, Lord Alexander, because of his knowledge of the educational position in this country prior to his coming to this House. But he had not a word to say in reply to the questions that were posed to him by the noble Lord, Lord Beaumont, or my noble friend Lady Bacon. Nor had he anything to say to the noble Baroness, Lady Brooke, in regard to the very important question which she put.
There is another aspect which has never been brought within the ambit of consideration regarding the 17s to 19s, quoted in the course of the debate—these young people who are not prepared to go in for their A-levels after being successful in their O-levels. There is one thing being overlooked, in my submission, and it is this. A lot of these young people who have left the sixth form have left the schools, and have not made application to go into these colleges but have gone into industry, have what is known as day release. They go to technical colleges; this is where you are going to get your technologists from and not so much from
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the universities. It is to the technical colleges that we look these days to produce those young men and women for the future of this country. I do not know whether Lord Belstead will make any reference at all to what was said by Lord Beaumont and my noble friend Lady Bacon, seeing that both of them are educationists in their own right. I was a member of a county council before I became a Member of Parliament, and I say this in all sincerity and without any sense of arrogance. Lord Alexander did not always receive the praise of local educational authorities up and down this country before coming here. I would say to Lord Belstead that he has played his tactics very well on this occasion, but the time will come when he will try such tactics once too often and he will find that he will be brought down. He will find that what he has to say on important issues like this will not come off in the way it has today.
3.55 p.m.
Lord ELTON: My Lords, I trust that the House will indulge me in exercising my normal prerogative. It is a difficult task to reply to this debate. It has in part turned out to be a debate about the merits and demerits of the sixth-form colleges as a means of education. To start at the point of greatest difficulty, I must refer to the third intervention of the noble Lord, Lord Donaldson, which was by leave of the House. We are in some difficulty about the figures, because although there is a difference between the figures presented by the noble Lord, Lord Donaldson, this week and those presented by the noble Lord, Lord Alexander of Potterhill, this week, there is also a difference between the figures presented by the noble Lord, Lord Donaldson, this week and the figures presented by him last week. To get a reduction from 14 to three in a matter of seven days is progress of a very high order.
The noble Lord, Lord Belstead, has already advised us to look at this carefully because the question is not as simple as it seems to be thought to be in some parts of this House. First of all, I must emphasise to noble Lords who dislike the idea of an increase in the number of sixth-form colleges that, deplorable as their effects may be in some directions, there are those who feel that they are less

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deplorable than the effects of gargantuan size which in many cases are the alternative in a straight-through comprehensive school covering the whole of the ability range. This, I think, is a point that should be brought home to the noble Baroness, Lady Bacon. And I am sure that my noble friend Lord Belstead had no intention of being discourteous either to her or to the noble Lord, Lord Beaumont, as the noble Lord, Lord Slater, seemed to think he might have, in not referring to what they had said. He referred in substance to what they had said even if he did not refer to them by name, and perhaps it is the courteous thing to refer to by name only those who have uttered sentiments with which one agrees.
The fact is that come the passage of this Bill, in whatever form, there is going to be an increase of demand for places in sixth form colleges and there is going to be in some cases an excess of demand over availability. We have heard nothing from the Government so far to say on what basis they would allocate the insufficiency of places to the over-sufficiency of pupils applying for them. Is it not going to be on the grounds of aptitude or ability? I shall be very surprised if it is not.
We are in a much more difficult position when we come to examine the noble Lord's reply to the substantive point that I sought to make in my speech in introducing this Amendment. He has said in effect that the admissions criteria for an institution are not the sum of the admissions criteria for the courses which that institution offers. Even if we look at it only in those simple terms, I feel that this is a matter of such importance that it must be decided on an irrefutable authority and one which we have had time to examine. I would have thought that this was something in which the noble and learned Lord on the Woolsack might well interest himself between now and Third Reading, because if we do not have an assurance of the rectitude of Lord Donaldson's interpretation of this Bill, then, like Lord Alexander, we simply cannot accept the assurance of an intention as being superior to the clear duty of the court to rule in a contrary sense if a case is brought. It does seem to me difficult, and indeed odd, to suggest that if a pupil should arrive at a sixth form college and say, "I want to study history. I have got
34
an O-level in history", he can be brought in; but if he arrives and says, "I want to study history but I have no O-level in history", he can be told that he cannot come in to that college.
What happens if he addresses himself to the head of the college and merely says, "I wish to come to your college. I have no O-levels"? He is then not going to be qualified to enter any course, or indeed the college. On a layman's view, it seems to me prima facie to suggest that a sixth form college is selective if it says that. Indeed, my doubts as to what the noble Lord means by an open college and a non-selective college are deepened by the figures he gave in his last intervention just before my reply. He said that the college at Luton was non-selective. I just wonder what non-selective is in that case, and I shall want to study that against the undertakings that the noble Lord has given as to the intentions of the Government.
What has been said by the noble Lord is so set about with uncertainty that it would be irresponsible to move this Amendment at this stage, since we shall be moving on uncertain ground. As I' said at the last stage, it is the duty of the Government to make clear what is the law and it is for the Government to draft their legislation in such a way that it can be understood outside the courts as well as inside the courts. Therefore, if the noble Lord cannot do better than he has now done, I hope your Lordship, will bear with me if I reserve the right to come back with this Amendment at Third Reading. Frankly, we are not satisfied. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.2 p.m.
Lord BEAUMONT of WHITLEY Lord BEAUMONT of WHITLEY moved Amendment No. 2:
Page 2, line 11, at end insert—
("( ) Subject to subsection (1) a Jove, local education authorities shall have. I duty to arrange for the admission of pupils with particular needs to the schools most suitable for them.").
The noble Lord said: My Lords, if it is indeed right that I should be sparking to this Amendment at this time—because I too was advised that it would be taken in a different order—I should like to move the Amendment standing in my name. This arises from an argument which we

35
had on Committee stage, I think very largely on a Conservative Amendment. The trouble with that Amendment as the Government saw it, and indeed as I saw it, was that it could have been used to wreck the Bill and to destroy subsection (1). I hope that this Amendment does not have that disadvantage, because it makes subject to subsection (1) what we are trying to put forward. That means that it cannot be used in any way to subvert the comprehensive principle, but it makes a positive virtue of the fact that local education authorities must do their best to arrange the admission of pupils with particular needs to the schools most suitable for them.
We shall be told that education authorities do this already, and I am quite prepared to believe that that is so in the great majority of cases—in fact I am sure that they do. But without joining in the competition as to whether we can be most paranoic about odd Secretaries of State, or rebel authorities, I think we are safe in trying to work on a basis that not every local education authority will be entirely faultless, and that there is always a like-lihood, in the bureaucracies of overworked and undersupplied authorities, that these matters are not always looked at with individual pupils quite as carefully as they might. By imposing this duty, I think that we can give a ground for parents and children to stand on when trying to get admission to a particular school for a particularly good reason.
It is not my intention to weary the House with a number of instances. I shall merely take one. In the library at Swiss Cottage of Camden Borough there was over the last month—and may be still for all I know—a remarkable exhibition of photographs by two girls aged 8 and 13, the daughters of a professional photographer, who were obviously guided, but not overtly helped, by their parents. The photographs of both of them were extremely good; in fact the photographs of the younger one were perhaps the more outstanding.
When it comes to choosing a school for a child like that, obviously it would be right that, if there was a school with good darkrooms and with an art teacher who specialised in photography, the child should go to that school. Although we
36
on the Front Benches here are agreed on the comprehensive principle, I hope that we are also agreed upon the principle of excellence, and that where we find excellence we ought to cultivate it. Here is a situation where a sensible education authority, when appealed to to make this choice in this particular allocation, would do so.
But not all education authorities are perfect, although most of them are very good for most of the time. I am sure that noble Lords can think of many other cases, it merely happens that the one I mentioned has come into my experience in the course of the last few months. When we come across a case like that it is right that we should lay an especial duty on the local education authority to make that kind of choice. I cannot see that this Amendment can do any harm to the general principle of the Bill at all. It seems to me that it strikes one of the very small blows which are available for the freedom of choice of parents and children that we should all like to see increased. Therefore, I beg to move.
4.7 p.m.
Baroness STEDMAN: My Lords, we discussed a rather similar Amendment at Committee stage, which was moved by the noble Lord, Lord Belstead, but warmly welcomed by the noble Lord, Lord Beaumont. On that occasion I explained that the Conservative Amendment would enable local authorities legally to retain their selective systems, and it was then withdrawn. This Amendment, although, similar, has one important difference. Local authorities would have a duty to arrange suitable education for pupils with particular needs, but subject to the comprehensive principle. This Amendment does not share the defects of the former one; in principle it is reasonable but, as I hope to convince the noble Lord, totally unnecessary.
In earlier debates we established the fact that, whether or not the first fourteen lines had been added to Clause 1, local authorities are to have regard to the comprehensive principle,
"in the exercise and performance of their powers and duties relating to secondary education …"
In other words, the duty to have regard to the comprehensive principle in no way absolves authorities from their duties

37
under Section 8 of the 1944 Act to offer such variety of instruction and training as is necessary in view of pupils' different ages, abilities and aptitudes. Authorities are already under a duty to provide children with a suitable education, and when the Bill is enacted, they will still be under a duty to continue to do this while having regard to the comprehensive principle—that is, within a school that admits children without reference to ability or aptitude.
As I said during the debate on the previous similar Amendment, the principle in Clause 1 is really quite narrowly drawn: all that it does not allow is the making of special arrangements for the admission of pupils on the basis of their academic ability. It would be permissible for a pupil to be admitted to a school in order to benefit from special facilities if his admission was not governed by his general academic ability and it would remain a duty of the local authority to ensure that each child was provided with an education suitable to his or her needs. It is because this ideal is more readily attainable within a comprehensive system that we support comprehensive rather than selective schools. I hope that in the light of what I have said the noble Lord will feel able to withdraw the Amendment; if not, I must ask the House to reject it as being unnecessary.
Lord BELSTEAD: My Lords, the noble Baroness, Lady Stedman, has assured us that the Amendment is unnecessary because Section 8 of the Education Act 1944 remains in force and that that lays a duty on authorities to provide schools which are suitable to the age, ability and aptitude of pupils. I accept from the noble Baroness that she means exactly what she says, but I confess that she could have fooled me, considering the reception which our first Amendment had in Committee when we tried to write in Sections 8 and 76 of the 1944 Act and for which it seemed the Government were not particularly enthusiastic. That aside, I have a more positive concern about this issue and it lies within the new draft Manual of Guidance which the Department of Education and Science issued in the summer and to which I referred in Committee.
The reply which the noble Baroness just gave does not seem to be quite in tune
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with new draft Manual of Guidance, a document which has raised considerable anxieties. As I pointed out in Committee, there is no mention in the new draft of the part which would b played by religion in deciding admissions to voluntary schools. In addition, there is no mention in it of many of the other reasons why parents want their children to go to a particular school; because it is large or small, because it uses new or traditional methods, because it is mixed or single sex or—and this is, I think particularly worrying the noble Lord, Lord Beaumont of Whitley—because it has especially good teaching in a particular subject. The noble Baroness kindly wrote to me on 20th October on this general point and in her letter she said:
"You also referred to the draft circular about the admission of children to schools of their parents' choice. Reference to religious factors was omitted quite deliberately, together with reference to other factors of a general kind (e. g. preference for single sex education) because such factors are mainly relevant to the general arrangements made by authorities for allocating places, whereas the draft circular was intended, unlike the old Manual of Guidance, to be concerned with particular cases which might be referred to the Secretary of State."
I am grateful to the noble Baroness for writing to me, but I find that passage worrying. Surely it is precisely on the grounds referred to in her letter that particular cases of parental choice get referred to the Secretary of State. It is because parents want a single-sex or denominational school or a small or traditional school that they sometimes come in conflict with their local education authority and eventually the case goes to the Secretary of State under Section 68 of the 1944 Act.
Am I to assume that because there are legitimate reasons for parents wanting choice of school and because they are accepted as being legitimate reasons by the Department of Education and Science, they do not need to be referred to in the new draft Manual of Guidance? I should like to think that I have t tat right, but my hopes were dashed when I read on in the draft manual and, on coming to paragraph 8—which I have quoted before but will repeat—I read:
"Questions of a school's suitability to the ability and aptitude of a child are not expected to remain of practical significance for much longer as they should not normally arise in the case of admission to a comprehensive school."

39
With their obsession for academic selection, I could have understood it if the Government were saying in their draft circular that questions of the ability of a child should not be allowed to arise in the case of admission to a comprehensive school. I would not applaud it, but I could understand it.
As noble Lords have pointed out incessantly in these debates, the aptitude of a pupil may require choice of one school and not of another. I am therefore particularly glad that the Amendment refers to the needs of children. In Committee I gave an example of a dyslexic child I knew who was not making any progress at school and was moved to another school where his need for specialised teaching would be met. Could anybody doubt that that boy had been admitted to his second school on grounds of need, the need in that case of his particular disability? My noble friend Lady Faithfull spoke in previous debates on this subject of children who were not categorised as handicapped but who were in need of special care and education, often in boarding schools, because they had symptoms of maladjustment and were probably backward. Those pupils are placed on grounds of their needs, the needs of their aptitudes and sometimes of their abilities, also.
The point to which I did not receive a reply in Committee was the question of what one does if one has a very gifted child who will obviously make progress in one school rather than in another. Presumably the Bill will prohibit admission to one school rather than the other because the admission of that pupil would be decided on the grounds of his or her need, in this case the need of ability, which can strike at the very root of the life of a very gifted child.
I was particularly glad that Lord Beaumont pointed out that this is not a wrecking Amendment but is subject to subsection (1). It says that there should be the discretion of local authorities to be allowed to take those pupils of whom I have tried to give illustrations into one comprehensive school, if the Government like, and not into another. The Bill, so far as can be seen, will prohibit the placing of a child in one school rather than in another, even if they are comprehensive
40
schools. If I am right on that, then that is the reverse to progress in education and the Amendment would help to rectify the damage which I still believe Clause 1 will do in this respect.
4.17 p.m.
Lord ALEXANDER of POTTERHILL: My Lords, I am sorry that, because of its drafting, I cannot support the Amendment. To place a duty on local education authorities to arrange for pupils to go to particular schools because of their particular needs is not in my opinion a practical proposition; that is, unless one accepts the entire principle of selection over all schools in the area. I should have no objection whatever if it was so drafted that it was not a breach of Clause 1 for a local authority to arrange for the admission of pupils with particular needs to schools most suitable for them. Then one would rest on parental choice.
This is a very real problem. The banding system will not work in practice, in my view, because of the difficulties of transport and the complaints of parents. It would be a very difficult operation. Inevitably, therefore, comprehensive schools will vary a great deal in their nature; they will vary in the range of ability in the schools according to the districts or areas in which they are. I am thinking of the last city in which I administered; the comprehensive school in Fulwood would be very nearly a grammar school while the comprehensive school in the Attercliffe Valley would be a very different comprehensive school indeed.
Obviously if one accepts what is now the amended Clause 1, the provision of Section 76 applies and parents would have the right to say to an authority, "I would prefer my child to go to this rather than that comprehensive school because he has particular needs, "whatever these might he, "and I should be happy if the authority will say we accept that and we agree." He is not required to go to the neighbourhood school, so to speak, if a case can be made. Obviously it would depend on the availability of places in the particular schools. However, to place a duty on the authority to arrange to do that is very different. I do not think it is a practical proposition in terms of administration.
Baroness STEDMAN: My Lords, by leave of the House I accept what the noble Lord, Lord Belstead, has said that this is not a wrecking Amendment. On the other hand, we think it is quite unnecessary and, perhaps I may refresh the memory of the House as to what Section 8(1) of the 1944 Act states. It is that:
It shall be the duty of every local education authority to secure that there shall be available for their area sufficient schools—(a) for providing primary education … and (b) for providing secondary education … and the schools available for an area shall not be deemed to be sufficient unless they are sufficient in number, character, and equipment to afford for all pupils opportunities for education offering such variety of instruction and training as may be desirable in view of their different ages, abilities, and aptitudes, and of the different periods for which they may be expected to remain at school, including practical instruction and training appropriate to their respective needs."
That part of the 1944 Act still goes side by side with this Bill when it is enacted and we are still subject to it.
So far as the comments which I made in my letter to the noble Lord are concerned, if he had read on it would have said:
"There is no intention of implying that denominational preferences should no longer play a part in school allocations but as explained in the debate at column 1624 we are going to have another look at the arrangement for allocations for school places and the Secretary of State will, among other things, be reviewing the draft circular to which he referred."
I am quite sure that this Amendment is unnecessary. I agree with the noble Lord, Lord Alexander of Potterhill, that it would be unwise to place a duty on authorities, and I hope the noble Lord might withdraw it.
Lord ELTON: If I might intervene briefly, my Lords, to take up a point which the noble Baroness made. She quoted to us in extenso the part of Section 8(1) of the 1944 Act which sets out the duty of a local authority to provide places,
"… sufficient in number, character, and equipment to afford for all pupils opportunities for education offering such variety of instruction and training as may be desirable …"
Of course, the whole Bill is concerned about whether children who have the needs meet up with the places that offer the resources they require. Therefore, I do not think that what the noble Lord, Lord Beaumont of Whitley, seeks to do is in
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any way superflous at all. That was the substance of our Second Reading and a good deal of our Committee stage debate, and I am surprised that it seems to be slipping away from us. The ethos of the comprehensive idea, the respectable content of the comprehensive idea, is that you remove from a child the agonising and odious choice between schools with different academic and, therefore, different social connotations and you present the same choice to the child within a school where the choice is no longer odious because it is not publicly discerned.
That is a condensed but recognisable description of the situation. That is what the noble Baroness and her friends seek to do. What we are saying is, "A 1 right"—and I specifically said this at the last stage on this Bill—"if that is what you are seeking to do and if you can do it, well and good." What we want is for children to be well-educated, educated as well as is possible with the resources at our command. But we said that we are not confident that it is physically possible to produce all these different choices in the one school. It becomes very big if you do and we have just had a debate about the sixth-form colleges which arose simply because of the need to make these schools less big.
Another solution is to split them up in some other way. But if you split them vertically instead of horizontally, and split them according to some criterion other than age, then some of the resources you want will be in one school and not in another; the choice will no longer be within the school, and thus the covert choice—to extend the paraphrase I have used—will be an open choice between two schools. Now, obviously, if the comprehensive principle is to survive, it must not be a choice resting upon academic aptitude and ability of the mass of the children, because that brings you back into the bipartite system.
What you have to do is to say that the schools are generally selected without reference to ability and aptitude, but in particular cases—and the noble Lord has wisely used the word "particular" as we did in our first draft—wherethere is a brilliant teacher of music in one school and you have a musically gifted child in another, regardless of any other considerations that particular nerd and

43
we have avoided the use of aptitude and ability) shall be taken into consideration and the child shall be transferred. You cannot say that is not a choice by reference to aptitude and ability and that destroys the principle of the Bill in reference to that school. Here is a child who is admitted to that school in regard to its particular ability for music. I am sorry I chose music, because there is an Amendment covering music already. Let us say it is sculpture or Greek—it does not matter what it is so long as it is a breach of the principle.
The noble Lord has a point and the noble Baroness has not answered it. I did not anticipate that she would because it will be very difficult to do. If the draft which the noble Lord is submitting to the House has the effect that I think it has, as the noble Lord, Lord Alexander of Potterhill—who is exercising a considerable effect on our debates this afternoon—thinks, then if he is right in this interpretation, and he would seem to be, you could say that every child is a particular child and every child has particular needs. Therefore, we are back to where we tried not to be before; though it might give a certain glow to our political hearts it would be in direct contradiction to the principle of the Bill. That, I know, is not what the noble Lord, Lord Beaumont of Whitley, wishes to do, and far be it from me to egg him on to do things which are contrary to his principles. But he has a point and I feel that the noble Baroness has not answered it. It must be answered if unfairness is not to result, and I hope that we resolve this question before the Bill leaves this House.
Lord BEAUMONT of WHITLEY: My Lords, one thing is quite clear, and that is that the noble Baroness, Lady Stedman, and the noble Lord, Lord Alexander of Potterhill, cannot both be right. It cannot be both unnecessary and impractical. So I should like to take the two arguments separately. I take very seriously the point which the noble Lord, Lord Alexander of Potterhill, has made, but I would say to him that if we cannot find a way in this Bill whereby we can make it more flexible for individual children without breaching the whole principle, we certainly will have failed in this House. I believe we can find such a way. I believe that my Amendment is
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two-thirds of the way there, if not further. It is my intention to ask the House to divide on this issue and I would say to the noble Lord, Lord Alexander of Potterhill, that perhaps he and I could get together in order to bring an Amendment to the Bill, as it will be amended, on Third Reading and to put in an extra qualification if one is needed. It seems to me that what is needed is a qualification about what is practicable for local education authorities. We can pass this Amendment now and then put in an extra qualification if necessary at Third Reading. I believe that would be a very straightforward way of dealing with the matter and would waste less time in your Lordships' House.
To the noble Baroness, Lady Stedman, I would merely emphasise what the noble Lord, Lord Elton, said. Section 8 of the 1944 Act does not lay a duty on local education authorities actually to help put children into the right schools. What it does is to say that they must provide the requisite number of places in order to deal with them, of particular types over a whole local education authority, which is a very different point altogether. The noble Baroness says that this Amendment is unnecessary, but I think that it ought to be put in because everyone knows—the Government Front Bench knows—that there is considerable worry in this country that what the Government are trying to do is to impose a rigid grey comprehensive system over the whole country. Whatever noises the Conservative Front Bench may be making at this particular moment, the Government Front Bench and myself know that this is untrue; but it is very important in my mind that we should make it quite clear to people that it is untrue and that we should make the system in such a way that it cannot be made true. It was for that reason, and with the assurance to the noble Lord, Lord Alexander of Potterhill, and anyone else who feels the same way he does, that we will examine the possibility and desirability of putting down a further qualifying Amendment at a later stage that I ask the House to divide.
4.30 p.m.
On Question, Whether the said Amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 102; Not-Contents, 53.

CONTENTS

Airedale, L.

Emmet of Amberley, B.

Nugent of Guildford, L.

Amory, V.

Erskine of Rerrick, L.

O'Hagan, L.

Ampthill, L.

Faithfull, B.

O'Neill of the Maine, L.

Amulree, L.

Ferrers, E.

Onslow, E.

Arran, E.

Fraser of Kilmorack, L.

Platt, L.

Ashbourne, L.

Glasgow, E.

Rankeillour, L.

Auckland, L.

Glenkinglas, L.

Redesdale, L.

Banks, L.

Gray, L.

Reigate, L.

Beaumont of Whitley, L.

Grey, E.

Rochdale, V.

Belstead, L.

Gridley, L.

Ruthven of Freeland, Ly.

Berkeley, B.

Grimston of Westbury, L.

Sackville, L.

Brooke of Cumnor, L.

Hailsham of Saint Marylebone, L.

St. Aldwyn, E.

Brooke of Ystradfellte, B.

St. Davids, V.

Byers, L.

Hampton, L. [Teller.]

Sandys, L.

Campbell of Croy, L.

Hanworlh, V.

Savile, L.

Carr of Hadley, L.

Harmar-Nicholls, L.

Sharples, B.

Carrington, L.

Harvey of Prestbury, L.

Simon, V. [Teller.]

Cathcart, E.

Hylton-Foster, B.

Spens, L.

Clancarty, E.

Inglewood, L.

Stamp, L.

Clifford of Chudleigh, L.

Kimberley, E.

Strathclyde, L.

Clitheroe, L.

Kinnaird, L.

Strathcona and Mount Royal, L.

Clwyd, L.

Lauderdale, E.

Sudeley, L.

Cullen of Ashbourne, L.

Long, V.

Tenby, V.

Darcy (de Knayth), B.

Lyell, L.

Teviot, L.

Daventry, V.

Macleod of Borve, B,

Thomas, L.

De Freyne, L.

Marley, L.

Trefgarne, L.

Denham, L.

Merrivale, L.

Vickers, B.

Derwent, L.

Mersey, V.

Vivian, L.

Devonshire, D.

Monck, V.

Wakefield of Kendal, L.

Drumalbyn, L.

Morris, L.

Ward of North Tyneside, B.

Ebbisham, L.

Mowbray and Stourton, L.

Ward of Witley, V.

Eccles, V.

Munster, E.

Wigoder, L.

Elles, B.

Newall, L.

Wolverton, L.

Elliot of Harwood, B.

Northchurch, B.

Young, B.

Elton, L.

NOT-CONTENTS

Aylestone, L.

Harris of Greenwich, L.

Phillips, B.

Bacon, B.

Henderson, L.

Popplewell, L.

Birk, B.

Houghton of Sowerby, L.

Sainsbury, L.

Blyton, L.

Jacques, L. [Teller.]

Shepherd, L.

Brimelow, L.

Janner, L.

Shinwell, L.

Brockway, L.

Kirkhill, L.

Slater, L.

Buckinghamshire, E.

Leatherland, L.

Stedman, B.

Burntwood, L.

Lee of Newton, L.

Stone, L.

Burton of Coventry, B.

Llewelyn-Davies of Hastoe, B.

Strabolgi, L. [Teller.]

Champion, L.

Lloyd of Hampstead, L.

Summerskill, B.

Collison, L.

Lovell-Davis, L.

Taylor of Mansfield, L.

Cooper of Stockton Heath, L.

Maelor, L.

Wallace of Coslany, L.

Crowther-Hunt, L.

Maybray-King, L.

Wells-Pestell, L.

Cudlipp, L.

Melchett, L.

Wigg, L.

Darling of Hillsborough, L.

Northfield, L.

Winterbottom, L.

Donaldson of Kingsbridge, L.

Oram, L.

Wise, L.

Gordon, Walker, L.

Pannell, L.

Wynne-Jones, L.

Hale, L.

Peart, L. (L. Privy Seal.)

Resolved in the affirmative, and Amendment agreed to accordingly.
4.38 p.m.
Viscount ECCLES Viscount ECCLES moved Amendment No. 3:
Page 2, line 11, at end insert ("or
(c) the provision of education in any school where the arrangements for the admission of pupils are based partly on selection to ensure the most effective use of qualified teachers of mathematics.").
The noble Viscount said: My Lords, this Amendment does not open the door to all kinds of exceptions to the general principle in Clause 1. I should not want it to do that. It creates one new exception—mathematics—to be added to music and dancing. When I put down the Amendment, I did not know that, in a matter of days, the Prime Minister would declare himself a strong supporter for the reasons which have prompted my new subsection. In his speech at Ruskin College, the right

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honourable gentleman made my case for me. The part of his speech which dealt with the decline of standards in mathematics received very wide and favourable publicity and so, with such backing from such an important quarter, it would be grotesque if the Government did not accept the Amendment. It replaces the one which I withdrew at the Committee stage; and, as your Lordships will remember, on that occasion all noble Lords who spoke recognised that the standards of teaching mathematics varied very much from school to school, and in many schools adequate teaching was almost non-existent. It was agreed by all of us that action was required. The Amendment which I then moved sought to divide that action into two parts. It called for the attainment of minimum skills in mathematics to become a statutory aim in all schools—something which the Prime Minister warmly endorsed in his speech—and it provided for the selection of pupils to attend schools where the subject was taught by highly qualified teachers.
The Amendment which I am now moving is reduced in scope. It proposes the first essential step towards making an all-round improvement in the teaching of mathematics, and that cannot be done unless the very best possible advantage is taken of all the qualified teachers in this subject that we have at the present time. It needs to be said again and again that the lowering of standards in mathematics has not occurred in the grammar schools but in the primary schools and the non-selective secondary schools. At the Committee stage, the noble Lord, Lord Davies of Leek, with his customary vigour, described the abandonment of elementary mathematics in many primary schools. It was there, he said, in the primary schools, that the rot had set in. That is indeed part of the story, but if the teaching it unsatisfactory in the primary schools that cannot be put right until more boys and girls secure reasonable passes in O-and A-level mathematics and until a fair proportion of them go on to become teachers. I wonder whether your Lord-ships realise that last year 38 per cent. of all students entering colleges of training as teachers did not have a pass at O-level in mathematics. That is the root of the trouble, and we must deal with it as best we can in this Bill.
What has been the result of this long neglect? Thousands of children are leaving primary schools hardly able to do the simplest sums. That was the point made by the noble Lord, Lord Davies of Leek, and no one can deny the truth of his statement. When these unfortunate children reach seconday schools, unless they receive remedial teaching in mathematics they abandon the subject as soon as they can. This is bound to happen on a considerable scale because, as your Lordships know, in many non-selective schools there are not enough qualified mathematics teachers to cope with the children who arrive having been well taught in primary schools, let alone the children who arrive knowing next to no mathematics, not even their tables. It would be very interesting to know how many are these deprived innumerate children; and we have to say that we do not know because the authorities do not tell us. If they did, they would have a prodigious row with the parents. But it would not be far out to suggest a figure between 30 and 40 per cent. of the total intake of the non-selective secondary schools.
I want to add one or two further points for your Lordships' consideration. The child who leaves school without having mastered the basic skills in mathematics is unlikely to acquire them later in life. Once out in the world, boys and girls may be inclined to educate themselves by reading, by watching TV, by taking up some hobby; but how often do they buckle to and learn elementary mathematics? This job has to be done in the schools if it is to be done anywhere. Yet—and this is my second point—if British industry is to keep up with the rest of the world, young entrants should have received a good grounding in mathematics. The Prime Minister made much of that in his speech last Monday, and, of course, he was right. Numbers are the language of technology. I could not, but industry, at a pinch, can do without music and dancing: industry cannot do without mathematics.
Therefore, my Amendment is designed to make it possible to maintain and enlarge the pool of potential mathematicians. I am not driving a coach and horses through the general principle of Clause 1, but in this House we ought to add to music

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and dancing any further specific exception if we are quite sure that such an exception is in the national interest and that the result could not be attained by any other methods. Of that, my Lords, I think there can be no doubt at all. Selection for mathematics is a very high national priority, at least as high, your Lordships may think, as music and dancing, and it ought to be written into the Bill. Whatever comes out of the Secretary of State's review of mathematics teaching—and we all hope that she will undertake that review with thoroughness and expedition—she will need to have this power in the Bill. Without it, she cannot get very far, and that is why we must put it in now.
It may be that the Government will object to my Amendment on two grounds. They may say that, where a comprehensive school does not have sufficient qualified teachers, the pupils wishing to take O-and A-level mathematics can at the age of, I suppose, 14 or 15 be selected and sent to another comprehensive where appropriate teachers are in post. My Lords, do not fall for that argument. The boy or girl with a bent for mathematics shows it early, as the noble Lords, Lord Snow and Lord James of Rusholme, told us on the Committee stage. They need good teaching long before they reach the sixth form. It is not only the children who will suffer from non-selection. Many good mathematicians—I know three or four—are attracted to teaching only when they can teach children all the way to A-level. They are unhappy teaching in the un-selected schools where classes of mixed ability can be the rule up to the age of 14. Noble Lords opposite may be inclined to say, "But how disgraceful! Every graduate teacher ought to be prepared to teach children of every level of ability and aptitude". Perhaps they ought, my Lords, but the facts of life are different.
At the Committee stage, the noble Lord, Lord Donaldson, dismayed some of us when he said that the Government intended all secondary schools to be neighbourhood comprehensive schools. He knows that this means that the good schools will get better and the poor schools will get worse. The reluctance to teach in the poor areas of the qualified mathematics teachers, who can pick and choose where they go because there are so few of them, will become more pronounced,
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and the result will be that thousands of children in the poor areas will never have a chance to discover their talent in mathematics. This Bill diminishes t le chances of the able children in the working-class areas, and the social consequences are bound to be deplorable. Professional people will not want to live in areas where the neighbourhood comprehensive school is unsatisfactory. Therefore this Amendment is a test case. Do the Government want to see teaching improved and more young people with the basic skill; in mathematics entering industry; or do they prefer to discourage the qualified teachers we have today from staying in the profession and, as a result, to diminish the output of mathematicians for the future? This is a test case by which we shall know whether the Prime Minister's encouraging speech last Monday means business. It is not possible to make any serious impression on the present unsatisfactory state of mathematics teaching unless we can select the able pupils to be taught by the totally insufficient number of qualified mathematicians. I beg to move.
Baroness ELLIOT of HARWOOD: My Lords, I should like to support the noble Viscount in the excellent case that he has put for this Amendment. Nobody knows more than he or has more experience and nobody could put the case better. I support it because I have had experience of mathematics in my own family. True, the boy in question did not go to a comprehensive school. If he had gone to a comprehensive school he would have had to fight very hard to get anywhere where he would have received the sort of teaching in mathematics that he obtained in the private sector. Nevertheless, once taught and once reaching a very high stage, he will then be in a position to help to train others if he so wishes. But some effort must be made to bring in this particular skill. My experience as chairman of an education committee for many years was that there were certain schools and certain teachers who were extremely good at mathematics and one was able to see that the children who wanted mathematics teaching got to those schools or to those classes in the schools. But one had to make a selection; there was no other way of doing it. And mathematics teachers wanted to get pupils who would benefit from the kind of skills that they were able to teach.

51
It seems to me that to be so hidebound about the way you deal with these special and important subjects means that you are shutting your eyes to what it is possible to do. I think it is necessary to have a clause of this kind in the Bill. After all, we have it for two other subjects, music and dancing. As my noble friend Lord Eccles has said, this is of vital importance in the development of our industrial life. Unless there is something of this kind in the Bill then, as my noble friend has said, the whole standard will continue to go down. It is going down now and we must stop it from going down. Unless this Amendment is accepted we shall be simply aiding what we are all desperately anxious to stop at the present time. I support the Amendment strongly.
Lord DONALDSON of KINGSBRIDGE: My Lords, the noble Viscount, in 75 per cent. of what he was saying, was talking about a serious reality which the Government would not for a moment wish to deny, which is the importance of putting right the present shortage of, particularly, graduate teachers of mathematics. Where we differ is in the view that this Bill is the place to do it. The Amendment would enable an authority virtually to retain its selection procedure on the grounds that it was an effective use of mathematics teachers. The word "partly" does little to mitigate this defect, and in a previous debate I pointed out that in a selective system pupils were only partly selected on academic ability—geographical area, age and sex all played a part in this selection. It is reasonable, however, to use this Amendment to discuss mathematics education in the light of the comprehensive principle, which is something of the greatest importance in our opinion; but if the Amendment is pressed to a vote it must be clearly seen as potentially wrecking. Hence, we shall have to ask the House to reject it.
My Lords, there can be no dispute that mathematics is a vital part of the school curriculum. My right honourable friend the Prime Minister, as the noble Viscount has said, in his speech at Ruskin College on 18th October voiced the concern of all of us that the standards of numeracy of school-leavers shall be such that they have the option to pursue careers in science and technology and to meet the
52
requirements of employers at different levels. But we need facts here. We need to know whether the achievements of the schools genuinely fail to match the needs of industry. There is a letter in The Times today, which most noble Lords will have seen, questioning this. We want to discover whether this is a serious failure to match or a matter of misunderstanding or of minor discontinuities which can be put right relatively easily.
At present there is no objective statistical evidence about national standards in numeracy. Such evidence as there is does not support the conclusion that there has been a substantial fall in standards. The Department of Education and Science has now given its Assessment of Performance Unit the task of developing methods of assessing and monitoring the achievements of children at school. The unit is treating mathematics as a priority area and is building on work already carried out for the Department by the National Foundation for Educational Research—and the noble Viscount will note that this is not a Departmental examination—in preparation for a monitoring system to cover mathematical skills. It is hoped that a start can be made on monitoring performance in mathematics in 1978. The National Survey of Secondary Schools by Her Majesty's Inspectorate is concerned among other things with the development of numeracy in the last two years at secondary schools, as I told your Lordships in Committee. This Survey, based on a 10 per cent. sample of all maintained secondary schools, will go on for 2½ years. These investigations together with information from national monitoring of performance of pupils in mathematics will give us much more evidence of the true situation in our schools.
To turn to the question of the numbers of teachers, the persistent shortage of teachers of mathematics is, of course, a serious problem. I recognise, as I think the noble Viscount does, that there is a vicious circle here. If the schools produce too few entrants to higher education in the shortage subjects, a consequence must be a shortage of teachers of quality in those subjects. This shortage itself is one of the factors which leads to too few pupils

53
studying them to a higher level. In these circumstances there can be no quick or easy remedy. But let me say again what I said in Committee. The number of A-level mathematic passes rose from 37,000 in 1964 to 47,000 in 1974. Over 25 per cent. in 10 years. This does not suggest that the rapid increase in the comprehensive education is having an adverse effect.
Let me explain the extent and nature of the shortage of mathematics teachers. The Department of Education and Science carries out an annual survey of teachers of shortage in secondary schools, based on an inquiry to heads of a 10 per cent. sample of secondary schools. On this basis, the net shortage of mathmeatics teachers was estimated to have declined from 1,140 in 1974 to 720 in 1975. This net improvement reflects the fact that heads report a net surplus of certificated teachers of mathematics. But the heads state their main need as being for graduate teachers of mathematics, and here the picture is more gloomy; the shortage of graduate mathematics teachers increased somewhat, from 1,450 in 1974 to 1,580 in 1975. This is clearly a situation which gives cause for concern.
For a number of years the Department has, on the basis of the results of its surveys, asked teacher training colleges to give priority to the admission of students who want to train to teach mathematics, or other subjects shown in the surveys to be difficult to staff in the secondary schools. The Department also keeps university departments of education in touch with its thinking on these matters. The available figures indicate that entrants to specialist courses in mathematics have not increased as a proportion of total entrants, although mathematics has on the whole been holding its own as a subject. The colleges have also been made aware of the importance of providing adequately for mathematics as part of the training offered to intending teachers of young children. The need to continue adequate provision for the subject has again been emphasised in guidance given to the colleges earlier this year for their forward plans for course provision over the next few years, as the total size of the teacher training system declines and with it the risk that those subjects to which recruitment is difficult will no longer he adequately provided for. These forward plans, co-ordinated on a
54
regional basis, are now being carefully examined by the Department so that further guidance can be given to the colleges if necessary.
One of the main results of the reorganisation of the teacher training system now in progress will be to strengthen the part played in teacher training of institutions with strong mathematics and science Departments. At the same time the establishment of the bachelor of education degree and the diploma of higher education in place of the old teacher's certificate should enable more students with scientific and mathematical backgrounds to opt for teacher training after a period in which they can carry forward these subjects beyond school level. These developments should help to strengthen the place of mathematics in the training system.
There is a further specific point to make on initial training. Noble Lords will know that, when compulsory professional training for graduates wishing to teach in secondary schools was introduced in 1973, it was agreed that new mathematics and science graduates should be exempted from the requirement because of the severe shortage of teachers of these subjects. The Advisory Committee on the Supply and Training of Teachers recommended at their meeting in June last that these exemptions from the training requirement should now be abolished. My right honourable friend the Secretary of State recognises the arguments in principle for professional training; but in the light of the continuing severe shortages in these subjects, and the contribution which untrained graduates are making to the schools, she has now decided or balance that the time is not yet ripe for removing the training exemption. We must encourage as many mathematics and science graduates as possible to teach in our schools.
In several of our previous debates I have been at pains to point out that we are legislating against selection for admission to secondary schools, not against selection for courses followed within those schools. A school whose admission arrangements are in accordance with the comprehensive principle may specialise in certain areas of the curriculum. We should consider this type of specialisation likely to be of overriding importance only at sixth form level; and, of course it may

55
apply to other subjects besides mathematics. One school may develop its mathematics provision; another its provision for languages, music or engineering. And where it is the most convenient way to arrange such matters children from other schools would attend courses at the school with the specialist teaching facilities. This kind of co-operation between schools—and indeed with the further education sector—is to be encouraged.
Authorities must consider carefully their 16–19 provision. We want to make the most effective use of all teachers, not only mathematics teachers. There are several subjects for which teachers are difficult to recruit: mathematics is not unique in this respect. It is clear that certain reorganisation structures lend themselves more readily to the efficient use of specialist teachers. Sixth form colleges and tertiary colleges, catering for 16 to 19-year-olds, and upper schools, catering for 13 to 18 and 14 to 18-year-olds, can bring together pupils and teachers in efficient working ratios for the more advanced levels of work. Nothing in this Bill will prevent reasonable arrangements from making the most effective use of all teachers.
I have spoken at considerable length, which indicates the importance that the Government give to the general point which the noble Viscount has raised. In relation to this Bill, this Amendment is unnecessary and, I fear, potentially wrecking. I hope that the noble Viscount will withdraw it; if not, I must advise the House to vote against it.
5.7 p.m.
Lord WOLVERTON: My Lords, I do not know what the noble Viscount, Lord Eccles, will feel regarding taking this Amendment to a Division. If he does so, I will certainly support him. We have been told in this debate and in previous debates that there is a great shortage of mathematics teachers. If there is such a shortage, this branch of the profession will have to be built up and that will take time. In the meantime, I see no other alternative but to have some form of selection. This deficiency must be put right, as the Prime Minister said at Ruskin College last Monday. I fully support the noble Viscount, Lord Eccles, in his admirable speech.
Lord ALEXANDER of POTTERHILL: My Lords, there is another problem which this Amendment would not solve—not that I am out of sympathy with its purposes. I believe the great problem in possible falling standards in mathematics is not in the secondary schools but in the primary schools. The reason for this, despite repeated attempts which some of us have made in the National Advisory Committee on the Training and Supply of Teachers, is that we have never faced the issue of making O-level mathematics a requirement for all those who wish to enter a college of education. We do so for English. It must be 15 years since I suggested we did so in mathematics but the representatives of the colleges would not accept it because the great majority of teachers going into primary schools are women and they argued that we would lose a great many good women teachers if they were required to take O-level mathematics. I reject that proposition. It is a fact that, whereas our ladies would be ashamed to suggest that they were illiterate, they can smile beautifully and say: "Figures? I haven't a clue". In other words, there is an acceptance among women that not to be numerate is in no way a disgrace—
Lord BOOTHBY: And they are right.
Lord ALEXANDER of POTTERHILL:—and it may apply to some men also. My Lords, I suggest that this is where the attack should be made. In general, graduate teachers of mathematics do not teach in primary schools—that would be quite exceptional. The need, therefore, is an attack in the primary schools which will not cause children at that stage to have an adverse reaction. A teacher who is not interested in mathematics, and not very skilled in the teaching of arithmetic, will transmit a dislike of the subject to the children. That, in turn, will cause them not to pursue the subject subsequently. I venture to suggest that the Department might look carefully at whether the stage has been reached where requirements in mathematics, as well as the requirements in English, for all students entering colleges of education should be imposed.
Lord THOMAS: My Lords, I should like to align myself firmly behind the noble Viscount, Lord Eccles, for his admirable

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proposal embodied in this Amendment. In this day and age mathematics is not merely a building block but a foundation stone for education of all kinds. It teaches honesty and produces a mental discipline which is good, and although it may not have the visual or oral glamour of music or dancing, it is essentially an emotional subject. Mathematics can be extremely attractive and sentimental, if properly taught and appreciated. As I say, I should like to align myself whole-heartedly behind the noble Viscount.
5.11 p.m.
Lord BEAUMONT of WHITLEY: My Lords, I must apologise to the noble Viscount, Lord Eccles, for having unfortunately missed a small part of his opening remarks. I agreed with 90 per cent. of what he said, and perhaps the 10 per cent. I did not agree with occurred because of my absence during those few minutes. I think the importance of this point has been underlined by every speaker, and not least by the noble Lord, Lord Donaldson, when he told us about the Government's decision not to remove training exemptions. That is an extremely important decision, which must have been taken under very considerable pressure from the trade unions the other way, and which shows the importance attached by the Government to this problem.
Nevertheless, I do not think this Amendment is in fact the right way to deal with the situation. I am against our putting specific exemptions like this into the Bill. It is very difficult to know when to stop and where to start. In spite of the fact that music and dancing add to the Bill, as a correspondent whom I quoted at an earlier stage said, an almost frivolous air, they have a defence in that there are already specialist schools dealing with those subjects. I think we are going quite a long way towards dealing with the problem in the progress we have already made in this Bill. At an earlier stage your Lordships were good enough to approve the last three lines of sub-section (2)(b) of Clause 1 which gave power to the Secretary of State to make categories of exemptions in the future. That is perhaps a better way of dealing with this problem, rather than taking what are rather technical decisions in this House. At the same time your Lordships have just been good enough to pass my
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Amendment No. 2, enabling local education authorities to match particular children with need for mathematical teaching with the best mathematical teachers in that area. If your Lordships should pass Amendment No. 13, concerning the Committee of Inquiry which would have the duty of looking into the facts of the situation, then with those three Amendments I have referred to—provided that your Lordships are firm in keeping them in the Bill, whatever happens—we shall have gone a long way towards meeting the point put by the noble Viscount, and we may be doing it in a rather better way.
5.14 p.m.
Lord ELTON: My Lords, I should like from these Benches to welcome with great enthusiasm the Amendment of my noble friend Lord Eccles. I think it is 'fortunate that the Amendment should have been moved by somebody with his distinguished experience, stature and eloquence. I must say that it was not matched in content by the reply gained, although there was a great deal of interest in that. It was noticeable that at Ruskin College last week the Prime Minister said in terms:
"I am concerned on my journeys to find complaints from industry that new recruits from the schools sometimes do not have the basic tools to do the job that is required."
He went on to say that there was concern about the standards of numeracy in school-leavers. It seems to me tint this is a matter of some urgency, when one looks at the economic and industrial scene around us. It also seems that this Bill is designed to accelerate the decline which we detect, and which the noble Lord does not detect, in the standard of mathematics in this country at the present time.
The argument is simple. I can do little more than recapitulate what the noble Viscount has said, but it may be that my approach will be somewhat different. Our resources for the teaching of mathematics are limited and inadequate. The need to make use of them is general and urgent. Surely, as a first step, regardless of any doctrinaire position adopted by any Party, we should at least ensure that wherever possible the children best able to make use of those resources are brought into contact with them. The device of the noble Lord, Lord Donaldson, for doing that was a sort of shuttlecock between

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schools with mathematically able children and schools with mathematically able teachers. The noble Lord said that they would be seconded to or could attend courses at other schools. There seems to be a certain absurdity about enrolling children in one school, with the deliberate intention of then ferrying them to another school for a great deal of their school career. Everybody in this Chamber must be aware, as I am, that at an early age one is aware of whether or not one is mathematically able. I was aware of the fact, to my great regret, at the age of 11 or 12. Computers did not exist then to make the analogy, but a lot of my friends had minds like silent and swift abacuses, whereas my own was like a rather jumbled cupboard. Whether it is a matter of heredity or the elective principle I do not know, but I think that among your Lordships the distribution is about the same as it is in constitutional terms. The fact is that by the age of 11 or 12 there are some of us on whom it is not worth wasting the highest mathematical teaching talents; and I am one of them.
The noble Lord, Lord Donaldson, and his Party are, it seems, completely "sold" on the comprehensive idea. When one used to ask them why that was, it used to be pretty clear that it was for the purposes of what one may loosely call "social engineering". They looked to it to produce homogeneity in our society. My own view has always been that in the long term it will produce a polarisation far less satisfactory, as a result of neighbourhood schools. But I do not want to tempt the noble Lord, Lord Donaldson, to charge me again with making a Second Reading point, so I shall move on. But I would say that in one of the more revelatory passages in our Committee stage the noble Lord disavowed the idea that the motives for comprehensive education were in any way social. Time did not allow for it to be made clear what other motives there could he for this extraordinarily expensive and disruptive reorganisation of our schools. I hope the omission may soon be made good, but even if such an explanation is not forth-coming, which it certainly ought to be, we have to look no further than our Prime Minister for an endorsement of what some of us have been proclaiming for a very long time. He said at Oxford last week:
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"There is no virtue in producing socially well-adjusted members of society who are unemployed because they do not have the skills."
It may be that this illumination has not yet spread beyond the Prime Minister and the more reasonable occupants of the Benches opposite. It may be that some of them still think that you have to mix pupils up in batches as if they were cement in order to produce a society that is either cohesive or just.
I would refer them first to the pronouncement of their Leader, which I have just quoted and, secondly, to my two certainties about the division between the mathematically gifted and the mathematical dunces. I think that even if they do hold these views it will be seen that they ought not to resist the Amendment of my noble friend. My certainty is that the division between the mathematically gifted and the mathematical dunces follows absolutely no discernible line of social demarcation. It is as clearly in evidence in the most patrician public schools as it is in the most disadvantaged and educationally deprived areas. Therefore selection on grounds of ability or aptitude in this subject will have no effect on the impact of the comprehensive system. The choice will be mathematically determinate but socially random, if T may so express it.
Therefore it is really necessary for the noble Lord to say what he expects of the comprehensive system, other than social advantage for our society, which causes him to reject this principle, which would not upset the social impact of comprehensive reorganisation in any way. If the motive is social egalitarianism that is a recognisable motive, although we do not welcome it. I can only say that to pursue it to the extent of rejecting the advantages which selection in this area would bring to the children on the one hand and to the nation on the other seems to me to be an example of exactly that which I said our Party were set against at the beginning of the debate on this Bill at Second Reading; and that was the universal, blind and undiscriminating application of the comprehensive principle. I believe that my noble friend Lord Eccles summed it up very nicely when he said that the Government's attitude to this Amendment was a test case of the good intentions of their Prime Minister, because he has said that he deplores what appears to be our

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shortcomings in the mathematical and industrial fields. My noble friend has gone further and said that here is one way in which we can help them.
The noble Lord, Lord Donaldson, has come forward with a number of interesting aspirations and intentions, but they will not mature until after the Bill has been effective for some time. I note, in passing, that it is not until 1978 that we are to have the statistics from the assessment of performance unit, which he said are the statistics that we lack before we can determine whether or not there is a decline. If he is to say that we should not take this step until we have these statistics, then he is in the position of the captain of a sinking ship with the water washing around our knees, saying: "Stand away from the pumps. You cannot use them, until I have sounded the water in the bilges", because subjectively it is clear, however objectively it may be obscure, that things are not as they should be.
There is also an absurdity in the position of a Government who reject an Amendment, which is as eminently constructive and sensible and as much in the public interest as this, and which is clearly not in breach of the general principles of the Bill, on the grounds that it is in breach of the principles, when they already have music and dancing. It seems to me that they are prepared to educate infant Neros to fiddle, while we destroy ourselves and leave the embryo Einsteins untaught in schools without adequate supervision. I think that their position is regrettable. I think it displays a far greater commitment to ideology than it does to political reality.
I would refer the noble Lord, Lord Donaldson, to the article by J. B. Priestley in the Sunday Telegraph only yesterday, which said that common sense dictated that when you found a good school you left it to get on with its job and ideology dictated that you removed it and replaced it with something else. I fear that that is the position that we are in—and he is a veteran Socialist. I think that the Government are here committing themselves far beyond the brief which they originally had. They are now legislating to satisfy their ideologues, who are pushing them on from behind, and they have got out of touch with reality. So I hope that my noble friend is successful in pressing this Amendment.
5.22 p.m.
Viscount ECCLES: My Lords, a really astonishing remark fell from the Minister's lips. I think I have got it right. He said, "Nothing in the Bill will make it impossible to make the best use of all our highly qualified teachers of mathematics". Let me give him just one example to show that that is not so. I know—and lie would know if I told him which I it was—an admirable grammar school in South London which had about 650 girls, a sixth form of 200 and far above the average number of scholarships to universities. Its arms have been twisted, because it has no money to go independent, and it has been compelled to come into the comprehensive system and the sixth form may be reduced to about 60. How does the noble Lord think that that kind of thing can take place, without a number of very highly qualified teachers saying: "I am sorry. I have spent more than half my life teaching sixth forms. I am not the kind of person who can teach children over the whole range of ability. I have had plenty of other offers from the computer industry, or wherever it is, for my mathematical ability, and I am off". That is happening. That is one reason why, at any rate, during the period when there are not the resources to make the new comprehensives really able to cope with the full range of ability, we shall have fewer qualified teachers than we have today.
The second reason—I am sorry, but I said it before and perhaps I did not make myself plain—is that for the production of mathematicians who will become graduates thereafter, and, we hope, return to teaching, it is no good selecting them at the age of 16 and sending them to a sixth form college, where there may be an admirable set of mathematics masters or m: stresses. Unless they learn their mathematics all the way up towards the A-level, they will not be fit and they will probably give up the struggle ever to take A-level at all. That is why selection is still needed now, because if you deny selection you will deny to a very large number of children the opportunity to be taught t y well-qualified teachers before they reach the age of 15 or 16, and in many cases that will be too late. I wish that the noble Lord, Lord James of Rusholme, was here. He understands that far better

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than I do, and he would put it to your Lordships most convincingly.
I now come to what the noble Lord, Lord Alexander of Potterhill, said. He made the case for this Amendment as no one has ever done. He said, like the noble Lord, Lord Davies of Leek, at the Committee stage, that the rot is in the primary schools. Very well then, he said, the remedy for that is to make O-level in mathematics a condition of a student going to a college of education to train to be a teacher. But how are all these girls to get O-level in mathematics, unless we make the very best use of the highly qualified teachers we have? Any teacher who is going to do any good taking a class for O-level in mathematics, must himself, or herself, have learned mathematics to A-level, or they will not teach O-level at all well. Where are they to come from?
We know that there is a tremendous gap. We could not have had the speech from the Prime Minister, which my noble friend Lord Elton quoted, unless that gap was very widely recognised, and recognised as very serious in the national interest at this time. To carry out the wish of the noble Lord, Lord Alexander, it would be admirable that every student presenting himself, or herself, at a college of education should have an O-level in mathematics. But there will have been
the greatest difficulty in bringing those students together, with the inadequate quantity of higher mathematics teachers which we have today. So that to say that this Bill does not damage the situation is something which I do not think anyone in the education world, who is not absolutely prejudiced beyond belief on the political principle, can possibly do.
It is equally sad that the need for a massive effort to teach mathematics better should not lead the Government to see that, however many inquiries the Department may make, however many groups are sent here and there and whatever the statistics they find out, that will not do any good unless the able pupils are matched with the inadequate supply of able teachers. We shall simply go on having one report after another and we shall lose a significant number—I do not know how many—of the middle-aged mathematics teachers whom we have in our sixth forms today. Therefore we should put this Amendment in the Bill and let them have an argument in another place, where, if it goes to a vote, the Prime Minister is bound to be in our Lobby.
5.30 p.m.
On Question, Whether the said Amendment (No. 3) shall be agreed to?
Their Lordships divided: Contents, 96; Not-Contents, 63.

CONTENTS

Amory, V.

Faithfull, B.

Lyell, L.

Belstead, L.

Ferrers, E.

Macleod of Borve, B.

Berkeley, B.

Fraser of Kilmorack, L.

Mancroft, L.

Brooke of Cumnor, L.

Gainford, L.

Marley, L.

Brooke of Ystradfellte, B.

Glendevon, L.

Mersey, V.

Caccia, L.

Glenkinglas, L.

Monck, V.

Campbell of Croy, L.

Gore-Booth, L.

Monson, L.

Carr of Hadley, L.

Gray, L.

Morris, L.

Carrington, L.

Gridley, L.

Mottistone, L.

Cathcart, E.

Grimston of Westbury, L.

Mowbray and Stourton, L. [Teller.]

Clifford of Chudleigh, L.

Hailsham of Saint Marylebone, L.

Clitheroe, L.

Newall, L.

Crawford, and Balcarres, E.

Hankey, L.

Northchurch, B.

Cullen of Ashbourne, L.

Hanworth, V.

Nugent of Guildford, L.

Darcy (de Knayth), B.

Harmar-Nicholls, L.

O'Hagan, L.

Daventry, V.

Harvey of Prestbury, L.

O'Neill of the Maine, L.

Denham, L. [Teller.]

Hawke, L.

Onslow, E.

Derwent, L.

Home of the Hirsel, L.

Orr-Ewing, L.

Drumalbyn, L.

Hylton-Foster, B.

Pender, L.

Ebbisham, L.

Ilchester, E.

Rankeillour, L.

Eccles, V.

Kimberley, E.

Redesdale, L.

Ellenborough, L.

Kings Norton, L.

Reigate, L.

Elles, B.

Kinloss, Ly.

Rochdale, V.

Elliot of Harwood, B.

Kinnaird, L.

Ruthven of Freeland, Ly.

Elton, L.

Lauderdale, E.

St. Aidwyn, E.

Emmet of Amberley, B.

Long, V.

St. Davids, V.

Sandys, L.

Strathclyde, L.

Vivian, L.

Savile, L.

Strathcona and Mount Royal, L.

Wakefield of Kendal, L.

Selkirk, E.

Sudeley, L.

Ward of North Tyneside, B

Sharples, B.

Tenby, V.

Ward of Witley, V.

Snow, L.

Thomas, L.

Wolverton, L.

Spens, L.

Trefgarne, L.

Young, B.

Stamp, L.

Vickers, B.

NOT-CONTENTS

Airedale, L.

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

Maybray-King, L.

Allen of Abbeydale, L.

Evans of Hungershall, L.

Melchett, L.

Ampthill, L.

Fulton, L.

Oram, L. [Teller.]

Amulree, L.

Gladwyn, L.

Pannell, L.

Avebury, L.

Gordon-Walker, L.

Peart, L. (L. Privy Seal.)

Aylestone, L.

Grey, E.

Phillips, B.

Bacon, B.

Hale, L.

Platt, L.

Beaumont of Whitley, L.

Hampton, L.

Popplewell, L.

Beswick, L.

Harris of Greenwich, L.

Sainsbury, L.

Birk, B.

Henderson, L.

Shepherd, L.

Blyton, L.

Houghton of Sowerby, L.

Shinwell, L.

Brimelow, L.

Jacques, L. [Teller.]

Simon, V.

Brockway, L.

Janner, L.

Slater, L.

Buckinghamshire, E.

Kirkhill, L.

Stedman, B.

Burton of Coventry, B.

Leatherland, L.

Stone, L.

Byers, L.

Lee of Newton, L.

Strabolgi, L.

Champion, L.

Llewelyn-Davies of Hastoe, B.

Taylor of Mansfield, L.

Collison, L.

Lloyd of Hampstead, L.

Wells-Pestell, L.

Cooper of Stockton Heath, L.

Lovell-Davis, L.

Wigoder, L.

Cudlipp, L.

McCluskey, L.

Winterbottom, L.

Donaldson of Kingsbridge, L.

Maelor, L.

Wise, L.

Resolved in the affirmative, and Amendment agreed to accordingly.
5.38 p.m.
Lord ELTON Lord ELTON moved Amendment No. 4:
Page 2, line 11, at end insert ("; or
(c) the provision of education at any non-maintained school which can afford opportunities for education to a particular pupil which cannot be afforded at a maintained school in that area").
The noble Lord said: My Lords, this Amendment is the lineal successor to an Amendment that I moved at Committee stage as Amendment No. 9, which specifically reserved the right of a local authority to provide boarding education in selective non-maintained schools, and part of the group of Amendments Nos.11 to 13 to which my noble friend Lord Belstead spoke at the same stage. It would have been possible to draft the Amendment now before your Lordships more technically by again naming specifically the existing legislation to be reserved from the effects of Clause 1 of the Bill, but our advice has been that it is more effective and simpler to state instead the functions for which those powers can be employed. This method has also the considerable and somewhat unusual advantage that the resultant passage in the Bill as printed, and hopefully the Act as passed, will appear to mean what it intends to mean.
The effect of the Amendment is to enable local authorities, notwithstanding the contents of Clause 1, to provide education at a non-maintained school where that non-maintained school can afford opportunities for education to a particular child which cannot be afforded at a maintained school in that area. The existing powers to which I refer, and which were referred to earlier by my noble friend and myself, are Sections 9 and 81 of the Education Act 1944 and Section 6 of the Education Act 1955. Together they permit the Secretary of State t D arrange and pay for the education pf pupils from their area in non-maintained schools when they are not able adequately to do so in their own maintained schools.
The noble Lord, Lord Donaldson of Kingsbridge, accepted at Committee stage (col.1420 of the Official Report) that certain authorities are at the moment dependent upon the use of places at non-maintained schools to fulfil their statutory duty to provide suitable education to those children for whose education they are responsible. He later assured us that:
"There is no intention on the Government's part to lessen the freedom which the authorities have to give assistance, provided that such assistance is not inconsistent with the comprehensive principle."—[Official Report 6/10/76; col.1421.]
That proviso is exactly at the heart of the matter because it is generally recognised

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that the majority of non-maintained schools are selective. I think the House has taken the point that the Bill has the effect of preventing local education authorities laying out their funds to secure education in selective schools. That prohibition clearly holds good whatever the grounds for which the LEA selects the particular children to go to a non-maintained school because the qualification relates to the school and not to the child.
Therefore, I was interested to receive from the noble Baroness, Lady Stedman, the letter which she promised to send me—for which I thank her—about the provisions for boarding. She said:
"We do not intend to probe into the admission arrangements of non-maintained schools. This would be both impracticable and unnecessary".
It may be impracticable, but I cannot see that under the terms of the Bill it would be unnecessary in the light of the prohibition in Clause 1. The noble Baroness went on to say in her letter:
"The important thing is that authorities' decisions to support education, boarding or day, and non-maintained schools should not be based on considerations of ability. If this condition is met authorities will not be in breach of the duties imposed on them by Clause 1."
Taken on its own, that statement seems to me to be a fundamental misreading of the Bill.
What the Bill expressly discourages is not the use of any particular selective criteria by the authority but the use by the authority of places in a school which selects upon the criteria of ability and aptitude. Those, as it happens, are precisely the criteria upon which most—though not all—non-maintained schools base their selection. However, I implied that this statement by the noble Baroness might bear a different interpretation if it was not taken on its own. By that I did not mean that it took on a different colour viewed in conjunction with what was said by the noble Lord, Lord Donaldson of Kingsbridge, at Committee stage. Your Lordships will recall that he said authorities were free to give assistance to non-maintained places only if that was not inconsistent with the comprehensive principle. The noble Baroness has now narrowed that principle quite without any basis in law, that I can detect, to apply only to the authority and not to the school. The context in which that passage
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of her explanatory letter to me should be set is the context of an earlier paragraph.
I may be in a difficulty here owing to an accident that I had with my notes earlier. She stated that there were 11,500 boarding school pupils at non-maintained schools who were being assisted by local education authorities in schools. The force of her argument seems to be that local authorities are only bound to have regard to the general comprehensive principle and may have regard also to a number of other considerations. It imputes to the Secretary of State the power to accept or reject exceptions from the general principle. I apologise to the noble Baroness for not quoting her in extenso—she will probably do so in any case in her reply—but this was the gravamen of what she said; that is, there were a number of general principles to which the local authority could have regard and it was up to the Secretary of State to decide which of these was admissible.
In the first instance I would say this: it is perfectly clear to anyone who has followed the debates in either House of Parliament that it is the undisguised intention of the Party opposite to use this Bill to secure as wide an application of the comprehensive principle as possible and that no Secretary of State of their Party is likely to extend such an act of clemency or indulgence, even where it is within her power, except under something approaching duress. Secondly, I must ask the noble Baroness to point out to me exactly where in the Bill she finds the power of the Secretary of State to accept or reject any of the exceptions to the general principle. She inclines to her judicial role in the matter and we should like to be told whence it derives.
Thirdly, I have to remind your Lord-ships that the phrase "have regard to" is one fraught with much legal nicety and peril. Your Lordships may see fit to repose confidence in the judgments given in Watt v Kesteven County Council in 1955 and Wood v the London Borough of Ealing in 1966 and assume that the generous intention of the noble Baroness that the local education authorities are left free to have regard to other considerations is soundly based, but I would not counsel your Lordships so to do. I am confident that where they are required

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to have regard to one general principle by statute and impelled to have regard to another by common sense then the courts probably, and the present Government certainly, will give precedence to the general principle enthroned by the Act over the general principle enthroned by reason.
What is more, I think that to rest our expectations of sensible conduct upon the interpretation of the phrase by the noble Baroness at least invites what I would call speculative litigation from those who feel that their authority has had too much regard to one general principle and too little to another which they prefer. This Amendment takes this matter out of the realm of speculation. It removes from the authority the expedient of throwing up their hands in despair when faced with a pupil with specific needs which they are unable to meet. It ought not to be open to them to say, "We recognise that you ought to be in a boarding school because of the circumstances of your family"—or "at a school at a certain altitude because of the circumstances of your health", or "a school of a certain size because of the conditions of your nerves but, alas and alack! we have no such school so here is a bus ticket to the local comprehensive. Good luck."
This Amendment leaves it clearly and unequivocally open for them to say that in those and analogous circumstances, "What we cannot provide out of our own resources we can procure for you elsewhere", and the child will be accepted into a non-maintained school at the authority's own expense, to his own advantage and the advantage of the non-maintained sector which the noble Lord has been at pains to say it is no part of the intentions of this Bill to curtail. The intentions behind this Amendment, therefore, are to enable local authorities to take up places in non-maintained schools when those non-maintained schools are selective.
It is upon that that the argument hinges; I have read very carefully what was said at Committee stage and I am not in any way convinced that the Bill does not prevent the placing by the local authority of its children in non-maintained schools when it cannot otherwise provide for them. I think it ought to be able to do so; I think it would be reasonable and
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I think your Lordships would agree with me that it would be unreasonable to deny them the opportunity of doing so. This is not intended as a means o enabling them to place all their children in non-maintained schools and I do not think really on a reading of the Amendment anybody could claim that it was or that it could be so used because that recourse would be held to be unreasonable. This is a reasonable Amendment, it is not politically based, it is intended to help the children and indeed to make, sense of the Government's legislation. I beg to move.
Baroness BROOKE of YSTRADFELLTE: My Lords, in rising to support the Amendment which has just been extremely ably moved by my noble friend Lord Elton, I should like to bring before your Lordships' imagination for one moment a case of which I happen to know the facts. Two small girls living in a country area, whose mother had to be moved into a mental home, whose father abandoned them, had to be sent to a non-maintained boarding school in order that they might have a certain sense of security and care in being looked after. These children were of an age that had they been boarded out and sent to the local day comprehensive school I regret to say that owing to influences that were around them there would have been nothing but potential criminal tendencies developed. It is on those grounds—human grounds of the individual child or children—that I feel so strongly this particular Amendment could be accepted. I am certain that they are not in large numb m. s. But there will be cases up and down the country which, through domestic, parental, or some problem of that nature, 'will need special care and special cherishing, which one can deal with only by moving them into a non-maintained boarding school.
Baroness FAITHFULL: My Lords, may I support the noble Baroness, Lady Brooke of Ystradfellte, on this. I have dealt with a number of children who can only be sustained in a small school for, say, 30, where there were particular problems with the family and with the child itself. I should very much like to sup port this Amendment.
Lord DONALDSON of KINGSBRIDGE: My Lords, if I may deal with

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the remarks of the two noble Baronesses first, there is nothing in the example given by the noble Baroness, Lady Brooke of Ystradfellte, which is contrary to the practice which the Bill would authorise without this Amendment. I think there is a total misunderstanding here.
Lord BELSTEAD: My Lords, may I ask the noble Lord the Minister a question before he goes on. What if the children to whom the noble Baroness, Lady Brooke of Ystradfellte, was referring were placed at a boarding school, and the entry to that school did require a level of academic standard—in other words, they were selective?
Lord DONALDSON of KINGSBRIDGE: My Lords, in the absence of other alternatives, in my understanding this would be possible for the local authority to use, just as we have said from the word "go" that boarding is a priority. The local education authority has a duty to provide boarding, if possible, within the comprehensive system, but it may not be possible. This has been the position from the beginning, as I understand it. If this Amendment were to be approved, it would be open to any local education authority to take up any number of places at non-maintained schools, without having regard to the comprehensive principle, whenever they thought that a non-maintained school could offer an "educational opportunity" not available in the maintained sector. This would be a very wide freedom indeed. Of course, the Government are not opposed to widening the range of educational opportunities available as much as possible: that is, indeed, precisely our objective in promoting the current Bill. We do firmly believe, however, that the comprehensive principle should be observed as far as possible in the provision of education—the words "as far as possible" are the governing words here.
It. is for this reason that Clause I exists and it was for the same reason that Clause 5—restoring to the Secretary of State her powers to control the extent to which authorities may make use of the non-maintained sector—was originally included in the Bill. It is our intention to ask our colleagues in another place to
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restore the powers contained in the original Clause 5 of the Bill, and if this happens we have declared our intention of administering these powers flexibly, giving sympathetic and careful consideration to a range of circumstances in which authorities, for good reason, may wish to make use of the non-maintained sector.
We are firmly opposed, however, to the selection of pupils to attend non-maintained schools on grounds solely of academic ability. If this Amendment were to be accepted, it would be open to any authority to do this simply by declaring that any particular pupil could only receive a particular educational opportunity (in itself an ill-defined and totally subjective concept) at a non-maintained school. This could, moreover, be done on a sufficient scale to undermine the provision of a fully comprehensive system. It is, therefore, not out of any desire to deny opportunities to particular pupils, but only through our wish to see a general improvement in opportunities for all pupils through the observance of the comprehensive principle that I would now ask the noble Lords to withdraw this Amendment. My right honourable friend has indicated her intention to use her powers of control over the use of the non-maintained sector sympathetically; the effect of the Amendment would be to render those powers useless, and to affect adversely the purpose of the Bill. I hope the noble Lord will not feel it necessary to press the Amendment.
Baroness PHILLIPS: My Lords, before the noble Lord opposite indicates his wishes in the matter—and I do not wish to throw any spanner in the works—I wonder whether the Minister could tell me what is the situation of the religious schools, the denominational schools, with which I am concerned. I listened to the case referred to by the noble Baroness opposite, and it occurred to me that there might be just such a case where the only school available of a certain denomination was a non-maintained school.
Lord DONALDSON of KINGSBRIDGE: My Lords, it is exactly the same as a boarding school. If it is the only available place, it would be up to the local education authority to make use of it, as I understand it.
Lord ALEXANDER of POTTERHILL: My Lords, it is perhaps not unusual that I shall find myself speaking in support of both sides of this House from time to time. This Amendment cannot be sustained without destroying the Bill. There are probably three reasons why local authorities use places in non-maintained schools. The first, and much the largest, is the need for boarding education, and we do not have the facilities for boarding education in maintained schools. As I understand it, an assurance that that would continue to be effective has already been given during an earlier discussion. There are a substantial number of these, of the order of about 10,000. The second reason is where there is a special need not necessarily requiring boarding education, but where there is a genuine lack of the necessary facilities in the area of the authority. As I under-stood it, on that again, there was an assurance that that would be acceptable, although I believe it was indicated that it was presumed it would be temporary rather than permanent.
The third reason is that of authorities wanting to select pupils on the grounds of academic ability, and to send them to schools where they feel they will have a greater opportunity than in the schools of their own area. We know authorities where this happens. This Amendment would enable the third principle to operate. On these grounds, it seems to me that the Government must necessarily reject it, but I hope we can have a repeated assurance that the first two grounds would be acceptable, even if Clause 4 were restored to the Bill.
Lord DONALDSON of KINGSBRIDGE: My Lords, with the leave of the House, I am very glad to give that assurance.
Lord BEAUMONT of WHITLEY: My Lords, the noble Lord, Lord Donaldson of Kingsbridge, said that the objective was to put into effect the comprehensive principle as far as possible. If that were so, I think it would be a bad thing. Luckily, I do not think that it is so in fact. I think that what we are agreed on is that the comprehensive principle ought to be put into practice all over the country, and that we should have a comprehensive system of education in this country. But
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it appears as a pattern from this Report stage and also from the Committee stage that within that system, we should be making the greatest flexibility for individual children, as much as we possibly can.
What this really boils down to—and the noble Lord, Lord Alexander of Potterhill, put his finger on it, although I dc not agree with him—is whether we are going to be more paranoic about a Secretary of State than we are about local education authorities. I think that in this case we are right to be. It is very much more likely that whatever the present Secretary of State says, there may be another Secretary of State who says something completely different. This is much more likely than that local authorities are going to use money which they now have not got, and which they are unlikely to have. for the next 20 years, as far as I can see, to breach the comprehesive system in a massive manner by sending lots and lots of children to maintained schools because of their academic ability. This seems a nightmare, and one which has no remote likely-hood of happening.
On the other hand, I think the vision of a future Secretary of State not using the powers against local education authorities which he or she is given under this Bill is a very real one. That is why, if very sadly the Government decide they will put back the old Clause 5 in another place, I hope your Lordships will not agree with it. I hope your Lordships will, complete the good work by passing this Amendment today.
6 p.m.
Lord BELSTEAD: My Lords, am not entirely happy with the assurance, given in good faith I know, by the noble Lord, Lord Donaldson, to the noble, Lord, Lord Alexander, that where there is a question of boarding need or a genuine lack of the necessary facilities in the area of an authority the Secretary of State will use her powers under the Bill (if the old Clause 5 is put back) to see that authorities can go on taking up places. I am not happy about this for two reasons: first, because the Government have defended their intention to revoke arrangements to take up places at independent schools on the grounds that by the use of these powers local education authorities might seek to avoid complying with the comprehensive

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principle of the Bill. The noble Lord, Lord Donaldson, repeated this view today and it was also effectively dealt with just now by the noble Lord, Lord Beaumont of Whitley.
That is a fundamental misconception of the way in which local education authorities go about their duty to provide education. If possible, authorities will always want to provide their own schools, not least their own sixth forms; but for different reasons, often financial, authorities choose to take up places at independent schools which pupils in the locality have often attended for a great many years. In passing, may I say that surely it is fundamental to the autonomy of authorities that they should be free to decide how to place their pupils at the most suitable schools. In recent years authorities have built up considerable expertise with staff consisting of educational advisers, psychologists, doctors and very often their own inspectors. What is the use of building up a structure like that if an authority is forbidden to use its discretion as to where to place its pupils?
My second reason for being unhappy about the undertaking which the noble Lord has given is connected with the question of boarding need. No one knows more about this than the noble Lord, Lord Alexander, who three years after the Martin Report chaired a committee on the question of boarding education. This evening he has put his finger on what was always held to be the fourth criterion for boarding education, where the special aptitude of the child requires a special training which can only be given by means of boarding education. One is talking about a report which was produced 16 years ago and it is interesting that the Public Schools Commission of 1968 not only accepted the Martin Report categories but elaborated on them and added two more which are particularly relevant to this Amendment. The Public Schools Commission—which, after all, is not notable for its particularly Right-Wing views—held that pupils should be considered for boarding education, and I quote—
"If the child's aptitude or intended course of study requires some special educational provision not available in accessible day school or college of further education …"
and the Public Schools Commission added
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a final criterion to which they said they attached great importance, namely—
"where there are any other exceptional circumstances which severely impede a child's educational progress".
When the noble Baroness, Lady Stedman, was replying in Committee to the Amendment on boarding education, the noble Baroness disregarded the fourth criterion of the Martin Report and the recommendation of the Public Schools Commission, and it is for this reason that I am worried also about the undertaking which has been given concerning boarding need. We should get plainly into our minds that it is a limited undertaking.
In addition there are a variety of other reasons, with which I will not weary the House and with which we are all familiar, as to why parents sometimes want their child to go to a non-maintained school. My noble friend Lady Brooke of Ystradfellte and my noble friend Lady Faithfull have mentioned some of them in passing. My noble friend Lady Faithfull made the point on previous debates that you may get children who are in need of boarding education because they arc bordering on being maladjusted, and my noble friend Lady Brooke made the same point. When he was proposing this Amendment my noble friend Lord Elton said that the difficulty here is what happens if unfortunate children of that sort are placed—as is likely—in a non-maintained boarding school which is selective in its intake.
If the Government are going to refuse this Amendment I would suggest that they will be meddling with arrangements which have continued for many years and where schools have often committed themselves to substantial expenditure in order to enlarge or convert, perhaps from single sex to mixed, or simply to improve their premises for the good of children in the area. I happen to live only I z miles away from a very ancient foundation, Woodbridge School, which spent a huge sum of money out of its own pocket in order to provide—and I know the Government will be pleased to be reminded of this—for a totally open sixth form for all pupils of the area. But they cannot be absolutely sure that under old Clause 5 of the Bill the Secretary of State will allow this arrangement to continue.

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Further, when one considers that 20 per cent. of all sixth form pupils in the country are still at independent schools and that some 35 per cent. of all independent school-leavers go to university one must conclude that sixth form facilities in the independent sector ought to be made available as widely as possible, not as narrowly as possible.
If the Government refuse the Amendment they will be rejecting closer links between the maintained and the independent sectors and will be affirming that what they really believe in is educational monopoly. I think this Amendment is very modest in its effect. In essence it is no more than an extension of Section 8 of the 1944 Education Act which we have written into the Bill, saying that as part of the opportunities of education for pupils authorities should be able to use independent education. This has been the law since 1944. Local authorities have had full discretion in this respect since 1959. I hope we may have persuaded the Government to look with a little more favour on this Amendment than they have suggested during the debate. If not, I very much hope that my noble friend will press the Amendment.
6.8 p.m.
Lord ELTON: My Lords, may I inquire whether the Government Front Bench intend to reply to what my noble friend has said before I reply to the debate?
Lord DONALDSON of KINGSBRIDGE: My Lords, at Report stage I think it would be quite inappropriate.
Lord ELTON: My Lords, it would be inappropriate for the same voice to speak twice, but there is more than one voice to cut off anything which the noble Lord wished to say. I wished to say two things myself: first, I notice that whenever there
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is an Amendment to which the noble Lord and the noble Baroness opposite take particular exception they instantly say that it is a wrecking Amendment. I presume this is because they wish to label it with something which will produce a shout of rage when it goes down the corridor. If they look at the wording—even with respect to the noble Lord, Lord Alexander of Potterhill—it provides for "opportunities for education to a particular pupil". Flow you could expect to use that reasonably to send all your best pupils out of the local authority to non-maintained schools at considerable expense to the rates and in the face of popular hostility among the local electors I do not know. It is not a wrecking Amendment.
The noble Lord laid great stress on the words "as far as possible" being a limitation of the duties of the 13111, but if those words are to have effect or the problem that we are discussing then they would have to occur at line 17 of page 1 of the Bill, because they would have to qualify,
"the general principle that such education is to be provided only in schools where the arrangements for the admission of pupils arc not based wholly on selection by reference to ability or aptitude."
They do not there occur. Thirdly, what the noble Lord says is very welcome in the form of an undertaking, but it is not what the Bill says, and, as I said before, it is to the Bill and not to Hansard that he courts will address themselves when any case is brought before them. Therefore I feel that the noble Lord and the noble Baroness have not answered the case we made. We made it before, we took it away to consider after listening to their arguments and they still have not satisfied us. Therefore I beg to press the Amendment.
6.10 p.m.
On Question, Whether the said Amendment (No. 4) shall be agreed to?
Their Lordships divided: Contents, 104; Not-Contents, 54.

CONTENTS

Airedale, L.

Emmet of Amberley, B.

Mowbray and Stourton, L.

Amory, V.

Faithfull, B.

Newall, L.

Amulree, L.

Ferrers, E.

Northchurch, B.

Ashdown, L.

Fraser of Kilmorack, L.

Nugent of Guildford, L.

Avebury, L.

Gainford, L.

O'Hagan, L.

Balfour of Inchrye, L.

Gladwyn, L.

O'Neill of the Maine, L.

Barrington, V.

Glendevon, L.

Onslow, E.

Beaumont of Whitley, L.

Glenkinglas, L.

Pender, L.

Belstead, L.

Gray, L.

Platt, L.

Berkeley, B.

Greenway, L.

Rankeillour, L.

Birdwood, L.

Grey, E.

Reigate, L.

Brooke of Cumnor, L.

Gridley, L.

Rochdale, V.

Brooke of Ystradfellte, B.

Hailsham of Saint Marylebone, L.

Ruthven of Freeland, Ly.

Brougham and Vaux, L.

Hampton, L.

St. Aldwyn, E. [Teller.]

Byers, L.

Hankey, L.

St. Davids, V.

Caccia, L.

Hanworth, V.

Sandys, L.

Campbell of Croy, L.

Harmar-Nicholls, L.

Savile, L.

Carr of Hadley, L.

Hawke, L.

Selkirk, E.

Cathcart, E.

Hylton-Foster, B.

Sharpies, B.

Chelmer, L.

Ilchester, E.

Simon, V.

Clifford of Chudleigh, L.

Kemsley, V.

Spens, L.

Clitheroe, L.

Kimberley, E.

Stamp, L.

Cullen of Ashbourne, L.

Kings Norton, L.

Strathclyde, L.

Darcy (de Knayth), B.

Kinnaird, L.

Strathcona and Mount Royal, L.

Daventry, V.

Lauderdale, E.

Sudeley, L.

de Clifford, L.

Long, V.

Trefgarne, L.

Denham, L. [Teller,]

Macleod of Borve, B.

Vickers, B.

Derwent, L.

Mancroft, L.

Vivian, L.

Drumalbyn, L.

Marley, L.

Wakefield of Kendal, L.

Dudley, E.

Merrivale, L.

Ward of North Tyneside, B.

Eccles, V.

Mersey, V.

Ward of Witley, V.

Ellenborough, L.

Monck, V.

Wigoder, L.

Elles, B.

Monson, L.

Wolverton, L.

Elliot of Harwood, B.

Morris, L.

Young, B.

Elton, L.

Mottistone, L.

NOT-CONTENTS

Alexander of Potterhill, L.

Gordon-Walker, L.

Pannell, L.

Allen of Abbeydale, L.

Greenwood of Rossendale, L.

Peart, L. (L. Privy Seal)

Ampthill, L.

Henderson, L.

Peddie, L.

Aylestone, L.

Houghton of Sowerby, L.

Phillips, B.

Bacon, B.

Jacques, L.

Popplewell, L.

Beswick, L.

Janner, L.

Sainsbury, L.

Birk, B.

Kinloss, Ly.

Shepherd, L.

Blyton, L.

Kirkhill, L.

Shinwell, L.

Brockway, L.

Leatherland, L.

Slater, L.

Buckinghamshire, E.

Lee of Newton, L.

Stedman, B.

Burton of Coventry, B.

Llewelyn-Davies of Hastoe, B.

Stone, L.

Champion, L.

Lovell-Davis, L.

Strabolgi, L. [Teller.]

Collison, L.

McCluskey, L.

Taylor of Mansfield, L.

Cooper of Stockton Heath, L.

Maelor, L.

Wallace of Coslany, L.

Donaldson of Kingsbridge, L.

Melchett, L.

Wells-Pestell, L. [Teller.]

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

Noel-Buxton, L.

Winterbottom, L.

Evans of Hungershall, L.

Oram, L.

Wise, L.

Fulton, L.

Paget of Northampton, L.

Wynne-Jones, L.

Resolved in the affirmative, and Amendment agreed to accordingly.
Clause 1, as amended, agreed to.
Baroness STEDMAN: My Lords, I beg to move that further consideration of the Bill on Report be adjourned.
Moved, That further consideration of the Bill on Report be adjourned.—(Baroness Stedman.)
On Question, Motion agreed to.

INDUSTRIAL COMMON OWNERSHIP BILL
Read 3a, and passed.

SUPPLEMENTARY BENEFIT (AMENDMENT) BILL
Lord WELLS-PESTELL: My Lords, I understand that no Amendments have been set down to this Bill and that no

81
noble Lord has indicated a wish to move a manuscript Amendment or to speak in Committee. Therefore, unless any noble Lord objects I beg to move that the Order of Commitment be discharged.
Moved, That the Order of Commitment be discharged.—(Lord Wells-Pestell.)
On Question, Motion agreed to.

AIRCRAFT AND SHIPBUILDING INDUSTRIES BILL
6.20 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 DERWENT in the Chair.]
Clause 35 [Compensation for vesting of securities):
Earl FERRERS Earl FERRERS moved Amendment No. 160:
Page 49, line 12, at end insert ("or—
(c) the amount which would have been payable under subsection (3) above, if the special declaration had not been made, less the amount of the payment or assistance which is the subject of the special declaration.").
The noble Earl said: This Amendment refers to the same subject as the last Amendment which we dealt with before the Committee adjourned last Thursday. It refers to this curious phrase "the reduced amount", which is the compensation payable when the Secretary of State makes a special declaration. This Committee will remember that a special declaration can be made when a company has received funds from the Government after 6th November, 1965, when these provisions were announced, and before the vesting date. If the Secretary of State considers that the company would have been unable to pay its debt without those funds, or that the state of the company's affairs—and this is quite remarkable—is such that in the foreseeable future in
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the Secretary of State's view it is probable that the company would be unable to pay its debts without those funds, then the Secretary of State can male a special declaration. It was at this point that on the previous Amendment we suggested that these were very wide rowers and the Secretary of State should have the advice of an independent accountant, but the Government did not see fit to accept that Amendment.
This Amendment is on a different point, because when the special declaration is made then the compensation is the reduced amount. The reduced amount is, as it says in Clause 35(6) either 5 per cent. of the notional value of the shares at 1974 prices, or what would be: he current break-up price of the company had it not received the Government funds. I gave an example of this last time, and I would trouble your Lordships by repeating it so as to remind you of the provisions. Let. us assume that in 1974 there was a company worth £5 million, and it may be that it was in financial difficulties—it may be that it was not—and that since 1974, and indeed between 1974 and 1976, an order had come to the company which it felt that it could carry out. It may be that it would have required to borrow some money, but because it was going to be nationalised the normal places where one would borrow money, such as the banks, would of course not be available. Therefore, the only place to which that company could go to borrow the money to retool, or to buy some new equipment in order to fulfil the order, would be the Government.
Once the company took the money off the Government, or accepted the money from the Government, it had, as it were, the kiss of death, because then the Secretary of State could come along and say, "You have borrowed the money and therefore I will pay you in compensation only the reduced amount" The reduced amount would be either 5 per cent. of the 1974 prices which, in the example I gave of a company worth £5 million would be only a quarter of a million pounds, or alternatively the current break-up price of that company had it not borrowed the money. That is, of course, a figure which would be open to question, and in any event would be an inaccurate figure because it would only be a guess. I believe that it is not fair

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that a company worth that sum of money in 1974 might only be paid a quarter of a million pounds now simply because it had borrowed some money.
The object of this Amendment is to say that the correct and fair compensation would be the figure that it would have received in 1974 less the amount of money which, as a loan or as grant or in any other form, it had received from the Government. That would appear to us to be a fair form of compensation. I hope that the noble Lord, Lord Winter-bottom, in his usual magnanimous way, will agree that it is a fair suggestion and will accept the Amendment. I beg to move.
Lord WINTERBOTTOM: It is a fair suggestion, but at this moment in time I cannot undertake to accept it. We are having a serious discussion, and therefore all suggestions are fair. However, I should like to try to persuade the noble Earl that the Government's view is not quite as rigid as he seemed to make out. I seem to remember that at about midnight one day last week we were talking about events arriving out of a blue sky. But what we are really talking about is a situation where a company is in difficulties—and companies can get into difficulties through no fault of their own—and has to decide whether to go it alone and, with the help of its bankers, fight its way through its difficulties, or turn to the Government and get a loan which in fact affects the degree of compensation that it is likely to receive.
The situation which the noble Earl described is perhaps possible, but I do not think that it actually will be so. Banks, taken by and large, are very loyal to their clients. If a client came to them and described the situation which the noble Earl has foreseen, I think they would support him, but if they did not, then we have this particular situation which we have to consider. May I just give the Government's argument as clearly as I can?
As I see it, and as the Government see it, Amendment No. 160 seeks to offer a further choice of valuation—and we have to deal with other choices of valuation in a later discussion—for a company facing bankruptcy; namely, the full valuation
84
less the aid given. The amount of aid given does not have any bearing on the question of whether or not a company is solvent without it. It is either solvent, and thus to be compensated for in full, or else insolvent and thus virtually worthless. The clause already provides two options for compensation, either 5 per cent. of the full compensation or the amount which the shareholders would have received had their bankruptcy taken place. In the vast majority of cases, and this is an unfortunate fact, shareholders receive nothing out of a compulsory winding up, and for this reason I believe that to offer 5 per cent. in these special circumstances is by no means unfair. But to offer any more, except in the remote possibility where shareholders would have received more had the winding-up proceeded, would perhaps be considered unjustified largesse on the part of the Government. It is for this particular reason that I feel I must reject this particular Amendment.
Earl FERRERS: I was surprised that the noble Lord did not accept the Amendment and I was greatly surprised at his reasons for not accepting it because the whole point of the compensation through-out the Bill is that it is based on spurious data; that is, the notional value at 1974. In the example I gave it is possible that in 1974 the company in question was viable and would not go into liquidation. If in 1976 one is buying out a company at 1974 prices, I suggest that it is not fair to say that because subsequent to 1974 the company got into difficulties we should therefore use a different figure from that on which the whole of the compensation is based, which is the 1974 figure. If in 1974 that company was viable, why should it not be paid out in compensation at 1974 prices?
I find the argument adduced by the noble Lord strange because it may be that a company will go into liquidation and, if it does, there is very little left for the share-holders. But in the example I gave the company was not, in 1974, in liquidation and was not likely to go into liquidation and I do not see why the noble Lord says that the Government would be paying out largesse if he accepted the Amendment. It would not be largesse. It would be just and fair to pay the 1974 value less any sums which the Government had paid. Would

85
the noble Lord care to explain—I am willing to be told if I am wrong—whether, if a company was solvent in 1974, under these provisions it would not be paid out at 1974 prices?
Lord WINTERBOTTOM: The argument is that in the period between 1974 and 1976 a hypothetical situation may have arisen in which a company is in such difficulty that it is at risk of becoming insolvent and being forced to wind up its operations. It is obviously the Government's wish that such companies should continue trading and one would hope that if such a situation arose the company would turn to the Secretary of State, get a grant and continue doing what it was doing at the time of the original situation in 1974 when it was brought within the ambit of the Bill.
I remind the House that we are talking about hypothetical situations, not real ones. If such a situation were to arise, then either the shareholders would get 5 per cent. of the full compensation—and it is open to them to decide—or the amount which they would have received had the bankruptcy taken place. I think we can assume that at this moment all companies which are concerned with the progress of the Bill would choose to take what assistance the Secretary of State can give them rather than go into liquidation and throw their work forces on to the labour market. Admittedly, this is not a usual situation about which we are talking—it is a hypothetical one—and I believe that the terms proposed by the Government are fair; either 5 per cent. of the full compensation or the amount which the share-holders would have received had the bankruptcy taken place.
Lord TREFGARNE: I regret that the noble Lord, Lord Winterbottom, has opposed the Amendment so strongly. Do the Government understand that the problem is one of blight? We all know that if one is living in the shadow of a projected motorway or similar development the value of one's property can decrease sharply. Similarly, a company threatened with nationalistaion can find itself in a similar position. The noble Lord will recall that the Bill did not appear in the first Session of Parliament, over which the present Government had some control, although it was expected to
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arrive. There was a period of' uncertainty before the Bill was introduced in another place and that exacerbated the situation to which my noble friend has drawn attention. The Government are being unreasonable over this and I hope that my noble friend will press the matter to a Division.
Earl FERRERS: I am grateful to my noble friend Lord Trefgarne and I, too, find the Minister's argument extraordinary, especially when he described this as a hypothetical case.
Lord WINTERBOTTOM: Can any noble Lord tell me of a factual case of any company suffering from blight? Perhaps the noble Lord, Lord Trefgarne, will tell me of one?
Earl FERRERS: It is all very fine to ask that sort of question and I think I see the noble Lord, Lord Winterbottom, smiling. I would remind him that we have not yet had the vesting date and much can happen before then. What he is seeking to defend is putting something in the Bill which I suggest is unfair. My noble friend, Lord Trefgarne, referred to blight and what I think he had in mind was the situation where a company might have been viable in 1974 but could not find the funds to re-tool or buy new equipment, or carry out this new order which it has got since 1974, aid because it might have been in difficulty it must go to the Government. Once it f as gone to the Government, the Secretary of State is obliged to pay out in compensation what is frankly a derisory amount. Had that company in 1974 been in difficulties and had it in 1974 got a grant from the Government because of those difficulties, things might have been different. But it is possible that in 1974 the company was totally viable, and it is the mere operation of obtaining funds from the Government later to develop its exercise that the Government put in this provision which, frankly, will result in a thoroughly unfair amount of compensation. The obvious and reasonable thing, I suggest with humility, would have been to pay out what was agreed to he the proper price in 1974 less any funds the Government paid into the company. Even then the Government would be getting the company at a value probably much lower than is current value simply because it would have borrowed the money to develop its work.

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I find the noble Lord's argument thoroughly unconvincing. I suppose that at this juncture he will not accept the Amendment and I see him, I think sadly, shaking his head in dissent. I am sorry about that. With respect, he is being most unreasonable. I hope there will be a little give somewhere from the Government, otherwise it makes the exercise in which we are involved rather tedious, particularly when we are trying to provide constructive Amendments, of which this is one. However, if the noble Lord sees fit not to accept it, then I shall be obliged to withdraw it and reconsider the matter.
Lord HANKEY: Before the noble Earl seeks leave to withdraw the Amendment, may I ask the Minister, as one who has had to deal with this question only in relation to Communist Governments who have tried to take over companies without paying any compensation at all, how the figure of 5 per cent. was conjured up? It seems remarkably low. One does not know what proportion the compensation bears to the value of the company. It could be virtually taking it over without any compensation. If the noble Lord would explain the clause a little more we might be able to have a better view of the Amendment.
Lord WINTERBOTTOM: I am not the most skilled person on the procedures of your Lordships' House, but I thought that the noble Earl, Lord Ferrers, had withdrawn the Amendment—
Several noble Lords: No!
Lord WINTERBOTTOM:—and, if he had withdrawn it, that is the end of the discussion on the Amendment.
Earl FERRERS: I was careful in the words I chose. I think I said that I would be obliged to withdraw it and then sat down. I did not actually seek leave to withdraw it.
Lord HANKEY: I said as I rose, "Before the noble Earl seeks leave to withdraw the Amendment". I would be grateful if the Minister would explain the provision further; I am sure he understands it better than I do.
Lord WINTERBOTTOM: May I put it in words of one and a half syllables? The Opposition is making too much of the "investment blight". No noble Lord opposite or on the Cross-Benches has told me of a company which is blighted. We have given assurances to companies to ensure that normal, on-going business is not blighted by the Bill and we believe that companies are operating quite normally against the background of this Bill. If any noble Lord can tell me of a case of blight I should like to know of it.
Lord TREFGARNE: Is the noble Lord really saying that because we cannot mention a particular case, we must now write this grotesque provision into the Bill?
Baroness WARD of NORTH TYNESIDE: Am I right in saying that the noble Lord said he had had enough talking? Am I not allowed to talk if I want to? I cannot hear what the noble Lord says.
Lord WINTERBOTTOM: I apologise. I said that I was bad on procedure. I thought that the noble Earl had withdrawn his Amendment, but I find that he has not.
Baroness WARD of NORTH TYNESIDE: I am very grateful to the noble Lord. I was wondering why he said that this was a hypothetical case and asked for evidence. When we are dealing with a Bill, we cannot, until we know what the conditions are and until all the firms that are to be nationalised have been gone into, give any evidence. One cannot say that one cannot have a clause in a Bill which is hypothetical unless one gives the cases. That seems to me to be quite ridiculous and I cannot understand it at all. We want clauses that are fair to the people so that, when we come to deal with the compensation, we can then provide the facts; but we cannot do so on a hypothetical case because at the moment we have no hypothetical cases. So what I want to know is why the noble Lord used the word "hypothetical".
Lord WINTERBOTTOM: I am afraid that hypothetical is hypothetical. I merely asked for an example of a blighted company. None has been given. Therefore, it is very difficult to say whether we are being fair or not. So far, no unfairness has appeared.
Viscount SIMON: I am going to throw a small pebble into the pool by asking the noble Lord whether, if he is satisfied that no case will arise, it is necessary to have the clause in the Bill at all.
Earl FERRERS: Oddly enough, that was almost the question that I was going to ask the noble Lord and, as we are asking each other questions, perhaps I may ask him this. Does he know of any company that was reasonably solvent in 1974 which has subsequently received a Government grant which will result in that company being paid out only either 5 per cent. of its 1974 prices or the current break-up value?
Lord MELCHETT: While we are asking each other questions, maybe I can join in and ask the noble Earl a question. We have been asked a lot of questions and I believe that I am entitled to ask one in return. Noble Lords opposite passed Amendment No. 156 when we were nearing the end of the previous Committee stage: am I right in thinking, as I think I am—for it is the Amendment of noble Lords opposite and not mine—that, under that Amendment, somebody who was not satisfied with the particular item of compensation with which we are dealing at this stage could go to the tribunal and say that, having regard to all the circumstances, the compensation was not fair and could ask the tribunal to alter the compensation? If that is the case, I am not quite sure what we are arguing about.
Earl FERRERS: I can tell the noble Lord exactly what we are arguing about: we are trying to make the provisions of the Bill reasonable. I do not think it much of a statement to say that because somewhere in the Bill there is the right of a company to go to arbitration, therefore all the other provisions of the Bill can be absolutely haywire for, if they are not right, the company can go to arbitration. Clearly, we must try to get things right, but the noble Lord, Lord Winterbottom, asked me specifically whether I knew of any company that was going to be blighted. I shall find out, for I cannot tell him on the spur of the moment. But that does not alter the reason for trying to make the provisions fair. What I should like to know is whether the noble Lord knows of any company which has received funds from the Government and which, as a
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result of receiving those funds, will have the reduced amount payable.
Lord WINTERBOTTOM: I think that we are getting down to details. I shall inform the noble Earl at Report stage.
Earl FERRERS: I am very grateful to the noble Lord. We are getting down to details, and I believe that they are rather important details, but I will withdraw the Amendment and shall come back to it at Report stage. I now, formally, and at the noble Lord's pleasure, beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.47 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 162:
Page 49, line 14, leave out ("either").
The noble Lord said: With this Amendment, which I am moving on behalf of my noble friends, I should like to speak to Amendment No. 163. Here, we are still addressing ourselves to this question of the special declaration and we are on a narrower point still. Since we have got into this rather unfortunate word "hypothetical", which looks like being our touchstone instead of our usual one—"flexibility"—I would just point out that, though I know that "hypothetical" is a dirty word in this House, the whole of this clause is to a very large extent hypothetical. That became very evident when the noble Lord was challenged by my noble friend Lord Ferrers to cite an example. Many of the provisions in the Bill are trying to deal with hypothetical situations that may arise. I think that we must accept that. So I do not believe that it will quite do to fling out the word "hypothetical" and say that that is an answer. I do not believe that it is.
What we are dealing with here is a rather technical point which, again, deals with accounting and also involves the onus of proof. Although these are comparatively narrow points, they are of some importance and I believe that they are made more important when this sinister phrase, "in the opinion of the Secretary of State" creeps in. That keeps on happening in this Bill. The subsections to which we are now referring were not in the original draft of the Bill. This is a point that was made in the discussion in

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another place and it was one of the Members from our side who pointed out that we were not here asking for special help but trying to redress an adverse balance against the companies. Indeed, one wonders why these subsections have been introduced. The apparent intention—and this has already been said—is to reduce the compensation which would otherwise be payable in the case of companies which receive Government assistance where, in the opinion of the Secretary of State, that assistance saves the company from liquidation or receivership.
Subsection (4) makes clear what is intended and, again, we are referring back to the date of 6th November 1975 and speaking of the reduced amount. I believe that we have discussed the broader issues involved here and the issue that we are addressing ourselves to in these Amendments is the fact that the accountants regard the phraseology as extremely unsatisfactory. We have these two provisions that the accountant has to declare that the company would be unable to pay its debts as they fall due without the payment or assistance in question. That, I understand, is technically possible, but, where the purely practical accountant says that he runs into grave difficulties is in the provision that the state of the company's affairs is such that, in all the circumstances, it is probable—one might almost have said "hypothetical"—that, in the foreseeable future, it would become unable so to pay the debts without that payment or assistance.
The accountants advise that this is not the kind of statement that they can be expected to make, and the industries feel that this is an unreasonable paragraph to have in here at all. We come back to the "heads I win and tails you lose" type of situation. I do not want to pre-empt the more general debate on compensation which will probably take place on the Question, That the clause stand part, but we are talking about a situation where one does not get a penny more if one has done better since November, but one gets substantially less if one has done worse. Again, in this particular instance, we are talking about a potential collapse.
May I finally remind the noble Lord that it was in discussing this point in another place that the remark which showed an appalling lack of understanding of the whole principle of compensation was made by Mr. Carmichael when he said:
"We are not in a take-over situation, we are acquiring by Act of Parliament."
If that is the attitude as exemplified in that discussion, then this is perhaps a slightly more important Amendment than at first might appear. I beg to move.
Lord WINTERBOTTOM: We have been discussing a group of Amendments which relate to the reduction of compensation for companies saved from collapse by Government financial assistance in the period, shall we say, from 1974 to whatever date it is when the Bill becomes an Act. May I briefly outline the basic philosophy behind the compensation terms before dealing with the Amendments which we are discussing now, Nos.162 and 163.
Compensation is fixed on the basis of a past reference period, the six months up to the end of February 1974. At that time, all the companies named in the Bill were viable concerns at the end of the reference period and the basic assumption still is that they will remain in that state up to the vesting day. Just to make the point clear, no company as of now has come to ask for aid under the clause, so we are—I know it is a longish word—in a position where the whole situation we are discussing is "hypothetical". I agree that it is the duty of this House and another place to discuss hypothetical situations, but hypothetical situations are less important than real situations, and as of now no company has come forward for help. The noble Lord opposite has said that clearly the prospects of individual companies may have changed since the reference period. But that in itself does not affect the basis of compensation. By basing compensation on a past period, the compensation payable is fixed, and generally speaking the shareholders are assured as to the basis on which the compensation they will receive will be assessed. We are talking about something that is not hypothetical but is factual.
However, all of this is built on the premise that the companies continue as going concerns up to the vesting date,

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and I think we can agree on that. If a company should collapse before the vesting date, then clearly the whole basis of compensation is destroyed. That is recognised by the provisions of Clauses 27 and 29 which have already been discussed. But for a number of reasons the Government may not be prepared to see a company collapse before vesting day, and again, noble Lords who arc fair-minded men would not wish that to happen. In those circumstances, the Government may decide to support the company in the intervening period with some form of financial aid. If a company is saved from collapse solely by the Government digging into their pockets—ot should I say more carefully as noble Lords will correct me—digging into the pockets of the public, it is clearly wrong that the shareholders should nevertheless receive full compensation as if the company had remained viable by its own efforts.
I believe that it would not be right for the House to accept these Amendments. When a company is running into financial difficulties, its directors will seek to avert the final collapse by early action and not wait until the receiver is at the door: that is to say, provided their accounting procedures are adequate. As soon as the danger signs appear, the company will seek whatever financial assistance it can to stave off collapse. The noble Lord opposite said that the bank might not support it. That again is a hypothetical situation, because I believe that banks tend to support their old and trusted clients.
It may be that the company has no option but to turn to the Government, if the size of the problem is too great for any other sources to deal with it. While the ultimate collapse without assistance might be inevitable and clearly foreseen, it might nevertheless not occur at once—shall we say that while the organisation was working at full blast, the order book was shrinking and the future looked some-what bleak. If the Government give aid in these circumstances it is just as much to stave off bankruptcy as if the bankruptcy would have occurred the next day. As I understand it, sub-paragraph (b) of sub-section (6) which the noble Lord, Lord Strathcona and Mount Royal, is trying to delete in Amendments Nos.162 and 163, is to recognise this fact. If that sub-paragraph were to be deleted, then a company
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could receive aid a mere week before its bankruptcy and this maintain its right to full compensation. It is for those reasons that I must resist these two Amendments.
Lord CARR of HADLEY: Before my noble friend replies on this Amendment, and since the noble Lord, Lord Winter-bottom, said that he wished: o give his view on these Amendments in the context of an explanation about the Government's philosophy on compensation, may I ask him one question? If I understood him aright, he was saying that if between the date in 1974 when we have a fixed point—which is a fact, not a hypothetical position—and the vesting date, a company's activity level and profit level drops so badly that it collapses, then, of course, the whole basis of compensation collapses also? But if that argument applies to a company whose level of activity and profitability changes dramatically in the downward direction, what about the position of a company whose level of activity and profitability changes dramatically in an upward direction? Does not the whole basis of compensation logically collapse, just as much in the case of a company whose level of activity and profitability changed dramatically upwards since 1974? Is that different in principle from one which changes dramatically downwards?
Lord WINTERBOTTOM: We are talking about collapse. If a company's profitability rises, then I suppose there are hypothetical situations when that could bring about the collapse of the company; but it is highly hypothetical and unusual.
Lord CARR of HADLEY: I thought that the noble Lord was trying to tell us an important thing—which we grateful for him trying to tell us—namely, something more about the underlying philosophy of the Government in setting these principles for compensation, which we shall debate more generally in a few moments, and that is why the statement is important and needs to be clarified. As I understood it, he said that it was part of the philosophy that if the situation changed dramatically since 1974, then the basis of compensation would also be undermined. He took the case of a change which was dramatic alas! in the bad direction; but logically the argument applies just as much if the dramatic change were to take place

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in an upward or hopeful direction. Both cases in logic, I suggest, would completely upset the basis of compensation.
Lord MELCHETT: The distinction which the noble Lord has not made and which we would make is that a company's activity and profitability after the date in 1974 can go up or down, and the basis of compensation is not affected; it would still be the base period of 1974. What we are pointing out is the distinction if the company ceases altogether. If the activity drops so low that the company goes bankrupt, then at that point the distinction should be made; but we are not making any distinctions if the profitability or activity goes up or down, except for this one case which, I think the noble Lord would accept, is of a different degree from an increase or decrease in activity or profitability.
Lord CARR of HADLEY: I think I now understand the Government's position. What the Government are in fact saying is that if, following 1974, a company (to put it crudely) sits on its behind and does nothing, then its compensation is fixed. If, on the other hand, in the national interests as well as its own, it really forges ahead and greatly increases its level of activity to the national benefit, then it does not get any benefit from it. Is that really very fair or very encouraging to the sort of effort we want over what is a period of two or three years?
Lord MELCHETT: I do not think there have been cases, unless the noble Lord can bring them to our attention, where companies have sat on their backsides, and I hope the noble Lord was not suggesting that that was the case.
Lord CARR of HADLEY: But if they have not, as I believe is the case, and they have greatly improved their business, on what conceivable basis of fairness is it right to give them only what the Government say they were worth in 1974, when since then they have been forging ahead to the national benefit and not just their own?
The Earl of ONSLOW: There is one question I should like to ask arising
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out of this small debate, and that is this. The noble Lord, Lord Winterbottom, said that no company had approached the Government for rescue aid. Is there any prospect of any companies approaching the Government for rescue aid? It is very easy, perhaps, obviously telling the complete and utter truth and looking backwards, to say that no company has, but is there any prospect, looking forward, of anybody approaching the Government for rescue aid?
Lord MELCHETT: As I understand it, the answer to that is "No", but obviously the Government cannot answer for the companies. It must be the companies who would know whether or not they are going to come to us; but as far as we know the answer which my noble friend gave was the correct one.
Lord TREFGARNE: One of the difficulties that I see with the subsection which the Government seek to retain is the word foreseeable". We have heard no indication of how long "foreseeable" might be. The Government's arguments might hold a little water if "foreseeable" was just a few months, but there is nothing in the Bill to say that. It might be six months, it might be one year, it might be two years, it might be ten years. Is the noble Lord able to give any indication of how far ahead a company would have to be able to ensure its viability to avoid the penal effects of this clause?
Lord WINTERBOTTOM: "Foreseeable" depends upon the accuracy of the firm's accounting and the wisdom of its executives. How far can one peer into the future?
Lord TREFGARNE: I really cannot allow the noble Lord to get away with that. The words in this clause are quite clear:
"… a declaration by the Secretary of State that in his opinion … it is probable that in the foreseeable future …"
According to this clause, it is for the Secretary of State to decide when the foreseeable future shall end. Can the noble Lord tell me how far ahead the Secretary of State can see?
Lord MOTTISTONE: Perhaps on the same point, if I remember rightly my

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noble friend Lord Ferrers said among other things with regard to this paragraph (b) that no reasonable and competent accountant would find it easy to make a statement which backs up the situation which is described here. It is too difficult for even the most expert of common men to deal with this particular paragraph in real life. The noble Lord, Lord Winter-bottom, did not in fact reply to that in his first statement, and it would seem to me that it would be helpful if the Government could tell us why they think this is a paragraph which is in practical terms able to be realised by somebody who is really competent and trying to meet its terms.
Lord STRATHCONA and MOUNT ROYAL: I am very grateful to the last two of my noble friends who spoke from behind me, Lord Trefgarne and Lord Mottistone, because they in fact returned us to the Amendment. On this occasion the Government widened the debate quite beyond what T had originally envisaged when we embarked upon it. I do not think we are any the worse for that, because we probably dealt with issues which we should otherwise have dealt with in a few minutes' time. But I was a little suspicious that possibly the noble Lord was distracting our attention from the particular point that I was trying to deal with and to which we now have to return. The noble Lord nods his head, which I take to mean that he is going to deal with the issue and that he was not trying to distract our attention.
We wandered off into this whole question of hypotheses, and I should like to remind the noble Lord of one thing. The whole basis of compensation, as we shall be saying in a moment, is throughout designed on a hypothetical Stock Exchange valuation; and once you start on that—and the Government have started on that; we have not—you can hardly blame us if we follow with a whole series of other hypotheses. In this particular instance we have a very hypothetical situation, as the Government themselves have admitted, since the noble Lord, Lord Melchett, said that he did not know of anybody who was likely to go "bust"—which I am very glad to hear, incidentally.
May I answer one or two of the other, more general, points which the noble Lord made? The issue of blight spreads right across the industry. Once you
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announce that it is going to be nationalised, it is very difficult indeed for any company, under that kind of threat, to borrow money. That is surely self-evident, and there are many noble Lords here tonight who will, I hope, reiterate this much more authoritatively than ever I can.
But the noble Lord asked us one or two questions, trying to envisage the kind of circumstances. If one thinks back to the position of property companies during the period of the recent fall in property values, one recalls that many large property companies were: technically "bust". The City thought it would be undesirable to allow them to go through the hoop, which is perfectly proper, and they have a lifeboat committee, or some such committee I think it is cal ed, which exists to avoid this happening to such companies. I do not think anybody suggests that because they are technically "bust" you should therefore say that all their assets are worthless, which I think is what follows from the kind of argument here.
Furthermore—and this brings us right back—is it seriously supposed that any accountant could possibly do any of the three or four things required of him here? No accountant could do them. It talks about the foreseeable future and "it is probable". Accountants try to make their trade into as exact a science as possible, and they like to stick to facts. We are all trying to stick to facts. That is our complaint here. On the narrow point, leaving aside the more geneeral one about hypothetical values, lifeboat operations, Burmah, the Bank of England, nationalised boards, et cetera, we are trying to stick to the practical point and we are saying that we are assured by those whose business it is that they would be extremely unhappy if they were asked to perform the particular service which is liable to be asked of them under this Bill as it stands at the present time.
I rather doubt if the noble Lord wants to say anything further about this matter at this stage. If he does, I will gladly give way to him. If not, I should be happy to allow us to proceed to the Question, Whether the clause shall stand part of the Bill?, and the debate on it which will ensue. But I must warn the noble Lord that it is quite possible that

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we may have to address ourselves purely to the narrow, technical point at a later stage of the Bill. I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
7.9 p.m.
On Question, Whether Clause 35, as amended, shall stand part of the Bill?
Lord CULLEN of ASHBOURNE: The reason I am entering the fray at this late stage is because my noble friend Lord Selsdon has asked me to move some Amendments which he put down. I have accordingly been studying the Bill and Hansard assiduously over the weekend, but I know quite well I can be tripped up on detail. However, I propose to deal with the general point, which I think is important and which was referred to by my noble friend Lord Orr-Ewing and expanded upon during the debate on Amendment No. 156 by my noble friend Lord Carr.
I would first refer your Lordships to subsection (3) of this clause, which reads:
"… the amount of compensation due to any person in respect of any securities of a company which are held by him immediately before the date of transfer of that company shall be an amount equal to the base value of those securities",
and so on. I draw attention to the significant words, "any person". These words occur again in subsections (4) and (5). As I understand it, these words are only applicable in the case of one out of the 43 companies intended to be nationalised. In the other 42 cases, the compensation is to be paid not to any person but to the parent company concerned.
Let us for the moment forget the one quoted company and consider the other 42. The Government have repeatedly made clear that they wish to be fair. I should like to know what is meant by the word "fair". I trust that this means fairness not only to the taxpayer but also to the parent companies and to the underlying shareholders. If the Government are going to be fair to the parent companies they will automatically be fair to the shareholders; but the shareholders are, so to speak, once removed and will receive no compensation at all from the Government. They will, if they so wish, continue to hold shares in the parent
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company and will be concerned that the value of the compensation stock will be sufficient to replace lost assets with others of equivalent earning power. If that is not so, the Government will definitely not have been fair to the shareholders—something which the noble Lord, Lord Melchett, has frequently told us it is the avowed aim of the Government to be. I realise that it is very late in the day to raise the point and I do not have the experience to know how the Bill should be amended, but I would suggest that the words "any person" should be changed to "any parent company or person". If the Committee agree with this then perhaps we could return to it on Report.
It seems to me that the Government, perhaps owing to the immense amount of legislation to which they were committed by their Manifesto, have used previous nationalisation Bills as a blue-print for this Bill. They have tried to use the previous system of using Stock Exchange prices by inventing the extraordinary idea of notional prices. For this, I suspect, they may have drawn some inspiration from Lewis Carroll. While speaking to Amendment No. 156, my noble friend Lord Wardington explained very clearly the inadequacy of using actual Stock Exchange prices as a means of valuing a company. It must be well known to the Government that during the relevant period Stock Exchange valuations were well below asset values. Therefore, if the parent companies had sold their assets on the basis of Stock Exchange valuations they would have been unable to replace them. Similarly, if the Government nationalise one of their subsidiaries and compensate on a Stock Exchange or quasi-Stock Exchange basis, the parent company will be unable to establish itself—to quote the words of the Under-Secretary of State—
"at the same level of activity as existed before its subsidiaries were vested".
If the Government would admit that, although they want to be fair they arc using a method of compensation that is unfair, we could get together and work out some improvements to the Bill to make it at least more fair, but the intransigent attitude adopted by the Government that they are being fair when it is obvious they are not, seems somewhat tedious and time-wasting.
7.14 p.m.
Lord ROBBINS: May I crave your Lordships' indulgence from the Cross-Benches to indulge in a few general reflections on the implications of this clause? I have not spoken, save on one occasion, on the rest of the Bill and I do not wish on this occasion to indulge in any observations at all on the nationalisation of the two industries concerned. I address myself solely to the question of fairness on which I personally am prepared to accept the assurances which have been given by noble Lords on the Government Front Bench that they are united with the rest of the world in seeking. I am afraid that the impression left upon what I imagine to be an impartial observer in this particular context must be to the contrary. It is on that matter and on that matter alone that I should like to expatiate for a few moments.
It is very clear (is it not?), that the draftsmen of this Bill started from the simple notion that if some person or group of persons is compensated on the basis of the Stock Exchange value at a said date, then the criterion of fairness is satisfied. Unfortunately or fortunately, it so happens that the companies enumerated in the Schedule for the most part lack a Stock Exchenge quotation on the named date. It is therefore considered to be necessary, and certainly it is necessary if compensation is to be devised at all, that some tribunal of arbitration should be set up to ascertain what would have been the Stock Exchange value at a certain date of these companies had they enjoyed the benefit of quotation—a task which must be associated with all sorts of perplexities and necessarily involves a vast number of judgments which in the nature of things are subjective.
It may be that if the fundamental Amendment moved last time by the noble Lord, Lord Selsdon, survives in another place, the terms of reference of the arbitration committee may be interpreted in such a wide sense as in the event to vitiate the many fears which have been expressed in this House (and, I think, are expressed in the knowledgeable world at large) with regard to the procedure of this tribunal which I think it is not unfair to say is implicit in much which has been said from the Government Benches, much indeed which has been said from the
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Government Benches, in the last half hour.
Let us then proceed to examine a little the fairness involved in what I, at any rate, believe to be implicit in the general philosophy of compensation as alluded to by the noble Lord, Lord Winterbottom, 10 minutes ago. Let me start from the position of an individual shareholder, if such an individual shareholder exists; but I hope Lord Winterbottom will not think I am indulging in too much in a hypothetical exercise if I use the words actually used in the Bill, "a person". The person involved may have observed that since the date mentioned in the Bill there has been a not inconsiderable degree of inflation. Any pecuniary compensation, therefore, which is paid to him now, or two or three years hence, is likely to have a very substantially lower real purchasing power than it would I have had at that date.
You may dismiss that and I can under-stand your dismissing it, although I deplore the fact that Governments in general usually dismiss such arguments. I must say—perhaps this may be thought by noble friends on the other side a vindication of my speaking from the Cross-Benches—that I think most Parties have been almost criminally indifferent to the effects of inflation on investors, especially on investors who have been coaxed by the very often honest and upright agents of the Government to invest their money in Government securities. However, this is the fate of many unfortunate people, and those who receive lower recompense in real terms for what is taken over in respect of aerospace and shipbuilding are suffering in common with a great many of their fellow countrymen who have not had the common sense to "twig" the inherent dishonesty of Government policy in general in regard to inflation. I will not dwell upon that grievance any longer.
On the other hand, I think that the individual might have some, complaint about the date. If I were in such a position—I am not aware I am—I should certainly feel that the choice of date and the perspective it involves is open to criticism on more than one count. Retrospectively, surely, the date occurs at a time when many values have been upset by every kind of unforeseen contingency:

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the rise in the price of oil; the gradual realisation of the catastrophic nature of the inflation to which we have been committed by an earlier Government, the attitude of certain bodies of producers and so on. If I were the individual person concerned, I should feel that some compensation assessed on a wider view of past profitability of what was to be taken from me would be appropriate.
Leaving that on one side, accepting for the moment the cynical vindication which might be made: "Well, you might just as well choose some date, and we have chosen that, and that is that", I cannot regard as so unimportant the point made just before we embarked on this part of the debate by the noble Lord, Lord Carr of Hadley. Supposing that some of the companies concerned—I use the word, "some" advisedly—had shown some elements of enterprise, had reinvested profits in the industry, some of the entrepreneurs concerned had shown themselves not to be the imbeciles they are sometimes represented to be, if I, the person, were to be compensated on some notional value of what my shares would have been worth on the Stock Exchange in 1974, I might feel some sense of grievance. Similarly, if there were some companies which answered to the description sometimes delicately referred to by the noble Lord, Lord Melchett, as not having been absolutely 100 per cent. in every possible respect, it may well be that if I were the person concerned with those companies, I might he rather lucky in comparison to the other persons, to whom I have alluded, who had foresight to invest their money in more go-ahead concerns.
I cannot regard this point as insignificant. I found it extraordinary that so fair-minded a debater as the noble Lord, Lord Winterbottom, can brush it aside as being merely hypothetical. It surely must be the case that there are some people who will lose relatively because of the adoption of this criterion. However, all this pales into insignificance beside a further conceptual mistake which seems to have been made by the framers of this Bill. For the purposes of argument, let me accept that compensation according to notional Stock Exchange value in the year 1974 seems to be fair. I am perfectly prepared to admit if you were thinking simply of inflicting an extraordinary fine on some reprehensible
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person by depriving him of his opportunity to possess shares in a certain branch of industry, and then you were persuaded that, after all, he needed compensation, it might seem fair if you could—and if your arbitration tribunal could do the job properly for you—compensate him at the notional Stock Exchange valuation. He could then buy another security of equivalent value.
But now we come to what may be said is the grand structural defect of this set of provisions. It may appear to be fair when you are considering individual persons, and regarding the rest of the world as staying put, but it loses all appearance of fairness when you are thinking of compensation to holding companies and to parent companies, whose subsidiaries are to be compensated in the same way. I will not dwell further on the anomalies very well pointed out by the noble Lord, Lord Wardington, in the debate on Thursday night which may arise as a result of the use of notional Stock Exchange values compensating equal holdings in different companies. The noble Lord, Lord Wardington, gave striking examples of the anomalies of that kind. The point I wish to make—I do not wish to detain your Lordships much longer—is this: taking over the assets of an entire company is taking over something which usually if the company has any prospects of prosperity is considerably lower than the Stock Exchange value. This has certainly proved to he the case again and again in the City where a perfectly fair take-over bid is made for the assets of a particular company.
Viscount SIMON: Did the noble Lord say "lower than"? Surely he meant "considerably higher than"? When you take over a company you usually pay much higher than the—
Lord ROBBINS: Did I not say "higher"? I beg your Lordships' pardon. I certainly meant to say "higher". The point is so obvious that I do not think I need elaborate it further. It is true that the individual shareholder, other things being equal, does not realise, either annually or when he sells his securities, his share of the total value of the going concern. But when the going concern is taken over as a whole, then a

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notional valuation based upon Stock Exchange values at a certain date will certainly not, even if inflation is taken out of the system, enable the company concerned to replace the value of its assets and control. That, I believe, is the fundamental defect inherent in this part of the Bill. In my judgment, fair compensation involves an assessment of re-placement value, and even to say that is over-simplifying.
The point to which I have been leading up is an extremely simple one. I have yet to indulge in any conversation or to read any article in which it is controverted. Yet unless the Amendment moved by the noble Lord, Lord Selsdon, so enlarges the opportunities for the arbitration tribunal, the simple principle of fairness will be flagrantly violated by this clause. That, I think, is a pity because people are cynical enough already about the degree of fairness they may expect from Government in this country. I think it is a pity, because it violates principles of abstract justice, because it will certainly be a further discouragement to prudent investment and, finally—and I do not drag this in now, since it has been at the back of my mind ever since I became conscious of this element in the Bill—it is a pity because of the impression that it will create abroad.
I wonder whether members of this Government, if some British company operating abroad were to be nationalised by some other reprehensible Government on the principles of this clause, would feel that full compensation was being paid by an export credits department or some other department if it were to act on this principle. Certainly we should be under no misapprehension at all in this respect. Noble Lords who were present earlier this afternoon will have witnessed that I have borne testimony on my feet in this chamber today to the unwisdom and the irresponsibility of certain remarks in the newspapers yesterday and to the effect that has had on the pound. But anyone who goes abroad deceives himself if he thinks that this kind of thing has not contributed materially to the inability of the pound to stand up to the sort of vicissitudes it has suffered recently. I cannot believe that the sober and moderate men on the Government Benches really intend that result.
The Earl of DUDLEY: Noble Lords have had a great deal to say about whether the compensation terms will be fair. The noble Lord, Lord Robbins, was among them. There haw been some very persuasive speeches from the Opposition Front Bench, and among others from the noble Lord, Lord Selsdon, and the noble Lord, Lord Orr-Ewing, from the Back-Benches. I am prepared to go along with those noble Lord; including the noble Lord, Lord Harmar-Nicholls, and the noble Lord, Lord Robbins, who paid tribute to noble Lords c opposite for being fairminded; and of course I would add that they obviously wish to be seen to be fair. Whether or not these terms are fair, it is perfectly clear that the only possible two reasons for unfairness would be either that the compensation "Cake" was too small or that the slices were cut unfairly. These are the two strands which the noble Lord, Lord Kirkhill, defined during the Second Reading of this Bill as being the Government's approach to compensation.
The Bill intends that the general principles, which the noble Lord set out as being necessary, should be devised for common application to all the companies to be taken over and that the Secretary of State would have regard to these principles in the case of the quoted company and the Secretary of State and the arbitration tribunal in the case of the unquoted company. As has been said by the noble Lord, Lord Robbins, and others, in this they will be guided by notional Stock Exchange values. Therefore all the effects which will flow from the compensation principle, such as fairness or unfairness, the added burden on the National Debt or restitution to the shareholders who have lost capital and income, depend upon the suitability of the Stock Exchange mechanism as a method of determining whether these effects can be achieved in the best possible way.
I should like to ask noble Lords Opposite which of these effects they are seeking to achieve in respect of the compensation terms. They have said that they wish to be fair, and, of course, it would be very satisfactory, egalitarian and equitable if shareholders could be compensated fairly; but I see some difficulty for noble Lords in the proposition that we should, at the same time as we attack nationalisation on

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the basis that the country cannot afford the cost, be suggesting that the price should be upped. What we ought to want, and what Ministers more than anyone else ought to want, is the most efficient and effective deployment of the nation's resources, which in terms of investment means that funds should find their way not, as so often happens, to the least resourceful companies, but to the most resourceful companies. I do not believe it is possible to sustain the momentum of a mixed economy unless the energies and resources of the public and private sectors are most delicately sustained, balanced and co-ordinated.
Noble Lords opposite accuse us of confrontation, but have they tried to sit down with the CBI and discuss with them, and with leaders of the other Parties, the implications and possible consequences of this Bill? And how can the private sector, which is soon to be deprived of these vast and, in many cases, profitable assets, plan to redeploy the proceeds of compensation stock in the most gainful way, in the way to achieve the greatest benefit to the domestic product, if they are to be kept in the dark about what they can expect to receive and what demands are to be made by some irrelevant and inappropriate formula?
If Ministers think that average Stock Exchange values of three years ago are the best way of valuing the current worth of a business, then they greatly misunderstand and overrate the mechanism of the Stock Exchange and the movement of share prices as a means of computing the resources and resourcefulness of a group or company in the private sector at any time. In my view nothing can be done to undo the damage to the economy by transferring companies to the State sector—some vigorous and flourishing, and removed from the control of well-tried and flourishing managements; others in decline being propped up at public expense for a period. But compensation will, at least, provide an injection of funds into the private sector to help carry the State sector whose enlargement, as Professor Friedman said yesterday, has brought us to the cliff top of collapse.
Many noble Lords opposite will, because of their views, reject what I say. But I ask them to consider whether the
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highest standard of living, and the greatest satisfaction, is obtained in that country which has the most vigorous and largest private sector, or in that country where all the resources, all the means of production, distribution and exchanges, are owned by the State. I have no doubt in which direction the Labour Party will take us, unless we dig our heels in all the way. That is why there is this talk of confrontation, and I suggest to noble Lords opposite that if they want to cool the temperature, to bring the heat down and to try to produce a situation where we shall have some kind of meaningful relationship between the Parties, they should try to introduce a measure of flexibility into this Bill, which does not at the moment exist; that they should try, between now and Report stage, at least to modify the compensation clauses so that they can be seen to bring benefit to the nation.
7.45 p.m.
Lord HARMAR-NICHOLLS: I hope that the noble Earl, Lord Dudley, was wrong in one respect. I hope he was wrong when he said that he anticipated that noble Lords on the Government Benches would reject the advice which he had been giving them, because that would mean that they underestimate the dangers that lie in front of us. One advantage of a debate on "clause stand part" is that one can talk in a general way. We have examined line by line, and word by word, what is in the Bill and we can now give a little genuine advice to the Government in the hope that they will accept it. I do not expect for one moment that noble Lords opposite can accept the arguments which will be put, but I hope that they will impress upon the Department how essential it is that, by the time this Bill becomes an Act—if ever it does—the compensation clause carries with it a message very different from what is in it now, even as amended.
The first question which I should like to ask noble Lords is whether they will use their influence to see that the Amendments which have been carried in this House remain in the Bill, and that it will not just come back to us from the other place in the most unfair state in which it existed before we first looked at it. Will they take into account what the noble Lord, Lord Robbins, said to them that this clause carries with it something

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much more important than that which is in the Bill? This will, I believe, affect the general world view of our future possibilities and potentialities.
If one values the pound now on a purely technical basis, taking into account the inflation in Germany, France, Switzerland and elsewhere, one can quite safely say that it should stand at around 1·90 to 1·95 to the dollar. The reason why it is at its present frighteningly low figure is that the world has no confidence in our forward projections, and people think that our potential will be misused. That has a bigger impact than anything else on forming a view. Everybody knows that what we need in this country is a bigger output per man hour to bring us to the level of some of our competitors. Alongside that, we need a more vigorous and risky investment programme, both from Government and from private individuals. Unless we can get those two things we shall be over the cliff, and we shall be unable to get back.
This clause relates very fundamentally to the second point. If the Government give the impression that when they nationalise they will be unfair in giving compensation, they will undermine world confidence at a time when they ought to be rebuilding it. They will drive the private investor away from using any savings or other money in a constructive way. They will encourage the feeling, which is rife throughout the country today, that the best thing to do is spend your money and not invest it; to get something on the shelf, in the safe or in the cupboard which will maintain its value. This kind of feeling, which comes from being unfair in matters such as this, will send us so quickly down the road to ultimate ruin that the present forecasts will seem almost rosy when we look at them in retrospect.
If I might have the attention of the noble Lord, Lord Melchett, who is the Under-Secretary as distinct from being a conveyor of messages, I should like to emphasise that apart from maintaining, with all their influence, the Amendments which have been written into the clause the Government should go further and recognise the force of the argument of the noble Lord, Lord Robbins: that unless replacement value is taken into account nobody will be compensated. People
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are not being asked to sell at a time of their own choosing; they are having to sell at a time dictated to them by the Government. The least that the Government can do is to insist upon a compensation clause which will ensure that people are able to retain the replacement it value of the assets that they have built up in the past.
There is much more to this clause than merely being fair to the people, who are involved. The clause will send out a message regarding our future approach which will decide whether or not we shall have any home investment. In. hat spirit, not merely in the technical spirit, I hope that the clause will be looked at by the Government before it comes back to us at Report stage and before we are asked to give it a Third Reading. If the clause goes back to the other place in anything like this form I hope that they will not feel that they have an ideological duty to send it back to us in a form which can bring only disaster to this country.
The Earl of ONSLOW: The noble Earl, Lord Dudley, mentioned the question of the mixed economy. Per taps the attitude of Her Majesty's present advisers to the mixed economy is that of drunken American who likes his dry Martinis mixed with less and less Martini. By this I mean that the Martini is the private section of the economy while the gin is the public sector. Also I have a feeling that noble Lords opposite are trying to buy the gin at duty free prices.
This leads me to my next point: that if the Government buy at a notional share value and find, leaving aside the part we were discussing the other day relating to the ship repairers and the plastic coating manufacturers, that they have something that they want to sell in that shipbuilding, ship repairing or aircraft manufacturing company which is totally the bounds of the Bill, they will be indulging in what they have accused the "flyer" members of the City of; namely, of asset stripping. Earlier in our proceedings when I raised the point of surplus office blocks and said that I hoped the Government would not have to buy new office blocks to house these vast Corporations, the noble Lord, Lord Melchett, gave me an assurance that they would try not to do this. If the Government are buying large numbers of ship repairing and

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shipbuilding companies and are putting them into British Shipbuilders and if they are also buying the two main airframe and engine manufacturing companies and calling them British Aerospace, they must find that they will have spare stuff to sell. Consequently they will be selling, either for their benefit or for the benefit of the Corporation, certain assets that they have and they will be buying at this notional share value. If the notional share value were freely negotiated or if it were a freely negotiated takeover perhaps this would be fair, but as it is not a freely negotiated takeover the people who are suffering are not the bloated City plutocrats who seem to loom so large in the imagination of noble Lords opposite but the vast majority of the institutions which to a large extent provide life insurance and pension funds for ordinary working men and women.
When they have to justify the Bill to our lords and masters, the citizens of the United Kingdom, I hope that the Government will explain to them that what they have done has been to depreciate those pension and life insurance companies which have tried to keep up the value through appallingly inflationary times, and economic mismanagement of Olympian standards; that it is their fault and that they are very sorry, but they had to do it for doctrinaire reasons, and that their pension and life insurance funds, when they come to maturity, will be less than they would have been had they not interfered by buying these shares in that way.
7.55 p.m.
Earl FERRERS: The clause that we are discussing is of extreme importance and the reason why it is important is, as has already been said, that any form of compensation must be fair. I do not think that there ought to be anything between those of us who sit anywhere in the House and the Government. If you are going to nationalise, then it stands to reason that the price paid must be fair. This means that the price has to be fair to the person receiving the compensation for which his assets are being removed. It must mean also that the price has to be fair to the Government and to the taxpayer in order to indicate that they should not pay out more than that which
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the assets are worth. It is fundamental to the discussion of Clause 35 that the compensation should be fair. The noble Lord, Lord Kirkhill, referred to this in his Second Reading speech when he said:
"My own view is that the compensation approach in the Bill is the fairest that can be devised"—
Those are very important words. Referring to the principle of compensation which the Government are using, the noble Lord went on to say:
"Your Lordships' House will have understood that the approach has two basic strands. The one is to devise general principles of common application to all the companies to be acquired"—
that is understandable—
"the other is to apply those principles in the fairest way possible".—[Official Report, 28/9/76; col.181.]
So if the expression of view of the noble Lord, Lord Kirkhill, is correct, there is nothing between anybody on the principle that compensation should be fair. If one does not agree with that, one is saying that expropriation or unfair compensation is acceptable and I do not believe that that is contemplated by the Government; at least, I like to think that it is not.
My worry is that even if the Government intend the compensation to be fair the very methods that they are using ensure that it cannot be fair because they are founded upon spurious data. The noble Lord, Lord Kirkhill, said that we have to find a common system of compensation. The whole basis of compensation is notional values of Stock Exchange prices, and of all the 43 companies which are to be taken over, only one is quoted on the Stock Exchange. Therefore one starts off by saying that the other 42 companies will be valued on an unreal basis; they will be valued on the basis of what the figure would have been had they been quoted, which they are not.
When I say to the noble Lord, Lord Winterbottom, that this is spurious data this is because one is trying to compensate people for a level of shares which does not exist. This means that then you have to devise a system to find our what is right. If one begins with what the share figure should be, one of the first things one realises is that the value of shares goes up and down depending on all kinds of circumstances: on the economic circumstances, on the viability of the company as a whole; and on the timing of the

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reports. And not only that: the share value of companies depends to a large extent on what is known about the company by the public at the time and it does not depend upon what the public knew about the company in retrospect. This is the situation in which the Government will be involved in trying to find out in 1976 not what actually happened in 1974 but what the view of people in 1974 would have been for the future of those companies, which at that time was not known. That is the type of consideration which has to be given.
And, of course, the value of shares depends upon what the public know about the company at that time, which is not the same as what the company knows about the company at that time. The company obviously may know very much more of its inner workings than the public knows, yet it is what the public knows that determines the value of the shares. Even then the value of the shares represents only the very small number of shares that change hands, and, as the noble Lord, Lord Robbins, said, absolutely correctly, if you are going to acquire a controlling interest then the value of those shares is enormously higher. It is reckoned that to have a controlling interest in a firm means that normally the share value will be 50 per cent. higher than that parcel of shares which is quoted on the Stock Exchange. Indeed, only the other day (dare we refer to it?) the Felixstowe Dock and Harbour Board were given a value for the full control of the company, and those shares were valued at 60 per cent. higher than those quoted on the Stock Exchange.
I suggest that in this respect these figures cannot be fair, because they are based, to start with, on shares that are not known and on the value at which they would have been quoted on the Stock Exchange floor, and they are not valued on the basis of an acquiring and controlling interest. So the whole basis of what the notional value of the shares would have been in hindsight I suggest is spurious and academic. It is certainly open to question and to argument on all sides and by many people. Of course, the value of these shares practically never reflects the value or the cost or the earning power of the individual assets which underpin the shares, because the individual investor is in no position to realise his share of those
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assets. The individual investor receives only the dividend income that that company chooses to pay, and that of course, as a matter of practice, is invariably much less than the total earnings of the company. Yet again that is the kind of value—what the shares earn—that determines the level of the shares on the Stock Exchange.
But if one accepts the fact that for control of a company it must be expected that the shares would increase in value by 50 per cent., and I think that is generally agreed upon by all people, then the value of the compensation which the Government are offering these companies is only two-thirds of the value of what it should be for a controlling interest. The curious part is that the shareholders are being paid, some time between 1976 and 1980, for securities which are transferred in 1976 and the compensation for which is based on 1973/74 values. So there is a huge time-lag and, as has already been stated, during that time inflation has gone up. So what in fact are the companies to do with the money which they acquire for the shares which have been taken over? The answer is that presumably they will either buy other companies or put that money into new plant and new equipment. They will have to buy new plant and new equipment at 1978 prices with cash paid for their assets at 1973–74 prices.
I do not believe that that can be said to be fair, and perhaps I may just interject this thought with regard to Amendment No. 159, which I think was the last Amendment with which we dealt on Thursday. It was asked whether the Government accountancy service was consulted over the drawing up of the compensation aspects of this Bill, and the noble Lord, Lord Melchett, said, quite reasonably, that that was not something which arose on that particular Amendment. He said that he did not know what the answer was but that he would be kind enough to let us know the answer if we referred to it on the Question, 'Whether Clause 35 shall stand part of tie Bill? So I shall be grateful if the noble Lord, Lord Winterbottom, if he is to reply to this Amendment, will say whether in fact the Government accountancy service was consulted over the drawing up of the compensation clauses.
I am bound to say that I find myself in a little difficulty over this matter because I

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believe that between us all we agree that the system should be fair. I do not think it is fair, and, what is more, the point that I find infinitely worrying is that when the Government were asked about compensation during the Committee stage of this Bill in another place the Minister of State, Mr. Kaufman, made it perfectly clear. He said, in effect, "We are not taking over these companies on the basis on which a willing buyer would get them from a willing seller. That is not what we are doing. We are nationalising them. We are taking them over by Act of Parliament. Therefore the terms on which a willing buyer buys them from a willing seller are not the terms on which we are offering compensation". It is as simple as that. That is what Mr. Kaufman said, in effect. The difficulty I find is that it is terribly hard to believe that the Government intend to be fair when the Minister of State says that that is the basis on which we are compensating companies. I genuinely hope—and I suppose it is an almost impossible thing to ask the Government—they they will reconsider this matter. If they want to be fair, then they must be seen to be fair, and at the moment I do not believe that they are being seen to be fair, nor do I believe that they are being fair.
Lord HANKEY: I hope that there may be time for one more speech from the Cross-Benches. I share the views which have been expressed that this really is not a very fair arrangement. The relevant days cover six months, during which period we had a coal strike, the engineers' strike, the three-day working week and numerous other troubles, and I cannot conceive that a worse period could have been chosen for fixing the base value.
I do not want to repeat all the things which have been said, but I did not get an answer to a question which I put to the Government as to how they thought up the figure of 5 per cent. for the "reduced amount". It seems to me an extremely low figure. My experience in cases of company compensations has been gained when dealing with Communist Governments. They never want to pay compensation, and they pay it at the lowest imaginable figure. The figure of 5 per cent. strikes me as an ominous similarity and puts fear into my bones. I do not like it. If it strikes me like that, it will
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strike foreign investors like that and we want foreign capital in this country. I have always hoped that we would have a Government which would give real help to our shipbuilding industry—knock down a bit of town around the shipbuilding yards, and extend the yards to build ships in a new way, as do the Swedes and the Germans. I had hoped that the Government would encourage investment in shipbuilding, but instead they have cast a blight on the whole thing.
Someone on the Government Front Bench—I think it was the noble Lord, Lord Winterbottom—said he did not know of any case where any company had asked for Government help. But with a text like this around where you get only 5 per cent. if you have asked for Government help regardless of how much their help was needed, how do you expect to find anyone asking for it? The shipyards are starved of capital and the industries have had a blight cast upon them. This is a most unfortunate moment to bring forward such a Bill.
What ought to happen is that in view of our economic situation, the Government should have the good sense to scrap the Bill. It does not matter that it is part of the Social Contract. If the Social Contract requires something manifestly idiotic and unfair, it should not be carried out. These are strong words, but I have very good reasons for thinking this in this case.
Finally, we have the interesting case that the compensation will be paid in the form of Government stock. At a time when the inflation rate is running at 14 per cent. and likely to rise again because the Government borrowing continues, can you think of a quicker way to lose everything than to put it into Government stock? This is so much so that the Government have had to raise the rate of interest to 15 per cent., and probably it will go higher. If you pay 15 per cent. for assets which you take over, the assumption is that you are able to make more than 15 per cent. out of them, otherwise you will lose your money. Do the Government seriously think that, by taking over the shipbuilding companies, which have been badly treated, they will make 15 per cent. profit out of them? Or is this not otherwise throwing money down the drain? This is bad economics, bad commerce,

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bad finance, bad in every way. These compensation proposals are very open indeed to criticism.
8.13 p.m.
Baroness WARD of NORTH TYNESIDE: It is perfectly obvious from the debate that compensation is badly regarded from all sides of your Lordships' Committee, and quite rightly so. I want only to raise one particular point, a rather different one from most people. I wish to ask why this system was introduced by this Government? Several of my colleagues have said that the system itself was a very bad one and that the Government ought to have been able to find a better system. I happen to have represented Wallsend-on-Tyne from 1931 to 1945. Wallsend-on-Tyne is a very big shipbuilding and ship repairing area. For all those years, even having lost my seat in 1945, and afterwards being returned for Tynemouth in 1950, I have still retained a very great interest in the shipbuilding area on Tyneside. I like to think that I know, at any rate, something about it.
When I lost my seat in 1945 and the Labour Government were returned with, if I remember rightly, Mr. Attlee as Prime Minister, the first decision was taken to nationalise the coal mines. That was the first nationalisation programme. So the coal mines were nationalised, and the question of compensation arose. It is very difficult to remember so long ago; but I think my brain is quite clear that the decision was then made that an independent body should advise on the compensation to be paid to the private coal owners.
Of course, the problem of compensation in shipbuilding depends, at any rate to some extent, on the different assets of the different companies. Some companies have tremendous assets, some shipyards are losing money and some shipyards have ship-repairing yards attached. One cannot find a general compensation scheme which would fit every shipyard. In the same way, in 1945 you could not find a scheme of general compensation because of the different coal fields.
At that time I had some connection with Bolsover, one of the most progressive coal mines, which always had plenty of money, which had deep seams and was a grand company. In my area of Northumberland and Durham we had a lot of
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mines which were losing money. Again, as today in shipbuilding, there were many differences in the compensation which had to be paid to the private mine owners, as there is in paying adequate compensation to the different shipyards.
Although I had lost my seat in 1945, I still had a fairly wide connection with colliery undertakings. An independent body was set up to assess what would be fair compensation. My recollection is that the compensation terms game out, they were considered by the private colliery owners as fair and there was not the controversy over the compensation to the private colliery owners as there has been over the compensation to ship-builders and ship repairing yards. So it seems to me that the system used then was a very much better one than tie system being used today. I should like to know from the Government whether they have considered using the same system as was used in 1945. I suppose it ran until 1948, because there would be some t me while the investigations were put into operation.
My recollection is that the private colliery owners were very well satisfied with the scheme that had been put into operation. I should like to know from the noble Lord why the Government have not used that system today in the compensation of shipbuilders and those connected with shipbuilding. Had that been done, it would have been very much more helpful. I am always looking at these things with great interest, with regard both to shipbuilding and coal-mining. I have always wondered why the old system of compensation paid to the private colliery owners was not used, and I should be grateful to hear why not, because it was regarded as fair. Nothing like the controversy arose then as is arising over the present system which this Government now want to introduce. I am very sorry that I failed to hear the speech made by the noble Lord, Lord Robens, because, after all, he fought in the next constituency to me in Blyth very many years ago when he was a great supporter of nationalisation.
Lord ROBBINS: With the deepest respect to the noble Baroness, she is confusing me with a much more eminent Peer of the name of Robens. I rejoice in the humble name of Robbins, and I

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have never entered into political conflict with the noble Baroness, and I should fear to do so.
Baroness WARD of TYNESIDE: I do apologise. Unfortunately, when I came in I heard one or two noble Lords talking about Lord Robens, so they also used my noble friend's name incorrectly. Nevertheless, had he been here I should have liked to hear what the real Lord Robens thought. In those days, he was a great believer in nationalisation. He does not seem to be now, and he has gone into other and wider fields. He accepted the compensation for the coal mines—whether or not he had shares of course I do not know. It seems to me that that scheme under Mr. Attlee was a much fairer one. Though I did not agree with his policies, Mr. Attlee for many years Prime Minister of a Socialist Government, was widely respected and had a very wide approach to the problems of industry. I wonder whether he would have been pleased with the terms in regard to ship-building and ship repairing which have been put forward by noble Lords opposite.
The scheme for compensation for the coal mines, carried out by an independent body and accepted by the private colliery owners, was apparently a good one. Of course, they regretted nationalisation, they did not enjoy losing their private collieries, but at the same time they considered that they had been fairly treated. When I heard many noble Lords say what a bad system this Government are producing, I wondered whether they had looked at that scheme—but perhaps they are all too young and it is only I who am old enough to remember what happened in 1945. When the noble Lord replies, I should be glad to know why this particular system, which has caused so much controversy, has been introduced, and why the other form of compensation has not been adopted on this occasion.
Lord LLOYD of KILGERRAN: I should like briefly to support the general view expressed by many noble Lords that the Government's formula for compensation, based on a notional Stock Exchange value, is not realistic and not fair. I should like to raise one aspect in which in my submission the formula is not realistic or fair—that is, in its application
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to the successful company, particularly the successful company whose success is based on the technology and the good will and the know-how that it has built up and also to the assets it has built up which are generally known as industrial and intellectual property.
When I spoke on Second Reading, I declared an interest in that I was a small shareholder in Vosper Thorneycroft. It seems to me that the Government's formula omits to take such assets into account. If I may mention a personal aspect, I have spent many hours of my life endeavouring to assess the value of good will, of know-how and the value of assets of industrial and intellectual property. In a successful company, the value of these assets often has no relation to the Stock Exchange value. Therefore, even at this late stage, I should like to invite the Government to indicate what their policy is in relation to that aspect of compensation.
Lord WARDINGTON: I cannot speak with the graciousness or fairness of the noble Lord, Lord Robbins, but without going back to the debate of last Wednesday and the various points which I then considered to be unfair, I should like to consider whether a notional price is appropriate. The Stock Exchange price represents the whole of the business. But many companies which are the subject of the Bill have a variety of interests and divisions. Not all divisions necessarily produce the same earnings or have the same assets or asset value for people who might wish to take over a part. Following on the remarks of the noble Baroness, Lady Ward of Tyneside, previous Bills have related to industries where there were a substantial number of companies quoted which, therefore, provided a reasonable base to start with, though exceptions had to be made. Previous Bills gave an option because the assets represented a different value to different people. Whether it is fair or appropriate I leave for the moment, though I do not retract what I said the other day. It is going to be difficult to arrive at a notional price.
A Stock Exchange price takes the future into account, but that is something we are explicitly excluding from 1974 onwards. That is unfair and inappropriate. We are

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specifically excluding any increase in dividend and, as I said the other day, we are including a period of quite exceptional circumstances and taking a very short period of time. Disregard the question of whether this is a good time to bring in the Bill or whether it is a suitable industry to be nationalised. Six months is not a good period, and I believe that one of the reasons why we have these anomalies in the Bill is that political expediency meant that the Bill had to be drawn up quickly and therefore previous nationalisation Bills were not blue-prints for these wholly exceptional circumstances. I should like to say one or two further things as we progress through Clauses 37 and 38 because they are all related together. But I beg your Lordships opposite to pay particular attention to what Lord Robbins said, because it is very pertinent.
8.30 p.m.
The Earl of LAUDERDALE: Noble Lords on the Front Bench opposite are beginning to look a little weary and perhaps even bored.
Lord WINTERBOTTOM: No.
The Earl of LAUDERDALE: I am glad that is not so; obviously my rising to my feet makes a difference. But in general I think it would he fair to say that there has been a look of some weariness, or a sort of Lenten look of fasting and misery, about noble Lords on the Front Bench opposite, because this is a tedious exercise. Constructive Amendments have been put forward and they have been simply blocked outright. We have been taking part in a dialogue of the deaf. It is necessary to go on repeating points made over and over again in the hope that noble Lords opposite may eventually tumble to the point. It is always said that if you make a speech to simple people you should say what you are going to say, say it, and then tell them what you have said. I am not going to say that noble Lords opposite are as simple as that, but there are moments when one wonders whether their refusal to answer questions derives from the principle, "Never explain, because your friends understand you and your enemies will not believe you", or whether their philosophy is, "Better a bad excuse than none at all."
What has been so extraordinary about
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debates on this Bill so far is the emptiness and silence of the Benches opposite. Your Lordships' House has been enriched in the last few years by the ennoblement of a number of persons of very considerable business, industrial and City experience. Indeed, some of them, when they have come here on a rare occasion, particularly the Opening of Parliament, have come in the Rolls-Royce we heard about over the weekend, which I must say are absent from noble Lords on this side of the House. But where are they? When the Front Bench cannot give intelligible explanations and rely simply on reading out briefs, which are not very well constructed to start with, all right, that is their bad luck; but one would have thought that at least their own supporters with knowledge and experience of industry and the City would come to their rescue and explain what they are up to. The fact is that they have been deserted by their own side, and it can only be that the good and intelligent and wise and experienced men who exist in the Party opposite do not really have much faith in; he policy behind this Bill in general and behind this set of clauses in particular.
The Government may be getting rather tired of hearing about fairmindedness. When I was at school we were always told about "house spirit" until I could have screamed. Of course "house spirit" meant that we all did what the housemaster wanted. It may well be that noble Lords opposite will say that when the rest of the House talks about fairmindedness, it means fair in our view and not in theirs. But the fact is that this issue of fairness is critical in the eyes of the world. It has been said half a dozen times tonight, but it is worth saying another twenty times, if only noble Lords would take it on board in their heart of hearts, that we are not asking them to declare a great charismatic conversion tonight but we are asking that they will look at the problem of fairmindedness in the light of this country's reputation, in the light of today's news about sterling, in the light of the lack of investment and lack of foreign confidence in this country, and by Report stage come back and at any rate, as the phrase is, be a little more flexible.
This word "fairness" is really, in the jargon of Statutes and of Bills brought before Parliament, a fairly new concept." Fairness cannot be defined; fairness

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is something we know about, something we recognise and understand, but it is jolly hard to define it. It is a fairly new concept, but it is creeping into other aspects of our public life. For example, only a fortnight ago—the text reached me today—the Department of Energy sent round a letter to companies applying for licences in the fifth round of licensing; they were invited to say whether they would enter into discussions about the participation of the British National Oil Company on the basis not of the market price for crude oil but a fair price. Hitherto it has been the market price. This is a matter I shall refer to on another occasion. The point is that the concept of "fairness" is being used by the Government to introduce quite a new slant where there is a negotiation between the Government on the one side and "little brother" on the other. So this question of the way the Government treat fairness is a touchstone, and is going to he seen abroad as a touch-stone, of the Government's good faith.
The words of Mr. Kaufman in the Standing Committee have been quoted, but they need to be quoted over and over again, because unless noble Lords opposite understand the inwardness, as we say in Scotland, the real meaning of what Mr. Kaufman said, they will never grasp what we are getting at. What Mr. Kaufman said was this:
"We are not taking over these companies on the basis on which a willing buyer would get them from a willing seller. The Government are not going out on the market to buy control. We are taking control by Act of Parliament. While doing so we are offering fair compensation for the assets".
If that is not the classic Communist case of, as you might say, double-think and double-speak with regard to expropriation, then it is very difficult to imagine what is. This phrase is going to be stuck in the Government's mouth for a long time to come.
May I say in parenthesis, talking about fairness, that we on these Benches, and I believe throughout the House, have no fear whatsoever of the sort of blackmail nonsense that has been spoken over the weekend in certain speeches by Members of another place. Where it comes to fairness and we are seen to be standing for fairness the public will be behind us. It might be well worth while noble Lords
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opposite understanding that, instead of allowing some of their friends down the corridor to rant about Rolls-Royces and a lot of other things that are quite irrelevant. The concept of fairness is critical to this country's good name in the world, and this is the point that is at issue on this clause.
It may well be said that I am only repeating what has been said already, but I have explained why it is worth while repeating these things. There are the distortions, of which the worst is the wholly hypothetical nature of the calculation; it is one hypothesis built upon another. There is a notional value which can be twisted and turned to mean absolutely anything; it certainly cannot be checked objectively. There is the question of the Stock Exchange quotation—what it would have been. How on earth can serious people, be they lawyers or economists, say what would have been in a hypothetical situation, one hypothesis on top of another? Then there is the assessment, which is either what the stockholders can negotiate with "Big Brother" in an atmosphere of so-called fairness, negotiate under the threat of the bullet, negotiate when some people are more equal than others, or it is what the arbitration tribunal may fix; and in view of the Government's philosophy about fairness as we have had it hitherto, who is going to have much confidence in a tribunal?
Then much has been said, and it is worth while repeating, about this nonsense of the Stock Exchange quote. An example was given so well and so convincingly and so plausibly, and I thought so simply, by the noble Lord, Lord Selsdon, who, alas, cannot be with us today. I think he is in America, or Geneva, or abroad somewhere. He said it is like trying to measure the value of Boot's by the value of the high street chemist. Stock Exchange prices, anyway, do not refer to assets; they refer to the market for a small block of shares on any particular day. One knows that, and it is worth saying again, because noble Lords do not seem to be able to understand quite simple matters in this regard.
They say they are taking control. All right, taking control normally means paying between 25 per cent. and 50 per cent. above the market level of the shares

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at the present time. Let us take a very good example. There has been an uproar over the weekend because this House threw out the Felixstowe Docks Bill on Friday. Under that Bill we were invited to approve a situation in which British Transport Docks Board has been offering 150p per share for shares that stood at 90p when the offer was made. This is an offer that the Government approved. If they accept the principle that when you buy control you have to offer very much more than the market price, surely they could recognise it now.
The fact is that the Government consider that it is fair to confiscate the control value of a company, and we shall listen with interest to what they have to say now. But I am reminded of the adage of one politician—and I think he was in fact from the Party opposite but he might well have come from my side—when he said something very shrewd on political argument. He said,
"The more one seeks to speak the truth, the more difficult it becomes to he precise".
8.42 p.m.
Lord WINTERBOTTOM: Before I reply to this somewhat diffuse discussion on clause stand part, may I, through the noble Lord, Lord Cullen, thank the noble Lord, Lord Selsdon, for his courteous note in which he told me that he was not going to be present here tonight. As I understand it, the noble Lord, Lord Cullen, has a watching brief on this subject, and I am certain that he will exercise his watching brief with precision. So far as I understand it the noble Lord, Lord Cullen, raised the question of the meaning of the word "person", which I believe under the Interpretation Act 1889 includes a body corporate as well as an individual; that is, a body corporate which is a parent company as well as an individual. This should not stand as a hazard in our discussions.
On Wednesday night noble Lords opposite passed Amendment No. 156 moved by the noble Lord, Lord Selsdon, which introduced in statutory form the word, "fair" into the Bill. We believe that this Amendment would have dealt with the problems raised by noble Lords on all sides of the Committee. However, we on this side of the Committee resisted
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the Amendment on the basic, that the terms in the Bill as present to the House were fair. I shall, therefore, make my remarks at this point on the basis of the Government's view of what is fair. May I say to the noble Earl, Lord Ferrers, that I think he was fair when le pointed out to the Committee that fairness is a two-way state: the Government have to be fair to the individual or to the company, and the Government at the same time have to be fair to the taxpayer, because at the end of the day it is the taxpayers' money that is being shifted to compensate the individual or the company.
The noble Lord, Lord Robbins, took perhaps a realistic but at the same time rather hard view that none of the Parties, no Government, is ever truly fair; that fairness is a word that they find very difficult to understand. It is not quite true because I think we all try to be fair, but what exactly we mean by fairness is not the easiest thing to define. Noble Lords opposite have put "fair'' into the Bill, and we shall perhaps in clue course know what the statutory in: aping of "fair" is. The best we could do as a Government was to take a measure that was not hypothetical but factual, and which was the average of a series of share values over a six-monthly period.
I am willing to accept that that method of measurement is imperfect. In point of fact anything that we did was bound to be imperfect. But I suggest that certain aspects of the fairness or unfairness of this decision might be discussed at a later stage in our discussions with greater precision. On this Motion on clause stand part noble Lords seen-to have fired at me with a blunderbuss, some bits going back and some going forward, and we are going to have an opportunity as we go on with our discussions to discuss the base value of listed securities, the base value of other securities, the function of the stockholders' representatives, and of course the arbitration tribunal. I should have thought that there were particular clauses in the Bill where certain of the points raised in this discussion might more profitably have been raised. After all, we are coming to them, and I hope noble Lords will be prepared to argue with us with greater precision these specific points which have been raised rather loosely at this stage of our discussions on Part II.
The Earl of LAUDERDALE: I hope that the noble Lord will acquit us of any endeavours to hold up proceedings. This section of the Bill is headed "Compensation", and it seemed to a number of us that by far the simplest way of despatching the business and, for that matter, helping the Government to get on with the Bill, was by making these general comments on the clause stand part. I speak for myself, but I think that was the idea. I hope we are not going to have a long clause stand part on each clause, otherwise we are going to get very thirsty indeed.
Lord WINTERBOTTOM: I think that the noble Earl mentioned the "Lenten look" on this Bench. May I say that so far as I am concerned it must be very early in Lent because I have not yet got a lean and hungry look. But I hope that the noble Earl will in fact practise asceticism at the later stages of our discussion, and having had a full meal now will in fact fast thereafter.
May I go back to the point that I was making. The most factual way that we could find of valuing shares as a starting point of negotiations was the Stock Exchange valuation of those shares, or the shares of parent companies, at a series of dates prior to the Government's announcement to nationalise these two groups of companies. Might I say to the noble Lord, Lord Robbins, that the reference period which ended in February 1974 was chosen as the last reasonable period during which share prices were unaffected by the prospect of nationalisation. To have chosen a later period would have opened the Government to the charge that they were rigging the terms of their offer. The problem we are discussing I think divides both sides of the Committee, but we believe that we chose the only factual and fair way of valuing the shares for the purposes of compensation.
Earl FERRERS: Can the noble Lord say how it is factual?
Lord WINTERBOTTOM: Stock Exchange prices, so far as I know, are a fact. When I buy a share or sell a share the price is a fact, and that is the best and nearest I can get to a factual state.
Earl FERRERS: The noble Lord will observe, of course, that the majority
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of the companies do not have Stock Exchange prices.
Lord WINTERBOTTOM: This is a very interesting point. I am not dodging it. I cannot dodge it because it is coming towards me. We should be able to deal with this with precision, even brutality, when we come to Clause 38. I see that the noble Earl, Lord Lauderdale, is about to leave the Chamber. Presumably he has lost his appetite for these proceedings, though it is of course for him to decide to have a meal whenever he likes.
The Earl of LAUDERDALE: I enjoy listening to the noble Lord, Lord Winterbottom, but I thought he had left the points that interested me and that I might have a thin Lenten supper.
Lord WINTERBOTTOM: After that pleasant exchange perhaps I might answer the noble Earl, Lord Dudley, who will of course correct me if I failed to grasp exactly what he said. He asked what, at the end of a transaction, when Government stock had been exchanged for shares and so on, the individual company was to do with its Government stock. He argued that it was essential that the money—not the money of course; the Government stock—that had been issued for this purpose should in due course find its way into productive investment for industry. This point is of great importance which is recognised by the Government, and I am grateful to him for bringing it to the notice of the House.
In cases where the compensation stock is issued to a single shareholder, which is the holding company concerned, that company may wish to realise its stock in order to restructure its company, and I am certain that will happen; it has happened in the past and I feel sure that it will happen now. The Government are anxious to encourage reinvestment in productive industry and they have therefore provided an incentive in the Finance Act 1976—I believe in Section 54—by which a company owning the shares of a vesting subsidiary which sells its compensation stock within one year of receiving it is exempt from any capital gains tax on the stock, provided that it reinvests the proceeds in what the Inland Revenue calls qualifying assets; for land, building, fixed plant and so on. This

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amounts to reinvestment in productive industry, whether or not it takes place inside or outside the aircraft or ship-building industries, which is what the noble Earl wants and what the Government also want.
Lord ROBBINS: I hope the Minister can relieve my extreme puzzlement. I gather that in the course of a friendly exchange of view concerning the issue of Government stock, the noble Lord, Lord Melchett, argued with great force and a considerable degree of voracity that this issue was simply a transfer and did nothing necessarily to augment the flow of aggregate expenditure.
Lord WINTERBOTTOM: That was the situation at the moment of the transaction, but time passes and various other factors come into effect and this is one of them. I do not believe that some of these great companies which receive a substantial holding of Government stock as compensation will just sit there and hold it; they will do something with it, but this is not on the day of the transfer, of the transaction.
Lord ROBBINS: Am I to understand, then, that the noble Lord thinks that eventually the issue of this stock will augment the flow of aggregate expenditure? This has deep implications as regards macro-economics.
Lord WINTERBOTTOM: I shrink from arguing with the noble Lord, whose expertise is far greater than mine, but I think he will agree that nothing in life is static. There may be an exchange of equal value between the Government and the individual on vesting day, but that does not mean to say that that freezes the situation for ever. I would hope that the situation today is not one that is frozen for ever.
The Earl of DUDLEY: I am grateful to the Minister for answering my point. However, nothing he has said so far invalidates my proposition that provided the stock is sold and the funds reinvested, a generous rate of compensation would be in the national interest.
Lord HAWKE: Arising out of what the noble Lord, Lord Winterbottom, has been saying and the fact that he visualises
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these companies selling their Government stock, may I ask him to agree, that the only people who will buy it are the very people who would otherwise buy Government stock direct from the Government? As the Government have at present enlisted every buyer they can to raise the wind, they are mortgaging their own future in this way. I am not sure that he was correct in his remarks about capital gains tax; I always understood there was no capital gains tax on Government stock, anyway.
Lord WINTERBOTTOM: That is going a little beyond what we are discussing. At any rate, what I am discussing is Clause 35 standing part of the Bill. Much of what has bun said is valuable, but it is not quite what we set out to discuss at this stage of the evening.
Lord CARR of HADLEY: It is the Minister who has inadvertently or other-wise strayed into another important field. Unless the Government tell Parliament and the country that there will be some time bar on the recipients of this stock in selling it, liquidating t, he does not begin to answer the point nude by the noble Lord, Lord Robbins; namely, the effect on the aggregate purchasing power released into the economy. Unless he says that the Government will put some time bar on the sale of this stock, he is admitting what we all—we on these Benches and the Liberal arid Cross-Benches as well as people o outside the Committee—have been saying from the beginning; namely, that this act of nationalisation adds significant, to the Government financial demand and the Government financial deficit.
8.57 p.m.
Lord WINTERBOTTOM: What the noble Lord has said is extremely interesting but there must be a point, which probably we have passed, when such points should be discussed. I think it is valid on Second Reading to discuss the whole impact of these proposals on the money stock, but what I am trying to do, and what I thought it only courteous to do, is to pick up the point made by the noble Earl and express the Government's view on the problem he raised. I cannot do more than that and noble Lords would not wish me to do more than I can do.

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I shall, therefore, stick firmly to the provisions of Clause 35 and not wander into the charming areas of macro-economics and Stock Exchange valuations and so on which have been dragged across my path. The points raised by the noble Earl, Lord Ferrers, will have to be raised again on later Amendments and I am sure he will keep up his strength to deal with those issues properly at a later stage of our night's discussion.
I come firmly back to Clause 35, which deals with two points only; it prescribes that compensation will be in the form of Government stock and that the amount of Government stock to be issued will equal the value of compensation and it provides that where a company is saved from collapse by Government financial assistance, a reduced amount of compensation will be paid. This is a splendid hook on which to hang much of our discussion, but I am sure that the Committee will excuse me if I do not go into the question of the saving of a company from collapse by Government financial assistance because we have had a good discussion of that already. I want simply to come back to the point that Clause 35 prescribes that compensation will be in the form of Government stock and that the amount of Government stock to be issued will equal the value of compensation. This will provide former shareholders with a steady income and with the opportunity of gaining whatever capital appreciation there may be on the gilt edge market.
The stock can be traded in in exactly the same way as equity shares. The clause provides that the amount of compensation due will be the base value of the vesting securities and we go to Clauses 37 and 38 to decide what is appropriate in the case of base values. Clause 35—the clause that we have been discussing—does not bear on the valuation of securities themselves. I know that noble Lords will sharpen their intellect to deal with the method of valuation on later clauses. It is on this very simple premise that I ask the House to accept the clause.
9.1 p.m.
Lord CARR of HADLEY: While I had a little sympathy with the noble Lord, Lord Winterbottom, when he felt that he
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was being fired at with a blunderbuss, I did not expect him to fire back with such accuracy at his own Minister. It seems to me that the shot from the blunderbuss has not done the noble Lord much damage but his own Minister's case on the effect of the compensation in the Bill has been utterly destroyed by the unerringness of his rifle shot. It is now clear that what the Government have been trying to tell the House and people outside about the financial effect of going ahead with nationalisation has been totally misleading. I feel that the importance of what he has said has perhaps not yet fully dawned upon him, but I am sure that it will almost certainly dawn upon some of his colleagues when they have had time to reflect.
I may not properly have understood what the noble Lord said about capital gains tax and, if I have misunderstood him, I have no doubt that he will forgive me and I can correct my error at some future date. I was under the impression that the Finance Act 1976 said that any compensation that might be reinvested in stocks and shares by the recipient would certainly be subject to capital gains tax. I may have misunderstood the point that the noble Lord was trying to make when he referred to certain conditions of freedom from capital gains tax, but I think that I am right about that and I do not believe that it applied to the compensation from steel nationalisation. There again, however, I may be misinformed and perhaps, if the noble Lord cannot answer me straight away, he will look at this and let me know because, if I am right in the two propositions that I have put forward, that only serves to underline what we were all saying from many sides of the House and from outside the House that, as at present proposed, the compensation formulae are not fair if we use precedents set in other nationalisation Statutes as a standard of fairness. They are not fair by past precedents, let alone by any more abstract or technical yardsticks that we might define.
As to the blunderbuss over which I said I had some sympathy with the noble Lord, I believe that there was a need for a general debate on the whole question of compensation and it did seem to a number of us that the debate on the Question, Whether the clause shall stand part of the Bill? provided the best opportunity. I hope—I cannot do more than that—

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when we come to the bits that are still ahead of us we may be speaking near enough in time to remember that we have used the same arguments already. However, I can only express that hope. I shall try to do my best to set an example in that respect, but I believe that it was for everybody's convenience to have a general debate at this stage.
Before I come, in summing up the debate, to the more general principles, may I first refer back, not in detail but very briefly, to the technical Amendments which preceded this debate? I want to ask the noble Lord, Lord Winterbottom, and his colleagues, to look very carefully at some of the arguments that we were using, because I do not believe that they were partisan in any political way. believe that they have substance. Of course they are to some extent hypothetical, but so is so much of what we are talking about. I would just say to the noble Lord, Lord Melchett, that, while I accept that it may be true that, if we have an arbitration tribunal with much wider powers, which is certainly what we want—and we shall be coming back to a further Amendment on that later in our deliberations tonight—it will not matter so much if some of the other clauses and sub-sections are not as fair as they should be because there will be this fall-back machinery to cope with any unfairness that arises, I hope that noble Lords opposite will agree that we ought to try to get the clauses as good as we can because we do not want to have to resort to the arbitration tribunal on almost every single case. We really ought to try to see that the tribunal is a genuine fall-back machinery which is used more as an exception than as a general rule.
For that reason alone, I feel that it is important to try to get the other clauses as technically correct and fair as possible, and I repeat that I really do not think that the arguments that have been put forward on a number of detailed Amendments to this clause are in any way partisan and, even if one accepts—which we do not—this basis of compensation, within that acceptance, I really believe that many of these present clauses are rather like a dog's breakfast and really need tidying up in order to avoid undue resort to arbitration, which is what would happen if they go through in their present form. So I hope that before the next
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stage the Government will lock at some of these technical points with an open mind, even if they feel unable to look at the overall issue with such an open mind.
Coming on to that overall issue, it struck me that one of our troubles not only on these Conservative Benches but on all sides of the Committee is that the Government are really not Seeing this problem through the same eyes as we are. It seems to me that they start from a belief that what we are trying to do is necessarily to get more money—more taxpayers' money—to compensate the present owners of these businesses. Of course we want to get a fair amount of taxpayers' money, but as we have said—and I am glad to notice that the noble Lord, Lord Winterbottom, picked up this point, because my noble friend Lord Ferrers said it again this evening—we must be fair to the taxpayer as well as to the present owners of hip business. I have a feeling, however, that noble Lords opposite suspect that every Amendment that comes forward is a device inevitably to raise the total amount of money we want to extract from the taxpayer.
I was encouraged to fear that by some words used by the noble Lord, Lord Melchett, in our debates on this subject last Wednesday night, when lie said at one stage—and I made a note of the words he used—that the compensation was fair or even generous. With respect, we are not talking about being generous. That has nothing to do with the Amendments we are moving. The Amendments are entirely to do with fairness, and fairness means fairness—fairness, let me repeat, as between the taxpayer and the recipients of the compensation; but fair-ness also—and this is extremely important—in the allocation of the total sum between the different claimants is on it. As has been pointed out both last time we debated this matter and again today, if we do not get fairness in the distribution, we shall get a misallocation of capital and therefore inefficiency both within the Corporation and within the holding companies being compensated for the loss of some of their subsidiaries.
First of all, therefore, I ask the noble Lord and his colleagues to realise that the arguments about unfairness are indeed strong. They are not Party arguments in a

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politically partisan sense. They do not come only from these Benches. Indeed, they do not come only from other Benches in this House; they come also from outside. As I said last week, some of the earliest and certainly some of the strongest representations about the unfairness of these proposals we have in the Bill at the moment came from those most concerned with the protection of small savings and present and future pensions of many hundreds of thousands of our fellow citizens. That is where one of the earliest and strongest protests came from, and it was not in any way politically inspired or motivated. As the noble Lord will know, that protest was made not only in the first place to the Minister but also later on personally to the Prime Minister. I hope therefore that the Government will, even though we are at a late stage of the Bill, take very seriously these arguments about fairness, realising they are not just politically partisan and realising that changing their minds about the principles of compensation does not in any way compromise their stand for the principle of nationalisation.
Of course I accept, however reluctantly, that to go ahead with nationalisation is a principle on which we cannot expect the Government to compromise. I believe that it is against the national interest, that they are wrong and will be proved wrong, but I accept that politically they cannot compromise on that point. However, I beg them to confine their incapacity to compromise to the genuine political issue of nationalisation and not to extend it to other areas of the Bill, notably the area about which we arc talking at the moment, the area of compensation, where the arguments being put forward are not politically partisan, did not start in that way, have not been continued in that way, as I believe was made very clear by the noble Lord, Lord Robbins, in his speech tonight when he specifically prefaced what he was saying by emphasising that he was not in any way referring to the merits of the main question as to whether these industries should or should not be nationalised.
I beg the Government to look again at their proposed basis of compensation. I beg them to look at it again from two points of view; first from the point of view of the reference dates. I do not believe,
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whatever basis is chosen, that the reference date contained in this Bill is fair. I noted what the noble Lord said about the particular six months in question having been chosen as the last period when it could be said that the share prices were not in any way affected by the blight of nationalisation. I accept that and I accept the good faith behind the choice of those dates.
There are two qualifications which one must make to that. First of all, I believe that when those dates were chosen it was anticipated by the Government, and indeed firmly intended by them, that this nationalisation process should go through much sooner: and the fact that it has not is not due to the time that Parliament has taken in debating it; it is due to the Government's own time-table. So I believe that when, in good faith, Ministers chose this particular period of six months they were honestly believing that the time between that period of six months and the enactment of this Bill would be much shorter than it has in fact proved to be. Because I do not need to remind the noble Lord that the Bill was not proceeded with at the moment in the Government's programme which was originally intended, but was in fact postponed by a good many months. I therefore think that we are now dealing with a much longer gap between the time when the compensation will be paid and the dates laid down in the Bill on which the share prices are to be taken than was ever thought likely by the Government when they laid down those dates.
I also think it is not fair for the related reason that I put forward in a debate on an earlier Amendment, as did other noble Lords, and which, indeed, the noble Lord, Lord Robbins, put forward in his speech in this particular debate; namely, that by sticking to this three-year-old period, as it will virtually be, or certainly two-and-a-half-year period, at the end of which this compensation might begin to be calculated, we are taking no account of the behaviour of individual companies in that period. A laggard company, provided it has managed to keep itself out of bankruptcy when certain things that we have been talking about earlier this afternoon happened, and which does no more than just keep itself out of bankruptcy, will do as well as the company which, in not just its own interests but in the interests of employment and of the

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overall state of the national economy, has done everything that any company could to be vigorous and expanding over these last two and a half years. It seems to me a pretty poor reward to have your compensation irretrievably fixed by some artificial yardstick dating back to the last few months of 1973 and the first two months of 1974, with no regard being paid to how you have behaved in the meantime. As I have said, a lazy company which has sat back and done nothing except keep itself out of the bankruptcy court will not lose anything by its action, whereas another company which has forged ahead as if nothing was going to happen to it, completely undeterred by the fact that it was going to be taken over, will gain nothing by what I think one can describe as patriotic behaviour in that period. That seems to me to be a bad principle. So I believe that the reference date is unfair for the two reasons I have given, quite apart from others which might well be adduced as well.
This brings me on to the second reason for the unfairness, and that is the basic method or reference standard which has been chosen by the Government; namely, of share prices. Of course I accept that share prices have been used as a basis for compensation in other nationalisation Statutes, and I accept that in certain circumstances they may provide a reasonably fair basis. Where the shares of a whole company are held by lots of people, then I accept that those recipients of the compensation are probably treated fairly because they are probably given an amount of money with which they can make an equally advantageous investment on the stock market. So when one is buying out a company which is held widely by a large number of shareholders, it may be that using the stock market price as the basis for compensation does produce a reasonably fair result, at least for the individual shareholders involved. But where the Government go wrong is in not realising that a totally different situation arises where one is dealing with wholly-owned subsidiaries, or almost wholly-owned subsidiaries, which is the the case in the majority of the companies affected by this Bill. There, the position is entirely different, because the value to the holding companies is no longer to be measured in terms of the share market
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price: it is in fact, and can only in fact be, fairly measured in terms of as; et values.
Perhaps I may ask the noble Lord to confirm a proposition which I am just going to put to him. I understand that the ICFC—that is to say, the Industrial and Commercial Finance Corporation; anyhow, we all know the ICFC—which was, after all, set up under Government auspices a good many years ago now, is specifically prevented from selling any subsidiaries except on an asset basis. The ICFC when selling a subsidiary can only deal by selling on an asset valuation basis and is specifically prohibited from doing so on a share price basis. If my information is correct, I suggest that that is an argument which the Government ought to look at. If it is not correct, then that particular argument falls to the ground; but I believe it to be correct. I think that the Government must address themselves to it. It is evidence that I think the Government have accepted that when you come to sell a complete company as opposed to shares to a lot of individual shareholders, you can only do ii fairly on an asset basis.
If it is needed to emphasise this—and I am only going through it briefly—it is also brought home that talking about making the share price a basis of compensation for 43 companies and then having to admit that 42 of them do not have a share price at all proves, at least by reductio ad absurdum, the proposition that we are trying to make: that this is not the right way to proceed. If all these companies, or a majority of them, had share prices, then the Government might have, not, I think, a convincing argument but a stronger argument on which to base themselves. The arguments against it in principle, coupled by the absurdity of picking a yardstick which does not apply and cannot apply to 42 out of the 43 companies which are to be nationalised, are so absurd as to be untenable.
I am sure that noble Lords opposite ought to take seriously what has just been said by my noble friend Lord Wardington, who speaks on the subject with specific knowledge and experience, that the problem of determining what is a notional share price is a very substantial one—indeed, so substantial as to be almost certainly incapable of achievement with

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any sense of certainty or fairness as between one company and another.
The trouble we are in is that the Government have embarked on this principle in the belief that the market for shares is the stock market where prices are fixed on an open market between willing buyers and willing sellers and that, therefore, the stock market prices must be fair; but they have never really faced up to the other part of the argument which I have been putting, which is that the Stock Exchange is the market for small blocks of shares owned by large numbers of people but it is not, and never has been, a market for the sale of whole businesses with a single owner. The market for whole businesses is conducted quite separately, and mainly by merchant hankers in the City. This market may be less well known and less understood by the public at large than the Stock Exchange, and, of course, it impinges on the Stock Exchange; but the terms of trading in this merchant bank market are quite different.
Many noble Lords in the course of this and earlier debates have pointed this out. I am not going into the detail of it all again except to tell the Committee that I have been looking at the record of 19 recent company purchases. It is interesting to find, taking the whole of the 19 purchases, that the price actually paid by the purchasers was on average 48 per cent. higher than the share price at the date immediately preceding the initial bid—which again is proof, in 19 recent cases, of a very big difference between the share market price and the price you have to pay for the control and acquisition of the whole of a company.
I do not believe that the Government can shirk that or shrug off that argument. I am not going to give the figures for each of the 19 companies, but let me say that the lowest surplus of the price that had to be paid over the share market price immediately before the bid was made was 21 per cent. and the highest was 124 per cent. In no case was the purchase price as low, or anything like as low, as the share price of the company immediately before the bid was made.
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The Government must look at this aspect. They must realise that if Hawker Siddeley, to take one of the two examples in the aerospace industry, were able, given the opportunity, to sell their shares in their wholly owned subsidiaries involved in this Bill through the merchant bankers' market and not through the Stock Exchange, they would get a wholly different and much higher value. The same applies to most of the other companies, but not all the other companies, involved. Indeed, some of them, I fear, would get a much lower value then they are going to get out of this formula. That brings me back to the other vital aspect of unfairness: not only the total must be fair, the allocation between the different claimants must be fair. The Government have misunderstood this distinction and so perhaps unintentionally may have arrived at the wrong result. The distinction between the two markets that I have been talking about is like the distinction between selling one-tenth of a Rembrandt in Petticoat Lane and taking the whole of the picture and selling it at Sothebys, and the Government are trying to sell it bit by hit in Petticoat Lane, and that is not fair.
Earl FERRERS: I wonder whether the noble Lord, Lord Winterbottom, would be kind enough to answer one question. When in Committee the other day, a noble Lord asked whether the Government Accountancy Service was consulted. The noble Lord, Lord Melchett, said that no doubt that was something which could properly be raised on the question that the clauses stand part. I said that perhaps the noble Lord would he good enough to seize himself of the information so that we would he able to get an answer. I am sure this is a matter of inadvertency.
Lord WINTERBOTTOM: I apologise to the noble Earl. I did not forget this undertaking. Government accountants have been closely involved at all stages during the formulation of the compensation provisions of this Bill.
Clause 35, as amended, agreed to.
9.27 p.m.
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendment No. 164:
After Clause 35, insert the following new clause:—
Compensation for severance
.—(1) This section applies to a person who—

(a) is entitled to receive compensation under section 35 above in relation to the securities of a company (the "relevant company"); and

(b) suffers special loss or damage or reasonably incurs expenses (not being taxes) as a direct result of the vesting of those securities in a Corporation.

(2) A person to whom this section applies shall be entitled to receive a payment (to be determined in like manner to the compensation payable to him) equal to the loss or damage or expenses referred to in subsection (1) above.
(3) Where the relevant company forms part of a larger undertaking, the payment referred to in subsection (2) above shall include a sum equivalent to the reasonable cost of re-arranging the affairs of that undertaking and a sum calculated by reference to any increase in the proportion of the overhead expenses of the undertaking to the volume of the business over which those expenses are spread, so far as that increase is due to the vesting of those securities and is not reasonably capable of being avoided or diminished.
The noble Lord said: As we know only too well, Clause 35 contains the provisions for paying compensation for the securities which are to vest in these Corporations. Most of the privately owned companies named in Schedules 1 and 2, as we have noted over and over again, are members of groups rather than independent companies in their own right. Their parent companies stand to lose more by the nationalisation of these subsidiaries than just the value of their securities as investments. This new clause is intended to enable these additional losses to be made good. This is a principle for which there is a good precedent in other nationalisation Statutes.
When a subsidiary is severed from a group of companies by nationalisation or, indeed, for any other reason, it will obviously cease to pay its share of the central costs of the group to which it has belonged. These costs include such items as expenses of management, administration,
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technological advisory services, industrial relations services, counting, salaries, printing, pensions and insurance; and so one could go on. When I company is severed, is torn out of the group, a heavier burden than beforehand falls upon the companies that remain in that group, moreover, the past profits of the nationalised subsidiary, which will be a relevant factor in the assessment of share values under Clause 38, will have been reduced by payments made towards the central costs. Thus a parent company may first see its compensation diminished by the subsidiary's past contributions to its central costs, while getting no compensation for the lack of those contributions in the future. So the reduced or altered scale of the group's operations may even make some head office staff redundant, which will reduce the remainder of the group's costs in the long run. But the compensation for loss of employment will be considerable in the short run and it will he for the employees of nationalised companies only.
Investigations within the industries cocerned have brought to light a number of other instances of potential losses arising from severance. While I want to be as brief as I can in moving this Amendment, I. feel I must give your Lordships some examples of the costs that the companies involved may have in mind. There is the cost of physically dividing premises which may arise, or the cost of providing alternative accommodation when one subsidiary has been hived off but some of the activities on those premises have not been, and therefore it is necessary to find a new home for them. There are the additional costs arising from changes in insurance arrangements organised on a group basis. There can be higher funding rates, pension and life insurance funds for staff and manual workers for permanent disability, death and other insurance schemes. There can be additional costs arising concerning additional centralised computer services, no longer available to the parent company and the remaining subsidiaries. There can be costs which will be borne by the parent company in connection with undertakings in respect of overseas secondments concerning continuity of United Kingdom employment which are not honoured.
There are cases where employees have gone abroad and have been promised a job when they return home, and the promises cannot be honoured because the company in which they were to be given a job is no longer part of the group. There are arrangements for goods and services supplied on a group basis which will be adversely affected by the reduced volume of those requirements following nationalisation. There is the cost of obtaining alternative security for a loan secured until vesting date by securities which will vest in one of the Corporations. One could go on to give numbers of examples, but I hope I have given enough to persuade your Lordships that there are many additional costs which a group can bear as a result of having had one or more companies within the group removed from it, and that these are not covered by compensation in the ordinary sense, whether or not we think the present proposed basis is fair.
I said that the Amendment we are seeking to effect through this new clause has good precedents, and indeed it has because the need to compensate for the kinds of losses I have been describing has been recognised in the past, notably in Section 17 of the Coal Industry Nationalisation Act and also in Clause 39 of the Ports Bill. It is true—and the noble Lord may well point it out—that no such provision was included in the Iron and Steel Act 1967; but I think when one thinks about that Act one should realise that the iron and steel companies then being nationalised were for the most part themselves quoted on the Stock Exchange, so that whole groups were taken into public ownership in their entirety. That is entirely in contra-distinction to what is happening under this nationalisation Bill.
So I really believe that something needs to be done on the precedent of those earlier nationalisation Statutes that I have quoted and that it is really not relevant to refer merely to the Iron and Steel Act 1967, which is not comparable, for the reasons I have just mentioned. I think I have made the main case which I need to make in moving this clause. It has, of
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course, already been put forward in another place.
I gather that one of the arguments put up by the Government against it was the precedent of the Iron and Steel Act, to which I have referred, and which I have explained should not apply. I think it may also have been said that, anyhow, the totality of the kind of costs I have mentioned is not very great, and therefore could perhaps be disregarded on de minimis grounds. I can only say that that is genuinely not the belief of the industries concerned, which believe that the Government have seriously underestimated the scale of the losses I have been describing when subsidiaries are severed from groups, as opposed to whole groups being taken over, and I cannot see why there should be this injustice of not offering compensation for these. So I hope that this Amendment will be seriously and sympathetically considered by the Government. I think it is important, and the precedents for it in previous nationalisation Statutes which I have quoted are very much stronger and more relevant than the one precedent against it.
Finally, it is perhaps right that I should mention that this new clause was tabled at Report stage in another place, but could not be debated because of the guillotine. That is why we are rectifying the omission here, and why it has not had previous discussion, and why we might have to have a fairly full discussion here tonight. I beg to move.
9.37 p.m.
Lord MELCHETT: As the noble Lord made clear, a similar Amendment was proposed in the Committee stage in another place, and after some discussion was rejected. Since that time, the Government have considered this whole question very seriously, in particular since the Amendment was tabled at Report stage in another place and again in your Lord-ships' House. I regret to say that after very full consideration I cannot tell the noble Lord that the Government have changed their minds since the Committee stage in another place. We still believe that there is no case for making additional

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payments of compensation for severance in the case of companies to be vested under the Bill.
The effects of severance are difficult to quantify, and in considering the question we have to look at the total effects of vesting certain companies from a group in the new Corporations. We believe that the Bill provides a fair method of compensation for the securities of the vesting companies. In the case of a subsidiary of a larger group being vested, valuation will be based on the company's imputed Stock Exchange quotation during the reference period which we have discussed at some length. To the extent that the profits or losses of such a company have been distorted by its position as a subsidiary, and, in consequence, arrangements with its holding company and fellow subsidiaries, the fact of its subsidiary status will be a relevant factor which will have to be taken into account for the purpose of removing any such distortion in order to arrive at a proper valuation.
The compensation will be payable to the parent as shareholder. There is a series of options open to the parent as to how it will use its compensation. It may decide to distribute it to its own share-holders; it may use it to expand its existing activities which are not affected by the Bill, or it may diversify into completely new activities. Either of these last two courses allows the parent to re-establish itself at the same level of activity as existed before its subsidiaries were vested. The disruption caused will therefore be significantly reduced if the parent decided on that course.
The noble Lord, Lord Carr, referred to the precedents for the clause which he has moved and, naturally, I take those very seriously. In particular, the noble Lord referred to the severance provisions contained in both the Coal Industry Nationalisation Act and the Ports Bill, which was lost at the 1970 General Election. I think that those were the two precedents which he had in mind. I must tell him that I would not accept that the Iron and Steel Act 1967 is not analogous to the present Bill. In fact, I would say that it is more so than the two precedents to which the noble Lord has referred.
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Under the coal Act, compensation was quite differently based. As we have already heard from the noble Baroness, Lady Ward of North Tyneside, this evening, the compensation was asset based; it was not based on share values. Also, compensation took some eight years to be completed. Under the Ports Bill severance payments were provided for only in relation to the vesting of ports businesses—in other words, stevedoring, warehousing, et cetera, often carried out on property leased from harbour undertakings. The Bill provided for the later acquisition of ports businesses and compensation was to be assessed in a different manner from that for the harbour undertakings acquired at the start. Ports businesses could in many cases be an integral part of a much larger operation. Without the ports business, the remainder of the under-taking could have found itself it a position where its operations were severely curtailed. It was for this reason, where the remaining productive business might have suffered, that provision for severance payments was included in that Bill.
This Bill is designed to ensure that the companies named in the Bill vest with the minimum disruption to the parent companies and fellow subsidiaries which remain in private ownership. I believe this was a point that the noble Lord, Lord Orr-Ewing, and I discussed at an earlier stage. We would all hope to see the compensation paid within a great deal shorter period than the eight years that it took under the Coal Industry Nationalisation Act. As has been said before and as I have to tell noble Lords I shall be saying again (with the noble Earl, Lord Lauderdale, I think that it bears repetition, even if it does not convince anybody) we believe that the existing provisions are fair. In particular, we believe that they are fair in relation to the concept to which the Amendment moved by the noble Lord, Lord Carr of Hadley, refers.
Lord ORR-EWING: I feel very sorry for the noble Lord, Lord Melchett, because he always seems to be put up when there is absolutely no budge to come, whereas the noble Lord, Lord Winterbottom, is allowed to make a more sympathetic speech and say that the

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Government will look at the matter again. Perhaps at a later stage the noble Lords could reverse roles so that we could get the carrot from the noble Lord, Lord Melchett, and the stick from the noble Lord, Lord Winterbottom. It would make a change.
I concede that there is a need for speed, but there is also a need for fairness, and we disagree about this. In another place a colleague of mine for some 20 years described the compensation terms as ridiculous. He is a very sensible person who is close to areas which arc involved with the shipbuilding industry. I think that this was a wise assessment. I make the point that the compensation must be fair if, as my noble friend put it earlier, you have a head office in your group. I speak now of an interest that I have declared six times so far in our discussions. Very often the head office is responsible for the computer services which have been mentioned and for advisory services, such as metallurgy, or physics, and for the more general services which it can provide on tap to its subsidiaries which need expert assistance. Very often the head office is responsible also for the research and development in a group, particularly long-term speculative research which cannot be decentralised to small companies consisting of 300 or 400 people. Such research is probably best done across certain parts of the spectrum of any group in centralised laboratories which can provide the service. Therefore it is rather naive of the noble Lord to say that you can decimate a group—that you can cut off the vital arms and legs of the group but that there need not be any compensation for recreating the head office.
If noble Lords will bear with me, I cannot help reflecting that one of the troubles which we as a nation are suffering from at this time—and that is why the Prime Minister is on "Panorama" tonight trying to explain it away—is that we have got far too big a head office. We have 1·9 million people in local and central Government and only 40 per cent. in wealth creating industry. I am not saying that one should have too large a central
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or head office; obviously that would be a grave mistake. One of the advantages of having had a fairly rigorous financial climate during eight out of the last 12 years under successive Socialist Governments is that we have had to prune to the bare minimum our head office in order even to stay alive.
But I still think it is a little naive to say that if you have to recreate offices and you have to recreate these services to serve a group there is no need for any additional financial compensation. I hope that perhaps the noble Lord will look at this rather more sympathetically and will, perhaps, ask some of his friends in industry. He has been so busy on the Front Bench since he joined us that probably he has not had all that time, and now he has Northern Ireland on his plate as well, so probably he has even less time to go and see and talk to people who are trying to make engineering groups viable—engineering groups which have very important and sometimes even a majority sector of the group likely to be cut off as a result of this nationalisation measure. If he does that, I think lie will come back with some understanding, and I hope perhaps that at Report stage he might have that gleam of satisfaction because otherwise—and, of course, this would be ridiculous—he might be charged with being a rather Left-wing character who does not like to shift when their Lordships' House are making constructive alternatives. Of course that would be obviously untrue and I hope he will put this matter right at later stages of the Bill.
Lord CARR of HADLEY: I must say once again that I really think the arguments put up are of a very stonewalling kind. I should have thought that the case made by the companies involved, which I tried to explain to your Lordships, was really a pretty reasonable one. Of course the amount of the severance costs will vary from company to company but I really do not see why they should have to bear them. I could only see why they should have to bear them without compensation specifically allocated to the cost if the Minister could give us confidence that the method of calculating the basic compensation was both fair overall

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and, in particular, took account of the sort of costs we are talking about.
I am not sure that at one stage in his speech the noble Lord, Lord Melchett, was not trying to say that to us. If he was, I wonder whether he would expand on it. If he is saying to us that in arriving at the notional share price, however that is to be done, one thing that will be done is to make allowance for the sort of severance costs that I have been referring to, and it is a specific assurance from the Government that these costs will he one of the factors to be taken into account (whatever others may also have to be taken into account) in calculating the notional share price, then perhaps we ought to listen to that. I wonder whether the noble Lord can say whether I was reading more into his words than I should have done, or whether that was what he was intending to imply.
Lord MELCHETT: I think the noble Lord was reading rather more into what I said. I was referring in particular to the position of a subsidiary and the fact that it was a subsidiary, and that any distorting effect on its profits and losses arising out of its status as a subsidiary will be taken into account; but I would not go so far as to say that the long list of things read out by the noble Lord, Lord Carr, would necessarily be taken into account. Of course, I am always anxious to come as far as I possibly can to meet noble Lords opposite and I apologise to the noble Lord, Lord Orr-Ewing, if I have given him the impression of being a hard and unbending character. Nothing could be further from my wishes. I am anxious to find ground for agreement with noble Lords opposite whenever possible, and with that in mind it might be helpful if I were to acknowledge a very minor point to the noble Lord, Lord Carr, about pension funds. In fact, severance costs arising from pension funds are covered by Clause 49(12). I apologise that it is such a minor point but I hope it is indicative that I am trying to do my best.
Perhaps while I am on my feet I might respond to one point made by the noble Lord, Lord Orr-Ewing. I may have got
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this wrong, but the noble Lord seemed to be giving the impression that the services concerned entirely with the vesting company in some way would be left with the parent and not compensated for. Of course, if the services were entirely concerned with the vesting company, they would be acquired under Clause 20 and compensation paid for them it the usual way. I may have misunderstood what the noble Lord said, but I have put it on the record for what it is worth.
Lord ORR-EWING: I am grateful for the more sympathetic approach of the noble Lord, Lord Melchett, and for the indication that the light was beginning to shine from his eye and that we would get some "give" in the later clauses. I was making the point that one has specialised characters, very highly trained people in the various sciences, based at head office. If you take one-quarter of the companies away, you cannot divide a cha D into four and give one-quarter of his body to one company, so the other subsidiaries have to carry the extra costs. This happens in many instances—I mentioned particularly research and development. There is a viable size for sensible, economical research and development. You have to have a laboratory of a certain size, a project team of a certain size, mechanical assistance and a team of draughtsmen of a certain size. If you think of a quarter of them as being used by the companies being taken over, it is difficult to reduce the laboratory or the service by a quarter.
Lord MELCHETT: I do not want to prolong the discussion. To make the point to the noble Lord, it does not cover every case. We both wish to see the companies investing compensation in new businesses and new productive assets. If that happens, I hope that the quarter of a research worker being used in one of the companies being vested will be used in the new investment the companies undertake.
Lord ORR-EWING: This is not immediately so. It will take us two or three years to re-create economically viable groups after we have had the major sectors cut off under this Bill. You cannot keep people standing around.

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Young people are ambitious; they want to work on something. They cost increasingly large sums of money and their support costs money. If we run them down or get rid of them pending acquisition of new companies or projects, we will have to give them redundancy pay. Whatever you do, you will be caught in years one, two or possibly three before you can re-create a viable group. That is why I am pressing the point my noble friend made so ably, that this ought to be one of the factors which ought to be taken into account by the Tribunal, which does not seem unreasonable. Many people have put this case in quite reasonable terms. My noble friend pressed this point. Is it one of the factors which may be taken into account? Or is the noble Lord's mind closed and it cannot be taken into account when assessing fair compensation?
Lord CARR of HADLEY: Perhaps we must bring the debate to an end so that we can move on, but I am profoundly disappointed by the reply from the noble Lord, Lord Melchett. It seems to me that he has undermined his own case (I hope this does not seem ungrateful of me) by pointing to the slight relief provided in Clause 49 which I myself had not yet appreciated, but no doubt will do when we get to it. If one admits the need for
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compensating the group in respect of extra pension costs arising out of losing part of the group as apparently Clause 49 does, at least to some extent, then it seems to me that one has admitted the principle that severance cost ought to be covered. If pension costs, then why not all the other costs of the kind that I have mentioned? I feel this is very unsatisfactory, and does not stand on any logical or consistent basis.
The Government have admitted in respect of one item, the need to compensate for the costs that I have mentioned, but not in respect of any others. I fear I must say to the noble Lord that I shall wish to seek further information about this, and almost certainly wish to return to it on Report. One of the things I am sure the Government are realising is that if, on point after point, we are saying we will return to it on Report stage, we are heading for a very, very long Report stage. It seems rather a pity and rather unnecessary, when more flexibility, or at least more substantial argument might dispose of it one way or another on Committee stage. In view of the circumstances, before voting on this issue I should like to seek more information. Therefore, I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Clause 36 [Payment of compensation]:
9.55 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 165:
Page 50, line 29, leave out subsections (6) and (7) and insert—
("( ) Where, after the date of transfer, a stockholder's representative submits a claim in writing to the Secretary of State for payment on account of compensation in respect of the vesting of securities under this Act, the Secretary of State shall within six months of that date make a provisional estimate of any compensation so payable and compensation stock equal in value to 75 per cent. of that amount shall forthwith be issued to, or at the direction of, that person or his successor in title.")
The noble Lord said: This is a fairly straightforward Amendment. In essence we are substituting the word "shall" for the word "may", though we have managed to do it in quite a number of words. Clause 36 provides that compensation shall not be payable for the vesting of any securities of the company before the Secretary of State has fixed the conversion date for all the securities of a particular class of that company, and it is on the date so fixed that compensation stock is to be issued. So far as the basic equity capital is concerned, Clause 36(3) and (4) provide that compensation stock cannot be issued until after its base value has been determined and from that, has to be deducted any claims in relation to the other provisions, in particular those in Clause 39. Of course we are faced with the fact that the base value of the equity share capital of a company may be the subject of quite long-winded negotiation or, indeed, arbitration proceedings, which is a subject we have discussed at considerable length already. It seems to us, therefore, that it could be months—and it is possibly not exaggerating to say years—before compensation gets paid.
Subsections (6), (7) and (8) go some way towards alleviating the position of the shareholders in that they are permissive on the Secretary of State and not obligatory on him to make payments of compensation on account before the valuations are finally agreed or determined. These provisions were not in the original Bill but following representations from the industries that it would be inequitable to shareholders they have been
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introduced. Of course the shareholders in the cases we are talking about are mostly parent companies or financiers, and it is not right that they should be kept out of their money. It is also an important point that these parent companies, either directly or through their subsidiaries, are engaged in industrial activities which are of great importance to the economy of this country. We feel that it is in the national interest that the companies should be enabled to re-invest in other industrial activities Es soon as possible. At a time of great worries about unemployment I do not think the point needs to be laboured.
The difficulty is that the companies do not know within a large area of doubt exactly the size of the compensation they are going to receive, and the noble Lord, Lord Melchett, was coy—to put it mildly—for what I thought was an unrespectable reason that it would weaken the Government's bargaining power about the amount of money he figured was going to be paid out in compensation, which I am bound to say rather reminded me of the noble Lord, Lord Balogh (who has not appeared for some time) who spoke about negotiations with the oil companies being "negotiations in the Arab souks". I am not necessarily suggesting that in this rather more respectable area of industry we are reduced to that kind of level. Nevertheless, this is implicit in some of the things we have been saying. This takes us back to an old bone of contention. I am not going to repeat the remarks I was making about assurances to the noble Lord, Lord Melchett, a few days ago, but I want to draw the distinction between the powers that the Secretary of State may have and the obligations which should be imposed upon him.
I dare say the noble Lord, Lord Winterbottom, will give us all sorts of undertakings before we are through today about how splendid the Government are going to be. From the way he is looking, perhaps he is not going to give us any undertakings at all, in which case we are going to be in serious trouble. What we are seeking here is perfectly straight-forward; we are saying that this should not be an option the Secretary of State may have, but an obligation upon him; if the money is owed it should be paid.
One can cite a number of precedents for this, and one in particular which has been called to my attention is the Transport Act 1947. There are also some of the land compensation pro-visions, where an advance payment equal to 90 per cent. of the agreed or estimated value of the interest is payable; that is, Section 52 of the Land Compensation Act 1973. But quite aside from the moral force of the equity point and the fairness point, what we are particularly concerned about is to keep these industries moving. One would make the perfectly simple point that in an ordinary commercial transaction the normal settlement period is one month. Perhaps this may stretch to three months. If we are talking of going to six, nine or even 12 months, we feel the companies would have something to complain about. Therefore, I move this Amendment in the hope that it will appeal to the Government to give us some help on this point.
Lord WINTERBOTTOM: I am grateful to the noble Lord, Lord Strathcona, for moving this Amendment, which enables me to explain to the Committee the Government's intentions with regard to payment on account of compensation. The negative motion of my head was due to the fact that I was not going to be tied down on percentages or time; but I think the noble Lord w ill find that in spirit we are together. Of the 43 companies named in the Bill 42 are unquoted. In all these cases compensation will be determined under the provisions of Clause 38—and I am stressing the next phrase—by negotiations with recourse to arbitration. While it is our intention and wish to complete these negotiations as quickly as possible, it is inevitable that even with the best will in the world it will be some time before the settlements are reached. Here we are still in agreement.
We recognise that shareholders could feel aggrieved if they have a long wait before they receive their compensation, even though interest on the stock will accrue from the vesting date. It is for this reason that we felt it right to make provision in the Bill for the Secretary of State to make payments on accounts of compensation stock. If the provision is to be of any real value, payments on
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account should he substantial and should be made at the earliest possible opportunity. A small payment on account only shortly before the final settlement would be of little benefit to shareholders or companies. It is therefore, intended that payments on account should be as large as possible and as early as possible consistent with the uncertainty still surrounding negotiations. The negotiations will be complex. Not only will it be necessary to settle the base value of compensation; it will also be necessary to establish, on the basis of detailed investigation of the company's records, whether there are any intercompany debts to be treated as securities, as we have discussed under Clause 21, and whether there are any appropriate deductions to be made under Clause 39. Here is an indication of the Government's thinking. While it is the Government's intention to make payments on account within six months of vesting day, the complication of negotiations may be such that in some cases it might not be possible to reach a sufficiently definitive view on that time-scale.
The Amendment, if passed, would reduce the flexibility of the present provision, which could act against the interests of shareholders where the negotiations are particularly complicated. Clearly we would wish to avoid making payments on account which might, in the light of further negotiations, have to be reclaimed. The noble Lords who have moved these Amendments have been perhaps less ambitious than those who tabled similar Amendments in another place. The noble Lord, Lord Strathcona, has suggested paying 75 per cent. of the Secretary of State's estimate rather than 90 per cent. While I consider this to be moderate, it in no way alters the objection in principle to the Amendment.
The setting of a figure is found to reduce the flexibility of the provisions. In cases of great uncertainty it could be too high. In others where there are few problems it could be too low. Either way one party or another could suffer. It is far better for everyone to retain the degree of flexibility in the existing provisions. I assure the Committee that the existing provisions for payments on account are intended to give real benefit to share-holders. The payments will be substantial

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and early. It is not intended that it should be a cosmetic provision. Unfortunately "substantial and early" is rather like the word, "fair"; what exactly it means is difficult to say, but we talked about industrial democracy and I think we know it when we see it. For that reason, I hope that the noble Lord will not press his Amendment, since the object of the Government is the same as his.
10.7 p.m.
Lord GEORGE-BROWN: I do not think that that meets this point very well. We have to say a little more clearly what it is we are going to pay for what assets we are taking over. To say that an elephant is only an elephant when you see it—
Lord WINTERBOTTOM: You would recognise it. Is my noble friend referring to my quip about an elephant being recognisable although difficult to define?
Lord GEORGE-BROWN: Yes, of course I was. I did not think it was a very clever remark, because I think that people who own assets need something a little better than that. The Government are buying here—I am not necessarily against it—the assets of a lot of people. They really have to say what they are buying, and what they are paying. To say they will take six, or nine months, or maybe 12 months, when the Bill does not say anything of the sort, is not good enough. When we get to clause whatever it is, I think it is No. 122 or thereabouts, I want to raise the question of the things that I do not think the Government should buy. Even if we are dealing with the things that the Government think that they should buy, they must explain the basis by reference to something.
I see the noble Lord, Lord Peddie, who has been through this one before. I do not think that the noble Lord, Lord Winterbottom, is able to get away with saying that it will all come out in the wash. The people who own the present equity need to be told on what basis their equity is to be compulsorily taken over and it must be something rather better
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than what is going; my impression from what Lord Winterbottom said is that it will not be then, it cannot be now and it could be almost any time in the future, so to speak.
I, as a Socialist who does not much mind the Bill—except the references to the matters which come up later in Clause 122 do not see how the Government can honestly and truthfully think that they can get away with the sort of brief that was provided to the noble Lord tonight. We must have an assurance that there will be a willing seller and a willing buyer arrangement. If that is not present, it will be cheating and the Government will have cheated a lot of quite nice ordinary people, many of whom up to now have voted Labour, and I simply do not see how this can be a Labour Government arrangement. The Minister must come forward with something rather more affirmative, something clearer, than he has given so far.
10.12 p.m.
Lord MOTTISTONE: Further to what the noble Lord, Lord George-Brown, said, it seems that there is a point that the noble Lord, Lord Winterbottom, did not cover, or if he did cover it I did not hear him do so. I refer to the essential difference between what my noble friends have suggested and what is in the Bill. I refer of course to the quest on of the obligation on the Secretary of State as opposed to the Secretary of State "thinking fit", and it seems to me that as the Secretary of State is come of the bargainers, so to speak, in this deal, it is reasonable that he should be obligated to make this payment—whether it is 75 per cent. or another figure does not matter for the purpose of this argument; I am sure that this would be arguable and that Lord Winterbottom is right to say that in some cases 75 per cent. would be too little and in others it would be too much—in advance rather than the matter being left to one of the bargainers making up his mind about it. I hope that Lord Winter-bottom will take that up more fully than he did in his last reply.
Lord WINTERBOTTOM: From now on I intend to cling closely to my brief

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and the clause under discussion; I do not intend to wander into any clause other than the one under review. Having said that, let me tell the noble Lord, Lord George-Brown, who came into the Chamber and talked about the value placed on the securities to be traded, that that is not what we are talking about. We are discussing this Amendment to this clause and what the Government should do to make life easier for individuals or companies whose shares are being valued for the purpose of compensation so that they should not be kept an inordinate time waiting for that compensation to be paid. Noble Lords must recognise that this is a proper attitude to take. The ultimate value of those shares will be decided at the end of the day in the negotiations between the representatives of the Secretary of State and the shareholders' and stock-holders' representatives.
This, as the noble Lord, Lord Strathcona, said, could take some time and it is pretty sure to do so, and, in order to alleviate any hardship or difficulties that may arise as a result of the necessary delay—and I am not here arguing about whether the nationalisation is right or wrong, but simply saying that a delay in the procedures will be necessary—some payment should be made on account. There are 43 companies, of which 42 are unquoted—those are the difficult ones—and there must be a period, first, of analysis and, secondly, of negotiation. We have at this point to accept the fact that the Secretary of State, who is responsible to Parliament, will be watched with interest by Members of both Houses to see how he deals with the problems of delay. We have to start somewhere in calculating the interim payments and the only starting point that we could think of is the Secretary of State's estimate because, when this operation started, the Secretary of State clearly made an estimate. So what will be paid early will be a substantial proportion of the Secretary of State's estimate of the what the ultimate settlement of the negotiations will be. I do not see, other than waiting for the negotiations to be completed, any other course of action that could be taken. "Substantial" and "early" are, as I have said, subjective matters and they will doubtless be watched by the Members of both Houses.
10.17 p.m.
Lord MOTTISTONE: I should like to come straight back because the noble Lord did not really answer the point that I was making, which was that the Amendment puts an obligation on the Secretary of State to pay this. We both agree that that is necessary and should be done as early as possible. We are not quarrelling with the Secretary of State making a provisional estimate, but the Bill as it stands says that this will be done when and if the Secretary of State thinks fit, whereas the Amendment puts an obligation on him to do it and does not leave it to when he thinks fit. Though it was encouraging to hear from the noble Lord that there is entire agreement in principle on this which, in that sense, is an undertaking that it will be done, we all know that undertakings are splendid but are not part of the law of the land. It would be helpful if the noble Lord would go a little further and agree to an obligation on the Secretary of State being written into the Bill, rather than leaving it to when he thinks fit.
Lord ROBBINS: May I make a humble suggestion in this connection? The noble Lord, Lord Mottistone, clearly feels—and I sympathise with him—that any tincture of arbitrariness in the shape of leaving it to the wish or the whim of the Secretary of State is unacceptable. May I suggest that, alternatively, if there is to be set up—as I understand there is to be—a tribunal which will fix the notional values on which compensation is to be paid, it might be possible to devise a clause whereby that tribunal might recommend to the Secretary of State that advance payment should be made in the absence of precise ascertainment of the ultimate sum? That would seem to me to meet both schools of thought.
Lord GEORGE-BROWN: May I just say how much I support that? It seems to me—and I think I know the noble Lord well enough to know that he must see this—that this is taking over somebody's holding by a diktat. All right, let somebody decide on what basis? Then let the somebody who decides upon-what basis decide at what points you make the decisions. This Amendment does not quite do that. I would hope very much that at some subsequent stage we could make

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an Amendment that does exactly that. Somebody assesses what is the value of the stock you are taking over; somebody assesses at what point you pay for it, and then the Minister is required to say—and I must say some of us do not have any longer as much belief in the present behaviour of Ministers just to pass Bills which assumes that Ministers will behave well.
I like the words moved by the noble Lord, Lord Robbins. Those are not the words in this particular Amendment. I should like to see such words moved at some stage in the Bill and if the Minister were to be good enough to say that he would not mind having a look at moving such words I would be much happier, so long as I can still make it quite clear that in my view these do not refer to the ship repairing part of this Bill. I liked those words. The Amendment does not use them, so perhaps at some future stage we can put down a different kind of Amendment. I thought that the noble Lord, Lord Robbins, got it nearly as right as I would like it to be.
Lord WINTERBOTTOM: The difference between us is that the Amendment would like to place an obligation upon the Secretary of State. I have given an undertaking on behalf of the Secretary of State. I know that my noble friend will not place a great deal of weight on that, but I place weight on it myself because I am authorised to do so. May I answer the point made by the noble Lord, Lord Robbins, which is constructive—and I always welcome any constructive points in debates like this. The only snag against using the arbitration tribunal is that it is the last stage of all and these negotiations do not come before the tribunal unless there is a deadlock. Therefore, that would be very much at the end of the day and a far worse situation than the one which we, as the Government, are proposing, or indeed as the Amendment proposes. I will, however, bring the view of the noble Lord to the attention of my right honourable friend the Secretary of State.
Although I shall not say a word, I feel that there must be some machinery which would enable one to get an early assessment of the figure of which a percentage would be paid in compensation. But, as I say, I try not to make promises
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saying that I will look at it if I do not mean to do so. I believe, however, that my right honourable friend will look at this matter. Whether or not any rational or precise method of calculation is available, I cannot say and I would not say: but since we have a starting figure which is the Secretary of State's assessment, perhaps we could build on that.
10.25 p.m.
Lord STRATHCONA and MOUNT ROYAL: The noble Lord has some to a conciliatory state of mind, I think, and I am grateful to the noble Lord, Lord Robbins, backed up by the noble Lord, Lord George-Brown, for putting him in that happy condition, I think it is fair to say. It is encouraging to find that the noble Lord agrees that we are all of the same spirit, and he goes on to say that it is intended that the payments shall be substantial and early. So them really is not anything between us in principle, and all we are up against is something we have talked about so often, and that is how far we can give good intentions the force of law.
I think it may be helpful if I read out what was said in the Transport Act 1947, which presumably was a Labour Government's Act—and I referred to this earlier. It says:
"A provisional ascertainment of the total amount payable under the last preceding section with respect to an undertaking shall be made as soon as may be after the date of transfer without regard to the possibility that the commission may, after the date of the completion of the pro-visional ascertainment, disclaim any property or contract not disclaimed by them before the completion of the provisional ascertainment".
There, it seems to me that they are covering themselves in very much the same way as we are seeking to cover ourselves in this clause of this Bill.
We quite understand that the Government are saying, "We concede that we owe you some money; we are lot totally certain about what the amount of money is"; and to my regret I find that the noble Lord is still saying that the Secretary of State has an idea as to what t le amount of money is. To use the noble Lord's actual words, "The Secretary of State will have made an estimate". Then it is also said, unfortunately, that the Secretary of State "may" decide to make an advancement, and "The reason we hedge around this is because we are fearful

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that the Secretary of State may advance too much having regard to the counterclaims against the original estimate which he, the Secretary of State, has made." It seems to me, quite seriously, that the proposal put forward by the noble Lord, Lord Robbins, would be quite a useful goad; and it is not a political point, I believe, to say that people who are not in Government find it necessary from time to time to have a slight spur to encourage the Government to move faster than they would normally move otherwise.
This is all that this Amendment is seeking to do. I do not want to try to make this wider than it really is, but the principle involved here is simply the ordinary principle that a man who does a commercial deal with another man has, and that is that if he does not get paid he can say to him, "Look here, chum; it is about time that at least you made a payment on account while we are arguing about the details". I think that is a totally reasonable situation to set up as between the Government and a company which is being forcibly acquired. That is all we are saying, and it seems to me that the noble Lord agrees in principle. He demurs in practice from having the obligations placed upon him, and I quite understand that that is what his brief tells him to say. I am grateful to him for opening the door even the tiny chink that he has opened it, and I think the best thing I can do is to say: Let us observe the chink, let us rejoice about it, and let us see if we cannot push the door a little wider open at a later stage. Having said that, I am sure the right thing at this juncture is to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 36 agreed to.
Clause 37[Base value of securities of a listed class]:
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 166:
Page 50, line 42, leave out ("that") and insert ("being a class any of the securities of which").
The noble Lord said: I beg to move Amendment No. 166 and I would suggest that, with this, Amendment No. 168 might conveniently be discussed. These are really drafting Amendments and I hope
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that the Government will accept them without much difficulty. The subject was discussed in another place and the Government said that they would look at the point. It is simply that the word "listed" in line 42 on page 50 is evidently intended to apply to the word "class" and not to "securities". In the same way in sub-section (1) of Clause 38 it is intended to apply to all the securities of a class where any securities of that class were issued on or before the last of the relevant days. That is the reason for Amendment No. 168.
It is clear from subsection (2) of Clause 37 (also applicable to Clause 38) that fresh issues are an exception to the treatment in subsection (1) in each case. We think that these Amendments would make the position clearer than it is at present in the Bill.
Lord WINTERBOTTOM: As the noble Lord, Lord Campbell of Croy, has pointed out, this particular proposal was discussed at some length in another place. The Amendment was withdrawn because of an assurance given by the Minister of State to consider altering the marginal note to Clause 37 from "Base value of securities of a listed class" to "Base value of listed securities". However, after due consideration, it was decided that such a change would make the note incorrect.
May I explain why we believe that this would be the case? I am grateful to the noble Lord for taking Amendments Nos.166 and 168 together. Subsection (1) deals with the valuation of quoted securities where they were on issue throughout the reference period. A company may have more than one class of securities. Subsection (1) deals with the valuation of all securities issued throughout the reference period no matter what their class. The important point of the subsection is that it is the securities which are being valued and not the class of which they are a part.
Subsection (2) deals with the same class of securities as is covered by subsection (1) but only with those securities of those classes which were issued after the reference period—I emphasise: "after the reference period." Again it is the securities that are being valued and not the classes. In this case the sum received for securities

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issued after the reference period is added to the valuation of the securities of that class which were issued throughout the reference period. The average price for each security in the class is thus worked out. This distinction between subsection (1) and subsection (2) is very important. It is one aspect of the assurances that we have given that any new money put into companies after the reference period will be taken into account at par in assessing compensation.
It is our view that the Amendment proposed would at least blur this essential distinction and could result in new securities of the type covered in sub-section (2) being taken into account at something less than par. This could act against the interest of security holders. Exactly the same arguments apply in relation to Amendment No. 168.
Lord CAMPBELL of CROY: This is not worth pursuing; but the noble Lord has had the opportunity of trying to explain further the purpose of the clause and of the clause immediately after it, and the explanation of what is intended. I would only ask the noble Lord to see whether there is any other way in which it might be made clearer. It has not been clear to those who will have to wrestle with this Bill when it becomes an Act. I know that the Minister must have had some difficulty about the marginal description; but I had hoped that these Amendments would have provided another way of clarifying the clause. I am sorry that the Government cannot accept them, but I should hope that if they can see any other and better way of clarifying what is intended they would seek to put down Amendments at a later stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
10.35 p.m.
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 167:
Page 51, line 4, after ("days") insert ("multiplied by 4/3,").
The noble Lord said: We have had a long and full debate upon Clause 35 and the various shortcomings which we see in the Government's proposals for compensation. This Amendment is an attempt to rectify one of those deficiencies. Clause 37 provides for the acquisition of
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the stocks in a company based upon their Stock Exchange value during a certain period. When my noble friend Lord Carr was talking on Clause 35, he drew, attention to the difficulty of distinguishing between a small parcel of shares which might change hands on the Stock Exchange, and the whole body of shares in a company which might change hands tender the auspices of a merchant bank or some agreed take-over bid.
He pointed out to your Lordships the difference in value and the difference in price paid for the shares on the one hand on the Stock Exchange in small I parcels, and on the other hand as part of a bid for the acquisition of the whole company. My noble friend referred to the percentage increase that might be expected when companies are acquired in this way. He referred to the examples to which I should like to draw your Lordships' attention again, and remind your Lordships of the figures that he mentioned. During a period late in 1973 and early in 1974—that is to say, the reference period described in this Bill—a number of bits, as is normal, were completed, and I have before me the figures. The average percentage increase in the price paid for the shares as part of an agreed bid, as distinct from the price ruling on the Stock Exchange on the day immediately prior to the bid, was no less than 48 per cent., yet the Government are proposing under the Bill to acquire the shares at the same value as was reigning on the Stock Exchange.
If we accept the average figure as accurate, the Government are therefore seeking, in my view, to acquire these shares for 48 per cent. less than they should be. I am prepared to accept that the figures may be a little generous, and it s for that reason that I have pitched my Amendment at 33⅓ per cent. over the Stock Exchange price.
There is one other aspect. Earlier, the noble Lord, Lord Melchett, was not able to explain why it is that the Estate Duty Office, when they are valuing shares which constitute control in the company" value them substantially higher than the Stock Exchange quotation reigning at the particular time. Taking these two points together, we ought firmly to say that the Government must pay a higher price for the shares than the price reigning on the

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Stock Exchange. We may be forced to accept that the Stock Exchange price must somewhere be used as a base line; but the price itself is substantially below what I believe to be an equitable price. I therefore beg to move.
10.40 p.m.
Lord WINTERBOTTOM: Some little time ago, while we were talking about Clause 35, I complained rather plaintively that we were debating every clause of Part II. The noble Lord, Lord Carr of Hadley, was good enough to say that if we could remember what was said, we could take that as read. May I say that this particular argument of the noble Lord, Lord Trefgarne, is one that we have dealt with in detail and with care—the whole question as to whether or not 100 per cent. of shares is more valuable than, say, an individual share at 20 per cent. For that reason, I would argue that the fairest way that we as a Government could think of calculating the value of shares was based on the Stock Exchange values over a six-month period. If that argument in the earlier debate did not convince the noble Lord, nothing that I can say now will convince him. The arguments are now as they were on the Question, Whether Clause 35 shall stand part of the Bill?
Lord TREFGARNE: I am a little shattered by that, I must say. I think the noble Lord is saying that I am not supposed to argue my Amendments and must just refer back to the debate we have had earlier. I must say that I really do not go along with that. I certainly have not been convinced by the arguments advanced by the noble Lord and his colleagues as to why the Government have stuck so rigidly to this baseline. I most firmly believe that there is a serious injustice, not to say a confiscation of assets in this matter. Here the Government are setting out to acquire a whole range of companies, and have produced a very unsatisfactory formula for compensation. We are stuck with the basic concept of Stock Exchange prices which, in the light of the fact that only one of the companies is quoted, is wholly unrealistic.
I have not gone so far as to try to change that, though I believe that perhaps that should have been done. I accept that, but have said that the Stock Exchange
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price must be "doctored"—there is no other word—so as to more accurately represent the fact that the Government are acquiring control of companies. Control is worth something. If the Government are acquiring control without compensation—and that is exactly what it is—then that is confiscation; and if the noble Lord is taking such an unhelpful line with my Amendment, I shall have to reserve my position very firmly and come back to it at another stage. There are a number of points I could raise but, while listening to my noble friends, I shall ponder on what to do now.
Lord CAMPBELL of CROY: I think that what the noble Lord, Lord Winterbottom, said—that everything had virtually been discussed on the Question, Whether Clause 35 shall stand part of the Bill?—was not a very fortunate way of dealing with the Amendment of my noble friend, because he has made a suggestion for dealing with a particular part of this clause. I would hope that the noble Lord would not repeat all the general arguments trying to support the Government's whole system of compensation, which is what we discussed in connection with Clause 35, but that he will address himself to the particular point covered by this Amendment.
I think it was convenient that we should have had a general debate at one place on the whole question of compensation—and that is what we have just had in connection with Clause 35. I think that was for the convenience of both sides, including the Government Front Bench, because it meant that we did not have general arguments repeated. But that did not mean that individual Amendments, when moved, should not get a reply addressed to the particular point being raised in a particular clause, as my noble friend is attempting to do here. For the Government to say, "We have answered all this already" is disappointing, because this is a particular matter that my noble friend is putting forward. I would hope that the noble Lord, Lord Winterbottom, in connection with the Amendments we are to move on Clause 38—and the noble Lord is always courteous in the way he does reply—will be able to reply to individual points raised. We are not, of course, going over all the ground which we covered on the general question

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in regard to compensation, and the Government's proposals.
Lord ROBBINS: I should like to suggest to the mover of the Amendment, with which, in some conceivable circumstances I would not demur, that in some respects it must be regarded as a pis-aller, a second-best. If the Government could be persuaded to jettison this ridiculous idea of going back to the share values of 1974, and manufacturing them by appointing a committee to establish notional values which might have prevailed at that time had these securities been quoted, and if they would simply substitute-I will not say retreat from that—the instruction to the arbitration committee that it should determine compensation on the basis of asset values, or replacement cost, if you like, taking into account intangibles, justice would be much better done than by inserting a rather artificial multiplier to the results of the attempt to ascertain notional values.
Lord WINTERBOTTOM: The noble Lord, Lord Robbins, has come to my aid. As I understand it, the noble Lord, Lord Carr, produced a vulgar fraction of about six over four, and the noble Lord, Lord Trefgarne, has a vulgar fraction of four over three, but I do not think that this is the kind of calculation which one can do in a Committee stage. Turning to the noble Lord, Lord Robbins, I am afraid that this argument has gone on and on. Many noble Lords who have spoken today have felt that the valuation of the stock on the basis of Stock Exchange valuations is not an equitable one. The Government have tried to explain that we have produced a formula which we believe is the best we can get, and I am afraid that I cannot move from that. Even if one were in favour of the principle of the Amendment of the noble Lord, Lord Trefgarne, I do not think that we could as a body agree to his arithmetic. That is a hard fact of life.
Lord ROBBINS: May I ask the noble Lord whether, among the solutions which the Government have considered, they have thought about the simple basis of ascertained asset values, which certainly has precedents in the past and which, so far as I know, has had no convincing arguments brought against it.
Lord MELCHETT: That, again, is one of the things which we have dealt with at some length this evening. I am not sure whether the noble Lord was in the Chamber, or was lucky enough to be having something to eat, at that stage. But we dealt with the Coal Industry Nationalisation Act and the fact that compensation then was based on asset values, which took at least eight years to settle. The noble Lord, Lord Orr-Ewing, and I agreed that we did not want that process repeated.
Lord TREFGARNE: I am still some-what smarting under the initial reaction of the noble Lord, Lord Winterbottom, to my Amendment. There is one point that I must put to him again; I am sorry that he has heard it before, and may well hear it again later. The formula that he has arrived at takes no account of the fact that the Government are acquiring control of these companies. Therefore, does the noble Lord not agree that, since the Government are offering no compensation for the control which they are acquiring, they are confiscating control of those companies? If I am wrong, the noble Lord will please put me right; but I insist that the Government are confiscating the control of those companies. The noble Lord has criticised my arithmetic, and I would not claim to be the greatest arithmetician in the world, but something like it ought to be acceptable to the Government. Clearly, I cannot pursue the matter new, but I must tell the noble Lord that he has quite failed to satisfy my fears about this confiscation of control, and I reserve the right to return to this at a later stage after consultation with my colleagues. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 37 agreed to.
Clause 38 [Base value of other securities]:
The DEPUTY CHAIRMAN of COMMITTEES (The Earl of Shannon): Amendment No. 168 is not moved?
Lord CAMPBELL of CROY: I understand that Amendment No. 168 comes before Amendment No. 167A, although it is printed the wrong way round on the

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Marshalled List. The Amendment has been discussed with Amendment No. 166 and therefore is not moved.
10.51 p.m.
Lord CULLEN of ASHBOURNE Lord CULLEN of ASHBOURNE moved Amendment No. 167A:
Page 52, line 39, after ("value") insert ("as being a fair price taking into account the past trading records and future prospects of the company and the company's net tangible assets on the relevant vesting date and in particular the amount of equity capital which would be required to yield the average profit which the arbitration tribunal is satisfied on the best available evidence would have been made (as if this Act had not been passed) in the company's financial years ending the calendar years 1974 to 1978 inclusive.")
The noble Lord said: On behalf of my noble friend Lord Selsdon I beg leave to move this Amendment which recognises that if nationalised industries are to be managed efficiently and the country's economic resources allocated effectively the correct economic value must be ascribed to the starting public capital: in other words, the cost of acquiring a company, taking account of its present value and likely future profitability. Any value which is based upon historic share prices can have no relation to this value and the Government are making a rod for their own back in future if they persist on this basis. The effects of using it have already been seen in the case of steel nationalisation.
Under the circumstances of the Bill, compensation for some of the companies in British Shipbuilders will be so high in relation to their real value today that the Government may later have to ask Parliament to write off some of the initial capital. On the other hand, the disastrous effect upon confidence to invest in profitable opportunities and hence upon the efficient allocation of economic resources if efficient companies are confiscated for less than their true value has already been discussed.
Lord MELCHETT: On some of the more general Amendments which stand in the name of the noble Lord, Lord Selsdon, which the noble Lord, Lord Cullen of Ashbourne, is moving on his behalf, it seems to me that we are in a slightly unreal position, in that I am not entirely clear whether I am expected to speak to the Bill as it is now—in other
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words, as amended by Amendment No. 156, which it was not when the noble Lord, Lord Selsdon, tabled the Amendment—or whether to justify the Bill as it was before it was amended. Although I take the point which noble Lords opposite have made that on some of the particular Amendments these general arguments do not apply, at the same time this is a fairly general Amendment (this I think the noble Lord will accept) on the broad principles of compensation.
It seems to me that if it achieves anything Amendment No. 156 has already achieved what this Amendment seeks to do, but perhaps I could very briefly say a word about the effects of the Amendment and the Government's reasons for not accepting it or, indeed, Amendment No. 156 when it was pressed. As we have said, the compensation terms included in the Bill are for unquoted securities to be valued as if they had been quoted on the Stock Exchange during the six months up to the end of February 1974. We believe that the Stock Exchange is established in precedent as an impartial and objective test of the value of the securities. Techniques for imputing Stock Exchange valuations to unquoted securities are tried and tested in the City of London as well as within Government. Instead of this, the noble Lord's Amendment No. 167A, as Amendment No. 156 has already done, seeks to set the valuation at what the Amendment refers to as a "fair price". The Amendment states that the fair price should take account of the trading record and future prospects of the company and its net assets.
As I said a moment ago in response to an intervention of the noble Lord, Lord Robbins, without a separate independent asset valuation, which would be a very lengthy process as previous experience has shown, the net assets of a company as recorded in its books reflect only the particular accounting conventions of the company. May I suggest to the noble Lord, who will, I think, agree with me, that that in itself would not be particularly objective and presumably, therefore, would not be particularly fair.
We have already dealt this evening at some length with the question of the premium for control, and that was something that the noble Lord, Lord Trefgarne, mentioned on a previous Amendment;

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and as this is something which no doubt will come up again and again during the course of the evening it might be helpful if I were to say another word about it. I know the noble Lord has promised to return to it at the Report stage and I look forward to that, but it may be if I say a word he will be able to reflect on that between now and the Report stage.
As I understand it, noble Lords have suggested that Stock Exchange quotations and, by analogy, imputed quotations, represent the price at which small parcels of shares change hands, and the suggestion is that when there is a takeover bid the price paid is generally higher than the quotation. This, I agree, may be so in the commercial world where one company seeks to take over another undertaking. In such circumstances the buyer may be forced to offer a higher price solely to persuade the seller to sell, but as my honourable and right honourable friends have said in another place and we have repeated here, the Government do not believe that this analogy with compensation terms in the Bill is a right one. The Bill seeks to establish the fair market value of securities by reference to the best established criteria for establishing that value—the Stock Exchange. The higher price for a complete undertaking does not, in our view, represent the fair market value. It represents only the price at which the buyer is prepared to buy to take over a company, and is the value to the buyer and not the market or the undertaking.
In the final analysis the true measure of fair compensation is whether it represents the capital and income loss for every security holder being compensated. The capital structures of companies in the aircraft and shipbuilding industries are very complicated and differ, of course, from company to company. The annual income received per f 100 of nominal stock will vary widely between the various companies. So will the certainty of that income being continued. To assume that all the profits which these very different companies might have earned could be directly related to equity capital not only could result in a substantial over-payment of compensation but must operate unfairly among the different classes of shareholders within those different companies.
We believe—and I do not make any apology for repeating myself because I
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I think it is fair to say that noble Lords opposite are repeating their attacks on us, but I make no complaint about that, the noble Earl, Lord Lauderdale will be pleased to hear. I repeat that in our view the Stock Exchange basis solves the basic problem of how to allocate compensation fairly between the various classes of shareholder within companies but with very different capital structures, and it is for that reason that we resisted Amendment No. 156, which is already in the Bill, and would of course resist this Amendment which I think covers the same ground.
Lord ROBBINS: May I ask the noble Lord a straight question? Would he maintain that a parent company, one of whose subsidiaries has been taken over on the basis of this notional stock Exchange value, would be able to replace the assets which it had surrendered out of the compensation thus paid?
Lord MELCHETT: The noble Lord said he was asking me a straight question but I have been in your Lordships' House just long enough to know that noble Lords' straight questions are not always quite as straight as they seem. If I may give him a straight answer—and no doubt he will say that that fact applies to my answer as it applies to his question—it is that they probably vary from company to company.
Lord TREFGARNE: The noble Lord was kind enough to refer to me. I think he said—and he will correct mo if I am wrong—that the Government justified acquiring these securities at their Stock Exchange value because the value of the control, which I was complaining about, is only of value to the company acquiring the assets or the shares in a takeover bid, and the value of the company to the market is the value of the share s, or the sum total of the value of the shares. But would he not agree that the market is not a market in companies; it is a market in companies' shares? One cannot buy a whole company on the Stock Exchange.
Lord WARDINGTON: The question of the noble Lord, Lord Robbins, is a perfectly fair and straight one. It is quite simple to give the answer, which is that if you are having assets taken away on a share price, they should be

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replaced on a share price; but this is impossible. If they are being taken away on asset values, they can be replaced by purchasing assets. I should just like to refer to the answer of the noble Lord, Lord Melchett, to the noble Lord, Lord Lord Trefgarne, a moment ago when he was quoting a remark he had made earlier, when I am afraid I was taking the opportunity of having something to eat, when he referred to coal nationalisation being protracted to the extent of eight years. May I remind the noble Lord that on that occasion the number of companies quoted was something of the order of 120, and there were an equal number of privately-owned companies, all of which were owned privately by individuals and were not subsidiaries of other companies. That is why it took eight years, not because there was an arbitration tribunal.
The Earl of LAUDERDALE: Might I just put a point. First, having had a slim Lenten supper, and being much fortified thereby, and I am glad that the noble Lord, Lord Melchett, is also fortified, I congratulate him on the highly-condensed prose he composed for his last answer. It was highly professional and bore all the marks of several double firsts. But from what I could understand, he was drawing attention to, and rather protesting against, our suggestion that there is, and should be, a premium for control. If I understood his very complicated, condensed and classic prose aright, it seemed to me that he was suggesting that premium for control is not really quite so proper. But the Government approved, and last week were very angry when we rejected the position with regard to the Felixstowe Dock Company when the British Transport Docks Board offered 150p per share when they were standing at 90p. Is there any legitimate premium for control, or not? Perhaps I misunderstood the complicated and condensed passage which the noble Lord had composed to read to us.
Lord MELCHETT: I made the point because the noble Lord, Lord Trefgarne, said he was going to return to this on Report stage, and I thought it would be helpful if I said a word or two so that the noble Lord could look at it before coming back on Report. The noble Earl, Lord Lauderdale, says it is condensed and complicated. Maybe it would repay
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study in Hansard. I hesitate to suggest that anyone should look at anything that I have said in Hansard, but noble Lords opposite have occasionally done me that courtesy, and then we can all return to it on Report, having had the benefit of study, if any benefit is to be gained.
Earl FERRERS: Did the noble Lord, Lord Melchett, say that it was a tried and tested way of valuing a company and, indeed, that it was by the best established criteria—I think that was the expression the noble Lord used—to use the Stock Exchange valuation? Is that the best and the tried and tested way to value a company?
Lord MELCHETT: I said the technique for imputing a share value was tried and tested.
Lord ORR-EWING: I should like to support the Amendment. I am relying on the fact that this was not discussed in the House in the other place; it was discussed in Committee, but the Committee stage was a very small one. This goes for 49 out of 57 clauses and four out of seven Schedules. That is why we are paying close attention to it here, although this view does not seem to be popular with the certain Government Ministers, nor with the Prime Minister on "Panorama" tonight.
This Amendment makes one more effort to get fair competition, and it is based on the Amendment of Mr. Willey the Member of Parliament for Sunderland. He had Austin and Pickersgill in his constituency. I do not think he was one of the most successful shipbuilders. He described these compensation terms as ridiculous, and it is believed—I do not know whether this is true or not, but I have read it in many papers—that Mr. Kaufman, the Minister, persuaded him not to move the Amendment which perhaps is why we are giving special attention to it here. My noble friend on the Front Bench will remember that Nye Bevan once said, "Why look in the crystal ball when you can read the book?" Here we can actually read the book of what profits these people have made, not in 1972 and 1973 but in 1974, 1975, 1976 and 1977. We can actually see the results. Surely, therefore, it is not unreasonable to

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take this as a criterion. I hope that the noble Lord, Lord Melchett, will look at this again and bear in mind that Fred Willey is a man who is deeply respected in another place and that this Amendment is based on his views. Therefore, we are not being biased in our view; we are asking that sensible consideration be given at this stage.
Lord STRATHCONA and MOUNT ROYAL: May I make one brief interjection? Following what my noble friend Lord Ferrers said, the noble Lord spoke about "tried and tested and accepted", but he seems to be unaware that many members of the Stock Exchange who are Members of this House have been at pains this evening to assert at great length that they do not accept the arguments he is putting forward. This seems to me the burden of what is being said here. He goes on to read a lecture to these members of the Stock Exchange, and then proceeds with the even more inconsistent argument by saying, "In our view …". We are arguing about the difference between what he thinks the Stock Exchange does and what the Stock Exchange thinks that it does, and there is a very considerable difference which is being emphasised by this Amendment.
Lord CULLEN of ASHBOURNE: I appreciate that we are not going to get any further on this point because we disagree on every aspect. I also see that Amendment No. 156 would cover it to some extent. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
11.8 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 169:
Page 52, line 41, at end insert ("taking into account all factors which the arbitration tribunal consider relevant in order to ensure that the compensation in respect of the securities shall be fair").
The noble Lord said: In the general debate on the Question, That Clause 35 stand part of the Bill, my noble friend and other noble Lords have pointed out how inappropriate, irrelevant and inequitable are the Government's proposals for compensation in the Bill. They are based on the values on the Stock Exchange of
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shares of parent companies over a certain period in the past; and as has been pointed out, those quotations are not a measure of the worth of a company, and there is very little relevance when one comes to the subsidiary companies. I do not expect the Minister w ho replies to attempt to repeat a justification of the Government's proposals, but in this Amendment we believe an important improvement could be made to the proposals in the Bill. I will briefly rehearse the reasons for the Amendment.
The value of a wholly owned subsidiary is that it can be disposed of as a going concern in its entirety. Such a disposal will attract a price much above any equivalent quoted value. The Stock Exchange quotation reflects the value based on the exchange of small quantities of shares in a market affected by factors unrelated to the specific company or even to the market as a whole. Then the means of calculating the notional quoted price is very uncertain. The amount of uncertainty and the virtual guesswork involved cannot produce fair or reasonable results. In this situation the object of this Amendment is that should the calculation required to reach a notional quoted price result in unfair and absurd compensation the arbitration tribunal will lave some latitude to take into account factors that will ensure an element of fairness.
I should like to add one example of a company which would receive inequitable treatment under this Bill. That is the company of John G. Kincaid, who are marine engine manufacturers at Greenock—a straightforward, uncomplicated case. The Government's proposed system of valuation applied to a situation nearly three years ago would produce absurd results. The company's report and accounts for the year up to the end of 1975 show that the turnover increased nearly fourfold, the profits are up four and a half fold and the reserves and assets are almost doubled. That no account can be taken of substantial improvements in profitability and the net asset position is tantamount to expropriation. This Amendment would go some way to improving the situation by allowing the Arbitration Tribunal which is to be set up under the Bill to take into account some other factors if an absurd result was produced by the system which is at present prescribed in the Bill. I beg to move.
Lord MELCHETT: This Amendment, No. 169, is clearly more limited in its scope than Amendment No. 156, which, noble Lords opposite pressed into the Bill on the previous Committee day. It does not seek so clearly to overthrow the Stock Exchange linkage which we believe is vital to the objectivity of the present terms. To that extent No. 169 is probably already subsumed in No. 156, which your Lordships passed after a Division. Amendment No. 169 merely requires that the Tribunal shall take account of all relevant factors in order to ensure that the compensation is fair.
There are two points that I should like to make to the noble Lord on this. First, the Bill already provides in Clause 38(3) that the Tribunal shall have regard to all relevant factors. The Tribunal is an independent body and it would not be acting properly if it had regard to factors relevant to Stock Exchange valuation yet failed to take account of them. While the present words may be different, the effect is exactly the same, and there is no need to duplicate the provision, as Amendment No. 169 seeks to do.
Secondly, there is the question of fair-ness, which we have discussed at some length. As drafted, the Amendment seeks to embody the concept of fairness in relation to the Stock Exchange valuation. In that fairness is ensured both by the basis and the application of the present terms, this might appear unexceptionable. But fairness is essentially subjective unless it is defined in relation to a specific set of parameters; indeed that was one of my main objections to Amendment No. 156. The second part of the Amendment could, therefore, weaken the basic objectivity of the terms. In itself, this could reduce the fairness already fundamental to the Government terms. I appreciate the noble Lord's desire to ensure that the compensation which shareholders receive will be fair. As we have tried to make clear from these Benches, although I know with not a great deal of success, that, is too, the objective of the Government. The terms included in the Bill are both fair in their basis and their application. Amendment No. 169 is unnecessary and could, in certain circumstances, be harmful. In view of that, and in view of the fact that I think it is probably subsumed in No. 156 in any event, I hope the noble Lord will not press the Amendment.
Lord HARMAR-NICHOLLS: Why does the noble Lord restrict the meaning of the words in this Amendment? Why restrict the very important words that "all factors" should be taken into account which are relevant in order to attain fairness in arriving at a notional Stock Exchange valuation. I wonder whether the noble Lord could answer this question. The words in the Amendment are, "taking into account all factors". Would he tell me the sort of factors he does not think should be taken into account; what description would he give to the factors which he does not think should be taken into account? I should have thought that to be fair you have to take into account all factors, apart from whether or not they fit into a notional Stock Exchange value at the end of the day.
If you do not want an arbitration tribunal to take all factors into account why go to the expense and trouble of setting one up? Why not just press a button or two on one or another of these computers we have, and they could give you that kind of answer. Since this is a human decision that is going to affect ordinary people, all factors ought to be taken into account.
The other word is "relevant". The noble Lord is not suggesting that matters which are relevant in arriving at a valuation, whether it is done by a computer or tribunal should not be taken into account? What are the relevant factors—that these things could be unkind, or unfair, or unclean—that should not be taken into account? This is a modest Amendment, as the noble Lord said, and it may well be already covered by Amendment No. 156. If it is, I do not think it would do any harm to reiterate and underline the importance of these factors. Can the noble Lord tell me what are the factors he would not like to take into account? What is his case for saying that relevant matters ought not be taken into account? If he rules out both of those things how, at the end of the day, can you possibly come to a fair valuation?
11.16 p.m.
Lord MELCHETT: I apologise for repeating myself, but I tried to make the point. The tribunal is an independent body, and the tribunal would not be acting properly if it had regard to factors

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relevant to a Stock Exchange valuation yet failed to take account of them. While the present words in the Amendment may be different from those in the Bill the effect is the same, and there is no need to duplicate the provision as the Amendment seeks to do.
Baroness WARD of NORTH TYNESIDE: Having regard to the fact that I think that every Amendment that has been proposed has been refused, and now we have got to the point when the noble Lord at least refers to the fact that there will be arbitration, would it not have been more helpful and perhaps saved time if we could have discussed the terms of the arbitration now, who will be on it, and all that sort of thing? We have to wait a long time before we come to discuss arbitration. It would have been better, if the noble Lord is going to refuse every Amendment and just adding occasionally that there will be a reason for arbitration, if we could have discussed the arbitration; we would have then felt that we were getting a hit of the way along the road trying to make things fair. But we have to wait such a long time before we discuss arbitration, and by that time the noble Lord will have refused every Amendment put forward in order to try to make fair compensation.
Lord TREFGARNE: The noble Lord, Lord Melchett, has repeatedly referred to Amendment No. 156, which was passed at an earlier session of this Committee. The noble Lord has asked us to accept that this Amendment is unnecessary because of that Amendment, although this Amendment is rather narrow. Is it the Government's decision that Amendment No. 156 shall be allowed to stand, and that no effort will be made to reverse that Amendment when the House of Commons consider the matter?
Lord MELCHETT: No, I simply made the point, but I went on, so that noble Lords opposite would not accuse me of the very thing the noble Lord has—I did not achieve my purpose, but I suppose one cannot win every time—to give the detailed arguments which the noble Lord will be interested to know were prepared before Amendment No. 156 was pressed into the Bill. Frankly I did not expect it to be pressed into the Bill, so I gave the noble Lord the same speech that I would
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have done if Amendment No. 156 had not been pressed into the Bill. I am sorry I did not convince him, but I have done my best.
Lord TREFGARNE: The point is that the noble Lord has asked us not to pursue this Amendment because we have already done it elsewhere, but it would be quite improper for him to do that if he was intending to pull the carpet out from under us by insisting that the Commons remove Amendment No. 156.
Lord MELCHETT: I do not insist on the Commons doing things. They will make their own decisions about these matters. I said that it seemed that this Amendment, because it was narrower than Amendment No. 156, was subsumed within it and that therefore it did not seem to be necessary at this stage. I went on, because we divided against No. 156 and I do not agree with it, to give the arguments against this Amendment in particular, which is also unacceptable to the Government.
Lord ROBBINS: May I ask; he noble Lord a question, which I will make as straightforward as I possibly can? The noble Lord, Lord Campbell of Croy, cited circumstances which, to ray mind, vividly illustrated the difficulties which have arisen in the minds of some of us who have criticised the Bill as drafted. In that case, would the noble Lord regard the circumstances of the company so described by Lord Campbell as being relevant or irrelevant?
Baroness WARD of NORTH TYNESIDE: A straight answer, please.
Lord MELCHETT: With respect, I do not think it was a straight question; at least, a fairer response might be for me to say that I did not understand the question. Would the noble Lori explain whether it would be "relevant" to what?
Lord ROBBINS: Relevant in the context of the Amendment.
Lord CAMPBELL of CROY: Perhaps I can remind the noble Loud, Lord Melchett, that I said that the turnover had increased by nearly fourfold in the period since the relevant period, that the profits were up four-and-a-half times and

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that the reserves and assets had almost doubled. Those were the points to which the noble Lord, Lord Robbins, was referring.
Lord MELCHETT: I regret to say that the noble Lord, Lord Robbins, answered my question from a sedentary position and I did not hear what he said.
Lord HARMAR-NICHOLLS: Perhaps the noble Lord will answer now. Having had an extra few seconds in which to think about the matter, may I ask him if he considers that the valuation which he is asking the Committee to accept would be fair if it did not take into account the points that my noble friend has just made?
Lord MELCHETT: I am not trying to be difficult. I know that noble Lords are giggling and are thinking that I am, but I honestly do not know whether the noble Lord, Lord Robbins, is asking me about the effect of the word "relevant" in the Amendment or is asking me about the effect of the Bill as drafted. When Lord Robbins answered by question from a sedentary position he had the Marshalled List of Amendments in his hand and I am still not clear where the "relevant" he is asking me about comes.
Lord ROBBINS: It seems quite plain. I am simply asking whether the circumstances mentioned by the noble Lord, Lord Campbell of Croy, would, in his judgment, be relevant to the determination of fair compensation.
Lord MELCHETT: With respect, that has not answered my question, but I will do my best to answer for the Bill as it is drafted and maybe the noble Lord will give his view on his Amendment as that is drafted. The factors that are relevant, so far as the Bill is concerned, are the factors that are relevant to valuing shares as if listed on the Stock Exchange, not those which a tribunal may consider are relevant to a loose concept of fair compensation, and that has been our objection to the looseness of the phrase "fair
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compensation" which noble Lords have already inserted in the Bill.
Viscount SIMON: We seem to be getting into some confusion over this. Perhaps I might, with the permission of the Committee, ask the noble Lord, Lord Campbell of Croy, a question. Does he think there is any difference between the effect of his Amendment and the effect of Clause 38 (3)? I do not see what the difference is, and if he could explain it, it might be rather easier to understand the position.
Lord CAMPBELL of CROY: I am grateful to the noble Viscount for asking that question because I had intended to deal with it at the end of the debate on the Amendment, and it seems that that point has now been reached. The noble Lord, Lord Melchett, began by saying that he thought that this Amendment, No. 169, was subsumed in Amendment No. 156 which the Committee made to the Bill at our last sitting. We do not believe that it is subsumed in that. We believe that it is supplementary to it but that it is not covered by it. Therefore, we believe that Amendment No. 169 is necessary also.
Then I come to the next point—and this is the point to which the noble Viscount referred—which the noble Lord spoke of, saying that he thought that this was covered by Clause 38 (3). However, that appears to be limited purely to Stock Exchange factors, whereas Amendment No. 169 refers to the application of the principle of notional valuation and is not simply limited to Stock Exchange factors. So, in answer to the noble Viscount, we think that there is an important difference between the two. We regard this as an important Amendment which would make a necessary improvement to the Bill. I would ask my noble friends to support me in pressing the Amendment.
11.26 p.m.
On Question, Whether the said Amendment (No. 169) shall be agreed to?
Their Lordships divided: Contents 76; Not-Contents, 43.

CONTENTS

Amory, V.

Halsbury, E.

Rochdale, V.

Ampthill, L.

Hanworth, V.

St. Aldwyn, E. [Teller.]

Atholl, D.

Harcourt, V.

Sandford, L.

Barrington, V.

Harmar-Nicholls, L.

Sandys, L.

Belstead, L.

Kemsley, V.

Seear, B.

Blakenham, V.

Killearn, L.

Selkirk, E.

Brookeborough, V.

Kimberley, E.

Sempill, Ly.

Campbell of Croy, L.

Kinnaird, L.

Sharpies, B.

Carr of Hadley, L.

Kinnoull, E.

Shuttleworth, L.

Carrington, L.

Lauderdale, E.

Simon, V.

Cork and Orrery, E.

Lloyd of Kilgerran, L.

Stamp, L.

Cullen of Ashbourne, L.

Long, V.

Strathclyde, L.

de Clifford, L.

Lyell, L.

Strathcona and Mount Royal, L.

Denham, L. [Teller.]

Middleton, L.

Sudeley, L.

Drumalbyn, L.

Molson, L.

Terrington, L.

Dudley, E.

Monson, L.

Trefgarne, L.

Ellenborough, L.

Mottistone, L.

Tweedsmuir, L.

Elles, B.

Mountgarret, V.

Vernon, L.

Elliot of Harwood, B.

Mowbray and Stourton, L.

Vickers, B.

Ferrers, E.

O'Hagan, L.

Vivian, L.

Glasgow, E.

Onslow, E.

Ward of North Tynes de, B.

Glenkinglas, L.

Orr-Ewing, L.

Ward of Witley, V.

Gray, L.

Rankeillour, L.

Wardington, L.

Greenway, L.

Redesdale, L.

Wigoder, L.

Grey, E.

Robbins, L.

Young, B.

NOT-CONTENTS

Brimelow, L.

Kaldor, L.

Peart, L. [L. Privy Seal.]

Brockway, L.

Kirkhill, L.

Peddie, L.

Champion, L.

Llewelyn-Davies of Hastoe, B.

Pitt of Hampstead, L.

Collison, L.

Lloyd of Hampstead, L.

Shepherd, L.

Cooper of Stockton Heath, L.

Longford, E.

Stedman, B.

Davies of Leek, L.

Lovell-Davies, L.

Stone, L.

Delacourt-Smith of Alteryn, B.

Lyons of Brighton, L.

Strabolgi, L. [Teller]

Elwyn-Jones, L. [L. Chancellor.]

McCluskey, L.

Vaizey, L.

Mais, L.

Weidenfeld, L.

Fisher of Camden, L.

Melchett, L.

Wells-Pestell, L.

Goronwy-Roberts, L.

Milner of Leeds, L.

White, B.

Gregson, L.

Morris of Kenwood, L.

Willis, L.

Harris of Greenwich, L.

Northfield, L.

Winterbottom, L.

Houghton of Sowerby, L.

Oram, L.

Wynne-Jones, J.

Jacques, L. [Teller.]

Parry, L.

Resolved in the affirmative, and Amendment agreed to accordingly.
11.34 p.m.
Lord CULLEN of ASHBOURNE Lord CULLEN of ASHBOURNE moved Amendment No. 170A:
Page 53, line 6, at end insert ("and amongst those factors to all relevant facts known at the time of the determination of the base value which were in existence on any of the relevant days, notwithstanding that any of them would not have been known on any of the relevant days.").
The noble Lord said: This Amendment might more conveniently have come later than Amendment No. 172A, because if the Government accept Amendment No. 172A then this Amendment will be unnecessary. This Amendment enables all facts inexistence during the reference period which are relevant to the calculation of a notional share price to be taken into account, and this would apply at least for
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the duration of the reference period. That is the bwllfa principle. I expect I have pronounced this wrongly, as I am no student of the Welsh language; but, in short, it is the general principle in law that where facts are available they are to be preferred to prophecies—a principle that I would hope commends itself to your Lordships as well as to lawyers. This Amendment is similar to a provision in the Coal Industry Act, which applied the bwllfa principle to facts which were in existence at vesting date but which were known only at the time when compensation came to be determined. I beg to move.
Lord WINTERBOTTOM: I very much apologise; I did not get the Welsh joke. I turned round to my noble friend behind me, who is Welsh-speaking, and I did not get the translation in time. As I understand it, Amendment No. 170A seeks to

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specify that all the facts relating to a company during the reference period shall be taken into account in determining unquoted securities, irrespective of whether they would have been known. In so far as the noble Lord is seeking to widen the compensation base of the Bill, I am afraid I must reject this Amendment: in so far as he is seeking to establish that adequate information should be available for valuation purposes under the Bill, I shall try to show why it is unnecessary.
Under Clause 38, unlisted securities are to be valued on the basis of what would have been their quotation on the Stock Exchange during the reference period had they been listed. I think this is a rather important argument. For the purposes of the valuation process, therefore, it is to be assumed that the shares were in fact listed. In making this basic assumption, it automatically follows that all the requirements of the Stock Exchange which would have been a condition of that listing, including the provision of adequate information, would have been satisfied, whatever the reality.
Officials of the Department of Industry have held discussions with representatives of the vesting companies on the whole question of which information is relevant to the valuation. It has been suggested on behalf of the companies that the information requirements of the Stock Exchange do not apply to unlisted secureties, and the information which would be required for a private treaty sale is more relevant. But, for better or for worse, the Bill prescribes compensation terms on a different basis. The basis prescribed is that the securities shall be valued "as if quoted". In such circumstances, it is the Stock Exchange basis, and not the private treaty basis, which is relevant; and it is therefore the information which is adequate for a Stock Exchange listing, and not some wider, ill-defined basis, which is relevant.
The provisions of Clause 38 require the valuation of unquoted securities to take account of all factors relevant to a Stock Exchange quotation during the reference period. This is deliberately widely drawn. It is inevitable in the valuation of 42 widely different companies in four industries that differing factors will apply in relation to different companies. The requirement
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to take account of all relevant factors is intended to give sufficient flexibility to ensure that the valuation is equally fair to all security holders. It enables the stockholders' representative for each company to bring into the negotiations, and if necessary before the arbitration tribunal, all the factors which he considers relevant to the valuation of the shares of the company as if they had been listed on the Stock Exchange. This enables him to argue that any piece of information would have a direct bearing on the share quotation of a company had it been listed.
Even if it were thought necessary to explain all this in the Bill, the Amendment would be inappropriate on the grounds that it would relate to an essentially different basis of valuation. I have told the Committee on more than one occasion that the Bill values unlisted shares as if they were listed in the Stock Exchange. It is not, and has not been, our intention to value them as if sold by private treaty.
There is another point that I would make in the form of a half-apology to the noble Lord, Lord Trefgarne. He is not in his place, but I was going to say that he had accused me of condoning expropriation. I do not believe that expropriation can be the word to be applied to a situation where the stockholders' representative can argue the case with the Secretary of State and, at the end of the day, the arbitration tribunal will decide. It is for this reason that I believe we will get the fairest possible valuation of the shares on the basis proposed in this particular clause.
Lord WARDINGTON: Am I being stupid or would it not be fair that some acknowledgement of the bwllfa principle should be accepted by noble Lords opposite and looked into? If one likes to go back, your Lordships may remember a very much respected Law Lord who laid down the principle that you should not speculate on facts when you can know.
Lord WINTERBOTTOM: I am afraid that I cannot help the noble Lord in this matter.
Lord WARDINGTON: I was suggesting that this matter perhaps might be looked at.
Viscount SIMON: The noble Lord's last remark in response to the noble Lord, Lord Trefgarne, seemed to me to imply that because provisions arise later for, first of all, negotiation and, if necessary, arbitration, that this could meet the point made by Lord Trefgarne. But I thought that in previous exchanges it had been made quite clear that the negotiation and the subsequent arbitration was only within the ambit of this Bill; that is, on the basis that no value could be added for the managerial content of the take-over.
Lord WINTERBOTTOM: What is intended within the ambit of the Bill is the following: the requirement to take account of all relevant factors is intended to give flexibility and to ensure the valuation is equally shared to all security holders. It enables the stockholders' representative for each company to bring into negotiations and (if agreement cannot be reached) before the arbitration tribunal all the factors he considers relevant to the valuation of the shares of the company as if they had been listed on the Stock Exchange. This would enable him to argue that any piece of information would have a direct bearing on the share quotation of a company. We are talking about honest arbitration and honest negotiations.
Lord ORR-EWING: I must confess that I am terribly perplexed about this business of "supposing that it had been on the Stock Exchange" when only one out of 43 companies actually had a quotation on the Stock Exchange. It seems an extra-ordinary criterion on which to base the whole discussion on all of Part II of the Bill. The noble Lord and I served on the Board of Admiralty for some time. I remember inquiring about how many people were color blind. We were always concerned about that for they would say they could not read the flags—though flags are not much used nowadays—and could not therefore serve in the Royal Navy. There were, say, 2½ in every 100 who were color blind. This is about the percentage of companies that we are concerned with. You would not say, "Let us judge all people by they number who are color blind and base everything on the assumption that the cannot read colours; cannot look at colour television or identify traffic lights, and so on".
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This does not seem a vet realistic approach to life. Therefore it is a false assumption. I have never heard of the bwllfa system. Even the noble Lord found it unusual. As I quoted earlier, I was more familiar with Nye Bevan's principle; why gaze at the crystal ball when you can read the record? This; seems an admirable principle, rather more modern and certainly not Welsh, and easier to pronounce than the other one.
Either principle is much sounder than the supposition that somebody, however wise they are, on the Tribunal can somehow work out what would have been the Stock Exchange value if in fact the company had ever been on the Stock Exchange for some strange period in 1972–73, paying no regard so far as we are able to know up to now, of any result achieved in expansion, improvement and efficiency, and every other factor in exports. We have not yet heard that these are relevant factors. The noble Lord has only to say, "As a sensible man I would think that these are some of the factors which a tribunal would need to take into account if we are going to have fair compensator, as every Government Minister has promised". Then I am sure we would be very happy to go on to the next proceedings.
Lord WINTERBOTTOM: May I reread the sentence I read from my brief, interpreting it in terms of what the noble Lord said. It enables the stockholders' representative to bring into negotiations and, if necessary, before the Arbitration Tribunal, all the factors which he considers relevant to the valuation of the Mares of a company as if they had been listed on the Stock Exchange. Tonight we are not trying to impose on the stockholders' representative an assessment, a code of conduct, a method of assessment, binding laws as to the way he starts his negotiations; the factors which are considered relevant by the stockholders' representative are the ones that will be brought into negotiation, and although I know that your Lordships would not wish any names to be mentioned, one name I know among the stockholders' representatives, s a man whose negotiating power is formidable and who I am certain will present the case of his clients very well indeed. So it lies with the stockholders' representative to produce any factors which he considers relevant to

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the argument. I imagine the cases mentioned by some noble Lords must be considered relevant.
11.48 p.m.
Lord ROBBINS: But is the noble Lord still not tying the concept of relevance to the establishment of the notional value of 1974, or is he prepared to admit that the case so admirably described by the noble Lord, Lord Campbell of Croy, events which happened after 1974, would he relevant to fair compensation? The noble Lord has passionately denied that he is in favour of expropriation. I would say that if the factors in the case mentioned by the noble Lord, Lord Campbell of Croy, were not brought into the assessment, there would be expropriation.
Lord WINTERBOTTOM: If the stock-holder's representative considered these factors to be relevant, he would put them forward in his argument. I do not think we can say more than that.
Lord CARR of HADLEY: May we be clear? In the Government's view, would the Arbitration Tribunal be entitled to take into account events which have occurred since 1974? This is the crucial factor. Let us assume that we accept for the moment—but it is wrong to accept—that the starting point has to be an extraordinary, notional Stock Exchange value. We think it is a crazy starting point; but let us for a moment assume it is the starting point. Having started with that, can the stockholders' representative argue about events which have taken place since then as a reason why the compensation should be different? If the stockholders' representative does so argue, do the Government give us a categorical assurance that the Arbitration Tribunal will be entitled to take those arguments into account and base their judgment upon them?
Lord WINTERBOTTOM: I can say that we are looking forward to the prospect beyond 1974 and are taking it into account. It is very difficult to put this into precise language, but I should have thought, knowing at least one of the individuals who are stockholders' representatives, that it would be very hard to keep him away from the situation mentioned by the noble Lord.
Lord CARR of HADLEY: I do not want to press the noble Lord unfairly, because I am sure he is not dodging the issue deliberately. Of course he can say that the stockholders' representatives can and will come and put the arguments, but the crucial point is whether the arbitration tribunal will be within their terms of reference to give weight to these particular arguments. It is no good just saying that the stockholders' representatives can put the arguments, if the terms of reference of the tribunal were such that they could not take them into account in arriving at their valuation. I think if we could all be reassured categorically that the arbitration tribunal would be able to give weight to those arguments and use them as part of the evidence on which they would base their recommendations, some of us would be at least less unhappy than we are at the moment.
Lord WINTERBOTTOM: It is not possible to foresee every question that might be put to one in an argument of this kind; but I think the argument put by the noble Lord is entirely valid and that what he says is correct. However, we have come to Clause 42 in due course this evening and I will try to get something more concrete for him by them.
Lord CULLEN of ASHBOURNE: We have had an interesting discussion on this Amendment, which I now beg leave to withdraw.
Amendment, by leave, withdrawn.
11.52 p.m.
The PRINCIPAL DEPUTY CHAIRMAN of COMMITTEES (Baroness Tweedsmuir of Belhelvie): Before I call Amendment No. 170B, I should say that if it is agreed I cannot call Amendment No. 171.
Lord CULLEN of ASHBOURNE Lord CULLEN of ASHBOURNE moved Amendment No. 170B:
Page 53, line 19, leave out subsection (6).
The noble Lord said: In order to arrive at an estimate of compensation for all but one of the 43 companies, it is necessary to calculate the price which the shares of those companies would have had if they had been quoted on the Stock Exchange between August 1973 and February 1974. Such a calculation can

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be shown to be impossible. If a notional share price is to be quoted in any systematic way, it must be possible to say, first, what factors determine the share prices, and secondly, the weight given to each of these factors by the Stock Market. Leading City analysts, statisticians and economists have attempted to do this in order to discover whether it is possible to predict future share prices, their subjective data going back for some years for the larger companies to the most advanced statistical method, but they found it impossible to make predictions with a degree of accuracy that was helpful, conclusive or meaningful.
The weightings given to various factors appear to be completely random: in other words, there is no clear or apparent relationship between the share price of individual companies or between the share price of individual companies or between the share price of an individual company and the general level of the Stock Market. Two almost identical companies can have a totally different share price when measured short term or over a longer period. This result may sound improbable, but it is nevertheless a fact. Even the largest companies, which might be thought to have the most consistent relationship with the Stock Market as a whole fluctuate substantially relative to each other and to the general level of the Market. For example, in one year ICI fluctuated relative to the Market by 59 per cent., GEC by 39 per cent., Unilever by 58 per cent., and Vickers by 100 per cent. Smaller companies are liable to fluctuate much more widely. The impossibility of calculating a hypothetical or notional share price would not matter if it was clear from the Stock Exchange evaluation of the parent company over the reference period what was the actual evaluation of the subsidiary. But the parent company's share price is helpful only if it is possible to dissect, from the evaluation of the whole, the evaluation of the separate parts of the whole.
Finding the relationship of the parts of a multi-activity company to each other, and to the company as a whole, is an insoluable problem for the same preconditions of knowledge are required. It must be known what weight the Stock Market gives to the factors in order to assess the contribution of the parts of the whole. Should it measure what is the
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subsidiary's proportion of the group's net assets, pre-tax or post-tax profits, or liquidity? Each factor used on its own would produce a separate remit. What balance or "mix" of factors should be employed? For this reason, the known share price of the parent is no a helpful guide to the subsidiary's notional share price. In fact, by directing as Clause 38 requires, that the parent's share price should be taken into account, the task of devising a notional share price is made more difficult and complex as an extra layer of difficulties is encountered. In the case of steel nationalisation, there was no such requirement. I beg to move.
11.57 p.m.
Lord WINTERBOTTOM: This is a complex matter and there was considerable discussion in Committee in another place about the meaning of Clause 38 (6) to which the Amendment relates. Clause 38(6) provides that, where a vesting company represents a substantial proportion of a quoted parent, the share quotation of that parent shall be one of the relevant factors. I must emphasise that this is only one of the relevant factors. The basic requirement on the Tribunal is to take account of all relevant factors in determining the notional share quotation of an unlisted company. The inclusion of Clause 38 (6) merely ensures that the quote of a parent is not excluded from the considerations when it is strictly relevant. If the subsection were not included, as proposed in Amendment No. 170B, the Bill would fail to recognise the obvious correlation between a parent company's value and the subsidiary's value when the subsidiary represented the major part of the parent. I think that that is a fair argument, using the word "fair" in the sense in which it was accepted earlier.
Lord CULLEN of ASHBOURNE: That is a very good answer, but it answers only a very small part of what I said. My main point was that to calculate a notional share price will be extremely difficult, and I wonder whether any noble Lord here today has a notion of what t notional share price is. I do not have one.
Lord ROBBINS: May I point out that at an earlier stage of our discussions the noble Lord, Lord Melchett, said that

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the technique of computing notional share price was well-known. After puzzling about the literature, I should like to submit a humble request to the Front Bench that a paper be laid in the Library, giving an authentic account of the technique of computing notional share prices.
Lord HARMAR-NICHOLLS: I was a little puzzled, too. The main explanation which the Minister gave for including the quotation of the parent company was to make certain that it would not be excluded when it was relevant. If you have to name something in order to show that it is not excluded because it is relevant, why do the Government not accept all of our suggestions that we ought to mention liquidity, profits being ploughed back or extra profits being earned? This adds point to our argument that what we have mentioned should be included, in order to show that they, too, are relevant. How does the noble Lord square that, because that was the only answer he gave?
Lord WARDINGTON: In his reply to my noble friend the noble Lord referred to a subsidiary being the major part of a parent. Does this mean that if it is a minor part of a parent the considerations do not apply?
Lord WINTERBOTTOM: If the subsidiary company is a minor part of a major group, then it is not quite so relevant as if the area for nationalisation were a major part of the parent group. There is a difference. The profits and assets of the minor part obviously must carry greater weight in calculating its value than if the bulk of a major company came within the ambit of the Bill.
Lord WARDINGTON: Then may I point out to the noble Lord that the greatest number of major companies which are to be nationalised will have a minor part nationalised? It seems to me that according to the noble Lord's interpretation, this applies only to minor companies which have no share quotation. A minor subsidiary would not come within the ambit of the Bill. It is the major companies, with minor subsidiaries, which are quoted. It would be helpful if the noble Lord could look again at this point. The noble Lord stated that where the subsidiary to be nationalised was a major
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part of a parent the price at which it would be nationalised would bear a relationship to its parent's quotation.
Lord WINTERBOTTOM: I am grateful to the noble Lord for having put his point so clearly because I think I can help him. The application of Clause 38(6) is strictly limited; it applies only where an acquired company represents a substantial part of a quoted group. In other words, Clause 36 will apply only where the activities of the acquired company are clearly a major factor in determining the quotation of the parent. It is not the Government's intention to apply Clause 38(6) where the activities of the acquired company are less than major in determining the share price of the parent. Minor holdings will not affect the issue. Clause 36(6) is limited in its scope.
Lord CULLEN of ASHBOURNE: This was another of the Amendments which was tabled in an effort to try to make the Government see how extraordinary the notional share price is. However, I know that one could go on like this for ever without its having any effect. Therefore, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
12.4 a.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 171:
Page 53, line 32, leave out from beginning to ("the") in line 34 and insert ("the arbitration tribunal, in determining the base value of the company's securities in accordance with subsection (1) above, may have regard to").
The noble Lord said: I beg to move Amendment No. 171. If one looks at line 32 on page 53 one sees that as the Bill stands it says that one of the relevant factors shall be—the words are obligatory—the quotation of shares of a parent company. This is most unsatisfactory. I will not go over the arguments again. My noble friend Lord Cullen of Ashbourne has just pointed out that a parent company's quotation bears very little relationship to the value of a subsidiary company. Its inclusion as a prominent factor is inappropriate, in that a parent company's quotation would be only a reliable indication of the notional value in the special circumstances where the acquired subsidiary constituted almost the whole of the parent company's activities. This is about

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the only situation where that would apply. The Amendment does not make the taking into account of just one prominent factor obligatory. The Amendment does not predetermine the question of relevance of the parent company quotation. What it does is to enable the arbitration tribunal to have regard to the quotation of the shares if they decide to do so. We think this is an improvement in the drafting of the Bill and I ask the Government to consider it. I beg to move.
Lord WINTERBOTTOM: Of course, the Government will consider these arguments; that is what we are really doing this evening, considering them; but as we see it Amendment 171 would limit the application of Clause 38(5) unnecessarily. It would make the arbitration tribunal responsible for deciding whether or not to take into consideration a parent share quotation. This could lead to an anomalous situation where, for example, the arbitration tribunal decided not to consider a parent's quotation where it was in fact strictly relevant. Clause 38(6) is so drafted that it can be applied in negotiations in the way most appropriate to the particular valuation in question. Any reduction in the flexibility of the application provision, which would result from the inclusion of Amendment 171, could be detrimental to either party in the negotiations. I feel that, since we are speaking about negotiations, flexibility is important since "give and take" between the two parties must be an integral part of the negotiations. Therefore, I suggest that this Amendment should not be accepted.
The Duke of ATHOLL: Can the noble Lord say how many companies will be affected by subsection (6) of Clause 38? My impression is that it will be very few.
Lord WINTERBOTTOM: I will give the noble Duke an answer as to exactly how many at a later stage. My impression is the same as his, but I should like to be precise when I give an answer.
Lord CAMPBELL of CROY: On this Bench we consider it to be unsatisfactory that this should be the only factor that is referred to, and our Amendment would certainly be in line with the other Amendments which the Committee has made today and on the last occasion. I will not
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press the Amendment at this time, but I reserve the right to return to it at the Report stage. At this stage I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 172:
Page 53, line 35, at end insert—
("( ) In determining the base value of any securities of a company in accordance with subsection (1) above, it shall be assumed that dividends had been paid by that company of such an amount as would have been appropriate if no restrictions as to the payment of dividends had been imposed on the company under the terms and conditions of a temporary loan made to the company by the Secretary of State for Defence.").
The noble Lord said: This Amendment at least has the merit of being relatively straightforward and of very narrow application. If we are going to have hypothetical Stock Exchange valuations it is likely that the main factor that will be taken into account by those who are responsible for agreeing or adjudicating on the values of a company will be the actual and prospective dividend yield. But it so happens that during the six months reference period when these valuations are to be struck, in the case of two shipbuilding companies, although they were in fact earning quite satisfactory profits they were precluded from paying dividends by the terms of the agreements under which they had accepted loans from the Ministry of Defence. The point of this Amendment is quite simply to demonstrate that it would be unfair if the existence of these particular and perfectly normal restrictions on dividend distribution during the particular reference period were to be taken into account to the detriment of the valuation of the shares of the two companies concerned.
I do not think there is any need for me to go into the cases in detail. Rather strange grounds were advanced in another place when a similar Amendment was put forward, on the grounds that it would destroy the generality of the phrase, "all relevant factors" in subsection (3). But what we are saying here is quite simply that the Tribunal should not merely have regard to the nature of these restrictions, but should adopt certain definite assumptions as to how the companies would have been situated if they had been quoted on the Stock Exchange. Noble Lords

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have been at great pains to point out that this is the basis of their valuation. I suggest what we are putting forward here is a nearer approach to reality in this respect. I have modest confidence that the noble Lord may be prepared to accept it. I beg to move.
Lord WINTERBOTTOM: I am afraid I cannot help the noble Lord, Lord Strathcona and Mount Royal, but it might be helpful to the Committee as a whole if I gave the same assurances as were given in another place by the Parliamentary Under-Secretary. The specific factors which might be considered to be relevant are not listed because their relevance can vary from company to company. It is for the stockholders' representative to make a case for including a factor among the relevant factors. Since the companies concerned are free to put their case to the Secretary of State—and I stress the word "free"—why the conditions attached to the Ministry of Defence loan should be disregarded, these Amendments are unnecessary unless, of course, the companies do not feel that their case is sufficiently strong to persuade the Secretary of State; but if they feel their case is strong, then they are in a position to put the argument forward.
Lord STRATHCONA AND MOUNT ROYAL: The reply of the noble Lord, Lord Winterbottom, is disappointing, and particularly so in this respect; he is suggesting that the Secretary of State is an open-minded man, prepared to listen to reasoned arguments. We have been here since about seven o'clock this evening, and judging by the degree of flexibility (to use one of the Government's favourite words) demonstrated by the Government, God help anyone trying to persuade the Government they should be reasonable in looking for loans of this sort! I am bound to say I found this extremely disappointing, but this is not something to make an issue of now. One can only say that I am sure the companies will be no more re-assured than I am. But having made our protest, I think I had better beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 175:
Page 53, line 45, at end insert—
("(7A) If, by virtue of an approval given by the Secretary of State pursuant to section 30 or 31 above, property, rights or liabilities have been transferred by the company in question, then, for the purpose of determining, in accordance with subsection (1) above, the base value of the securities of the company or such of them as are specified in the approval, it shall be assumed that, immediately before each of the relevant days—

(a) the property, rights or liabilities so transferred were not vested in the company, and

(b) in place of that property, those rights or liabilities there were vested in the company funds equal to any consideration which passed to the company as a result of the property, rights or liabilities being so transferred.").

The noble Lord said: This Amendment was discussed with Amendment No. 148, which the Committee approved. Therefore, I beg to move.
On Question, Amendment agreed to.
12.13 a.m.
Lord WARDINGTON Lord WARDINGTON moved Amendment No. 175A:
Page 55, line 22, at end insert—
("(11A) Where apart from this subsection the base value of the securities of a company for the purposes of section 35 above would be determined in accordance with the provisions of subsections (1) to (11) above, the stock-holders' representative may by notice in writing to the Secretary of State given at any time before the expiry of three months from the date of transfer of the company, elect that in lieu of subsections (1) to (11) above, the base value of the securities of the company be agreed or determined in accordance with the provisions of subsection (12) below.
(11B) In the event of the stockholders' representative giving notice to the Secretary of State under subsection (11A) the base value for the purposes of section 35 above of the securities of the company shall be such as may be agreed between the Secretary of State and the stockholders' representative or, in default of agreement, as may be determined by arbitration under this Act to be the price which would be put on the securities of the company by a purchaser willing to purchase at arm's length on the open market (as if the Act had not been passed) all the securities of the company in order to acquire the company as a going concern on the day following the date of transfer; and the arbitration tribunal in determining the base value that any securities would have had in those circumstances shall have regard (in addition to any other relevant factors) to the following, that is to say—

(a) the net value of assets after allowing for liabilities;

(b) the amount of the profits or losses which have been made during such period as appears material or might have been expected to be made in the future;

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(c) any property, rights or liabilities which become vested in the company by virtue of section 20 above.").

The noble Lord said: In the absence of my noble friend Lord Selsdon, may I speak to this Amendment. The draft Amendments to Clause 38 are to provide the stockholders' representative with the option to choose a different measure of compensation for companies whose securities are unquoted. The whole basis of the nationalisation of the companies is the acquisition of their securities, and compensation is paid on that basis. The draft Amendment is consistent with this, and measures the compensation by the value of the company's securities. The value is to be the price put on the securities by a person who wishes to acquire the company as a going concern by purchasing the securities. As a company's business can either be acquired by purchasing all its securities or by buying for cash the whole of its undertaking, this measure of compensation in essence is identical to the measure of compensation proposed in the Ports Bill 1970.
In addition, the Iron and Steel Act had a 61-month relevant period from 1961 to 1966. The companies in any one industry are not either at their peak or their trough so far as prices or earnings are concerned at any given moment. The option that was given under the Iron and Steel Act was that a company could choose an average of that 61-month period or the last six months. That struck me then and strikes me now as being a perfectly reasonable and fair basis. It applied to quoted companies and was used as a basis for quoted companies, and also used in argument for unquoted companies, but the unquoted companies did not necessarily use the same basis of compensation; they had the option. I think, also, it is fair because prices fluctuate with the company's history, its potential, what has just been reported, what orders they have received. Assets remain the same basically, although the assets can be valued totally differently in the market place. if I may recall to your Lordships' attention Lord Selsdon's remarks; he referred to a company which at one moment had a market capitalisation of £190 million and at another moment shortly afterwards of only £19 million. The assets had remained the same; the assessment by the investing public had changed.
This draft Amendment follows very closely Clause 40 of the Ports Bill 1970 and paragraph 3 of Schedule 4 to this Bill. I am not arguing about nationalisation I am not really at this moment arguing about fairness. I am arguing about the correctness and the feasibility, the possibility, of utilising the terms that are being put forward. We have heard so much about the notional price. I have tried to explain earlier how difficult this is to arrive at when a number of the factors which would apply to a notional price are disallowed in the Bill. In trying to arrive at a notional price, it is surely wrong to prohibit an increase in dividend—which I have been led to believe could be taken into account by the stockholders' representatives in arguing the case after 1974—and at the same time refuse compensation for amounts put back into the business. The former could have a very marked effect on the price. Everyone knows the effect of a dividend increase.
Therefore, assuming for one moment that the price in the Stock Exchange is a worthwhile tool to use in arriving at compensation, if the dividend was allowed to be increased and if, as the noble Lord hinted might be the case, it could be applied to the period after 1974, then it would have a marked effect on the terms at present envisaged for compensation. In the latter case, which is the refusal to allow compensation to be paid for amounts put back into the business, it seems to be even more unfair. This ploughing back in Kincaid has been mentioned today, and Yarrow and Vosper and Vickers, and many others which I mentioned on Wednesday, have ploughed back enormous sums into these companies.
They have expanded their employment, business, exports, and yet the Government are refusing any compensation to be allowed for that ploughing back of retained profits, which they could not pay out in dividends because that is prohibited. Do the Government realise that the appalling waste of time by management in keeping these companies that are to be nationalised as ongoing business entities successfully exporting and employing people has very damaging effects, in many cases, on share prices because of the time that is taken up in dealing with these questions? It does not necessarily have an effect on assets. I have taken rather a long time,

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but in the absence of my noble friend, I beg to move.
12.23 a.m.
Lord CARR of HADLEY: Perhaps I may make one more effort to penetrate the minds of noble Lords opposite to try to get them to understand why this basis which they are insisting on cannot provide a basis for fair compensation. They go on asserting that their object is to provide fair compensation, and they further assert that this extraordinary business of the notional share value will achieve it. This Amendment gives us one more chance to try to penetrate their minds about this, and, if only we could, to provide us with the basis on which we might put the matter right.
The Government insist that their aim is to compensate the shareholders on the basis of the earning power of the assets being nationalised. I believe that that is common between us. The Government insist that it is their object to compensate the shareholders on the basis of the earning power of the assets being nationalised. We all agree about that proposition. May I now repeat the words of the noble Lord, Lord Melchett. He stated categorically on 20th October, at column 1437 of our debates, that what the Bill tries to do is,
"… make good to each and every shareholder the capital and income that that shareholder has lost from the acquisition of his or her shares."
That again we can agree with fully, if that is the Government's intention, as we understand it is. But what sort of shareholder did the noble Lord think he was referring to? The previous day—it appears at column 1408 of Hansard—the noble Lord referred to the general level of the stock market as if it had something to do with the earning power of the sort of shareholders with whom we are concerned in this measure; namely, a share-holder who is a parent company or a controlling shareholder as opposed to being a Stock Exchange investor, because there is a crucial difference between the two.
Surely by now we can hope that we have made it clear—it is no great discovery on our part; if the noble Lord had consulted the Stock Exchange Council or anybody in the City he would have heard this
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long before the Bill was drafted—that the Stock Market reflects only the value of the dividend earning power to the private individual investor and, by definition, cannot reflect the much greater earning power of all the company's assets when those assets are in the hands of a controlling shareholder or parent company. What such a shareholder needs—in other words, what no fewer than 42 out of the 43 companies being nationalised under the Bill need—in return for the assets which they are losing, and what they must have in order to make good their loss, is what I have just described; namely, the total cost of the physical assets, the stocks and so on, plus the goodwill element, in other words the asset value of the company to be nationalised.
There is no other way in which the parent company can replace that which is being lost, and to replace what is being lost is, according to Lord Melchett, the purpose of the Bill. I really believe it is unarguable that the method chosen simply cannot fulfil the purpose which Lord Melchett and his colleagues keep repeating to us is the purpose of the Bill. The purpose of the Bill is right in this connection and we are prepared to accept the good faith of the Government in saying that that was their intention when they drafted it, but we must, before we finish, penetrate their minds to get them to understand that what they are proposing fails to achieve the purpose which they claim to have in mind.
Lord Melchett further confused the issue by arguing that because the level of the Stock Market now might be slightly lower than in the reference period, some companies might not just be fairly compensated but might be receiving a bonus. But that again is based on this wholly wrong conception of the company share-holder holding the whole of the assets, compared with the individual investor, stockholder. For reasons which I have at least partially touched on in previous debates, the limitations on the dividends which companies have been allowed to pay to their Stock Exchange holders out of the total income they enjoyed has meant that even in 1974 the Stock Market values of most companies were well below the value of the assets owned by them, and since 1974 inflation has made the situation even worse. Thus, compensation equal to the reference period capitalisations of

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most companies could not, even in 1974, have allowed the parent company's share-holders to replace the assets which they owned.
To what extent will that amount allow those assets to be replaced three or four years later when inflation has just about doubled the cost of all the industrial assets they will have to replace? As I have already said, the Government say that they want to compensate on the basis of the earning power of the assets being nationalised. Well and good. I repeat that that is what we want too, but we are stuck with the provisions of Clause 38, which says that the compensation will be based on the price the vesting company would have commanded as if it were quoted—in others words, based upon the earning power of a Stock Exchange shareholder and not upon the basis of the earning power of a parent company shareholder who is actually losing the assets and not just losing his share and getting another share in place of it.
I hope that, by now, I and many other noble Lords from all sides of the Committee have shown that these two things are not the same thing and are not approximately the same thing. So will the Government at long last explain why they think that the terms of the Bill will allow their professed aim to be achieved? I, for one, cannot see how that will be so, nor—as I believe noble Lords opposite must admit—can other noble Lords from all parts of the Committee, or experts outside the House, regardless of Party political persuasion.
May I finally in support of my arguments ask noble Lords opposite to refer to the tenets of one of the Government's own Departments which has been referred to in our previous debates; namely, the Export Credits Guarantee Department? As I understand it, that Department recognises the distinction that I have been making between the value of a Stock Exchange shareholder and the real value of a company to its parent company. As I understand it, the ECGD works on the principle that a fair compensation value is the original cost of the investment plus retained profits and that this—and I quote from one of their official statements,
"bears no direct relation to any Stock Market quotation of the shares concerned".
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I therefore say most seriously to the Government that, if they will r of believe me and other noble Lords, they should believe their own Department and the criteria that that Department has set down. I believe that the case that we are putting is a substantially reasonable one in order to achieve fair compensation on the very terms that the Government themselves have defined. I repeat that we are not seeking to set any different objective from the Government themselves. We are trying to get them to understand that they cannot achieve their own objective by the means that they are proposing and that that is the unanimous view of anybody who knows anything about the subject, not only in this House but outside it as well.
Please will the Government understand that this is no Party matter at all. It has nothing to do with any confrontation between Lords and Commons, Conservatives and Labour. This is a technical matter as to how the Government can or cannot achieve the very objective they have said they are seeking to achieve. So often in this Committee we have been at severe odds about our objectives: here, we are in 100 per cent. agreement about them, but apparently in 100 per cent. disagreement about the technical competence of the methods selected by the Government to achieve those objectives. I make or. e further appeal to the Government to take this matter seriously because I beg them to believe that it needs taking seriously and to remember another case which I quoted earlier today of another Government sponsored body—the ICFC. For very much the same reasons, the ICFC is only allowed to sell a company on asset value, not on share value. There are precedents within the Government themselves for the point of view which we and everybody else are putting to them. May I make this further appeal to the Government at last, therefore, to let their minds be penetrated by what we are trying to say.
Lord ORR-EWING: May I quote another instance which gives some substance for some "give" on the Government side. On the 18th November, 1975—and I had warned the noble Lord, Lord Beswick, that I or others might be raising this point so the noble Lord will be able to turn to that part of his brief

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which deals with it—some of the City institutions saw the noble Lord, Lord Beswick, who was at that time Minister of State at the Department of Industry and was specifically concerned with aero-space. That timing was before the Second Reading in another place which took place on 2nd December, 1975. The institutions reported receiving an assurance from the noble Lord, Lord Beswick, that:
"The intention of the Government was to provide fair compensation and that the Bill would permit the Arbitration Tribunal to take all relevant factors into account."
We have had much debate on relevant factors. The two associations representing the investment trust companies and unit trust managers used the above-quoted words in a Press release which they put out on the 22nd January. That Press release recounted the points set out in that note and, having quoted the words of the noble Lord, Lord Beswick, they added:
"The assurance is welcomed. The associations, however, consider that the basic formula for compensation adopted in this Bill is unsuitable in particular for the compulsory acquisition of unquoted companies and are concerned that they should not be used as a precedent."
The Chairman of the Investment Protection Association of the British Assurance Association followed up the meeting with the Minister of State with a letter to him which the Under-Secretary quoted with approbation in the Commons Committee, at column 1767 of the Official Report of their 34th sitting as follows:
"We welcomed your assurance that the Arbitration Tribunal will be able to have regard to all relevant factors in determining the base value of unquoted securities"—
and this is the vital point which I hope will be impressed on the minds of noble Lords—
"that the quoted market price of the shares of a parent company will not be the overriding consideration."
That is very encouraging because it means that some of the relevant factors may be more important than the quoted market price of the parent company. I may say that the Under-Secretary went on to say:
"In other words, as we have said, there will he other considerations."
I thought there was a little more extra "give" there than we have had confirmed in this Committee tonight, and I
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felt I should put it on the Record in the hope that the noble Lord would be able to say, "Yes, we accept that. It was said by the noble Lord, Lord Beswick, who was a Minister of the Government at the time, and naturally we stand by a Minister's statement of that sort which had itself been repeated in Committee by another Minister in another place."
12.38 a.m.
Lord MELCHETT: May I first of all say to the noble Lord, Lord Carr of Hadley, that certainly we take the points he is making on this Amendment very seriously and I hope he has not gained the impression from anything I have said or anything my noble friends have said that we arc not taking the Amendments he is moving seriously, and I hope he has not got the impression that we have not taken this point seriously when he has made it to us, as he himself said, several times before in the Committee stage. Certainly we have, and we have done our best seriously to respond to it. I certainly intend to do my best to try again.
Once again, the general effect of what the noble Lord said is overtaken to some extent by Amendment No. 156 and I merely say that to put in on the Record. The noble Lord, Lord Trefgarne, is not here, but in case anybody else gets up to say, "The noble Lord is dodging answering the question", I will go on to answer this particular Amendment as if No. 156 was not in the Bill. However, it seriously alters the background against which we would be considering the Amendment.
Amendment 175A seeks to offer a choice between the concept of the imputed stock exchange quotation and the concept of the price securities will fetch in a transaction between a willing buyer and a willing seller. The clearest objective test of that price is, for quoted securities, the Stock Exchange quotation of that security. The Stock Exchange quotation is, quite simply, the price at which a security will change hands between a willing seller and a willing buyer. It is the fair market price for the security. I am repeating the point I have already made several times this evening, and I make no apology for that. In the case of unquoted securites, a ready-made Stock Exchange quotation is, of course,

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not available. But, nevertheless, an imputed Stock Exchange quotation provides an equally valid yardstick for valuing a security as an actual share quotation. In the same way as a Stock Exchange quotation represents a fair market value of a quoted security, an imputed share quotation represents a fair market value of an unquoted security.
All the noble Lord's Amendment No. 175A does, therefore, is to offer to the stockholders' representative the choice to remove from the clause the one accepted yardstick for measuring the fair market value of a security. That is why I say that, in a sense, it follows Amendment No. 156, which in the Government's view would achieve the same result. In our view, this Amendment would quite simply reduce the clarity of the clause. There are three further major objections which the Government have to this Amendment.
Lord CARR of HADLEY: At this point, I wonder if I could ask on what criteria, then, one calculates the uplift over the share value which always has to be paid, not just to buy a few shares in a company but to acquire all the shares in a company? The noble Lord will no doubt remember that earlier I quoted 19 recent cases which showed that, on average, the price paid was 48 per cent. above the quoted share value. Somewhere, if there is going to be fair compensation, there has to be a calculation of that uplift over the price at which you can buy just a few shares.
Lord MELCHETT: I answered that specific point on an earlier Amendment, when it was raised by the noble Lord, Lord Trefgarne. I know the noble Earl, Lord Lauderdale, accused me of speaking very quickly and made some complimentary remarks about my English; and I think the noble Earl and the noble Lord, Lord Trefgarne, said that they would look at what I had said, and the noble Lord, Lord Trefgarne, particularly, has promised to return to it at Report stage. So possibly I could leave it at that, as I really have said all I have to say this evening, at any rate. I will study what noble Lords have said to me about it; and we have the promise to return to it.
As I was saying, the Government have three further major objections to this Amendment. First, it proposes that the
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stockholders' representative should have a choice of the valuation method. The representative can either accept the method already in the Bill or he or she can choose the willing buyer/willing seller method. In other words, the stockholders' representative can choose the best option. The objective of the compensation terms is that they should be fair. I think that in giving someone an option in the way that the noble Lord's Amendment would, the noble Lord is implying that "fair" means the highest possible price. I know that that is not the noble Lord's intention, but it does seem to me to be implicit in giving people a choice between adopting one method or another, because inevitably the stock-holders' representative will make the choice which gives him the highest price, and it is quite right that he should, too. Before the noble Lord intervenes, perhaps I could finish making my point, and then I shall certainly give way to him. Noble Lords are asking the Committee to approve compensation terms which effectively say, "Heads the shareholder wins, tails the taxpayer loses", and that, in the interests of fairness, we must reject. Does the noble Lord wish to make a point?
Lord WARDINGTON: I beg the noble Lord's pardon. I think I was wrong in my etiquette when I tried to correct him. I should not have said, "May I correct the noble Lord?". He said that one of the accepted views—I am sorry; I have lost the thread of my remarks.
Lord MELCHETT: Perhaps the noble Lord could think about it and make his point when I have finished my speech. The second major objection that the Government have to this Amendment is that it introduces the concept of an asset valuation. The book value of assets represents little more than a company's accounting conventions and is of little use in a fair valuation process. This point I made earlier. I also said then, and repeat it now, that a separate independent valuation of a company's assets would be a very time-consuming process. I mentioned the case of coal nationalisation. Although one noble Lord—I think it was Lord Wardington—explained one reason for the time involved, I would still say that the fact that there had to be an independent valuation of the assets of the companies involved meant that the process took as long as it did (eight years) to settle.

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The third major point of objection that the Government have is that the Amendment contemplates the alternative willing buyer/willing seller basis of valuation taking place as at the date of transfer. This destroys the fundamental principle that the valuation should not be affected by the prospect of nationalisation. Any form of valuation at the date of transfer must have been affected in some way by the prospect of nationalisation. In some cases, this may have been an adverse effect and, in others, a favourable effect. Whichever way the effect operates, it is bound to have an influence on the valuation and this must detract, in the Government's view, from the basic fairness of the terms.
There are two other points that I could make briefly in answer to noble Lords. The noble Lord, Lord Carr, raised the question of the ECGD overseas investment insurance scheme. This, as the noble Lord knows, was discussed at great length during the Committee stage in another place. As my honourable friend the Minister of State made clear at that time, the Government do not believe that this scheme has any relevance to the compensation provisions in the Bill. The ECGD scheme is designed to protect United Kingdom investors against expropriation of their assets by foreign Governments. Investors pay a premium in return for which they can claim recompense from the ECGD in respect of losses suffered as a result of expropriation of their assets.
This arrangement has no relevance to the compensation terms for two reasons: first, because there is no question of compensation under the Bill being unfair; and, secondly, the ECGD scheme is a form of insurance under which certain benefits arise as a result of the payment of a premium.
The noble Lord, Lord Orr-Ewing, raised the question of, as I understand it, a letter written by my noble friend Lord Beswick. Although the noble Lord told my noble friend that he was going to raise the matter, he did not tell me. While I think I may have been handed by somebody outside the Chamber a copy of the letter, I am not sure that I have it right. If I have not got the point right, perhaps I could write to the noble Lord on it. I have not seen the documents, but my
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understanding is that my noble friend gave assurances that the tribunal will have regard to all factors and that the parent company's quotation will not override that. My understanding is, as my honourable friend said in another place, that we stand by those assurances.
Lord ORR-EWING: It is a little more than that. It is: "will not be the over-riding consideration". It implies that other considerations will be more important than the parent company's share quotation.
Lord MELCHETT: The parent company's quotation will not be an over-riding factor. I hope that the noble Lord will take this. I have not seen a copy of the letter and he did not give me notice. If I have not got it straight, because it is a complex issue, I should like the chance to look into it.
12.50 a.m.
Lord HARMAR-NICHOLLS: I have been trying to find some way of putting these explanations, and what they mean, in what I would call simple language. I have been looking through my own business commitments and I cannot find a good example. But my eye did alight on the noble Lord, Lord Gregson, when he was in his place. He may represent a company and circumstances which may impress upon the noble Lord what could be the unfairness of this situation. The noble Lord, Lord Gregson, is a director of Faireys; he is also the managing director of one of the subsidiaries.
The Fairey Group is quoted round at about 30p, the asset value of Faireys is about 74p. The subsidiary of which he is managing director is about a half of it. If it is that this subsidiary was one that was going to be taken over under this Bill, they could only have the 30p valuation at which their main company is quoted on the Stock Exchange. Since the subsidiary is half of the main, that would mean that they would get the equivalent of 15p, not 37p—half of the 74p asset value—and the main company would then be left with half of the company, which would mean they had half of the 74p asset value, which would be 37p. They would have 15p from the half which had been sold on the valuation. Automatically, the asset value of the company that would

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remain would he reduced from 74p down to 52p; that is the 37p plus the 15p that they get.
How would one feel in having to recommend that to one's shareholders? If, when the noble Lord has had a chance of reading what I call this simple example, he can say that is even rough justice, never mind about general fairness, I will withdraw all the opposition I have. It is literally a fact that if this Bill is applied as it was written before Amendment No. 156 amended it (and I hope that Amendment is going to remain), innocent shareholders would be put at risk having the asset value of their holding reduced from 74p to 52p in the example I have given, through no fault of their own. I fail to see where that could be considered to be fair in any meaning of the language.
Lord CARR of HADLEY: I must press this further. I cannot accept what the noble Lord, Lord Melchett, said about the relevance of the ECGD example. The fact there is an insurance policy, with respect, has nothing to do with the case. Presumably, the ECGD is a Government Department that would not agree to insure an unfairly high value. They would only insure what they regard as a proper value; they would not insure some fancy value. They define what they regard as the fair value, then they charge a company a premium for insuring that fair value. I repeat that ECGD specifically say that what they regard as the fair compensation value bears no direct relation to any stock market quotation of the shares concerned. That is a statement of principle and policy by a Government Department on the basis of which they issue insurance policies in effect. I do not think the example of the ECGD can be brushed off like that.
I still notice that neither the noble Lord, Lord Winterbottom—with whom I raised it for the first time some hours ago—nor the noble Lord, Lord Melchett, have yet referred to the analogy of ICFC. I repeat that I am informed that is not allowed to sell companies based on share values, but only is allowed to sell them based on asset values. Once again, it is said that that is the only fair basis on which to arrive at a value. I am quoting examples of two Government-sponsored bodies.
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One is a Government Department and one was set up by Government—I believe, though I could be wrong, set up by a Labour Government. What film is wrong with those precedents, particularly when reinforced by other arguments?
May I finally say to the noble Lord, Lord Melchett, that he said, quite fairly, that he was replying to this particular Amendment as if we had not already passed the Amendment strengthening the powers of the Arbitration Tribunal. I agree, and accept that makes a difference, provided that we really can be sure that the arbitration tribunal will be effective. Some time ago—I believe when we were debating Clause 42—the noble Lord, Lord Winterbottom, said, as I understood it, that he could confirm that it would be within the terms of reference of the Arbitration Tribunal to give weight to what had happened since 1974. I think I understood him to say that at a later stage he would confirm that. Since then I have myself been trying to make some inquiries and what I have discovered rather concerns me. First, I have discovered that it is the opinion of one leading counsel that the tribunal, under the Government's proposal, would be able to admit only information which was available to the Stock Exchange in the relevant period; that is the only evidence which would he admissible. If that were so it would contradict the assurance which the noble Lord hoped to be able to give rte. Moreover, my research shows that it was made clear in Standing Committee in another place by one of the Ministers that no information beyond this can be admissible, because it undermines the logic of the notional Stock Exchange price in the relevant period. If the noble Lord cannot now confirm, as I fear he cannot, the assurance he had hoped to give me, we are all in great difficulty. I do not think it will be a difficulty we can resolve tonight, but I must warn noble Lords that this is something to which we shall return with much persistence and vehemence at Report stage. I hope I can get replies from the noble Lord about this earlier hoped-for assurance which he said he would check but may I just try to emphasise again that we are not seeking here to achieve any purpose other than the Government's own purpose. However, the Government have totally failed to convince me that the methods

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they propose do achieve their admitted purpose. That is something we must continue to press to be satisfied on, and if that is not done tonight then we must continue at Report stage.
Lord MELCHETT: May I very briefly answer the point to which my noble friend said he would return, as I understand it. The Arbitration Tribunal w ill take into account all factors which a prudent investor would have taken into account during the reference period. The stock market valuation takes account of the condition of the company and of its future prospects. The terms of the Bill allow the Tribunal to look forward from the reference period, but it would be inconsistent with the basis of valuation for them to look back from the present day. If that is not immediately clear to the noble Lord, perhaps he will study the answer, as he has promised that he will come back to this on Report stage.
Lord WARDINGTON: The Arbitration Tribunal takes into account the value of a Stock Exchange share; but there is only one, and that is tiny. We have been into this before this evening and I will not go into it again. But I should like just to say that I am not entirely conversant with the procedures of your Lordships. I should like to mention that Amendment No. 180A is consequential on this Amendment, and at this stage I should like to ask leave to withdraw both Amendments and possibly reserve the right to raise them at a later stage.
Amendment, by leave, withdrawn.
Clause 38, as amended, agreed to.
Clause 39 [The appropriate deduction]:
1 a.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 176:
Page 57, line 1, leave out from beginning to ("there") in line 4 and insert ("on the date of transfer").
The noble Lord said: On behalf of my noble friend Lord Carr, I beg to move Amendment No. 176 and it might be convenient to speak to Nos.177 and 179 which are on the same point. This is basically a technical point, when compensation can be affected by orders
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issued by the Corporations themselves. The situation is that after the date of transfer a repayment, which might result in a deduction from compensation under subsection (5), would be decided by the debtor company only after it had ceased to be controlled by its present owners, and hence became controlled by the statutory Corporation which the Bill sets up. It seems quite unreasonable that an act done on the instruction of the Corporation should result in a deduction from the compensation. I will leave it at that and see what the noble Lord says. I beg to move.
Lord WINTERBOTTOM: The noble Lord has been good enough to speak to three Amendments together, and I should like to get one small point out of the way which has arisen for the first time this evening. The Government will be very pleased to accept Amendment No. 177, which is a drafting Amendment and improves the Bill. I now come to the "nitty-gritty" of Amendments Nos.176 and 179. As we see it, Amendment No. 176 seeks to limit the effect of the provision to a repayment in the period before the date of transfer (as opposed to up to nine months after under the present provision). The effect of this would be to allow repayment any time after the date of transfer until a notice had been served with respect to the debt, without any effect on compensation. As most of these debts are on immediate call, such repayments would be almost inevitable, and would result in a significant loss to the new corporations.
Amendment No. 179 seeks to prescribe that no deduction shall be made unless the Secretary of State has notified the stockholders' representative that a deduction will be made; in the case of a part repayment by the time the notice is served under Clause 21, and in the case of a total repayment by nine months after the date of transfer. This is unnecessary. No debt will be treated as a security unless a notice is served in respect of it. Once the notice is served in respect of a debt which has been repaid either in part or in whole, the stockholders' representative will know that a deduction will apply. And if a notice has not been served within nine months of the date of transfer, a debt cannot be treated as a security and so no deduction can apply.

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I hope that with those explanations the noble Lord will feel able to withdraw Amendment No. 176.
Lord STRATHCONA and MOUNT ROYAL: Of course, we are grateful for the acceptance of Amendment No. 177. As regards Amendments Nos.176 and 179, these are technical matters and the best thing we can do is to read the report of the noble Lord's reply. One is always slightly doubtful when he rejects something of this kind, which has been put forward in all seriousness. But the best course is to read what he has said and see whether it satisfactorily meets the point. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
1.5 a.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 177:
Page 57, line 5, leave out third ("of") and insert ("to").
The noble Lord said: This Amendment has been agreed. I beg to move.
On Question, Amendment agreed to.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 177A:
Page 57, line 6, leave out ("on") and insert ("following").
The noble Lord said: This Amendment goes with Amendment No. 146A which was accepted more days ago than I can remember. I beg to move.
On Question, Amendment agreed to.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 180:
Page 57, line 8, at end insert—
("( ) No deduction shall be made from the amount of any compensation by virtue of the application of subsection (5) above if the period therein referred to has expired without either the amount of such deduction having been determined by agreement under subsection (7) below or an application having been made to the arbitration tribunal to determine such amount under that subsection.").
The noble Lord said: This is another complicated technicality. Clause 39 has the effect of creating a deduction from the compensation where a loan has been repaid after the vesting date to a parent company and, had this loan been left outstanding and valued as a security under Clause 21, might have been valued at less
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than its face value. By Clause 21, any such notice has to be served within nine months of vesting date. However, in the applications under Clause 39 no such limit exists as the Secretary o' State can at any time assert that a Section 21 notice could have been served and that a deduction should, therefore, be made.
The point of the Amendment is to provide that where a loan has been repaid in the circumstances described in Clause 39(5) no deduction shall be capable of being made unless the parties are aware of it and unless the deduction has been established, or at least referred to arbitration, before the expiry of the nine month period but which would have been applied had the loan been left outstanding. I hope that the Amendment will commend itself to the Government. I beg to move.
Lord WINTERBOTTOM: The noble Lord has led me into a draftsman's maze. I have to be more strongly disinheriting about this Amendment than I was about the other two. Apparently, Amendment No. 180 destroys the whole purpose of Clause 39(5) by seeking to have the deductions settled or referred to arbitration within nine months of the date of transfer, but a notice not needing to be served in respect of a debt until nine months after the date of transfer. There would, therefore, be no time under Amendment No. 180 to assess the deduction before the time limit expired. For this reason it would be impossible to make a deduction. I hope I have made myself clear. Apparently Amendment No. 180 seeks to achieve the impossible, although the word "impossible" is one which the noble Lord will hardly accept. Nevertheless, he may accept that it would be almost impossible. The Government cannot accept the Amendment because we believe that it is a nonsense.
Lord STRATHCONA and MOUNT ROYAL: I doubt very much whether either of us has made himself clear, certainly not to each other. I can assure the noble Lord that the intent on of our Amendment is nothing like so drastic as he has suggested it might be. The proper course to take is to refer back the Amendment to those who are briefing us to see what they make of our exchange. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 39, as amended, agreed to.
Clause 40 agreed to.
Clause 41 [Stockholders' representatives]:
1.10 a.m.
Lord REDESDALE Lord REDESDALE moved Amendment No. 181:
Page 59, line 8, leave out ("company whose securities") and insert ("class of securities which").
The noble Lord said: The Bill at present provides for the appointment of one stock-holders' representative to represent the holders of all the securities of each of the companies that have been acquired. There could well be a situation where different classes of securities may have to be negotiated or determined on the basis of presentations which will not necessarily reflect the interests of another class of securities. For example, if a company were to have both shares and debenture stock requiring to be valued, the arguments used for the two valuations would be different and the holders of the debenture stock may want to establish arguments which could prejudice the valuations of other securities.
It is not reasonable for a single stock-holders' representative to be obliged to represent conflicting interests unless he is both willing and also instructed to do so by all the holders of securities in that company. We believe that the Amendment enables the holders of each class of securities to be represented separately, should they so wish. I beg to move.
Lord WINTERBOTTOM: I do not know whether the noble Lord wishes to take Amendment No. 182 at the same time?
Lord REDESDALE: Yes.
Lord WINTERBOTTOM: I have sympathy with the objective of Amendment No. 181, but I find that I cannot accept this group of Amendments, which seek to alter provisions in Clauses 41 and 56 which are concerned with the appointment of stockholders' representatives. Amendment No. 181 would have the effect of appointing a stockholders' representative for each class of security in a company instead of at present only one for each company. Amendments Nos.182 and 206
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make consequential changes to Clause 41(1) and the definition Clause 56.
We believe that these Amendments are harmful, Schedule 6 provides that all the holders of the securities in a company shall appoint their own stockholders' representative who will represent their various interests in the negotiations with the Secretary of State and, if necessary, before the Arbitration Tribunal. The stock-holders' representative may call a "general" meeting of all the holders or a meeting of particular classes of holders where matters affecting exclusively these classes are to be discussed and at both types of meeting the procedure provides fairness for all and in particular safeguards the minority shareholders. Every holder is entitled to one vote for each pound by normal value of the securities held by them. To have more than one stockholders' representative per company would open the way to certain groups of shareholders being treated differently, either more or less advantageously than other groups. Further it could delay the process of negotiation which would be detrimental to the shareholders. I hope I have made myself clear. It is felt to be very much better that one stockholders' representative should represent one company than one particular class of share, and on reflection I am sure the noble Lord will agree.
Lord REDESDALE: I accept what the noble Lord has said. I am still not entirely happy that one person can represent different interests totally satisfactorily. However, I will read very carefully what the noble Lord has said and, if necessary, I will come back to it at a later stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 41 agreed to.
Clause 42 [The arbitration tribunal]:
1.15 a.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 182A:
Page 60, line 24, leave out subsection (3) and insert—
"(3) The arbitration tribunal shall consist of a President who shall be a Barrister or a Solicitor of not less than 7 years' standing appointed by the Lord Chancellor and such number of other Members as the Lord Chancellor may determine, so, however, that as nearly

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as may be at all times the members of the arbitration tribunal including the President shall consist of an equal number of barristers or solicitors of not less than 7 years' standing, of persons experienced in business and of persons experienced in finance, of whom the barristers or solicitors shall be appointed by the Lord Chancellor and the persons experienced in business or finance respectively shall be appointed by the Secretary of State after consultation with all the stockholders' representatives.
(3A) The jurisdiction of the arbitration tribunal shall be exercised by any one division consisting of the President or a barrister or solicitor who shall preside over that division, one person experienced in business and one person experienced in finance, and references in this Act to the arbitration tribunal other than in subsection (3) above shall be construed accordingly.
(3B) Subject to the provisions of subsection (3A) above the President shall select the members of each division and shall determine the division which shall deal with each question dispute or other matter.
(3C) Subject to any rules made under paragraph 5 of Schedule 7 of this Act, the President may give directions to each division as to the date and venue of each hearing and such other directions as may be necessary to secure the just, expeditious and economical disposal of all issues."
The noble Lord said: Here we are moving into Part III of this Bill. This is a point of practical administration and, I hope, clarity, which I think possibly may commend itself to the Government. We have already established in Clause 42 and in. Schedule 7 which goes with it the Aircraft and Shipbuilding Industries Arbitration Tribunal. We make regulations regarding the composition and proceedings of the Tribunal. But Clause 42(3) seems to us to be ambiguous. It says the Tribunal may sit in two or more divisions, but it may only consist of, and there is only power to appoint as the Arbitration Tribunal, a president and two members. In view of the many uncertainties surrounding the determination of compensation—and if there is one thing we are agreed about it is that there are a good many uncertainties—and of the difficulties in valuing unquoted securities, it seems rather more likely than not that a good many issues will be taken to arbitration under the Act. Indeed, this is of particular importance in view of some of the Amendments we have moved earlier on the compensation clauses.
It seems to us that, if only one issue can be determined at a time, it will be many years before all the issues are finally
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determined; so the purpose of this Amendment is to enable the Arbitration Tribunal to sit simultaneously in a number of divisions. The terms of this Amendment have been lifted from Sections 2 and 3 of the Land Tribunals Act 1949. In the same way, paragraph 5(1) of Schedule 7 gives the Lord Chancellor power to make procedural rules. In order to avoid unnecessary delays, either the Act or the rules should impose on the president of the Tribunal the d to give all the interested parties and to the divisions of the Arbitration Tribunal such directions as may be necessary, "to secure the just, expeditious and economical disposal of all issues". That is an expression lifted from what I believe is called the White Book of the Supreme Court.
In Committee, the Government argued that the present wording enables as many divisions of the Tribunal to be created as the situation demands, and for ad hoc appointments to be made. However, we would contend that the Bill is not crystal clear, and this Amendment is an attempt to clarify any doubts there may be beyond all possibility of further argument. I beg to move.
Lord WINTERBOTTOM: I hope that I shall be able to remove the anxiety of the noble Lord, Lord Strathcona and Mount Royal, over the meaning and intention of Clause 42, and to relieve the anxieties of the shipbuilders and repairers national Association, which is one of the organisations most concerned with this particular problem. As I understand it, the theory is that there will be a large number of parties appealing to the Tribunal, and if only one issue can be determined at a time, many years will elapse before they are all finally determined. This is obviously an impossible situation. However, I will try to explain what the actual subsection says.
The Bill can deal with this; situation because Clause 42(3) provides that the arbitration tribunal shall,
"as the Lord Chancellor may direct either sit as a single tribunal or sit in two or more divisions and shall for the hearing of any proceedings consist"
of a president and two other members. I agree it is not immediately crystal clear. It is the two or more divisions that give us the flexibility we require. This may be

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elliptical, but it means that the reference to composition is to the composition of the tribunal or division which is sitting to hear a given set of proceedings. Where divisions sit there will be as many presidents as there are divisions. The Amendment is, therefore, based on a misunderstanding, in that it appears to assume that there will be only one president, of the Tribunal as a whole.
Subsection (3B) provides for the selection of members of each division by the president and for the allocation of business by him to each division. Again, I think this is misconceived. If the Tribunal were a permanent panel of judges, like the Queen's Bench Division of the High Court, it would be necessary for someone to decide which judge heard what, and who should sit together when more than one judge heard a case. But the Tribunal is not such a standing court. It is set up ad hoc to meet the demands of business, and as many divisions will be set up as the Lord Chancellor may, in the light of the workload, direct, with the membership of each division appointed by the Lord Chancellor and the Secretary of State in accordance with Clause 42(3)(a) and (b). There is, therefore, no scope for a president to select members of the Tribunal where it sits as one tribunal, or of the divisions when the Tribunal is divided.
Similarly, since the Tribunal or each division will be set up ad hoc to deal with a particular set of proceedings, there will be no scope for allocating business between them. The Lord Chancellor and the Secretary of State might decide that on the termination of current proceedings before one division they would appoint the same members to hear subsequent proceedings. This would look very like allocation of business between divisions, but strictly speaking it would not be so. Subsection (3C) of the Amendment provides for directions by the president to the divisions as to date, venue and conduct of their proceedings. The Government consider that these are all matters for the rules to be made under paragraph 5(2) of Schedule 7. For these reasons, the Government remain convinced that the present version of Clause 42 takes care of the fears expressed. I, therefore, urge the noble Lord to withdraw his Amendment.
Lord STRATHCONA and MOUNT ROYAL: It is quite clear the noble Lord
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is at great pains to reassure us on all the doubts we have expressed. He conceded that possibly this did not have the total clarity that one might wish; so conceivably he might consider whether it would be possible to bring in an Amendment at a later stage to deal with this small point. In the meantime, we will look at what he has said and see whether it satisfies those who have raised this point. I thank the noble Lord for his help, and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 42 agreed to.
Clauses 43 to 46 agreed to.
Clause 47. [Right of persons engaged in shipbuilding or ship repairing to object to practices of British Shipbuilders or its wholly-owned subsidiaries.]:
1.24 a.m.
Lord CARR of HADLEY Lord CARR of HADLEY moved Amendments Nos.183 to 192 en bloc:
Page 64, line 26, leave out from ("in") to end of line 27 and insert ("one or more of the activities specified in section 2(1) or (2) above, other than—
(a) a Corporation, or")
Page 64, line 32, leave out ("British Shipbuilders") and insert ("a Corporation")
Page 64, line 33, leave out ("the sale of ships") and insert ("that or those activities")
Page 64, line 35, leave out subsection (2).
Page 65, line 8, leave out ("British Shipbuilders") and insert ("the Corporation con
Page 65, line 10, leave out ("British Shipbuilders") and insert ("the Corporation")
Page 65, line 12, leave out ("British Ship-builders") and insert ("the Corporation")
Page 65, line 17, leave out ("British Ship-builders") and insert ("the Corporation")
Page 65, line 23, leave out ("British Ship-builders") and insert ("the Corporation")
Page 65, line 30, leave out ("British Ship-builders") and insert ("the Corporation")
The noble Lord said: I think it might be to the convenience of the Committee if, together with this Amendment, we dealt with all the other Amendments on the Marshalled List up to and including Amendment No. 192, because they are all directly consequential; they all hang together. The object of these Amendments is obviously to widen the scope of Clause 47 to cover all the activities of both Corporations in respect of this matter of fair trading, guarantees to the private sector that the Corporations will not indulge in any unfair trading practices, any unfair competition.
A number of Amendments were proposed in Standing Committee in the other place in relation to various clauses in the Bill, to give some measure of protection against unfair competition to companies remaining in the private sector after nationalisation of the shipbuilding and the aerospace industries. All these proposed Amendments were originally rejected by the Government, but one proposed by Mr. Willey was accepted by the Government in principle in relation to shipbuilding and then, at Mr. Willey's insistence, to ship repairing also. Certain reassuring noises were also made by Government spokesmen during the debates on the policies which the Co-operation would adopt. At the Report stage in another place the Secretary of State, Mr. Varley, tabled a clause, which is now Clause 47, to provide for a tribunal to investigate complaints in respect of shipbuilding sales, or ship repair contracts only. In our submission this is unsatisfactory in two major aspects. First, it does not cover the activities of British Aerospace at all. Secondly, in relation to British Shipbuilders, it does not cover the activities of other than the sale of ships and the provision of ship repairing services.
On the first aspect, that it does not cover the activities of British Aerospace, there seems to us to be no logical reason for the exclusion of sales of aircraft, or aircraft repairing, since the activities of British Aerospace could very well have the effect of eroding the highly successful equipment sector of the industry. Moreover, so far as aircraft manufacture is concerned, the facile reply which I believe was made in another place, that British Aerospace will contain the principal airframe manufacturers and therefore, by implication, there are no others one needs to worry about, is not good enough because Westland, Short Brothers and Harland, and Fairey (that is to say, Britten Norman) are all remaining in the private sector, so there are other aircraft manufacturers remaining in the private sector who in our view need protecting.
So far as aircraft repair is concerned, there is in any event one large company in the private sector which specialises in this work, and which could be severely damaged by unfair competition from British Aerospace. One of the purposes
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of the unfair trading clause was, in the eyes of the Society of British Aerospace Companies, to put an obstacle in the way of unnecessary diversification and wilful undercutting of the private sector by Government financed concerns. I believe that one cannot logically, or on grounds of equity, exclude the activities of British Aerospace.
On the second aspect, it is well known that the methods of engaging in unfair competition are many and varied, and it would be impossible to specify them with any degree of precision in the Bill. However, private sector companies feel strongly that the Bill should contain a procedure which would enable them to draw attention to acts on the part of either Corporation which amount to unfair competition. When the steel industry was nationalised the provision was introduced into the Iron and Steel Bill, subsequently the Act of 1967, on its passage through your Lordships' House for setting up a complaints procedure to deal with cases of unfair competition by the Steel Corporation. That provision, which became Section 30 of the Iron and Steel Act 1967, was introduced following a debate in the other place at the Report stage when the then Minister, Mr. Richard Marsh, confirmed that the provision containing a complaints procedure would be introduced into the Bill, and at the same time sought to reassure steel producers remaining in the private sector that their fears regarding unfair competition were unjustified.
The remarks of the Minister giving those assurances were quite emphatic, but despite those assurances the complaints procedure did subsequently hive to be invoked by the independent steel producers and their complaints were found to some extent to be justified by Lord Hirshfield, who was appointed to investigate the complaints. In his report he found that there had been unfairness and made certain recommendations to bring the t state of affairs to an end. I have quoted that to show that in the previous nationalisation measure, in spite of the assurances given by the then Minister, which were undoubtedly given in good faith, the private steel producers subsequently found it necessary to have recourse to the appeals machinery; and, when the appeals machinery was activated, it Was found that there had been some unfair practices

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which needed to be corrected. There is, therefore, a precedent to show the need for this machinery.
Clause 47 of the Bill would secure for shipbuilding and ship repairing a provision similar to Section 30 of the Iron and Steel Act 1967. As I have pointed out, it would not secure it for aircraft manufacture and aircraft repair, so the very minimum is that Clause 47 should do the same for aircraft manufacture and aircraft repair as for shipbuilding and ship repairing, but in our contention it needs to go further than that because while ten years or so ago the circumstances in the steel industry were such that a limitation to unfair competition simply with sales was reasonable, we believe that under the different circumstances now applicable to the aerospace and shipbuilding industries, wider scope for the appeals tribunal is necessary.
In Standing Committee in another place attention was drawn to a number of possible forms of unfair trading which are not covered by Clause 47. I will not go over them now because I am sure the Minister has briefed himself on them, although T shall if necessary refer to them later. On some of those, assurances were given in Standing Committee that the new Corporations would not act unfairly. Of course such assurances are welcome and I repeat that we accept them in good faith, but they do not have statutory force. I have pointed out in relation to the steel industry that there was appeals machinery and that recourse was had to it, and if the Government are sufficiently confident and good-intentioned on this matter to give those assurances, I fail to see why they should have any real objection to an extension of the scope of the appeals tribunal to cover these further possibilities.
The Minister will have noticed that the new Clause 47 is permissive, and we are not asking that it should be anything more than permissive. In other words, the Secretary of State under Clause 47 has discretion whether or not to investigate a complaint and that, T suggest, provides an effective remedy against the possibility of any frivolous complaints that might be made. While I have no doubt that the companies remaining in the private sector might prefer to see a more independent and compulsory appeals procedure, they would I believe accept, and certainly we
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would, a provision along the lines of Section 30 of the Iron and Steel Act in the appropriate circumstances; in other words if the Government would agree to the extension of Clause 47 in its present form to cover aircraft manufacture and air-craft repair as well as shipbuilding and ship repairing, and include for both Corporations certain practices other than simply sale and repair contracts, we should be perfectly happy for the clause to remain permissive, and it would give the Secretary of State control over what he feels should and should not be investigated. I feel that this is a reasonable case and I very much hope that the Government will accept it.
1.35 a.m.
Lord MELCHETT: I accept that the noble Lord, Lord Carr, moved this string of Amendments in a constructive way and I am grateful to him for saying what he did about the assurances given in another place on the points covered, and for making the point that there was considerable discussion about this matter during the Committee and Report stages in another place. As the Government made clear when Amendments similar to these were tabled in another place, the Amendments are not acceptable. In the Government's view, they are not necessary.
In accepting, during Committee stage in another place, the need for this clause covering shipbuilding and ship repairing, the Government are not accepting that the fair trading legislation introduced by the Party opposite is deficient; nor that, in general, a procedure such as that in Clause 47 is necessary or desirable when a nationalised industry is competing with the private sector in either its main line or its ancillary activities. We recognise special circumstances in shipbuilding and ship repair where some yards will remain outside public ownership. We consider that the only activities of British Shipbuilders which should be covered by fair trading provisions in this Bill are the sale of ships and the provision of ship repair services. The noble Lord, Lord Carr, made some reference to Section 30 of the Iron and Steel Act 1967, but that was restricted to the selling of certain iron and steel products and, as I understand it, went no wider than that.
The noble Lord, Lord Carr, referred to the remarks made in another place about

229
the extension of these provisions to aerospace and the Government's reasons for not wishing to extend the provisions to aerospace. But I would say that underlying our arguments is this basic contention that legislation such as is provided in this clause is not generally necessary just because we are dealing with a nationalised industry which is competing with the private sector. It seems to me that, just because it is nationalised, noble Lords wish to restrict British Aerospace in its competition—if any—with Westland, which of course makes helicopters which are not made by BAC or Hawker Siddeley, or with Britten Norman, which makes light aircraft a great deal smaller than those made by BAC or Hawker Siddeley, or with Shorts, which we shall come to on the next Amendment, and which I believe I am right in saying is not directly in competition with either BAC or Hawker Siddeley. British Aerospace, in its competition with these companies which remain in private ownership, will be subject to general fair trading legislation and to the Minister's control over diversification. Unlike British Shipbuilders, the main competitors of British Aerospace will be overseas companies.
The Earl of KINNOULL: Hawker Siddeley and Britten Norman make executive aircraft. I think that the noble Lord was suggesting that they do not compete against each other. In fact, they do so far as executive aircraft are concerned. Hawker Siddeley make jet executive aircraft and Britten Norman make the slower type of aircraft.
Lord MELCHETT: Though I bow to the noble Earl's greater knowledge of the specification of the planes involved, I should not have said from my own limited knowledge of flying in the two aircraft that they could be said to be directly in competition. In fact, I should have thought that the propeller driven light aircraft were in a slightly different category to the executive jets, but I do not think that it will necessarily be all that helpful to prolong a detailed debate on technicalities because, as I have said, I am accepting that there may be instances where British Aerospace could be in competition with these companies. I repeat that, in that case, they will be subject to the general fair trading legislation passed by the Government of noble Lords opposite,
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which we believe will be sufficient to ensure that there is no unfair competition.
Aside from the substantial Fair Trading legislation which will apply to the two Corporations, I will of course reiterate the assurance given in another place and welcomed by the noble Lord, Lord Carr that British Shipbuilders and British Aero-space would have no wish to extract unfair advantages. Both chairmen of the organising committees have agreed to make, in due course, a formal Policy statement on future trading practices. I know from my discussions with them both that they are both deeply committed to fair trading. I hope that with that explanation of the background to the Government's objection to the Amendments, and a repetition of the assurances given in another place—which I know the noble Lord does not find wholly satisfactory, but I can repeat them very firmly for what it is worth—he will see fit to withdraw his Amendment.
Lord CARR of HADLEY: I do not understand this argument because the noble Lord started by saying early on in his remarks that the Government had admitted Clause 47 for ship3uilders, I think I understood him to say, because some yards were outside public ownership and could therefore compete. But we have just been hearing—and he has not been denying in the last few moments—that some aircraft manufacturers and some aircraft repairers are also outside public ownership. Certainly on the aircraft repair side there is already the potentiality of direct competition between the public and the private sector. When one comes to aircraft manufacture, it may he true at the moment the t Hawker Siddeley and BAC, which will form the new British Aerospace Corporation, are not manufacturing the sort of aircraft that Britten Norman are, or Westland who are at the moment confined entirely to helicopters. But who is to say that that will continue and who is to say that the Aerospace Corporation may not get into either the helicopter field o: into the lower priced, lighter executive plane field. The fact that they do not directly compete at the moment does not give any indication that they may not directly compete in, say, five years' time.
I cannot understand why it is appropriate to have Clause 47 for shipbuilding

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and ship repairing if it is not also appropriate to have it for aircraft manufacture and aircraft repair. There is no logic of any kind behind the Minister's reply on that point. It is no good referring us to the Fair Trading Act 1973 and saying that that will give sufficient protection. If it will give sufficient protection in the realm of aircraft manufacture and aircraft repair, why does it not give sufficient protection in the field of shipbuilding and ship repairing? Surely the answer is that it does not give the sort of protection required, nor, frankly, was that Act ever intended to give the sort of protection that is required here.
The reference of the State-owned Corporation to the Monopolies Commission on the part of the Office of Fair Trading, strikes one as somewhat unlikely in any event, though I certainly hope it is not impossible. But, even if such a reference were made, surely the Minister would agree that the Monopolies Commission on all past experience, would be unlikely to report for perhaps two or three years, certainly not for many months, whereas Lord Hirshfield in the Steel case, to which I referred earlier,
was able to report within almost exactly three months of the date of his appointment. When one has a case of this kind, it is essential to have machinery to deal with it which can operate quickly.
While I might not agree with him, I can understand the Secretary of State refusing to extend the scope of the appeal machinery beyond pure sales and beyond pure repair contracts into all the other fields. I would not agree with it, but I can understand it as there would be a certain logic about that. I can see, however, neither fairness nor logic in saying that shipbuilding and ship repairing are in a different category and order of protection from aircraft manufacture and above all even at the present time aircraft repairing. I cannot understand what is the reason for that. if the Government will not think again about it, I have no option but to ask my noble friends to press this Amendment to a vote.
1.45 a.m.
On Question, Whether the said Amendments (Nos.183 to 192) shall be agreed to?
Their Lordships divided: Contents, 56; Not-Contents, 39.

CONTENTS

Ampthill, L.

Halsbury, E.

Robbins, L.

Atholl, D.

Hanworth, V.

Rochdale, V.

Barrington, V.

Kemsley, V.

Sandford, L.

Belstead, L.

Kimberley, E.

Sandys, L.

Blakenham, V.

Kinnaird, L.

Seear, B.

Brookeborough, V.

Kinnoull, E.

Selkirk, E.

Campbell of Croy, L.

Long, V.

Sempill, Ly.

Carr of Hadley, L.

Lyell, L.

Sharples, B.

Carrington, L.

Mackie of Benshie, L.

Stamp, L.

Cathcart, E.

Monson, L.

Strathcona and Mount Royal, L

Cork and Orrery, E.

Mottistone, L.

Sudeley, L.

CuIIen of Ashbourne, L.

Mowbray and Stourton, L. [Teller.]

Trefgarne, L.

Denham, L. [Teller.]

Tweedsmuir, L.

Devonshire, D.

Newall, L.

Vernon, L.

Dudley, E.

O'Hagan, L.

Vickers, B.

Elles, B.

Onslow, E.

Ward of Witley, V.

Elliot of Harwood, B.

Pender, L.

Wardington, L.

Ferrers, E.

Rankeillour, L.

Wigoder, L.

Gray, L.

Redesdale, L.

Young, B.

NOT-CONTENTS

Birk, B.

Jacques, L. [Teller.]

Peart, L. (L. Privy Seal.)

Brimelow, L.

Kagan, L.

Peddie, L.

Champion, L.

Kaldor, L.

Pitt of Hampstead, L.

Collison, L.

Kirkhill, L.

Ponsonby of Shulbrede, L.

Cooper of Stockton Heath, L.

Llewelyn-Davies of Hastoe, B.

Shepherd, L.

Davies of Leek, L.

Longford, E.

Stedman, B.

Delacourt-Smith of Alteryn, B.

Lovell-Davis, L.

Stone, L.

Donaldson of Kingsbridge, L.

McCluskey, L.

Strabolgi, L. [Teller.]

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

Mais, L.

Weidenfeld, L.

Fisher of Camden, L.

Melchett, L.

Wells-Pestell, L.

Goronwy-Roberts, L.

Morris of Kenwood, L.

White, B.

Gregson, L.

Oram, L.

Winterbottom, L.

Harris of Greenwich, L.

Parry, L.

Wynne-Jones, L.

Resolved in the affirmative, and Amendments agreed to accordingly.
Clause 47, as amended, agreed to.
Clause 48 [Duty of British Shipbuilders to consult, etc., with Northern Ireland state-controlled shipbuilders]:
1.53 a.m.
Viscount BROOKEBOROUGH Viscount BROOKEBOROUGH moved Amendment No. 193:
Page 65, line 34, after ("Shipbuilders") insert ("and British Aerospace")
The noble Viscount said: The object of this Amendment which I now beg to move is to make sure that Short Brothers and Harland are included in the ambit of Clause 48. Short Brothers and Harland represent 10 per cent. of the British Aerospace employment and if they are left out there is a great danger that they might die from neglect. At this late hour, I do not want to detain your Lordships in debating this issue, because the Government recognised, when it put in Clause 48 at the last moment, that Harland and Wolff, by being left out totally from the Bill, were going to suffer from neglect and were liable to be in trouble. What I am now asking the Government to do is to accept that what applies to Harland and Wolff should apply now to Short Brothers and Harland.
It is a question entirely that I feel, my noble friends feel, the trade unions feel and the management feel, that it is necessary for this to be written into the Bill. There must be a legal requirement in the Bill, and subsequently in the Act, on British Aerospace and on British Shipbuilders that they must involve both Harland and Wolff and Short Brothers and Harland.
1.55 a.m.
Lord MELCHETT: It is a great relief temporarily to sail into the quieter Parliamentary waters of Northern Ireland. When we discussed Amendment No. 6, 1 made it clear that the Government were most sympathetic to the objectives of securing proper co-ordination between British Aerospace and Short Brothers and Harland. At that stage, the noble Viscount and I both referred to these Amendments to Clause 48 and I promised that the Government would consider them most carefully to see whether there is
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anything we can do to meet the points that these Amendments make.
The Amendments extend Clause 48 in two different ways. Amendment No. 193 seeks to extend its scope so that the same arrangements would obtain for Shorts and British Aerospace as for Harland and Wolff and British Shipbuilders under Clause 48 as drafted. I emphasise "seeks to extend" because I am advised that Amendment No. 193 is technically defective. I think the body which British Aerospace will be required to consult will be Harland and Wolff under the Amendment as drafted. The Govern went want to consider the question of further extending the scope of Clause 48 to aerospace. I would ask the noble Viscount not to press the Amendment at this stage, on the firm understanding that we will come back to it at Report, and in the hope that I can draft an Amendment which does not have the same effect as the noble Viscount's Amendment, but one which he would be happy to see.
I do not know whether it would be helpful if I gave a firm view on Amendment No. 194A, which I think the noble Viscount spoke to as well. I appreciate that he wishes to strengthen Clause 48, but the Government feel that it would not be reasonable to place a duty on British Aerospace and British Shipbuilders to assist Shorts and Harland and Wolff wherever practicable. The Government believe that this could amount to a requirement that the Corporation should provide financial support for these companies. That is probably not what the noble Viscount nor I wish to see. We would both object to an element of cross-subsidisation which that phrase, I am advised, would imply. I hope that, with the firm undertaking I have given, the noble Viscount will withdraw both Amendments.
Viscount ROCHDALE: I gather the noble Lord, Lord Melchett, wants to discuss both the Amendments at this stage. He said in the earlier Amendments we had in Clause 1 that he was sympathetic; but he has not yet produced anything new in the way of an improved Amendment on Clause 48. One or two counts are important, and we should get them clear. I am pleased with what the noble Lord said about Amendment No. 193, and that

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he will re-draft an Amendment so that it applies to both aerospace and shipbuilding.
On Amendment No. 194A, we want to make it clear that this is not merely a local or provincial Amendment. To my mind it affects the organisation of the whole industry. It illustrates the point I want to make from shipbuilding. This industry, like so many other industries, has operated in the past and does today operate as an industry, but not merely as individual companies. There are a great many things, of course, individual companies operate themselves; they compete with each other, have their own designs, and so on. Equally, there are a lot of areas where often they operate as an industry, and what I think my noble friend and I are afraid of is that when the new set-up takes place, when we have British Shipbuilders, the Northern Ireland companies will tend to be squeezed out from a number of different areas where they ought to be.
For instance, let us take the case of technical research. Obviously individual companies do technical research on their own. It is essential that British Ship-builders will have a research policy of their own to which Harland and Wolff must be a party. If you take market research, that is something they will do on their own, but equally they will do it as an industry, and it is natural that British Shipbuilders would take over the role of the focal point of that sort of market research. Are Harland and Wolff to be excluded?
Again, in connection with advertising, quite often we have overseas delegations operated by the industry in co-operation with the Government. There may be exhibitions and delegations going overseas: would not Harland and Wolff be allowed to play their part and express their views on those things? One could go on quoting all sorts of different areas where it is absolutely essential that Short and Harland in the case of aerospace and Harland and Wolff in the case of shipbuilding, can go in and play their part as of right. The important thing is that the leaders of these companies should not constantly have to struggle to make their voices heard. Referring to Amendment No. 194A, where we have used the word
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"assist"—as the noble Lord, Lord Melchett, said, it may not be the right word but it is absolutely essential that there should be the opportunity for those companies to come in. Until now the focal point has been very largely the trade association, the SRNA. Now the focal point will be the Corporation, which must view these Northern Ireland companies in the same way as SRNA or SBAC have viewed the Northern Ireland companies who were their members in the past.
I should like to mention one other important area, which is the negotiations and agreements between the trade unions and the companies. That has been done. There were central and national agreements. Who is to be responsible as the focal point of those agreements on the employers' side? If it is to be the Corporations, then surely the companies must be party to them. One could go on in this way, but I do not want to take up more time of the Committee. However, I should like to press for some assurance from the noble Lord that, at the next stage, he will bring forward an Amendment or Amendments dealing with these points, so that Harland and Wolff and Short Brothers can know that it is to be written into the Bill that in these areas they are to be regarded as members in their own right and able to take part in matters that are of great concern to their future wellbeing. Having said that, perhaps the noble Lord will give a further definite assurance of what he intends to do on Report stage, so that the further Amendments standing in the names of my noble friends and myself may not be moved.
Viscount BROOKEBOROUGH: I should like to say to the noble Lord, Lord Melchett, that there is a precedent for this within part of Northern Ireland that the Chairman of the Tourist Board for Northern Ireland has of right a position in the BTA. Originally this was in the Act: they have recognised it as a right, and so the Chairman of the Northern Ireland Tourist Board has always been part of the BTA. There is a precedent here; but I think we really do feel that somehow or other there must be some right to meet the problems which my noble friend Lord Rochdale has explained, and to give assurances to the whole industry. This is a question of a united industry: the trade unions, the

237
managements and people of Northern Ireland feel very much that they could be left out in the cold.
2.5 a.m.
Lord MELCHETT: As I said before, I do not think there is anything between the two noble Viscounts and myself about what we wish to see happen. We are really talking about the mechanics of it. I explained my objections to the Amendment and, in particular, to the word "assist", which seemed to me to have undesirable connotations and might well lead to effects which none of us wished to see in the cross-subsidisation and so on between British Shipbuilders and Harland and Wolff.
Maybe it would be helpful if I told the noble Viscount that informal consultation has already started between the organising committee of British Shipbuilders and the board of Harland and Wolff Limited. These two bodies have recently had a useful meeting at which subjects of mutual interest were discussed, including all of those raised by the noble Viscount; that is, technical research and development, general market research, standardisation, participation in international organisations, co-ordination of activities in engine building, purchasing policies and so on. I understand that both the organising committee and Harland and Wolff felt that the discussion was mutually beneficial, and that they are confident of building up a good relationship for future co-operation.
I suggest that the provisions of Clause 48, which we will consider extending to Short Brothers, have already been translated into action so far as shipbuilding is concerned, and the Government are confident that the objective of Clause 48—namely, the co-ordination of shipbuilding activities in Northern Ireland with British Shipbuilders, which we all wish to see—will be achieved in practice. I suggest that the meeting between the organising committee and Harland and Wolff gives us grounds for very considerable optimism that, by the two organisations getting together and sorting things out for themselves, which must always be the best way of proceeding, we will achieve what we wish.
I will certainly look at what the noble Viscount has said about his second
238
Amendment, and study the matter before we get to Report stage. I cannot promise to bring forward an Amendment on that aspect, but I will certainly look at the question of including Short Brothers in the Bill. If the noble Viscounts are not satisfied with what I have said about how Clause 48 is already working, so far as shipbuilding is concerned, no doubt they will put down an Amendment to make sure that I am compelled to discuss the matter at a more congenial hour on Report.
Viscount ROCHDALE: From what the noble Lord, Lord Melchett, has just said, I felt that he had rather gone back on what lie said to begin with, because I understood him to say just now that he doubted whether it was necessary to alter Clause 48 as it stands.
Lord MELCHETT: No; I have given a firm undertaking that, so far as Amendment No. 193 is concerned, the Government will consider tabling an Amendment. I have promised that I will look at Amendment No. 194A on Report, but our information is that Clause 48 is working well, so far as British Ship-builders and Harland and Wolff are concerned, and we do not at present see the need for any further Amendment. But I have said that I will look very carefully at what the noble Viscount has said.
Viscount ROCHDALE: I hope the noble Lord will not take it too, much for granted that it is already working well enough.
Viscount BROOKEBOROUGH: I do not want to keep the Committee any longer, but am I to understand that the noble Lord will be able to give us a guarantee that Short Brothers and Harland and Wolff will have available to them, on an equal basis, research, marketing, finance and all the otter items which are available to every company within British Aerospace and British Shipbuilders? In particular, will the noble Lord assure us, so far as Harland and Wolff are concerned, about the statement which his right honourable friend Mr. Stanley Orme made in another place, that no more money would be available to Harland and Wolff? Further will the noble Lord make sure that taking this

239
money—£37 million out of £60 million—out of a geographical unit will apply to the whole of the United Kingdom or else that the aid to Harland and Wolff, if it has to happen, comes out of the United Kingdom as a whole rather than just out of the Northern Ireland budget?
We want to know whether all the special facilities which will be available for British Shipbuilders and British Aero-space will be available to each and also whether the latest method of financing Harland and Wolff—that is, taking it out of the social budget of Northern Ireland—either applies to the whole of the United Kingdom by area or does not apply to Northern Ireland. I say this in order to shorten the debate.
Lord MELCHETT: I am not sure whether the noble Viscount wishes me to use them, but I have two long pages of answers to the points which he raised earlier in the debate. I shall be quite happy to give those answers to the Committee now but it is very late. If, therefore, the noble Viscount will allow me to write to him with full answers to all the points he has raised, that might be a better way to proceed.
Viscount BROOKEBOROUGH: I should be delighted if the noble Lord were to adopt that course. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 48 agreed to.
Clause 49 [Provisions as to pension rights]:
2.12 a.m.
Lord WINTERBOTTOM Lord WINTERBOTTOM moved Amendment No. 196:
Page 68, line 2, leave out from ("person") to ("Corporation") in line 4 and insert ("who is liable to make contributions or to pay pensions under an existing scheme (other than a wholly owned subsidiary of the relevant Corporation) the relevant")
The noble Lord said: Amendments Nos.196 and 197 are Government Amendments which bring about purely technical changes. After Government Amendments at Report stage in the Commons, Clause 49(12) was left containing references to subsidiaries of "that Corporation". In the context, the phrase
240
fails to make clear which Corporation is meant. It is believed that the two Amendments will clarify the position and I hope that noble Lords will accept them. However, before I ask them to do so it might be of value if I made a comment upon the implications. Subsection (12) is designed to deal with the possibility that there may be cases where a pension scheme applies to a group of companies, not all of which pass into public ownership. In such a case, a consequence of the pension regulations may be that those which do not will have to pay higher premiums in respect of their pension schemes in order to secure the same benefits for their employees. The sub-section ensures that in such an event any person suffering loss by reason of any regulation made under subsection (4), except in cases covered by subsection (8), will be indemnified by the Corporation, the extent of the loss involved to be determined by the arbitration tribunal in default of an agreement.
This subsection differs from those in previous nationalisation Statutes in that it could apply more widely than just to the vesting companies. In particular, it could, in certain circumstances, enable insurance companies engaged on the pension arrangements by the vesting companies to go to arbitration if they felt that they had been adversely affected. I thought that it was worth while putting this on the record because the reasons behind these Government Amendments are important. I beg to move.
Lord CARR of HADLEY: We are grateful to the Government for tabling these two Amendments and we appreciate the arguments put forward by the noble Lord, Lord Winterbottom. Certainly we have no wish to resist the Amendments.
On Question, Amendment agreed to.
Lord WINTERBOTTOM Lord WINTERBOTTOM moved Amendment No. 197:
Page 68, line 8, at end insert—
("( ) In subsection (12) above "the relevant Corporation" means the Corporation which is the holding company of the company for or in respect of whose employees or former employees the existing scheme provides pensions.")
On question, Amendment agreed to.
Clause 49, as amended, agreed to.
Clause 50 agreed to.
Clause 51 [Furnishing of information to the Secretary of State]:
2.15 a.m.
Earl FERRERS Earl FERRERS moved Amendment No. 198:
Page 70, line 3, at end insert—
("( ) No person shall under subsection (1) above be under a duty to produce any book, record or document or to furnish any information unless and until the relevant Corporation or the Secretary of State (as the case may be) specifies in writing to that person the provision of this Act for the purpose of which such production or furnishing is required and (in the case of such production) the nature of the information thereby sought to be ascertained, and no such requirement shall be deemed to be reasonable to the extent that the nature of the information so sought or required to be furnished is not such as directly to concern the application of the provision so specified.")
The noble Earl said: This Part of the Bill gives the Secretary of State power to look at all and any documents, not only of the companies which are to be acquired but of any other associated company or parent company. Of course it is perfectly reasonable that for purposes of compensation the Secretary of State should have access to some books in order to get the necessary information, but we believe that the clause as it is drafted at the moment is too wide. One merely has to look back at the problem which we have been facing in recent months over inspectors who go round looking at VAT returns and documents. From that one learns that there has been wide concern that the VAT inspectors have been looking at documents which have nothing to do with the particular business they have in hand, and they can cause very great distress.
At the moment, as the Bill stands, any person who is authorised by the Secretary of State can go along to the company and say, "I want to look at your books", and the Bill says that his request must be for information
"reasonably required for the purpose of the Act".
But of course in so doing he may acquire a whole lot of information which is not reasonably required for the purpose of the Act; indeed it may have nothing to do with it at all. It may well be the business, solely and properly, of the parent company or the associated company; and the company concerned or the
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individual representing the company may well be reluctant to give information which it is felt not necessary to give, and yet at present it is bound to be given.
This Amendment would allow the Secretary of State access to the books of any parent company or associated company, provided that the person so authorised specifies the information he wants and why he wants it. He would then produce the document saying what it is and the individual concerned would be able to give him the information which he requires. I hope this is a reasonable Amendment. I beg to move.
The MINISTER of STATE, SCOTTISH OFFICE (Lord Kirkhill): The Government believe that any fears which may be expressed about this clause are unjustified. The provisions are not exceptional, nor are they unprecedented. They are certainly in balance with previous nationalisation legislation, for example the Iron and Steel Act of 1967, Section 41. This Amendment requires that the Secretary of State or the relevant Corporation, when seeking information under sub-section (1) of the clause, shout I specify in writing the provision, or provisions, of the Act for which the documents are required. However, in seeking: he documents the Secretary of State or the relevant Corporation must similarly specify the nature of the information sought. No requirement for the production of documents would be considered reasonable unless the nature of the information sought or required to be produced tallies with the provision of the Act specified. Thus the Secretary of State would have to write a note saying he wants Document X under, for instance, the compensation provisions, Section 35–41; however he would also have to specify that the information sought is, for example, the value of a particular premises or the terms of an individual contract.
On the other hand, if noble Lords are worried about the Government having access to unlimited documents—and indeed the noble Earl, Lord Ferrers, made specific reference to this—I can assure your Lordships that the provisions in the Bill, tried and tested under previous legislation, ensure the proper respect to commercial confidentiality and quite adequate protection against the abuse of the powers given to the Secretary of State.

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First, the documents, reports and so on sought by the Secretary of State are restricted to those that,
"may reasonably be required by the Corporations or the Secretary of State for the purposes of this Act".
Secondly, there are strict and specific provisions in Clause 52 prohibiting the unauthorised disclosure for purposes not related to the Act of any information obtained under the provisions of this clause. I can quite see that noble Lords opposite may object that the test of reasonableness could mean a wide access. Indeed it could, but a wide range of information will be needed to provide a fair basis for the compensation negotiations. Were this to go ahead on the basis of either incomplete or incorrect information, the result may be unfair either to the taxpayers or shareholders. Surely that is in the interest of no one and the Government would, of course, wish to resist this Amendment.
Earl FERRERS: I want to make it perfectly clear that the Amendment was in no way designed to curtail the information which the Secretary of State reasonably requires to come to the appropriate figures for compensation. The noble Lord, Lord Kirkhill, said that the provisions are not unprecedented, and I think that is something which makes one a little alarmed, because of the facts to which I referred, where inspectors can go into great detail about many things which in fact do not actually refer to their particular problem.
I absolutely accept that if the inspectors or the representatives of the Secretary of State do find this information, I am not concerned that they would have disclosed it, but that they would have the right to go through not only the books of the company, but also the parent company, the subsidiary company and any associated company. As an example, if one can take just one out of the air—Hawker Siddeley Aviation will be taken over and that would give the Secretary of State the right to inspect all the accounts of all the Hawker Siddeley group and all the associated companies. You could have inspectors crawling all over the company books. I should have thought that this was far too wide a provision. I hope the noble Lord, Lord Kirkhill, will look at it
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to see whether he can meet us in some way.
Lord KIRKHILL: I am further advised that if we were to talk about the phrase, "may reasonably require", if a company thought that the request was unreasonable, it would not supply the information required, and would leave the Secretary of State to test in the courts whether or not the request made to the company was reasonable. Perhaps I should have added that earlier on.
Earl FERRERS: I am grateful to the noble Lord for having informed us of that, and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
2.22 a.m.
Earl FERRERS Earl FERRERS moved Amendment No. 199:
Page 70, line 35, at end insert—
("( ) If a person refuses or fails to comply with a requirement purporting to be made by a Corporation or the Secretary of State under subsection (1)(a) above or refuses or fails to provide any facilities of the kind referred to in subsection (1)(b) above, the Court, on the application of the Corporation or the Secretary of State, may make such order or orders requiring that person to comply with the requirement or provide the facilities as the Court think just and reasonable for the purposes of this Act.
For the purposes of this subsection "the Court" means the High Court in England or Northern Ireland or the Court of Session in Scotland, as the case may be.")
The noble Earl said: This Amendment is on the same subject, except for the fact that, as I understand it, under the Bill at present if a representative of a company believes the request which the Secretary of State is making is unreasonable, he may go to the courts, as the noble Lord, Lord Kirkhill, has just said, for clarification and, indeed, for instruction as to whether the information which the Secretary of State requires should be disclosed by the company.
The object of this Amendment is that the requests to the courts should not be to the magistrates' court, but to the High Court, because where one is dealing with items of a confidential nature and of an important nature, we think it would be more appropriate that the High Court should do that rather than the magistrates' court. I beg to move.
Lord KIRKHILL: I think the Government have a difficulty over Amendment No. 199, in that it excludes any provision for refusing and failing to comply with a requirement under Clause 51(3). This means that under the provisions of the Amendment, anyone can simply transfer documents and other relevant material to someone not covered by subsection (2). That would happen for the two years for which the clause is in operation. If this Amendment were accepted and the action I have just described were taken, the Secretary of State could have no access to documents vital to the implementation of the Bill. I am thinking, for instance, of a banker, lawyer, or some other person of that kind, someone outwith the terms of the clause. There is the Government's difficulty in accepting Amendment No. 199.
The Earl of KINNOULL: I wonder whether the noble Lord would consider this. If a company refused to disclose information it is under a duty to disclose under the Bill, could some indication be written into the Bill to inform the company that indeed it has the right to go to the court to see whether the test of reasonableness does apply?
Lord KIRKHILL: I am not empowered to accept that suggestion this evening, but it is on the record and I will certainly look at what the noble Earl has said.
Earl FERRERS: I am very grateful to the noble Lord. I will also look at what he has said, because it seems to me that what he said was considerably wider than I had anticipated the Amendment to be. The object of my Amendment was really to give the authority to the High Court and not the magistrates' court. I shall be interested to read what the noble Lord has said and the implications of it. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 51 agreed to.
Clause 52 agreed to.
2.26 a.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 201:
After Clause 52 insert the following new clause:
Acquired company's documents to be made available to former parent company
.—(1) This section applies to—

(a) a company which comes into public ownership (the "former subsidiary")
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and which immediately before its date of transfer was a subsidiary of n company not being a company which comes into public ownership (the "former parent company"); and

(b) the books, accounts and documents of the former subsidiary so far as they relate to its affairs subsisting at, or at any time before, that date of transfer.

(2) The former subsidiary shall, an any time, and from time to time after the date of transfer of its equity share capital, make available to the former parent company such ft citifies for the examination of and the making of extracts from or copies of the relevant documents as the former parent company may reasonably request for the purposes of its business or, in the event of any question arising between the former parent company and the former subsidiary whether any request is reasonable, as may be directed by the Secretary of State.
(3) A company which comes into public ownership and whose equity share capital was held immediately before the date of transfer by two companies in equal proportions shall make available to each of those companies, or to a company of which either of them was a subsidiary, the same facilities, to the same extent and upon the same terms w a former subsidiary is required to make available to its former parent company under sub; section (2) above.
The noble Lord said: As the Bill stands there is no provision which gives a former parent company the right of access to books of a former subsidiary company which is to be nationalised. This Amendment seeks to give the parent company the reasonable access to the records of their former subsidiary after the latter have been nationalised which they would have insisted upon in an ordinary commercial transaction. A clause somewhat similar to this was moved in another place and the Government resisted it on the grounds that it was a fundamental principle that when the ownership changes the former owner loses all rights with respect to the company. But that is simply lot true. It is, I understand, normal for a company which sells its subsidiary to another group to make it a condition of the sale that it should continue to have access to the books and records of the subsidiary at least during the period of warranty which normally goes with the sale. I remember instances in my own experience. This seems a sensible provision. I hope the noble Lord will be able to accept this new clause. I beg to move.
Lord KIRKHILL: This new clause seeks to enable the former parent company of an acquired company to have access to information held by the acquired

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company after its transfer. The Government consider the new clause entirely open-ended. As drafted it would give right of access at any time after the date of transfer, no matter how long after that date. At this point the noble Lord, Lord Strathcona and the Government would diverge. The Amendment is virtually identical to one put down by the Opposition during Committee stage in another place. As my honourable friend the Minister of State explained then, it is a fundamental principle that when the ownership of a company changes the former owner loses all his rights or interests with respect to the company. The noble Lord has given an example of the difference between us at this point. Nevertheless, the Government's view is that the break is usually complete and absolute.
This clause would destroy that principle. A third party—namely the former parent—would have a continuing power of access to the books of a wholly-owned subsidiary of the Corporation. Not only would this be quite wrong, it would also be unnecessary. Any prudent company, especially of the efficiency so often claimed for the companies concerned, which was aware that it was about to give up ownership of one of its subsidiaries would ensure, before the date of transfer, that it had all the necessary information to continue its residual business after the transfer.
Furthermore, the new clause is unnecessary in connection with the compensation negotiations. The negotiations will be carried out on behalf of the shareholders by a stockholders' representative for each company appointed under Clause 41. Under subsection (6) of Clause 41, the stockholders' representative has full access to all information necessary for the conduct of the negotiations. It is therefore unnecessary for a former parent also to have direct access to the same information. That is the Government's view of the noble Lord's Amendment.
Lord STRATHCONA and MOUNT ROYAL: Someone has gone to a good deal of trouble to destroy the case that one might reasonably have tried to make, and I hope that they think the trouble has been worth while. It seems to me that they
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are making heavy weather of a comparatively minor point, and I think they are wrong on a straight point of fact. It is quite a common practice to have something like this. I accept that the time element is a perfectly fair point. We will look at what the noble Lord has said, and it may be that the proper thing to do is to come back with an Amendment which puts in a time limitation, but I hope possibly he will remonstrate with those who have briefed him for not even trying to sound a little more co-operative.
Lord KIRKHILL: I am too tired to remonstrate with anyone.
Lord STRATHCONA and MOUNT ROYAL: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 53 [Liabilities of Corporations etc.]:
2.32 a.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 201A:
Page 73, line 7, after ("effect") insert ("(a)")
The noble Lord said: I beg to move Amendment No. 201A, and I suggest it would be convenient to discuss Amendments Nos.201B and 201C at the same time. One of the effects of subsection (6) is to deprive a lender of any entitlement to exercise a right to have his loan repaid on any of the grounds referred to, while at the same time excusing the borrower from the corresponding obligation to repay. I understand that subsection (7) was introduced following discussion between the companies and the Government. The effect of the subsection, as at present worded, is to preserve the right to repayment in these circumstances without also preserving the corresponding obligation to repay. This seems an absurd situation, and the proposed Amendments are intended to correct this. I hope that the Government will feel able to accept them. I beg to move Amendment No. 201A.
Lord MELCHETT: At the risk of usurping my noble friend Lord Winter-bottom's role as the soft man on the Government Front Bench and losing my reputation with the noble Lord, Lord Orr-Ewing, as being a hard line Left Winger—and I am very sorry that he is

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not here—I am glad to say that I accept the noble Lord's Amendments. I am tempted to make it conditional, but of course I will not, on the noble Lord agreeing to tell his noble friends Lord Carr and Lord Orr-Ewing that I have actually accepted an Amendment, because they have constantly criticised me for not doing any such thing.
Lord CAMPBELL of CROY: I was going to say, in thanking the noble Lord for that, first that I was delighted to see that he was rising because I thought that the Government would be able to accept this group of Amendments, and I shall certainly make sure that my noble friend Lord Orr-Ewing is told as soon as possible. I am most glad that the Bill can be amended in these respects.
On Question, Amendment agreed to.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 201B:
Page 73, line 9, after ("made") insert ("by him").
On Question, Amendment agreed to.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 201C:
Page 73, line 11, at end insert ("or
(b) in relation to any obligation owed to such a person by the debtor in respect of such a loan").
On Question, Amendment agreed to.
Clause 53, as amended, agreed to.
Clauses 54 and 55 agreed to.
Clause 56 [Interpretation]:
2.35 a.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 202:
Page 74, line 40, at end insert ("being a date falling not less than twenty-eight days after the making of the order").
The noble Lord said: It may be for the convenience of the Committee if we discussed at the same time Amendment No. 205. This clause contains the definitions of various expressions which are used throughout the Bill. It defines the aircraft industry vesting date and the shipbuilding industry vesting date as being
"… such date as the Secretary of State may by order made by statutory instrument specify …"
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As these definitions stand, the Secretary of State will be enabled to make an order which is not subject to any form of Parliamentary control. It may be made without warning and it may specify an immediate date for the vesting in each Corporation of the companies to be nationalised. We believe that the vesting orders should give the companies concerned some warning, and the object of the Amendment is to secure a minimum breathing space of 28 days between the date when a vesting order is made and the date when it comes into operation. I beg to move.
Lord MELCHETT: The Provisions for specifying vesting dates in the Bill follow, as the noble Lord may have realised, the Iron and Steel Ac: 1967 in which there was no provision for a statutory gap between the publishing of the vesting order and vesting day. It may well be that there will have to be a period of some weeks or even months between the Royal Assent and vesting, but the Government can see no advantage in a statutory requirement for such a gap. Once Parliament has given its approval to this measure—and I feel sure that that will not be long delayed in view of the marvellous progress we have made tonight—the only factor to which the Government will give weight on deciding vesting date is the preparedness of the Corporations to take control of the companies.
The Organising Committees which become the new Corporations on Royal Assent have been hard at work for almost a year. They are making excellent progress—I was able to give the two noble Viscounts an example of this when we discussed an earlier Amendment—and there is every advantage in vesting at the earliest opportunity. I suggest to the noble Lord that these two Amendments would limit the flexibility to do what is best in the interests of the Amendments and I hope, therefore, that he will agree to leave the Bill as it is.
Lord CAMPBELL of CROY: I think the noble Lord meant to say "in the interests of the Corporations"; he said "in the interests of the Amendments".
Lord MELCHETT: I meant to say "in the interests of the industry", which is what I think I did say.
Lord CAMPBELL of CROY: The noble Lord mentioned the Iron and Steel Act 1967, and there my recollection is that the vesting date was specified as occurring 36 weeks after the passing of the Act
"… or such earlier date as the Minister may by order appoint".
He could have made the appointed day very soon after, but the fact that 36 weeks was mentioned made it clear that a considerable interval was expected. In this Amendment 28 days, a much shorter period, is being suggested; the Minister could act so quickly that the companies got no warning at all. I have made the point and the noble Lord said that the Government's interest is to get the Corporations going as soon as possible. I hope will he take into account the need to warn the companies, and I will reserve the possibility that we may wish to raise this matter again on Report. At this stage, however, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
2.39 a.m.
Lord MOTTISTONE Lord MOTTISTONE moved Amendment No. 203:
Page 75, line 21, at end insert (""industrial democracy" means Management of a concern with the maximum practicable consultation with representatives of all employees at all levels").
The noble Lord said: The Committee may remember that when, it seems many moons ago, we discussed this general subject of industrial democracy under Clause 2, I reserved the right to move this Amendment depending on how that debate went, and in my humble opinion it did not go very well. If your Lordships will remember, what worried me and many of my noble friends, not to mention other noble Lords in other parts of the House, was that, without a proper definition of what "industrial democracy" meant, it was going seriously to impede effective and efficient management. I remember making the point—and others have made it too—that management is a serious, important and difficult job which requires much experience and training and is not something that any old person can do by being fed into the management system by the back door in some rather obscure way. My attention has been drawn to an interesting letter in The Times today by Sir Henry Chisholm, who makes this point
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rather effectively. I commend it to the Government.
In putting down this Amendment, I should of course like to think that the Government, having gone through the long debates associated with the Bill, are now so wise in their understanding of these problems that they will accept my Amendment without further ado. However, if they do not propose to do that, perhaps they can explain what they do not like about it rather fully, even at this late hour, so that we may know what is the Government's thinking on this point. I beg to move.
Lord KIRKHILL: As I explained when discussing the noble Lord's Amendment No. 44 to Clause 2(4), the approach that the present Amendment reflects is unacceptable to the Government. The promotion of industrial democracy is one of the most important features of the Bill. We have explained that we do not consider it right to prescribe a particular form of industrial democracy because that is something for those in the industries to work out. At this point, the Government and the noble Lord diverge somewhat. But our firm hope and expectation is that it will enable all employees to play their full part in the future of these industries.
The Amendment would simply define industrial democracy as management of a concern with the maximum practicable consultation with representatives of all employees at all levels. We, of course, fully support maximum consultation, but what we hope to see evolve within the Corporations is something much more than mere consultation. I would hope that any good management would follow the principle of maximum consultation with the workforce, but consultation is not in itself equivalent to involvement or participation at all levels and it is this which we hope will be encouraged by our industrial democracy provisions.
With respect, the approach reflected in the noble Lord's Amendment is the sort of attitude which we hope to see change as industrial democracy develops. We believe that industrial democracy will involve employee participation and that our provisions will encourage this. This is something much more fundamental than consultation. Encouraging it will be one of the prime benefits we expect to see

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from this legislation. I do not believe that I can add more, given what I said on Amendment No. 44.
Lord CARR of HADLEY: I should like briefly to say one or two words because it is too late at night to go into this subject in detail, although I believe that we shall have to return to it at Report stage. I accept that it is genuinely one of the Government's major intentions in the Bill to promote industrial democracy, but I really think that, if they mean to do that, they will have to make some attempt to define what they mean by industrial democracy. I said earlier, and I repeat very briefly tonight, that it is not our intention to try to force the Government to prescribe what forms industrial democracy should take, but that it is really essential, if they mean what they say, that they should establish that democracy is something which, of its very nature, is available to all the members of the community.
We keep saying to the Government that they are deliberately excluding large numbers of the members of this community and while, as I have already admitted on previous Amendments, there are difficulties when it comes to collective bargaining, difficulties which I fully understand and admit, we do not accept on this side that they apply to consultation. We have had assurances from various Members of the Government Front Bench that nothing in the Bill was meant to exclude everybody from consultation. We have tended to say, "But if you give a legal right to some there is a danger that by implication you will exclude others from the enjoyment of that right."
I received this morning a letter from the Shipbuilding and Airline Industries Management Association from which I will read out two or three sentences and no more. It says:
"Our greatest immediate concern lies in the fact that the definition of a relevant trade union in the Bill is apparently being pre-emptively applied before the Bill is on the Statute Book in as much as we have been excluded from facilities for consultation"—
for "consultation" not from collective bargaining—
"excluded from opportunities for consultation with the organising committee and Ministers on proposals for the future of the industry under nationalisation. A meeting which we were promised with the organising committee some time ago has still not taken place."
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There is fear that that is what is going to happen, and here is some: suggestive evidence that what is feared is already happening; namely, by giving the legal right to a proportion only they will deny this basic democratic right to a substantial minority which may be as many as 30 per cent. of all employees, at least in the aircraft industry.
I do not wish to push the matter further tonight, but I hope that Ministers will realise that the very assurances which they have been giving look as if they are being denied in practice. This is, therefore, something to which, if they mean what they say about industrial democracy, we shall both have to return to when we come to the Report stage.
The Earl of KINNOULL: I should like to support briefly what my noble friend has said. I have heard the same complaint, particularly in the aircraft industry, and it would be of great value this evening that even if the Government cannot accept this Amendment, they could at least give an assurance that those who are worried at the present time about rot being consulted, will be consulted. Perhaps the noble Lord can explain what consultations are taking place at ft e present time, particularly at the middle management level between the organising committees.
Lord KIRKHILL: We discussed this matter at some length earlier and we will come back to it at Report, there is no doubt about that. I believe that the Government should rest their position at this time,
Lord CARR of HADLEY: Will the Minister at least think very carefully about finding out before Report stage whether or not some of the fears which I am reporting have any substance. If they have not, could he give some assurance in a categorical form that the substantial minority will not be denied this right to consultation?
Lord KIRKHILL: I cannot respond this morning to the latter pat of the question by the noble Lord, Lord Carr of Hadley. As to the first part of the question he addressed to me, I shall certainly give every consideration to it.
Lord MOTTISTONE: This being a late hour, and it being due to the intransigence of the Government in many other respects that we have to discuss these important matters at 3 o'clock in the morning, I hope that they will consider the points which have been raised by my noble friends and the suggestion that I made that perhaps the Government would care to read the letter in The Times which makes the matter very clear. Furthermore, I hope that, in reconsidering this matter, they will give serious thought to the efficiency of management. That is the important thing, These Corporations and their subordinate firms will not be successful if they are not efficiently managed. Any happy, bright ideas about what might happen under the broad heading of "industrial democracy", as described by the noble Lord, Lord Kirkhill, are not going to be conducive to efficient management; so further thought must be given to it. But with that proviso, and with the thought that we shall return to this at Report, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
2.50 a.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 204:
Page 75, line 45 at end insert (""net loss" means the amount by which the value of the securities of the company would have been reduced upon the hypothesis that the relevant transaction had occurred immediately before the first of the relevant days.").
The noble Lord said: Compensation is to be based on the average of the values of the securities in the specified six months, but it will not be paid until after vesting date, possibly not until a long time after vesting date. But deductions from compensation, which are the amount of net losses resulting to the new Corporations from relevant transactions under Clauses 30, 31 and 35, will be related to values at the date of transfer, for the net losses suffered by the Corporations must be measured by the difference caused by those transactions in the value of the assets at the date of transfer. So losses valued at 1976 prices are to be deducted from 1973/74 base values.
The purpose of the Amendment is to ensure that both the positive and negative elements of compensation are valued on the same basis with regard to the time of
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valuation. Otherwise, the Corporations would be protected against inflation while the owners of securities would be exposed to it. I would point out—and I am sorry the noble Lord, Lord Winterbottom, is not here, as he was talking about hypotheses and hypothetical matters earlier on—that the concept of a hypothetical date is here taken from Clause 39 of the Bill. I beg to move.
Lord KIRKHILL: Clauses 30 and 31 impose a personal liability on directors for any "net loss" to the new Corporations arising from material transactions and onerous transactions entered into after the safeguarding date. The purpose of these provisions is to prevent the transactions in question taking place. It is therefore important that adequate sanctions should be included to secure that that type of asset dissipation covered by these clauses does not take place.
The fundamental concept behind all of these clauses is that any of the transactions in question are either the responsibility of the equity holders or will confer a benefit, either directly or indirectly, on the shareholders. The extent of this benefit will be the actual sum of money they will gain as a result of the transaction. The gain to the shareholders will at the same time be a loss to the Corporations. The shareholders will have gained a sum which they would not otherwise have received, and the new Corporations are poorer by the same amount. But I would emphasise the point that the concept of "net loss" implies simply an arithmetical sum for which the directors would become liable, or by which the compensation would be reduced, under the relevant clauses of the Bill. That is the Government thinking behind this clause, and, of course, we would wish to resist the Amendment.
Lord CAMPBELL of CROY: I cannot say that I think that explanation is very satisfactory, but I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 56 agreed to.
Remaining clause agreed to.
Schedule 1 [Aircraft industry]:
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 212:
Page 80, line 34, after ("aircraft") insert ("other than guided weapons")
The noble Lord said: This is a simple question of definition. Schedule 1 includes in the companies to be nationalised those making guided weapons, but goes on to exclude aircraft designed to fly un-manned. For the sake of clarity it should be made clear that the definition of "aircraft designed to fly unmanned" is exclusive of guided weapons. It seems to me that that is a sensible definition to make in a world going into cruise missiles, space shuttles and the like. I beg to move.
Lord MELCHETT: I have to confess that I have a note here which is based on the assumption that the noble Lord wished to omit guided missiles altogether from the scope of the Bill. I hope noble Lords will not take it amiss when I say that this was not unexpected in view of the attitude they have taken over other parts of the Bill they wanted to omit. In view of the fact that it is designed as a drafting Amendment, I would suggest that it probably does not achieve the result intended; but I should like to take it away and look at the Amendment. If there is any need for re-drafting, I will undertake to come back to it on Report.
Lord STRATHCONA and MOUNT ROYAL: That will be perfectly satisfactory. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Schedule 1 agreed to.
Schedule 2 [Shipbuilding industry]:
The DEPUTY CHAIRMAN of COMMITTEES: Before calling Amendment No. 214, if it is moved, I should point out that if this Amendment is agreed to, I cannot call Amendment No. 250.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY: had given Notice of his intention to move Amendment No. 214:
Page 81, line 15, leave out lines 15 to 17.
The noble Lord said: There are five Amendments, Nos.214, 216, 219, 220
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and 221, which are linked with and are consequential to Amendments on ship repairing on which we have had two debates. Our intention is not to move these Amendments now, as we have been over that ground, but to revert to the subject on Report stage. I do not move Amendment No. 214.
Schedule 2 agreed to.
Schedules 3 to 6 agreed to.
Schedule 7 [Procedure etc. of arbitration tribunal]:
2.59 a.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 226:
Page 97, line 7, leave out ("and").
The noble Lord said: It seems a pity that we cannot finally wind this up, but I must move Amendments Nos.226, 227 and 228, which return to the question of interim payments on account of compensation, and attempt to ensure that any issues of this kind are speedily settled. These Amendments are merely designed to give the parties the advantages conferred by sections 13, 14, 15, 16 and 17 of the Arbitration Act 1950. This requires the Lord Chancellor in determining the rules for arbitrators to have regard to the fact that the issues should be resolved as quickly as possible. I beg to move.
Lord MELCHETT: The Arbitration Act 1950 contains the code regulating the procedure for arbitrations which are plainly designed to cover cases where arbitration is provided for in agreement between private persons as a means of settling differences or where questions are referred to arbitration by a court. Many provisions of this Act are therefore inapplicable to a tribunal such as the one being set up under the Bill. As a result, the Bill applies only a few of its provisions, and supplements this by making special though analogous provisions where they are specifically needed.
I have a long list of the various sections which will be applied by Amendments Nos.226 and 227. It would take me a quarter of an hour to read them all out, to gather the reasons why in each case they are not relevant. If the noble Lord would like me to refer to any of them, we can return to this on Report. I think the noble Lord also referred to Amendment

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No. 228, the final Amendment, which deals with speed. The Government sympathise with the desire to see speedier decisions reached by the tribunal. But in addition to speed, there are other important objectives: for example, the need to give parties a fair hearing and adequate opportunity for presenting their case. Subjects likely to figure in the arbitration tribunal rules would include the institution of procedures, pleadings, interlocutory directions, service of documents, representation at hearings and evidence, et cetera Regulations will be framed so as to enable speedier decisions so long as they are consistent with the need to see justice done. But to pick on speed as the only criteria worthy of mention in the Bill, as I think would be the case if Amendment No. 228 were passed, would be inappropriate. I hope the noble Lord will not press it.
The Earl of KINNOULL: While accepting the time limit is almost impracticable in many instances, can the noble Lord say whether interest will run from the vesting date?
Lord MELCHETT: We have covered this in great detail. We gave that assurance at least a couple of days ago, if not earlier.
Lord STRATHCONA and MOUNT ROYAL: Speed appears to be of the essence at this time of night. I am sure the Government have hoisted on board
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the point being made here. If it is necessary to come back and look at the detail, this is something we can do later. I am grateful to the noble Lord for his assurance and warnings about some of the other issues involved in the early part of our Amendment. I beg leave to withdraw this, our last, Amendment.
Amendment, by leave, withdrawn.
Schedule 7 agreed to.
House resumed: Bill reported with the Amendments.

ENERGY BILL [H.L.]
Returned from the Commons agreed to with Amendments; the said Amendments to be printed.
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  RAF: SUNDAY AND NIGHT FLIGHTS