Sitting of 4 July 1977

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

MR. SPEAKER (LEAVE OF ABSENCE)
Mr. Speaker: I have to inform the House that the University of Southampton, my own university, proposes to do me the honour of conferring on me the honorary degree of Doctor of Laws on Friday 8th July. I therefore ask the indulgence of the House and leave of absence to enable me to attend the university for that purpose.
Hon. Members: Hear, hear.
Mr. Speaker: I am much obliged to the House.

ORAL ANSWERS TO QUESTIONS
  ENERGY

    Electricity Generation
    Mr. Biffenasked the Secretary of State for Energy if he will make a statement on the current and prospective margins of unused capacity in the electrical generating industry.
    The Under-Secretary of State for Energy (Mr. Alex Eadie): The electricity generating industry plans to have an adequate margin of generating plant in reserve to meet abnormally high demand in the event of severe weather and plant breakdown. Recently this margin has been higher than planned. The margin of plant on the Central Electricity Generating Board system over and above last winter's peak demand was 33 per cent. and it is expected to remain at about that level until the early 1980s.
    Mr. Biffen: In view of this substantial margin of excess capacity over and above
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    what was planned, will the Minister and his colleagues pay high regard to that factor before yielding to the well-orchestrated lobby that is trying to persuade the Government to authorise the accelerated construction of Drax B power station?
    Mr. Eadie: The ordering of Drax B must be seen in the context of the need to preserve a healthy manufacturing capability in this country. The margin has been 20 per cent. during the past few years. However, the industry considers that a higher margin is now justified and has endorsed an increase to 28 per cent., which will be reviewed by the Government in two years' time. At high peak demand, the service capacity with these margins of safety is 5 per cent.
    Mr. Palmer: Does the Minister agree that the trouble with the electricity supply industry is that it has too much coal and not enough electrical load? Should not steps be taken by the Department to create a proper pricing policy to obtain more load for the electricity supply industry?
    Mr. Eadie: The matter—as my hon. Friend has put it—of too much coal and reduced demand is a factor that the House has debated before. My hon. Friend is well aware of that. However, with expansion in the economy demand will begin to pick up and we may be grateful for the fact that we have this spare capacity.
    Mr. Gray: Is the Minister aware that our potential export markets are having their confidence undermined by the complete lack of decision on the part of the Government in this matter? How long does the Cabinet require to study the relevant documents before reaching a conclusion?
    Mr. Eadie: It has been announced that a decision will be taken as quickly as possible. It is a difficult decision. It is not entirely true that export markets are being undermined. There is a worldwide difficulty about demand and potential.
    Mr. Mike Thomas: Is my hon. Friend aware that the figures show a modest upturn in electricity demand and that, therefore, he is right in believing that the sort of margins that there have been recently may not last long? Is he further aware that the debate on Drax B

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    is about the long-term future of an industry, not about a short-term problem which I hope we shall shortly overcome?
    Mr. Eadie: The arguments that my hon. Friend has described are about the capability of the manufacturing capacity of the industry.

    British Gas Corporation
    Mr. Neubertasked the Secretary of State for Energy when he last met the Chairman of the British Gas Corporation.
    The Secretary of State for Energy (Mr. Anthony Wedgwood Benn): I last met the Chairman of the Corporation at the BNOC board meeting on Friday 24th June.
    Mr. Neubert: Does the Secretary of State support the competitive advantage of North Sea gas? Would it not be a breach of faith with the public and a conspiracy against the consumer if the price of gas were forced up to offset the increasing cost to electricity of the miners' poor productivity and excessive pay claims?
    Mr. Benn: To the best of my knowledge, no such proposal has been made.

    Nuclear Reactors
    Mr. Rostasked the Secretary of State for Energy what period of time he anticipates will elapse between the reports being received by him from the Nuclear Power Company and the National Nuclear Inspectorate, and his Department's decision on the choice of the nextthermal nuclear reactor.
    Mr. Benn: I expect to receive the reports shortly and I shall want to study them carefully. I recognise the need for an early decision.
    Mr. Rost: As the Secretary of State has now sacked his Chief Scientist, Dr. Walter Marshall, because he had been advising the right hon. Gentleman to make an early decision rather than to procrastinate about the nuclear future, can he give an assurance that he will not dismiss everybody whenever they disagree with him?
    Mr. Benn: As the hon. Gentleman knows better than I, Dr. Walter Marshall's appointment as chief adviser was on the basis that he would not advise the Secre-
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    tary of State on nuclear matters, for the reason that Sir John Hill, Chairman of the Atomic Energy Authority, is the chief nuclear adviser to the Government.
    As for the reports, I am waiting for them. I commissioned them last year, and it will clearly not be possible to reach a decision until the Nuclear Inspectorate has reported on safety and until industrial companies have indicated their views.
    Mr. Skeet: Is the right hon. Gentleman aware that if he chooses the AGR it will have no export potential? Will he consider this point so that British industry may be safeguarded and build the appropriate type of reactors and the necessary machinery in the future?
    Mr. Benn: I am aware of the campaigns going on on both sides of this argument. There is a strong campaign for the light water reactor, which has been going on for some time, based upon the export orders for other light water reactors. I am also well aware of the fact that our formidable achievements have been via the gas-cooled route, through the Magnox and gas-cooled stations. The reason why I am awaiting the reports so anxiously and am anxious to reach as early a decision as possible is that I want to have the considered view of the industry as well as the Nuclear Inspectorate on this matter.
    Mr. Emery: Does not the right hon. Gentleman realise that, while he drags his feet and does not go forward with further orders for a fast breeder, we are losing out to the French and others in many areas throughout the world where there are great potential earnings? Is he aware that he must come to a decision quickly?
    Mr. Benn: The hon. Gentleman knows that there has been no delay whatever in the fast breeder programme. The rate of spend that I have authorised in the two years I have been Secretary of State has been sufficient to keep the fast breeder programme going. The fast breeder at Dounreay is the finest in the world, well ahead of the Phoenix which the French have built. There is no doubt in my mind that British fast breeder technology is of the highest order to be found anywhere in the world. The hon. Gentleman will also know that, following the

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    Flowers Report, the Government issued a statement describing in detail how they would handle the question of ordering the CFR1.
    Mr. Gray: Is not the right hon. Gentleman aware that it is his credibility which is at stake, because this is only one of the many decisions which he has not taken and which the public are awaiting? Has it not occurred to him that if he does not start taking decisions quickly he may find himself having a sideways move like Dr. Marshall?
    Mr. Benn: My credibility would be most totally destroyed if I announced what system we should adopt before I had had the advice of the Nuclear Inspectorate, which is a statutory body, and before I had consulted the industry. That supplementary question is totally meaningless. I have received helpful advice from many people, both on the fast breeder reactor and on the thermal reactor. I have received no advice whatever, as I would expect, from the Conservative Party.

    Energy Savings (United States Discussions)
    Mr. Macfarlaneasked the Secretary of State for Energy what contacts his Department has had with the Carter Administration on the subject of energy savings.
    The Under-Secretary of State for Energy (Dr. John A. Cunningham): As the House knows, my right hon. Friend visited the United States from 3rd to 6th April for discussions and met Dr. Schlesinger and others. Officials of my Department have frequent meetings with United States officials on many aspects of energy policy, including energy savings.
    Mr. Macfarlane: Following the meetings which the right hon. Gentleman had with United States energy officials, may I ask the Under-Secretary to urge upon his right hon. Friend the need to introduce a co-ordinated energy-saving strategy in the United Kingdom, not identical with but similar to that which has been introduced in the United States, bearing in mind that all that this country has had so far is a rather disgraceful and expensive "Save it" campaign?
    Dr. Cunningham: The hon. Gentleman should not confuse President Carter's speech with a policy. We already have a co-ordinated policy in the United Kingdom and, far from what the hon. Gentleman says about a wasteful "Save it" campaign, we have a wide range of measures, as he well knows, in industry and in the domestic sector. My right hon. Friend made clear in the House a few weeks ago that we are currently reviewing our energy conservation policy with a view to improving that where possible.
    Mr. Gordon Wilson: Is the hon. Gentleman aware that in the United States grants and loans are specifically provided for domestic premises, with the aim of bringing 90 per cent. of American homes up to the necessary insulation standards? Is he further aware that one of the means by which this is being done is through the electricity companies? Will he initiate discussions with our own electricity authorities with a view to operating a similar system, whereby improvements are carried out by the electricity authorities and recouped later by payments from the consumer?
    Dr. Cunningham: I am aware of the points to which the hon. Member refers and of various other schemes in other countries. We are looking at these with great interest. I am currently engaged in a round of discussions with the nationalised industries and the oil industry in the private sector to see how best we can co-ordinate our efforts on a voluntary basis to deal with conservation measures.
    Mr. Forman: Is the hon. Gentleman aware that perhaps the best comment so far on the Government's conservation programme came from his right hon. Friend the Minister of State when replying to a debate a little while ago? Is he aware that it was obvious from his right hon. Friend's remarks that he and the Department feel contrite and apologetic about the lack of success that has been achieved so far? Would not this explain the need to look at the programme again?
    Dr. Cunningham: My right hon. Friend the Minister of State can answer for himself. If the hon. Gentleman is trying to suggest that the remarks to which he refers mean that we are not well aware of the need for conservation and the need to

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    strengthen our policies whenever possible, he is mistaken. From the energy elasticities report, Energy Paper 17, it was concluded that we saved about 6 per cent. of our primary energy requirements. That is a fairly good measure of success, contrary to what the hon. Gentleman suggests.

    European Community (British Presidency)
    Mr. Skeetasked the Secretary of State for Energy if he will give a report of his term as President of the Council of Energy Ministers.
    Mr. Skinnerasked the Secretary of State for Energy whether he will make a statement on his term of office as President of the Council of Energy Ministers.
    Mr. Benn: I made a statement on my term as President of the Council of Energy Ministers in my reply to my hon. Friend the Member for Blaydon (Mr. Woof) on 30th June, when I also laid in the Library a copy of my published report on this subject.
    Mr. Skeet: Is the right hon. Gentleman aware that Dr. Brunner, in Edinburgh, referred to the "I'm all right, Jack" policy of the Government and the Secretary of State? Is he further aware that this presidential period has got us nowhere? We do not have JET as yet, we have not been able to get coal exports to Europe increased and, finally, we have not got a minimum selling price for oil. What has the right hon. Gentleman achieved? Nothing.
    Mr. Benn: The hon. Gentleman will know that the JET matter is for the Research Council, not the Energy Council. He will also know that the coal issue was one on which we pressed strongly but without success. As for the minimum selling price, if the hon. Gentleman reads the report he will see that, apart from Euratom loans, coking coal and the work programme, Commissioner Brunner expressed himself as being well satisfied with the achievements of the past six months. I believe that the hon. Gentleman has read wrongly into that speech by Commissioner Brunner a criticism of our Presidency.
    Mr. Tom King: Is the right hon. Gentleman aware that our view on the Conservative side of the House is that
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    his term as President had just about the success we would expect when all his colleagues at the meetings knew that he was totally opposed to the idea of a European energy policy in any case? Is he further aware that we regard the failure to agree even on a site for the JET project as a major setback for a most important European research project? Although he says that this is a matter for the Research Council, is it not a fact that he appeared before that Council?
    Mr. Benn: All I can say on the JET project is that one of the hon. Gentleman's colleagues in the European Assembly demanded that JET be sited at Ispra. The British position has not been helped by the total lack of support for JET which has been evidenced by the Opposition.
    Mr. Skeet: Not true.
    Mr. Benn: There has been absolutely no support. The last time the hon. Member for Bridgwater (Mr. King) made a criticism of my Presidency, the example he cited was that during my Presidency the German courts had delayed the German nuclear programme. If he reads Hansard, he will find that his criticisms then were as foolish as those he has made today.
    Mr. Kinnock: Is it not, as a general rule, a better principle for British Ministers to take an attitude of constructive criticism in the Common Market, as my right hon. Friend has done, rather than the meaningless and supine sell-out attitude towards British interests which would be adopted by the Euro-fanatics on the Tory side?
    Mr. Benn: The attitude we have adopted is to work actively and constructively, to see all the Ministers, discuss with them and send regular reports, which I did, and at the same time, at the Council meetings, to put up a vigorous defence of our own interests, exactly as every other member country in the Community does. That is the right way to proceed. The three examples given by the hon. Member for Bedford (Mr. Skeet) on JET, coal and MSP were examples of difficulties created by other members of the Community involving projects of great importance to this country.
    Mr. Biffen: During his Presidency of the Council of Energy Ministers, did the

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    right hon. Gentleman form any impression as to whether there would be difficulties for his Government obtaining their objective of up to two-thirds of North Sea oil being refined in the United Kingdom as a result of anxiety on the part of the Commission or Continental Europeans that there should be consideration of a European context in oil refining?
    Mr. Benn: Anyone who follows energy policy, as the House does, will know that there are conflicts of interest in each country between producers and consumers and difficulties in different areas. Those conflicts of interest present themselves internationally in exactly the same way as they do within a nation State. The basis upon which I would answer the hon. Gentleman's question is that I do not suppose for one moment that the Commission would seek to challenge the development of an oil policy in the United Kingdom dealing with refineries, landing rights, participation and the rôle of BNOC, which are so manifestly in the interests of the people of this country, any more than I was prepared to engage in public criticism of other member States when they found themselves unable to support things on the ground that they were contrary to their interests. The one thing that the hon. Gentleman will have noticed about my Presidency is that there has been not one word, publicly or by private briefing, of criticism of other nations that have stood up for their own interests.
    Mr. Hardy: Does my right hon. Friend agree that the first two supplementary questions that we have had from the Opposition suggest not merely that the national interest would be treated quite frivolously if they were in power, in general terms, but that they would be quite agreeable to the siting of JET elsewhere than at Culham? Will he explain to Opposition Members that they need to make their position abundantly clear on that matter?
    Mr. Benn: I should be greatly helped if a firmer line were taken by the Opposition on the siting of JET and if there were firmer support and if my hon. Friend the Minister of State, Department of Industry, who took the chair at that very difficult meeting, in pursuit of perfectly legitimate and objective chairmanship, had not been in receipt of a rain of
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    criticism for handling a difficult matter with considerable skill.

    British National Oil Corooration
    Mr. Canavanasked the Secretary of State for Energy when he next expects to meet the Chairman of the British National Oil Corporation to discuss further participation in the oil industry.
    Mr. Benn: I have very frequent meetings with the Chairman of BNOC, the most recent of which was this morning, at which we discuss participation amongst other matters. I met the members of the Corporation in Glasgow on 24th June.
    Mr. Canavan: As part of the reason for public participation in the oil industry is to ensure better employment prospects, will my right hon. Friend tell the BNOC and BP that it is absolutely intolerable that hundreds of workers' jobs are at risk in the offshore oil construction industry, on Clydeside and elsewhere, at a time when we hear reports that 500,000 man-hours of work for the Sullom Voe project are being done in yards in Holland?
    Mr. Benn: My hon. Friend will know that when I was in Glasgow last Friday week I took the opportunity of having a meeting with the Offshore Supplies Office and the Confederation of Shipbuilding and Engineering Unions and the management and unions from John Brown Engineering. I followed that up with a meeting on the following Monday with BP, and further meetings took place during the course of the week. It is the function of the Offshore Supplies Office to see that full and fair opportunity allows British firms to compete. This is a continuing function of the Department and of the OSO. My hon. Friend will also know that in the case of Marathon an order for a rig was placed by BNOC, in pursuit of the objectives that he and I share.
    Mr. Tom King: As the criticism referred to by the hon. Member for West Stirlingshire (Mr. Canavan) originated from Mr. Gavin Laird, a director of BNOC, and was referred to by me during the energy debate, when I also drew the right hon. Gentleman's attention to the fact that BNOC had not ordered a single British supply ship, what further investigation has the right hon. Gentleman made into the matter?
    Mr. Benn: My right hon. Friend the Minister of State, in winding up the debate a few days ago, gave a very clear immediate answer, which was that BNOC inherited from the Burmah Oil Company—BODL—a pattern of use of supply ships. In the light of what the hon. Gentleman said, immediate inquiries were initiated, and I shall inform the House of the results as soon as possible.
    Mr. Ioan Evans: Has my right hon. Friend seen the report which states that oil production will exceed requirements by 1979? In view of the great benefit to Britain that flows from this oil, will he give an assurance that there will be maximum participation in ownership of the offshore oilfields, and will he refuse the persistent Opposition demands to sell it off to foreign interests and oil companies abroad?
    Mr. Benn: The fifth round licences, which were the first of the licences for which the British Government were responsible, are on the basis of a genuine 51 per cent. equity. Helped largely with the petroleum revenue tax and the royalty in oil, this will mean that 85 per cent. of the revenue from the fifth round licences will accrue to the British taxpayer and the British Treasury through the national oil account. That is not a bad achievement.
    Mr. Rost: Will the right hon. Gentleman confirm that BNOC has made a request to him to have favourable treatment in the allocation of new licences? Will he further confirm that in no circumstances will he grant such an unfair trading concession, particularly as his predecessor gave a categorical assurance, not only to this House but to the industry, that this would not happen?
    Mr. Benn: I referred to that matter in the debate last week, and the reference can be found in Hansard. The difference between the present position and the position some time ago is that we now have a State oil corporation, able and empowered by Act of Parliament to take part in every part of the oil business, here and abroad. If we are to make sense of the powers that we now have in the national interest, it would certainly be right for me to consider most seriously proposals for sole licences. No decision has yet been reached. It might be a very good way of develop-
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    ing a conservation policy which would allow us to know where the oil was and then develop it to suit our own national interests.
    Mr. Gordon Wilsonasked the Sec retary of State for Energy if he will issue a direction to BNOC regarding its com pliance with the terms of the Continental Shelf (Jurisdiction) Order 1968.
    The Minister of State, Department of Energy (Dr. J. Dickson Mabon): No, Sir. The jurisdiction orders operate, in those matters which they govern, independently of any policy adopted by BNOC and other licensees. No direction is needed.
    Mr. Wilson: Is the Minister of State aware that the BNOC is operating in defiance of Parliament under the order by not using Scots law in relation to these oilfields, which clearly lie within Scottish jurisdiction of the North Sea? What is he going to do about this betrayal of the Scottish legal system, which was guaranteed by the Treaty of Union?
    Dr. Mabon: No, Sir, I am not aware of that, because it is not true. The BNOC is perfectly at liberty, with the other companies concerned, to apply Scots law to its contracts, or English law, and it does so. If the hon. Gentleman has any information to the contrary, perhaps he will get in touch with me.

    Fuel Bills (Low-Income Consumers)
    Mr. Ovendenasked the Secretary of State for Energy if he proposes to re- introduce the scheme for selective assist ance to electricity consumers next winter; and if he will consider extending the scheme to cover other types of fuel and amend the qualifications so as to increase the number of beneficiaries.
    Dr. John A. Cunningham: We are keeping under review the need for helping those on low incomes with the cost of fuel.
    Mr. Ovenden: Will my hon. Friend accept that there is growing concern about the delay in announcing the Government's intentions about assistance towards fuel costs next winter? If he goes ahead with a scheme, as I very much hope he will, will he take account of the

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    criticisms made of last winter's scheme in view of the fact that it did not help those who are dependent upon coal or gas for the majority of heating costs and those who are just above supplementary benefit level and who, therefore, lost out entirely and were denied any assistance?
    Dr. Cunningham: Gearly, we recognise that there is always concern about people on low incomes having to face high fuel bills, but to say that there is growing concern about an announcement is to overstate the case. We have just finished last winter's scheme. We have not yet had opportunity fully to review its working. But of course, if we can draw any lessons from the working of the scheme last winter and if we were to repeat it next winter, we should put them into practice wherever possible.
    Mrs. Bain: When the hon. Gentleman analyses the reports on last year's scheme, will he look further particularly at those on the poverty line and those who face a conflict between claiming rent and rate rebates and supplementary benefit?
    Dr. Cunningham: I am aware of the hon. Lady's interest in this point and that of other hon. Members. However, only a very small percentage of those who opt for rent or rate rebates fall into this borderline area. The overwhelming majority of people who are in receipt of rent or rate rebates have incomes substantially above the level for supplementary benefit.
    Mr. MacFarquhar: Does not my hon.Friend agree that in addition to these very desirable special schemes it is absolutely essential to keep down nationalised industries' prices in the fuel sector for all consumers if we are to have a successful transition to phase 3 or whatever it is to be called?
    Dr. Cunningham: The Government made a decision early in their life to move towards the economic pricing of fuel. That remains the position. Within that broad general position, it is important to ensure not only that the right decisions are made on investment and conservation grounds but that fuel is available to industrial and domestic consumers at prices they are able to afford.

    Drax B Power Station
    Mr. Mike Thomasasked the Secretary of State for Energy whether he will now invite the CEGB to place the order for the Drax B power station.
    Mr. Benn: Discussions are continuing, but I recognise the need for an early decision.
    Mr. Thomas: Is my right hon. Friend aware that procrastination is now becoming a real threat to jobs and that there are overwhelming reasons for making this decision quickly? Can he confirm that competitive tendering for this order, which would delay work on the shop floor by up to two years, would not achieve the objective which was intended—that of saving jobs in the industry? Does he not agree that that would be nonsense which the Government should not entertain?
    Mr. Benn: The energy case for Drax B is not in dispute. The problem is over the restructuring, which is a matter for my right hon. Friend the Secretary of State for Industry. The question of competitive tendering is one that would have to await decision on the order itself. It is recognised that the previous Government, when Ince B was put out, did not engage in competitive tendering for similar reasons.
    Mr. Mellish: Does my right hon. Friend remember that some time ago he gave an interview at a firm in my constituency, Babcock and Wilcox, which is the largest firm in London dealing with generating equipment and which involves 15,000 people? Is he aware that we were impressed with the way in which he handled that negotiation? Can he do something about the uncertainty that the decision on Drax B is creating for this and other firms because they do not know what the future holds for them?
    Mr. Benn: I recall the visit to Babcock and Wilcox when I saw management and workers. I also went to see the plant at Renfrew. The problem arises not so much concerning the restructuring and the boiler-makers but on the more difficult questions involving the turbogenerator manufacturers. The Government can proceed only by trying to reach an agreement by consent between those concerned. The powers do not lie with

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    us to impose a solution. These are matters for the Secretary of State for Industry.
    Mr. Gray: May we have clarification about competitive tendering? May I remind the Secretary of State that his Under-Secretary of State gave a categoric assurance to the House that there would be competitive tendering?
    Mr. Benn: The record does not show that. The hon. Member is always reminding me that the nationalised industries themselves have prime powers in this matter. A decision about competitive tendering does not in the first instance lie with the Government. The hon. Member will also recall that in similar circumstances his Government thought it right not to go for competitive tendering. That is a very important precedent which must be uppermost in our minds.
    Mr. Buchan: Does my right hon. Friend accept that his visit to Renfrew was extremely welcome? Does he recall that we exposed the job figures in relation to delays in the Drax B project and that with every day that passes further redundancies are being considered? Does he accept that redundancies must be avoided at all costs? Will he bring pressure on his colleagues and say that if the restructuring does not take place he must cut the Gordian knot and put the contract where everybody expects it to go—to the North-East and to Babcock and Wilcox in Renfrew?
    Mr. Benn: I appreciate what my hon. Friend has said. I remember discussing the problem with him when I was in Renfrew. I am anxious that there should not be any playing off between the management and work forces of the companies concerned. They are all caught in the serious situation of a serious dip in ordering, and jobs are threatened. The research and development technology and management in all these centres, in turbo generating and boiler manufacturing, are of the highest world standards. It is important not to allow one group to be played off against the other while these matters are dealt with.

    Oil Exploration (Celtic Sea)
    Mr. Wyn Robertsasked the Secretary of State for Energy if he is satisfied
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    with progress to date in the exploration of the Celtic Sea for oil.
    Dr. J. Dickson Mabon: Although no discoveries have yet been made, exploration is still continuing. It would, however, be premature to attempt a realistic assessment of prospects at this stage.
    Mr. Roberts: Does the right hon. Gentleman agree that because the level of activity has been so low the licensees are unlikely to be able to complete their drilling programmes by the end of the licence period? Does not that cause him some concern? What will he do when the licence periods come to an end?
    Dr. Mabon: The sad fact is that, of the seven wells that have been drilled so far, six have been failures. The findings on the seventh have not yet been released. Up to March next year 14 wells are due for drilling. It is for the licensees to decide on the prospects of those wells. The Government are keen to see some findings here—and I include Cardigan Bay in that area.

    Nuclear Processing Orders
    Mr. Palmerasked the Secretary of State for Energy what is the estimated probable cost of lost orders to British Nuclear Fuels from overseas processing contracts due to delays brought about by the present environmental inquiry.
    Mr. Benn: I am advised that the value of potential overseas business for the proposed oxide reprocessing plant is some £600 million. Signature of these contracts has been delayed but I am not aware that any orders have been lost.
    Mr. Palmer: May we have an assurance that once this inquiry is out of the way, and assuming that it is favourable to British Nuclear Fuels, the Government will stand solidly behind BNF—a State-owned company—in obtaining work in this country and in markets abroad?
    Mr. Benn: I said precisely that on 12th March 1976. That is the position of the Government. The planning inquiry, which falls to the Secretary of State for the Environment, is under the control of different legislation. The delay in signing the contract is not confined to the United Kingdom. The French, who are co-signatories, have also not signed their contract with the Japanese.
    Mr. Skeet: Is not the Minister aware that the French company Cogema can go ahead and sign the contract, although it has been deferred for the time being? Is he aware that if the hearing is too long delayed the French company might go ahead in any case?
    Mr. Benn: I have heard a lot of rumours about this. With a contract of this magnitude at stake, I have gone out of my way, not only in discussions in Tokyo when the problem first arose but with the Japanese Ambassador in London on more than one occasion and with Japanese utilities, to assure them that it is not a delaying tactic. I have told them that we have to satisfy ourselves, under domestic legislation, that a matter of this magnitude is handled under proper planning procedures. I have also told the Japanese—and they fully understand—that as customers of Windscale we are in equal difficulties. The difficulties apply to them and to us. I think that that position is fully understood.
    Mr. Blenkinsop: Is my right hon. Friend aware that many of us on these Benches, as well as outside the House, strongly support the Government in ensuring that an inquiry is carried out before a final commitment is made?
    Mr. Benn: I am grateful to my hon. Friend. I think that he speaks for many who, without prejudice to one's attitude to British nuclear development, believe that it would be odd not to use planning procedures for the building of a big reprocessing plant when planning permission is needed to build an extension, a garage or a conservatory. I am grateful for that support.
    Mr. Tom King: Since the Secretary of State for the Environment urged that this should be a speedy inquiry, and since there are Press reports that it might last until October, may we have an assurance that when the findings are made we shall have a direct decision? The Secretary of State will recall that we supported the setting up of the inquiry but urged that it should be completed quickly.
    Mr. Benn: The one thing about which the House is agreed is that there should be no undue delay, but in addition—I am grateful to the House for this also—it is recognised that one could not have gone forward without a proper planning
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    inquiry. Without prejudice to what the outcome may be, there is no desire to delay matters, for many reasons and, in part, for the reason set out in my answer.

    North Sea Divers
    Mr. Grayasked the Secretary of State for Energy what recent consultations he has had with representatives of North Sea divers.
    Dr. J. Dickson Mabon: I held a meeting with representatives of the Association of Offshore Diving Contractors on 16th June about the effects of the application of PAYE to divers who had previously been taxable under Schedule D.
    Mr. Gray: Is the right hon. Gentleman aware that the degree of insensitivity which has been shown by the Inland Revenue towards this group of extremely courageous and hard-working men is taxing their patience to the end? Since they have hitherto shown an extremely responsible attitude but this may now be in danger, will the right hon. Gentleman consider using his good offices in discussion with his Treasury colleagues with a view to having another look at the position in order that North Sea production shall not be interfered with in any way?
    Dr. Mabon: Yes, Sir; I have already indicated, as has my right hon. Friend, that we ought to discuss these matters in view of the further representations which we have had from the association. I entirely agree that these are very brave men, there is a lot at stake for them, and damage could possibly result for our country. However, the hon. Gentleman will appreciate that the Inland Revenue treatment of all citizens must be equitable and fair. I remind him of what happened in the Standing Committee on the Finance Bill on 23rd June when my right hon. Friend the Financial Secretary replied on this matter. I agree that the divers have shown a responsible attitude. All I would say to them is that, despite the representations, they ought to secure rights of appeal in as many individual cases as they can.
    Mr. Emery: I declare a secondary interest here. Does not the Minister agree that if the Treasury does not somewhat alter its view there will be a serious possibility that we shall have to rely on

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    foreign nationals for diving work in the North Sea, that although the British divers are now probably more highly trained than any other divers in the world we may have to rely on others outside this country to meet the demand, particularly for saturation diving, and that, if that happens, it will be a major factor with consequences for our oil production in the years 1979, 1980 and 1981?
    Dr. Mabon: Yes, Sir; I do not dissent from the view that it could have an adverse effect on certain diving activities, and we might have to rely more and more on foreign nationals to do this work in order to meet what is required. But I do not entirely agree wtih what the hon. Gentleman says about the effect on oil development. We have asked the companies and so far they have given no positive response that that is their view. However, we are actively in conversation with colleagues on the matter. But I return to what I said, that we must be absolutely clear that in Inland Revenue matters every citizen is treated equally.

    Energy Commission
    Mr. Formanasked the Secretary of State for Energy when he now expects to announce the appointment of the members of the Energy Commission.
    Mr. Bean: I refer the hon. Member to my answer to my hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey) on 28th June. I shall make an announcement about the allocation of the seven non-producer seats on the Energy Commission as soon as possible.
    Mr. Forman: In the light of that Written Answer and of the Government's comments in their response to the Flowers Report about the importance of adequate institutional arrangements to take account of the environmental side of energy developments, does the right hon. Gentleman feel that the environmental and conservationist elements are sufficiently represented on the Commission if they are outnumbered by at least two to one?
    Mr. Benn: As the House recognised, it is a difficult matter. Everybody wanted to be on the Commission, and I therefore tried to reach a part-solution by making clear that the Commission documents would be made available so that no one would be at a disadvantage even if not
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    on the Commission. Others will be able to come. There are a large number of interests. There are the industrial interests and consumer interests. I may not be able to satisfy the hon. Gentleman that all the interests about which he is concerned will be represented, but at least matters will be conducted openly and others will know what is happening and hence will be able to influence decisions before they are made.
    Mr. Palmer: Will every legitimate technical interest be represented, including the technical staff in the electricity supply industry?
    Mr. Benn: I take it that my hon. Friend is referring to the EPEA, of which he is a distinguished member, and he put his question in a very modest way. No doubt he would like to know whether he or his general secretary could be on the Commission. The problem is this. The trade union side—the TUC fuel and power committee—not itself wanting an enormous Commission, suggested that the trade unions should be represented by the six unions on the fuel and power committee which were also members of the General Council. I discussed this with my hon. Friend's general secretary and I believe that, although disappointed, he appreciates the problem. He will have the papers and will be able to go as and when necessary. I think that he understands the difficulty.
    Mr. Tom King: Has the Secretary of State noticed the irony in his own speech last Tuesday when, while on the one hand boasting of the success of British offshore activity and the figures for oil production, on the other hand he announced the setting up of his Energy Commission and specifically excluded from the Commission any representation of the offshore operators which had been responsible for the successful development?
    Mr. Benn: This is another case of someone who has a strong claim. On the other hand, as the hon. Gentleman knows, UKOOA has a place in the participation arrangements and each member company of UKOOA will have regular and ongoing deep consultations with the Department of Energy and myself about its own interests. I have signed, or am in process of signing, a consultation agreement with each of them.

  OVERSEAS DEVELOPMENT

    Technology Transfer
    Mr. Brocklebank-Fowlerasked the Minister of Overseas Development if she has completed her review of the best methods of transferring appropriate technology to developing countries; and if she will make a statement.
    The Minister of State for Overseas Development (Mrs. Judith Hart):An official working party has recommended that existing aid activities to promote intermediate technology should be intensified. It also recommends a number of new activities to be supported initially by at least £500,000 a year from the aid programme. I have accepted the recommendations, which, I believe, constitute an important step in our policy of increasing the emphasis in the aid programme on the poorer groups in the developing countries. The report will be published today.
    Mr. Brocklebank-Fowler: I am grateful to the right hon. Lady for that full reply. In the course of the review and consultations, was the Department of Trade included, and did its officials share with me and others of my right hon. and hon. Friends concern at the growing loss of trade which we are undergoing in our trade with the least developed countries? Second, has the right hon. Lady looked specifically at the commercial possibilities and opportunities which may exist for the transfer of appropriate technology?
    Mrs. Hart: There were, as is normal, interdepartmental consultations on this matter. As for the hon. Gentleman's second point, he may have noticed—I am sure that he has—the statistics which I gave in Cardiff a week ago about our loss of trade with developing countries. I am profoundly convinced that we have a tremendous opportunity to expand trade and British exports with developing countries if we produce products appropriate to their needs. I greatly hope that this will be the beginning of an effort to promote just that, although, of course, it is only one aspect, and can be only one aspect, of a drive in that direction.
    Mr. Spearing: I congratulate my right hon. Friend on the announcement she has just made, but can she tell us a little
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    more about where the £500,000 will be spent? Will it be spent in overseas countries of the Third World or in this country, or, if not, where?
    Mrs. Hart: I think that it will probably be spent mainly in supporting groups in this country which are promoting the development of intermediate technology. For example, I am certain that the Intermediate Technology Development Group will play a full part in this initiative. I think that the money will be mainly spent here.

    Commonwealth Countries
    Mr. Canavanasked the Minister of Overseas Development whether she intends to introduce any additional measures for overseas development, following the Commonwealth Leaders' Conference in June.
    Mr. Raphael Tuckasked the Minister of Overseas Development when she intends to introduce any additional measures for overseas development and planning following the Commonwealth Conference in June.
    Mrs. Hart: In their final communique the Commonwealth Heads of Government outlined a number of ways in which the Commonwealth as a body intends to promote economic and social development among its poorer members. We wholeheartedly endorse these proposals.
    The House will recall that at the conference the Prime Minister announced an increase of two-thirds in our pledged contribution to the Commonwealth Fund for Technical Co-operation—to give a ceiling of £3 million for this financial year, 1977–78.
    Mr. Canavan: As the provision of more opportunities in education is one of the most meaningful ways by which we can help underdeveloped countries, are there any new initiatives forthcoming to help overseas students, especially from underdeveloped Commonwealth countries, who face the exorbitant increase in tuition fees imposed on them by the Department of Education and Science?
    Mrs. Hart: As my hon. Friend will know, students who come here under the student and scholarship system of my Ministry are not affected by the fees increase. However, we are concerned

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    about this matter, and my right hon. Friend the Secretary of State for Education and Science and I and others are seeking to find a way in which we can resolve some of the undoubted problems which occur with poor students from rich countries or poor students from poor countries who are not covered by my Ministry's programme.
    Mr. Tuck: Is my right hon. Friend aware that many of us were greatly distressed, as I am sure she was, at the cut of £50 million last November in the United Kingdom aid programme? Can she tell the House when it is likely to be restored to its previous level?
    Mrs. Hart: I wish that I could tell my hon. Friend that it will be restored immediately, but I am afraid that I cannot. As he will know, the question of public expenditure on this programme, as on others, will be falling for collective consideration in the months ahead. I trust that a full recognition of the self-interest of Britain and of other factors will enable the cut to be restored.
    Mr. Luce: Did not the Commonwealth leaders recognise the important rôle to be played by Western private investment in helping to improve the standard of living in developing countries? What action is the right hon. Lady taking to facilitate and encourage this?
    Mrs. Hart: The hon. Gentleman must be aware from everything I have said in the House on this subject that I regard this as a matter for a direct relationship between the developing countries and private investors. That is the best way to approach it.
    Mr. Greville Janner: In view of the denunciation by the Commonwealth leaders of the régime in Uganda, can my right hon. Friend give two assurances: first, that there will be no question of any aid, direct or indirect, going to Uganda during the rule of the present murderous régime, and, secondly, that she will consult the Foreign Secretary and the Secretary of State for Trade in an attempt to stop the indirect aid which Uganda is getting through the current trade going on between the countries?
    Mrs. Hart: On my hon. and learned Friend's second point, as he may be aware, such consultations are already continuing.
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    There are great obstacles, as I think he knows. Nevertheless, we are seeking to see what can be done.
    On my hon. and learned Friend's first point, no United Kingdom aid has gone to Uganda for, I think, five years. It is perhaps worth mentioning that at the time when President Amin succeeded President Obote—I do not say this in any sense of reproach to hon. Members opposite—there was a considerable welcome from Conservative Members. Later they learned better. Now we can say that we are all completely united in condemning what is happening in Uganda.
    Mr. Tapsell: May I, on behalf of the Opposition, totally reject what the right hon. Lady has just said?
    Mrs. Hart: The hon. Gentleman was not around at the time of the debates which took place then. I recall the precise debate in which—[Interruption.] Perhaps the hon. Gentleman was not present in the Chamber at the time. I recall the precise debate in which Conservative speakers welcomed what had happened in Uganda.
    Mr. Tapsell
    Mr. Speaker: Mr. Forman. Question No. 35.
    Later—
    Mr. Kinnock: On a point of order, Mr. Speaker. In the course of a previous exchange in questions to my right hon. Friend the Minister of State, the hon. Member for Horncastle (Mr. Tapsell) gave the impression that the previous Administration had not received the rule of President Amin with enthusiasm, whereas I have a clear memory of the fact that they received it with ecstasy, in spite of his record of being a murderer throughout his military career. In the interests of good order of the House, could an opportunity be provided for the hon. Gentleman to withdraw his remark?
    Mr. Speaker: It is not a point of order, but I will allow the hon. Member for Horncastle (Mr. Tapsell) the opportunity to speak.
    Mr. Tapsell: I sought to catch your eye, Mr. Speaker, on a second occasion. The right hon. Lady said that I had not been around while all these matters were discussed. I have been a Member of this

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    House for 18 years and have taken an intense interest in these subjects. I visited President Amin shortly after he became President of Uganda. On my return I saw the then Conservative Foreign Minister and told him that I thought President Amin was an exceedingly dangerous man who would cause nothing but tragedy for Uganda.
    Mrs. Hart
    Mr. Speaker: Order. I allowed the hon. Member for Horncastle to make a point. It was not on a point of order. I felt that it was fair to allow the hon. Gentleman that opportunity.
    Mrs. Hart: Further to the point of order, Mr. Speaker. I was seeking to refer to the point of order raised by my hon. Friend—
    Mr. Speaker: It was not a point of order.
    Mrs. Hart: On a point of order, Mr. Speaker. Would an apology from me to the hon. Member for Horncastle (Mr. Tapsell) be permitted? I apologise to him personally because, in the light of what he has said, it is clear that his was one of the voices which counselled against the then current opinion of the British Conservative Government.
    Mr. Speaker: Order. That is a nice way in which to begin the week.

    Low Income Countries
    Mr. Formanasked the Minister of Overseas Development what is the estimated cost of the new aid commitments for the United Kingdom which have arisen out of the North-South dialogue.
    Mrs. Hart: The only new aid commitment arising from the North-South dialogue to which a specific figure has been attached is the $1 billion "Special Action" programme of quickly disbursing aid to individual low-income countries. The United Kingdom share of this will be $115 million, equivalent to about £67 million.
    Mr. Forman: In view of the difficulty of raising sums of that kind, and bearing in mind the Prime Minister's statement over the weekend that there was light at the end of the national economic tunnel, may I ask the right hon. Lady whether she is aware that many of us on this side
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    of the House would want to support any efforts which she might make, collectively or otherwise, to get the aid budget up again on overseas official assistance?
    Mrs. Hart: I am most grateful to the hon. Gentleman for his comment, but he will have observed what the hon. Member for Horncastle (Mr. Tapsell) said in the aid debate of 10 days or two weeks ago. I hope that he will persuade his hon. Friends to support the commitment which he and, I know, others on the Conservative Benches would like to make.
    Mr. MacFarquhar: Will my right hon. Friend, in examining any of the aid commitments which her Department is to make—and all are welcome—investigate the possibility of spending more money on the teaching of English abroad which the Prime Minister agreed, after the Commonwealth Conference, was a very important aspect of our relations with our Commonwealth partners in particular?
    Mrs. Hart: We should be very glad to extend our operations in this field. As my hon. Friend knows, we already do a great deal, and so does the British Council. Indeed, last week I had the opportunity of talking to representatives of one of the French Portuguese-speaking countries of Africa who emphasised to me how much they wanted the teaching of English and the British cultural presence to be part of whatever Britain could do in co-operation with them. I am completely aware of this.

    Asia and South America (Rural Development)
    Mr. Spearingasked the Minister of Overseas Development what proportion of the 45 million units of account recently agreed by the EEC Development Council in Luxembourg for non-associated States in Asia and South America will be devoted to rural development.
    The Parliamentary Secretary to the Ministry of Overseas Development (Mr. John Tomlinson): It has not yet been decided what proportion of the 45 million units of account will go towards rural development, but all member States appear to be generally in favour of projects in aid of food production in its broadest sense, and the Commission has this need very much in mind.
    Mr. Spearing: I thank my hon. Friend for his reply and welcome his sensitivity about the question of food production, but will he not agree that the most important question in rural development relates to subsistence economies where the cash increase to people in need may not be shown? Will he press on his colleagues in the EEC that this is the best and most urgent type of development to help people most in need?
    Mr. Tomlinson: I am grateful to my hon. Friend for his observations. I can give him the assurance which he seeks. Not only will the pressure be maintained; it is being made to be felt in the Community.
    Mr. Greville Janner: What approaches has my hon. Friend had in this connection from the new Government of India? Can he give an assurance that we, through the EEC and in our own account, will give every assistance we can to them?
    Mr. Tomlinson: The interests of India were very much to the forefront in the attitude of the British delegation at the last Meeting of the Council of Development ministers when we pushed very strongly for the proportion of the 45 mua going to the Asian countries to be somewhat larger than that which other countries would have liked to see.

  Falkland Islands
  Sir Bernard Braineasked the Minister of Overseas Development why she will initiate studies into the possibility of aid for the extension of the airport and the development of fisheries and tourism in the Falkland Islands only when a framework of political and economic cooperation with Argentina has been established.
  Mr. Tomlinson: As my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs' predecessor said on 2nd February, the Government will at the appropriate moment commission essential preliminary studies on airport enlargement. Major economic developments, including tourism and fisheries, can be undertaken only within the framework of economic co-operation with Argentina, and any useful study of the need for an enlarged airport would have to take into account the likely demands
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  which would be made by such developments.
  Sir B. Braine: That is not an answer to the Question on the Order Paper. Is the hon. Gentleman aware that the reply of the Minister of State to my hon. Friend the Member for Surbiton (Sir N. Fisher) on 13th June that she would not consider the question of aid for extending the airfield until agreement had been reached with the Argentine came as a great shock to hon. Members on both sides of the House? Is not the hon. Gentleman aware that the only interest of the Argentine Government is in securing sovereignty over the islands, which the islanders do not want? Is he further aware that the only way of giving the Falkland Islands an independent outlet to the world is by extending the runway? Anyway, why are we talking to a Fascist Government whose disregard of human rights has already, rightly, led the United States Administration to cut off aid?
  Mr. Tomlinson: I believe that the hon. Gentleman must have misheard or misunderstood what I said. I told him that the Government
  "will at the appropriate moment commission essential preliminary studies."
  In fact, that clearly and specifically answers the Question which the hon. Gentleman tabled. The wider political aspects to which he referred are matters which should be raised with the Secretary of State for Foreign and Commonwealth Affairs.
  Mr. Luce: Did not the Shackleton Report recognise an agreed number of areas of commercial potential for the Falk-lands, including fisheries and tourism? In the light of this, should not the Government regard the provision of any moneys for the extension of the airfield in the Falklands as an investment upon which Britain can expect a return? Will the Government therefore get on with it?
  Mr. Tomlinson: Any possible extension to the airport enabling larger aeroplanes to land would need the provision of large terminal buildings and of more sophisticated equipment and manpower and would increase the recurrent costs. These are matters which will be subject to consideration at the appropriate time.
  Mr. Tapsell: Concerning the fisheries aspect of the question, is the British

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  delegation at the third United Nations Law of the Sea Conference, currently in session in New York, actively safeguarding the fishing and mineral interests of South Georgia and the South Sandwich Islands, as well as the Falkland Islands?
  Mr. Tomlinson: That does not directly relate to this Question. If the hon. Gentleman will table a separate Question or write to me about it, I shall certainly deal specifically with that, but at the moment—
  Mr. Tapsell: The Question mentions fishing.
  Mr. Tomlinson: If the hon. Member is so insistent upon hearing his own voice for a second time without listening to the reply, so be it, but the detailed question does not arise. If he wants a detailed reply, he can have it. In more general terms, the Falkland Islands do not have the requisite manpower or the infrastructure to develop an offshore fishing industry.
  Mr. Faulds: Will my hon. Friend accept that a goodly number of us on the Government side very much endorse the animadversions of the hon. Member for Essex, South-East (Sir B. Braine)?
  Mr. Tomlinson: In my ignorance, I am not quite sure what my hon. Friend the Member for Warley, East (Mr. Faulds) was saying. I am sure that I have some company in the House in that respect. The answer I gave quite clearly said that
  "Major economic developments, including tourism and fisheries, can be undertaken only within the framework of economic co-operation with Argentina".
  Sir B. Braine: On a point of order. Mr. Speaker. In view of the unsatisfactory nature of the replies received, particularly the very last one, I beg to give notice that I shall raise this matter on the Adjournment at the earliest opportunity.

EUROPEAN COMMUNITY (COUNCIL OF MINISTERS MEETINGS)
The Minister of State, Foreign and Commonwealth Office (Mr. Frank Judd): With your permission, Mr. Speaker, I will make a statement about business to be taken in the Council of Ministers of the European Community during July, the first month of the Belgian Presidency. The monthly forecast for July was deposited on 22nd June.
At present four meetings of the Council of Ministers are proposed for July. Finance Ministers will meet on the 18th; Agriculture Ministers on the 18th and 19th; Budget Ministers on the 20th; and Foreign Ministers on the 25th and 26th July, or possibly only on the 26th July.
At the Finance Council, Ministers will have their second quarterly examination of the economic situation in the Community.
Agriculture Ministers will be considering fisheries matters, together with proposals for a potato régime, the labelling of milk products and aid for producer groups.
At the Budget Council, Ministers will establish the draft Community Budget for 1978.
Foreign Affairs Ministers will discuss the outcome of the European Council on 29th and 30th June, relations with Spain, Cyprus and Malta, the accession negotiations with Greece and possibly fisheries matters.
Mr. John Davies: I thank the Minister of State for his statement. I have several questions to put to him.
First, will it be the meeting of Finance Ministers or that of Budget Ministers which will deal with the very critical question of the conversion rate used from units of account to sterling for the purpose of the budget?
Secondly, concerning the two meetings which will deal with fisheries matters, are we right in supposing that there is now some intention on the part of the Government to abandon their stand on the up-to-50-miles limit and to adopt a different system, a quota system, in their

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discussions of these matters, which would be against the generally expressed wish of the House?
Thirdly, we had understood from the European Council report that Foreign Ministers would be seeking to find a solution to the very important and as yet frustrated issue concerning the Joint European Torus. The Minister's statement makes no mention of that. Will he assure us that that matter will not be left aside?
Finally, I assure the Minister that, even for those of us who believe very deeply in the future of the Community, the essential need to re-characterise our well-known ice cream as something else does not seem to us to justify the great effort that the Commission might make.
Mr. Judd: I thank the right hon. Gentleman for the spirit of his questions.
The Finance Ministers have the European unit of account well on board.
Our policy on fisheries at future meetings will be as set out clearly by my right hon. Friend in the context of the debate on 23rd June.
The position relating to JET is, of course, well known. The Government are very anxious to have JET at Culham. This has remained our position consistently for some time now. We believe that it is high time that we had a European institution in this country. This is an ideal opportunity. The Prime Ministers have charged the Foreign Ministers with the task of continuing discussions on this at the next Council of Foreign Ministers.
I know the strength of feeling on both sides of the House concerning our ice cream. That is an issue which we are pursuing vigorously.
Mr. Thorpe: Will the hon. Gentleman say whether we may expect a further initiative to be taken in regard to the Middle East, following the Council declaration in that regard?
Will the hon. Gentleman say a little more about JET? Are there further technical matters which are required to be ascertained, or is it merely a political agreement?
On a minor domestic matter, some of us think that it would be rather more
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honest if ice cream were ice cream and not filthy vegetable fat masquerading under that name.
Mr. Judd: The right hon. Gentleman is entitled to his views on ice cream. Some of us have a degree of personal sympathy with what he said, but there is a great deal of feeling in this country about British ice cream and the traditions of it, and we shall make sure that these are not thrown lightly aside.
The right hon. Gentleman will agree that one statement at a time on such a sensitive issue as the Middle East is right. It was a significant statement. Time should be taken to digest it, to let the parties concerned consider what is at stake and also what is the position of the Community. The Community constantly monitors this situation carefully. It is not only of concern to the people of the Middle East but has implications for the international community as a whole.
There are two elements in the JET problem. One is a Community management problem. We believe that the management arrangements for JET should reflect the fact that it is genuinely a Community enterprise. There is also the more political issue of where it is to be situated, and this is the issue with which we are principally grappling.
Mr. Spearing: Does my hon. Friend recall that on Friday 24th June the House debated Regulation No. 2655 of 1976 concerning the harmonisation of rules for immigrant workers? Can he tell the House whether this will be discussed at the Council next month, if it has not already been discussed, and whether this will be reported back to the House?
Mr. Judd: The position of immigrant workers is constantly before the Council of Ministers and it is something that we shall continue to watch carefully. I am able to tell my hon. Friend that agreement was reached at the meeting of the Council of Ministers on social affairs on 28th June with regard to the directive on the education of migrant workers' children. This will assist the free movement of workers within the Community by providing for the special educational needs of their children.
Mr. Dykes: Now that the presidency of the Council of Ministers is in more

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capable hands than the British Labour Government, does the Minister think that in the next six months there will be a new economic impetus particularly for the reinforcement of economic policy guidelines? What has happened to the proposal to form a European export bank?
Mr. Judd: As I have just said, Finance Ministers will be continuing their discussion this month and will be looking at the forthcoming budget. With regard to the first part of the hon. Gentleman's question, I am bound to say that if he reads all the commentary—and there has been a great deal of it in recent weeks—one continuing theme time and time again is about the professional efficiency with which the presidency was handled.
Mr. Crawford: Leaving out the sellout of the Scottish fishing industry by the Conservative Party, may I ask the Minister whether the Council of Ministers will be discussing the Community's new approach to the regional fund? If so, can the Government spell out precisely what the net gain will be for Scotland?
Mr. Judd: This will be a matter which continues to receive careful attention.
Mr. Greville Janner: What steps will be taken to review the meetings going on at Belgrade at the moment concerning the attitude of the Nine with regard to the Helsinki Agreement? Will my hon. Friend confirm that there can be no question of our delegation agreeing to the meetings taking place in October until there is a clear and full discussion on the implementation of the Helsinki Agreement thus far?
Mr. Judd: I can assure my hon. Friend that the Nine have been putting a great deal of effort and time into coordinating their position and are determined to approach these talks with as much common ground as possible between them. We ourselves are not interested in charades at the Belgrade talks. We are interested in some probing of what progress has been made towards the fulfilment of what was agreed at Helsinki.
Mr. Biffen: In view of the recent European Court decision to disallow the quota marking of broiler chickens, is it the view
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of the Minister that the British Government will be able to secure a revision of the Potato Marketing Board, with its existing powers, at the meeting of the Agriculture Ministers on 18th and 19th July?
Mr. Judd: I can assure the hon. Gentleman that there is no immediate prospect of the demise of the Potato Marketing Board. This is something on which we shall have to await the decisions about the whole potato régime, which are still not yet finalised.
Mr. Arthur Latham: Will my hon. Friend clarify his reference to potatoes, because it is a matter which is leading the British housewife to believe that Brussels will now be responsible for potato supplies?
Mr. Judd: It is certainly our intention that whatever emerges as an EEC potato régime will preserve all that is best in our own approach and policy towards potatoes.
Several Hon. Members rose—
Mr. Speaker: I propose to call those hon. Members who have been standing and also the Opposition Front Bench spokesman, if he wishes, at the end.
Mr. Forman: With regard to the meeting on 25th and 26th July, what reason is there to suppose that the Foreign Ministers will be able to reach agreement on this most important matter of JET any more easily or speedily than the Heads of Government? Secondly, will the Foreign Ministers be looking into the proposal of Roy Jenkins to set up slightly modified institutional arrangements in the Community to cope with an enlarged Community?
Mr. Judd: We were determined to try to reach a Community solution to the JET project. But, as we have made very plain, the British Government believe that we have a strong claim for JET in this country. There are other countries in the Community with more than one EEC institution already established. We do not have one.
It is not a matter of seeking one to come here. If we did not have the project here it would remove the one already established in embryo. That is the basis

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on which we are going into the discussions. With regard to enlargement, this is one of the problems that we shall be discussing over the months ahead, but the British Government's general attitude towards enlargement and the importance of underwriting and strengthening democracy in this process is well understood.
Mr. George Gardiner: Will there be any opportunity in July for the member Governments to review their commitment to holding direct elections to the European Assembly in May or June next year, since it is becoming increasingly obvious that the United Kingdom will not be able to meet this deadline, whichever system in the Bill dealing with European Assembly elections is approved?
Mr. Judd: Not for the first time, the hon. Gentleman must speak for himself. With regard to the general position, as my right hon. Friend the Prime Minister made very clear after the recent meeting of Prime Ministers, we seem to be as well advanced as most other members of the Community.
Mr. Watt: When the budget is being discussed in the Council of Ministers, will the Government point out that their contribution to the budget is grossly excessive and that unless and until the CAP is greatly revised this money will be largely wasted?
Mr. Judd: The hon. Gentleman will recognise that on a number of occasions I have made quite clear what our position is with regard to the CAP and with regard to the need for reform.
Mr. John Davies: Can the Minister clarify his remarks on potatoes? He left us with the unhappy impression that as the discussions evolve he would be perfectly prepared to jettison the Potato Marketing Board. That would be a very dangerous situation for this House to accept.
Mr. Judd: As someone who regards himself as a connoisseur of potatoes, no one has greater respect for the Board than I have. I can assure the right hon. Gentleman that we shall not lightly cast aside the distinguished rôle of this important British institution.

ORDERS OF THE DAY
  SUPPLY
  [26 th ALLOTTED DAY]—considered

  PRIME MINISTER (SALARY)
  3.47 p.m.
  Mr. Donald Stewart: I beg to move
  That the salary of the Prime Minister be reduced by half.
  Mr. Speaker: I have not selected the amendment in the name of the hon. Member for Liverpool, West Derby (Mr. Ogden).
  Mr. Stewart: It is an interesting fact—perhaps not inappropriate—that the debate is being held on Independence Day—American Independence Day. Despite the opposition of Lord North, George III and others, the American colonies achieved their independence, as Scotland assuredly will, despite the spiritual heirs of Lord North in this House.
  The Declaration of Independence speaks of Governments
  "deriving their just powers from the consent of the governed."
  This debate concerns a Government abusing their unjust powers, with the dissent of the governed.
  My remarks will be confined mainly to the Scottish situation. That does not imply that the Government have acted in an acceptable way in Wales, England or Northern Ireland. I have no doubt that other hon. Members will be bringing that to the attention of the Government. Nor does it imply that we on the SNP Bench expect a Tory Government to be any improvement. It is extremely difficult to attack their policies. As Churchill said in another connection, they are
  "a riddle, wrapped in mystery, inside an enigma."
  The manifesto of the right hon. Lady the Leader of the Conservative Opposition appears to be simply "Won't you please buy my pig in a poke?" I shall say no more about the Conservative Party because today I want to fight on one front. I do not want any of the reserve troops deserting.

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  I turn first to devolution and to the legislative Assembly to which the Labour Party in October 1974 promised to give
  "high priority in the next Parliament."
  It is true that we did have a Bill of sorts. On the guillotine motion, the Government exposed their lack of real concern. That has not gone unnoticed in Scotland. Nor has the fact that although Scottish MPs, or hon. Members from Scottish constituencies, voted two to one for the guillotine, that expression of opinion counted for absolutely nothing.
  In 1974 the Tories said,
  "Devolution can free Scotland from the frustrations of centralisation."
  To show their attachment to that principle, they have just merged their Scottish organisation with the English one.
  What is this Government's record on social welfare? According to the—[Interruption.] The hon. Member for Watford (Mr. Tuck) is in a hurry to deliver one of his carefully prepared and usually damp squibs. I have not said anything really controversial so far.
  According to the report of the National Children's Bureau, Scotland has the highest proportion of disadvantaged children in Britain—five times the ratio of disadvantaged children in the South-East of England. In the words of the report, they are
  "doomed to become failures from the day of their birth"
  because of overcrowded or deprived homes, parents with low incomes, and so on. What has Labour's rhetoric on compassion and caring done about that? Incidentally, what has happened to the £120 million announced to deal with deprived areas in Glasgow?
  At the other end of the scale, we have the old people. Age Concern in Scotland has campaigned, so far without success, for an increase in the funeral grant. The average funeral in Scotland now costs about £120. The Government's contribution remains at £30. [Interruption.] Government supporters may think that that is a laughing matter. It is not a laughing matter for many people in Scotland who cannot meet these expenses, especially under this Government. Where is the trumpeted concern for old people in that fact? The position is not helped by rising prices, reduced living standards and a pound in
  892
  the pocket which has shrunk to 50p since this Government came to office.
  As for education, recently the Secretary of State for Scotland produced a paper proposing widespread and catastrophic cuts in training colleges in Scotland. Following very strong opposition from all parties in Scotland, including some members of his own party, the right hon. Gentleman has been obliged to reduce the extent of the mutilation of Scotland's education system.
  It has been pointed out in the past that education is not a function, like roads which can be halted for 10 years and then resumed. In that period, a large section will have been deprived of educational opportunity, to the permanent loss of society and themselves.
  A week or two back, the Child Poverty Action Group reported that younger children were missing lessons because their parents could not afford to buy them school uniforms. In some authorities, the average grant is £9 a year, which is a ludicrously inadequate figure. The same report stated that 16-to-18-year olds were forced to leave school because their parents failed to get adequate help with the cost of maintaining them at school.
  The March figures show that 580 teachers are registered at unemployment exchanges in Scotland. The Government, like their predecessors, induced people to go into the teaching profession, even asking people of mature age to leave their jobs to become teachers. Therefore, they have a moral obligation to see that these people are not left on the dole.
  What is the Government's record on transport? I deal with this briefly because I hope that one of my hon. Friends will be fortunate enough, Mr. Speaker, to catch your eye in order to spell it out in detail. The recent transport document is a severe blow to Scotland. It is geared to the English dimension. I refer only to two items in that document which affect my constituency. Paragraph 161 says:
  "In Scotland air services are an important basic means of communication, particularly to and from the islands."
  That is very true. What have the Government done to live up to that sentiment? They have permitted British Airways to charge £116 to fly from Stornaway to London, although it will fly anyone to

  893
  Athens for £85. They have permitted British Airways to increase charges on flights from Stornaway and Benbecula to the south by a third inside one year, so its aircraft are flying with 50 per cent. of their seats empty.
  It was a great relief in Scotland that the proposed 5½p tax on petrol had to be scrapped. However, it should be noted that the Government promised to withdraw it in time for the holidays. That covers the English holidays, but it is too late for the school holidays in Scotland. The rejection of road equivalent tariff is a severe blow to the Scottish Islands, which are as entitled to economic transport costs as any other part of the United Kingdom.
  I turn now to the area of the greatest betrayal—unemployment.
  "Back to work with Labour".
  What a sick joke that is now. There were no reservations or caveats when that slogan was produced. There was no suggestion then that unemployment was a worldwide phenomenon.
  Scottish unemployment has been rising steadily during the lifetime of this Gov ernment. In June 1974, 77,900 men and women were unemployed. That figure represents 3·6 per cent. of the working population. By June 1976, the figure had risen to about 144,000 or 6·6 per cent. of the working population. By June 1977, last month, the figure had risen to 186,000, or 8·6 per cent. of the working population. That was an all-time peak and an increase of about 22,000 on the previous month. It is, in fact, the worst figure since the 1930s. There are young people today who are experiencing a situation unknown in Scotland since their grandfathers' time in the 1930s.
  The prospect for school leavers is desperate. There are 24,997 of them unemployed and only 1,574 jobs notified to careers officers. Youth unemployment is particularly severe in Scotland, and 13·3 per cent. of Scottish unemployed are teenagers, compared with a figure of 9 per cent. for the United Kingdom as a whole.
  Mr. James Kirkwood, Assistant General Secretary of the STUC, said recently:
  "The fact that 24,997 school leavers are unemployed in Scotland is a sad reflection
  894
  on the importance society attaches to the needs and aspirations of the country's future."
  The sad reflection is on this Government
  The previous Secretary of State for Scotland, the right hon. Member for Kil-marnock (Mr. Ross), said that a holder of that office should leave it when unemployment reached 100,000.
  Mr. William Ross: Will the right hon. Gentleman tell me when I said that? I have no recollection of saying it at any time during the period when I was Secretary of State.
  Mr. Stewart: The right hon. Gentleman told his Conservative counterpart in a debate that he should be ashamed and should demit his office if unemployment reached 100,000. [Interruption.] The right hon. Gentleman has heard this said on many occasions in this House, and I have never heard him repudiate it before.
  Mr. Ernest G. Perry: Give us the reference to the quotation.
  Mr. Stewart: I cannot keep that sort of information in my head. But I have no doubt about it. The right hon. Gentleman said that a Secretary of State should leave office if unemployment reached 100,000. However, when unemployment reached that figure, he did not leave office.
  Mr. William Ross: The right hon. Gentleman has just said that when I was Secretary of State I made a certain remark. I want him to tell us when I said it and whether he will repeat the words that I used.
  Mr. Stewart: The right hon. Gentleman charged his counterpart in the Conservative Government with failure to leave office when the figure reached 100,000.
  Mr. William Ross: When?
  Mr. Stewart: It is a well-publicised statement, and it has never been repudiated by the right hon. Gentleman until today.
  It is totally unacceptable to put forward the excuse that unemployment is a worldwide phenomenon. The facts are that in April, when unemployment in Scotland was running at 7·4 per cent., in Sweden it was 1·7 per cent.—
  Mr. Malcolm Rifkind: And in Ireland?
  Mr. Stewart: In Japan, it was 1·8 per per cent.—
  Mr. Rifkind: And in Ireland?
  Mr. Stewart: In Norway, it was 1·5 per cent.—
  Mr. Rifkind: And in Ireland?
  Mr. Stewart: In Switzerland, it was too small to be counted.
  Mr. Rifkind: The right hon. Gentleman is correctly referring to the unemployment figures of a number of other countries. Can he give us the present unemployment rate in the one country of the British Isles which has been completely independent for the last 50 years?
  Mr. Stewart: I was making the case—and I think that I have proved my point—that unemployment was not a worldwide phenomenon. I stand by that. I do not want to be too difficult with the hon. Member for Edinburgh, Pentlands (Mr. Rifkind). As I said earlier, I do not want any of the reserve troops to fall by the wayside.
  I am especially bitter about unemployment because my constituency with an unemployment level in the region of 15 per cent., should be a test case with this Government. An hon. Friend of the Secretary of State said, after he returned from my constituency with a Select Committee a few days ago,
  "These islands have been neglected by successive Governments."
  Vague replies about plans by the Highlands and Islands Development Board and the job creation schemes will not do. What we require are permanent job creation schemes for the Western Isles and for Scotland as a whole.
  All that deprivation is totally unnecessary in Scotland. It is a nation that can ensure the basic foodstuffs for its own people. It is a nation that, from one industry alone—I know that the hon. Members will find this funny—has produced over £100 million every day in 1976 from whisky for the British Exchequer. It is a nation whose trade deficit is small.
  896
  A project carried out by the Scottish Council Research Institute, the Fraser of Allender Institute, and the IBM scientific centre, shows that the deficit on the Scottish balance of trade was running at only £253 million in 1973—less than half the figure accepted by Ministers in their arguments against the case for Scottish independence. The United Kingdom visible trade deficit in the same year was £2,332 million.
  Scotland is a nation of vast oil resources. The Prime Minister bases his optimistic future on oil. I want to say seriously that he should not depend too much on oil. He cannot blind the Scottish people to the enormous resources from their own area and at the same time tell them that there are no finances to do the things that are so urgently required in Scotland.
  It will not go unnoticed that these enormous resources, leaving aside the question of ownership, are in the Scottish sector or the North Sea, by the British Government's own designation. At the same time Government spokesmen are telling us, when we are putting forward all these deprivations in Scotland, that the funds do not exist. That bluff cannot be continued indefinitely.
  Therefore, we charge the Government with failure and neglect on education, on the devolution Bill, on social welfare, on transport, on unemployment, and on falling living standards. They ought to be getting the message by now.
  In the 1974 Election the Labour Party lost 10 deposits in Scotland—more than it had lost in the whole of the United Kingdom at any election since 1935. The recent by-elections and opinion polls all point the message to the Government. Their heads are in the sand.
  Mr. Norman Buchan: Craigentinny.
  Mr. Stewart: The hon. Member talks about Craigentinny. To point to Craigentinny as the sign of the road back makes building bricks without straw a fairly rational occupation.
  The Government's head is in the sand, and the Government have an appalling obtuseness that keeps their heads in the sand when their behinds are being so frequently and so heartily kicked. On

  897
  previous occasions in the House, Governments have been told that they have been sat there too long for any good they have done. Let the House complete the message tonight.
  4.5 p.m.
  The Secretary of Stale for Scotland (Mr. Bruce Millan): One of the few things that the right hon. Member for Western Isles (Mr. Stewart) did not mention was the salary of the Prime Minister. He covered a fairly wide area, although whether we had anything new from him I would very much doubt, because what we had from him seemed to me to be a rather tired recital of the normal stuff that we get slightly less distilled in a series of speeches from members of the Scottish National Party.
  I want to pick up at least one or two of the points that the right hon. Gentleman mentioned. This is a rather extraordinary debate, because the way in which the motion has been tabled is such that it is presumably intended to be some kind of motion of censure on the Government. I suppose that that is the reason for the extraordinary decision, as I understand it, of the Conservative Party to go into the Lobby with the SNP at the end of the debate. I hope that, having listened to the speech of the right hon. Gentleman, the Tories feel pleased with themselves.
  Another extraordinary feature of the debate is, as I understand it, that the hon. Member for Argyll (Mr. MacCormick) is to wind up for the SNP, but he does not happen to be here.
  Mr. Hamish Watt: If the Prime Minister and the Secretary of State for Scotland were running affairs better, perhaps British Airways would be running their shuttle service more regularly and the hon. Member for Argyll (Mr. MacCormick) could get here more expeditiously.
  Mr. Millan: I understand that the competence of the hon. Member for Argyll to run the country does not extend to getting here at the start of the debate. [Interruption.] It would help considerably—[Interruption.]
  Mr. Speaker: Order. The exchange of compliments from a sedentary position is not helping the debate at all. It will ruin it.
  Mr. Millan: It would help if we were to know who is to wind up the debate for the SNP and Welsh nationalist party, because it is an extraordinary situation as well that apparently the debate was to be opened and wound up by the SNP with the Welsh nationalists nowhere.
  I should have thought that the SNP, whose members normally complain about small parties and small nations being badly treated, might have allowed the Welsh nationalists to wind up tonight. I do not know why the Welsh nationalists are being treated in this disgraceful way.
  Despite that, whoever winds up for the motley collection opposite tonight, it is the intention that my right hon. and learned Friend the Secretary of State for Wales will wind up from the Government Front Bench because we took this debate as a matter of some seriousness, although that might have been a mistake on our part.
  I want to say something about the economic situation and unemployment particularly as it affects Scotland, because that is a very serious matter. The right hon. Gentleman mentioned a number of other matters. I do not intend to cover them all, but perhaps I should say something about one matter that he mentioned, which concerns teaching. We have had a debate on Scottish teaching and the teacher supply position on a number of occasions in recent months. I will not cover the whole of the ground because we shall be discussing this matter also during one of the Scottish Estimates debates. I should like to give a couple of figures to demonstrate the absolute absurdity of the assertions that were made by the right hon. Gentleman.
  For example, I will give the number of teachers and lecturers in Scottish education in March 1977, which are the latest figures we have, compared with March 1976. I think that it is on the basis of full-time equivalents. The figure has increased from 62,600 to 63,900. In other words, there has been a substantial increase over the past year despite the fact that there is a strong assertion that the numbers have fallen. The numbers have risen considerably over the past year.
  I would also like to give figures for the pupil-teacher ratio because, again, the right hon. Gentleman would have

  899
  us believe that the figures have deteriorated in the past year or so. That is not true. In the September 1976 school census, the pupil-teacher ratios in Scotland were 22·4 in primary and 14·7 in secondary schools. Those were the best figures we have ever had. Incidentally, if I make the English comparison to this mixed audience of Scottish, Welsh and English Members, the fact is that the figures of 22·4 and 14·7 for primary and secondary respectively compare with figures of 23·9 and 17 in England. Therefore, the Scottish position is, in fact, considerably better than that south of the Border.
  Mrs. Margaret Bain: Could the Secretary of State tell us when he intends to reach a conclusion on his deliberations about the money that should be spent on deprived areas to improve the pupil-teacher complement? All educational authorities in Scotland do not accept that the pupil-teacher ratio there is the best guide. This was reiterated in a letter that was sent to me today from the NAS and the NWT.
  Mr. Millan: I am considering that, but at the same time I must answer some of the wilder assertions made about Scottish education by the right hon. Member for Western Isles and some of his colleagues. He consistently suggests that everything is deteriorating and that the teacher supply position is disastrous. That is not true at all. It is better than ever before and the figures compare favourably with those for the rest of the British Isles.
  Mr. Perry: They are better.
  Mr. Speaker: May I ask the hon. Member for Battersea, South (Mr. Perry) to restrain his enthusiasm. He should let the Minister do his best.
  Mr. Millan: I am trying to do so, but I am grateful for help, Mr. Speaker, from whatever quarter it comes.
  It is true that one of the problems with which we are dealing at present is that the world economic situation presents difficulties. The right hon. Gentleman quoted certain unemployment figures, but when he was asked to quote other comparisons with other countries, he did not do so. The Scottish seasonally adjusted figure which, in June, was 7·7 per cent., is far too high. But it compares with, for
  900
  example, Belgium where the figure is 9·4 per cent; Denmark with 11·2 per cent; and Ireland, where in January the figure was 12 per cent.—considerably higher than either the Scottish or the United Kingdom figures as a whole.
  These figures are a reflection of a number of things, particularly the very difficult world economic situation that we have had over the past two or three years.
  Mr. Eric S. Heffer: As this is Independence Day, will the Secretary of State give the figures for the United States? Its unemployment figures are much higher than those in Britain at present.
  Mr. Millan: I do not have the figures offhand but what my hon. Friend says is absolutely true. We have been dealing with a world situation of considerable seriousness. If one looks at Scotand—and my right hon. Friend the Secretary of State for Wales will speak for that country later—one sees that in recent years we have been very much more successful. We have had a relative improvement in the Scottish economy. The average earnings of male manual workers in Scotland exceeded those in the United Kingdom as a whole for the first time in 1975 and then again in 1976. It is absolute nonsense to pretend that the Scottish situation is, in all these matters, so much worse than that of the rest of the United Kingdom. That is simply not true.
  The Government are very concerned about the present level of unemployment. I have never disguised my view that it is unacceptably high. The figure for the month of June, in particular, was disappointing. It was very much affected by the influx of summer school leavers, who leave school rather earlier in Scotland than they used to do. But the figures would have been very much worse had it not been for the special measures that the Government have introduced to alleviate the worst experiences of those—particularly young people—who are unable to get jobs in the present difficult time. At present, about 320,000 people are being assisted by these schemes, including 44,000 in Scotland.
  Of course, there is no substitute for a permanent productive job, but at a time when we have been going through deep world recession, it takes time for economic policies, aided by regional policies,

  901
  to have their effect in the creation of new job opportunities. That is why we must act now to try to combat the worst effects of the situation. Against that background I am sure that people in Scotland, especially parents of young school leavers, will welcome the imaginative scheme announced last week by the Secretary of State for Employment which will provide an integrated programme of work preparation, work experience and training for young people who are at present unable to get jobs. With a target of 130,000 places by September 1978, it will double the places provided under the existing programmes for helping young people.
  On adult unemployment, particularly the young adults or those over 25 who have been out of work for a year or more, the introduction from 1st April of the special temporary employment programme, to provide 25,000 places in areas with severe problems, also will be welcomed in Scotland. I hope that these measures ably demonstrate the Government's concern—shared in all quarters of this House—about the plight of the unemployed in Scotland and in other areas of high unemployment. Naturally, we shall press on as fast as we can with these measures, recognising that they are important in the present situation but also recognising that we wish to have a situation as soon as possible where we can rely on the general state of the economy to provide additional jobs rather than relying on temporary measures.
  We must recognise that there are certain elements in the unemployment situation at present—particularly youth unemployment—which show signs of structural unemployment. I believe that some of the measures we have taken that were announced last week are more than temporary. We shall need elements of special effort of this kind on a permanent basis to deal with the serious problems.
  Mr. Douglas Henderson: To come back to the point of the unemployment rates, those quoted by the Secretary of State were in countries that are members of the EEC. Those quoted by my right hon. Friend were in countries that are not in the Common Market. In terms of unemployment, what benefit has it been to Scotland to be a member of the EEC?
  Mr. Millan: I thought that the Scottish National Party had decided that the United Kingdom should stay in the Common Market.
  Mr. Robert Mellish: As a very humble Englishman, may I have either an affirmation or denial whether the SNP believes that we should stay in the Common Market? This is a very relevant argument.
  Mr. Millan: I believe that there is more than one point of view about the Common Market on the SNP Bench.
  It is part of the Government's efforts to reduce unemployment, and, within that, to give priority to industrial strategy. There are a number of figures which I shall quote to illustrate the way in which Scotland has benefited from this strategy in recent years. In the new sectoral schemes of assistance under Section 8 of the Industry Act, Scottish firms have been obtaining their share. For example, grants of more than £5 million were paid to 23 Scottish firms under the ferrous foundry schemes. This is on top of the additional funds announced for the SDA and the continuing high level of expenditure on regional development grants—£108 million has been spent in Scotland in 1976–77 and selective assistance to industry under the Industry Act—about £20 million paid in interest relief grants in 1976–77.
  Scotland is continuing to attract important developments by overseas companies. Within recent months we have had the new project announced by Cummins at Shotts; there has been the opening of a new plant by Polaroid at the Vale of Leven; and within the last week JLG Industries has announced plans for a new and substantial project at Cumbernauld.
  These firms have been attracted by the availability of suitable factories and selective assistance from my Department. But there is also a good deal of evidence of continuing confidence in many parts of the industrial structure in Scotland in indigenous firms and this shows confidence in Scotland's industrial future. I should mention in this context Ferranti of Edinburgh which has engendered an additional 1,200 jobs, and Nairn Floors at Kirkcaldy, a large project which has also provided an additional number of jobs. Therefore, there is considerable evidence of increased confidence in the Scottish economy

  903
  I should like to mention the CBI industrial trend survey in April which produced the most optimistic figure of costs in terms of industrial investment in Scotland we have had since October 1973.
  Regional policies have continued to improve, witness the increases in assistance in special development areas in respect of improvements in interest relief, grants and rent-free factories announced by my right hon. Friend the Secretary of State for Industry on Monday of last week. Perhaps I should also mention that the Scottish Development Agency, in the 18 months of its existence, has had a creditable record of success. In industrial investment the agency has announced the expenditure of over £8 million in companies whose activities range from knitwear to domestic appliances. About 7,000 people are, or will be, employed in companies in which the SDA already has an interest. It has also announced three advanced factory programmes, and it has been involved in most of the major industrial developments in Scotland in the last year or 18 months.
  The right hon. Gentleman appeared to dismiss the important rôle; of the SDA in the Glasgow East End urban renewal project—a project the importance of which I should like to underline. It is a massive scheme which has received assistance from the SDA and the SSHA. That scheme is on a scale that is greater than anything we have in the rest of the United Kingdom.
  As for the SDA's total budget in the current year, we have budgeted for expenditure of over £66 million which will represent a considerable increase over last year. I am glad to say that I believe the SDA will show increasing success in the next few years.
  Mr. Alexander Fletcher: May I draw attention to what was said in Friday's Scottish Daily Record when its political reporter said that representatives of the SNP had visited the Scottish Development Agency and had been told by its chairman that he was very worried about the organisation's future and the fact that it might be centralised under the National Enterprise Board. Is there any foundation in that report?
  Mr. Millan: There is no foundation in that report. I have checked the matter, and the SDA is not worried in that
  904
  respect. There is no question of a takeover by the NEB, there never was, and I think there never will be in the life of this Government.
  Let me say a few words about the subject of North Sea oil, which was mentioned by the right hon. Gentleman. The situation is that in 1976 the United Kingdom consumed practically 90 million tons of oil, nearly all of which was imported at a net cost of £4,000 million on the visible trade account. This represents a staggering increase compared with only two to three years earlier. By 1980 we estimate that the annual savings to the visible trade account will amount to between £5,000 million and £6,000 million at estimated 1980 prices.
  The benefits to Scotland are apparent, and any hon. Member who visits Scotland can see the situation for himself. A total of 50,000 to 65,000 jobs have already been created directly or indirectly by the North Sea oil activities. It is particularly encouraging that many of these jobs have been created in areas of high technological development and geographically in areas of historic high unemployment. Therefore, it is absurd for anybody to claim, as the right hon. Gentleman constantly does, that there has been no benefit in Scotland from North Sea oil. There has been very substantial benefit from North Sea oil in terms of development in Scotland. The only thing that could prejudice that situation would be the adoption of SNP policy on North Sea oil. I understand that SNP members wish to phase down the production of North Sea oil so that it reaches a maximum of no more than 30 million to 40 million tons a year.
  Mr. Watt: Will the Minister give way?
  Mr. Millan: The hon. Gentleman is certainly not an authority on fish and, as far as I know, he is no authority on North Sea oil either. The effect of the SNP's policy would be an immediate loss of many thousands of jobs in Scotland. Incidentally, jobs provided by North Sea oil activities which have come to the Stornoway area, would under SNP policies almost certainly disappear very rapidly indeed.
  We can expect in future an increase in the number of jobs arising from North Sea oil, which has shown annually an

  905
  upward trend. We appreciate that whereas there is now a situation of comparative stability, it is important that we maintain employment at something like the present level in North Sea oil activities directly or indirectly in Scotland. This is why we have been encouraging industry to look abroad to where important markets exist for offshore oil equipment—for example, to South America and South-East Asia. The potential has already been illustrated by the recent winning of an order for Petrobras in Brazil, to be built by McDermott at Ardersier. We also have prospective developments in petrochemicals which in the longer term will have even greater significance for Scottish industry.
  On all these fronts there has been considerable advance in the last two or three years—advance which is well recognised by the people of Scotland. We intend to see that the advances of North Sea oil will be felt generally in Scotland, but there is nothing in the right hon. Gentleman's policy or in the SNP policy generally which will lead to anything other than what I believe could be potential industrial dereliction. The kind of destructive policies which the SNP have been proclaiming, whether on North Sea oil or on industry generally, would lead to a mass exodus of industrial development in Scotland.
  Mr. Watt: Does not the right hon. Gentleman admit that many regional and district councils have had to borrow over a 60-year period? Therefore, SNP policy involving a slow down in the amount of oil would at least last over the lifetime of that debt. Surely that is sound business by any standards.
  Mr. Millan: So far as what the hon. Gentleman says is intelligible, it demonstrates that SNP policy would lead to a massive loss of jobs in North Sea oil development in Scotland.
  Mr. Dennis Canavan: On the subject of oil and industrial strategy in general, will the Minister remind SNP Members that in this House they opposed the setting up of BNOC, they opposed the public enterprise rôle of the SDA and they also opposed public ownership of aircraft and shipbuilding—all of which were wanted by trade union-
  906
  ists because of the effect on the job situation in Scotland? In other words, by opposing those measures they voted against jobs for Scotland.
  Mr. Millan: I do not need to remind the House about those matters because my hon. Friend has done it for me. The record of the SNP on industrial development in Scotland is deplorable. It is not only in the area of North Sea oil but Chrysler as well, as my hon. Friend the Member for West Stirlingshire (Mr. Canavan) reminded us. At best the SNP has played an equivocal rôle. At worst it has voted in this House in a way detrimental to the maintenance and expansion of jobs in Scotland.
  I was drawing to a close. I wanted briefly to mention devolution. I repeat what has been said in this House: the Government are utterly determined to put a devolution proposal on the statute book. We intend to introduce legislation on devolution in the next Session of Parliament and to see that that legislation goes through in the next Session of Parliament. I want to state in the most categorical terms that that legislation will be an essential feature of the Government's programme for next Session. We intend to get that legislation on the statute book.
  We have a number of other policies that we also intend to get on the statute book. We intend to legislate for parts of the new housing strategy that I announced to the House last week. We have proposed legislation on a number of other matters that will more than keep Scottish Members busy during the next Session of Parliament.
  I repeat, the Government intend to get the devolution Bill through. We have a full programme of work for the next Session and we intend to continue to govern this country.
  On that basis, I ask the House to reject this ridiculous motion.
  4.32 p.m.
  Mr. Gwynfor Evans: This debate concerns the life of Scotland and of Wales. Therefore, I was surprised to hear the right hon. Gentleman the Secretary of State for Wales in his opening say that he did not know why he took the debate seriously. We have the best of reasons for taking debates of this kind seriously. Anything that concerns

  907
  and can help the future of Wales and of Scotland is of great importance to us.
  Today we find ourselves part of a State—sometimes called Britain, sometimes the United Kingdom—which is a multinational State. In recent years we have seen the Government of this State in something of a shambles. That is why we have proposed the reduction of the salary of the Prime Minister, who is now presiding over that situation.
  Britain is a unitary centralist State. Although it is responsible for the government of a group of nations, it has never developed into a truly multinational State.
  Two or three generations ago there was talk of home rule all round. That was supported by the Labour Party for a whole generation and it was also supported by the Liberal Party, but, when they had the opportunity of acting, they did nothing.
  The more the power of the State has increase, the greater the State has been centralised. That is doing the life of our countries the greatest harm in every respect.
  Policy decisions concerning the whole of Wales are made in Westminster or Whitehall, particularly by the bureaucratic section of the Government. No policy decisions are made in and for Wales by the elected representatives of Wales.
  Much power over Wales has now been transferred outside the United Kingdom altogether to Brussels, but none has been transferred to Wales where the Welsh Office administers London-made decisions.
  Behind these London-made decisions lies the powerful Civil Service in Whitehall. Its membership has grown since the disappearance of the Empire, but its nature has not changed. For the most part, its members are Oxbridge men and women who attended the same schools—Harrow, Winchester, Eton, Rugby and so on. About three-quarters of the members of the Civil Service in London attended those schools. They are tenaciously determined to cling to and to keep power in their hands in Whitehall. Those who want power transferred to the hands of the people of Wales and of Scotland have no more tenacious opponents than the civil servants in Whitehall. However much Governments may change in colour, this public school Mafia,
  908
  as it has been called, remains constantly in the background and, to a great extent, remains constantly in control.
  When we last debated the present and future of Scotland and Wales, two other European States could be associated with Britain as the last bastions of unitary centralism. They were France and Spain. But a few weeks ago the land of Franco's long dictatorship amazingly proved that it could become—and become in a peaceful way—a democracy. That would have been utterly unthinkable a couple of years ago. But now it is possible that the Catalans and the Basques will enjoy a measure of autonomy before the Scots and the Welsh.
  The results of the elections were extraordinary. I should like to quote from The Times of 20th June, which stated that
  "Basque congressmen and senators, elected in the general election, demanded the re-establishment of their autonomous government, which was suppressed by General Franco.
  More than 30 of the 42 congressmen and senators from the Basque country went to Guernica, the spiritual centre of the region, and swore allegiance to their traditional rights. …
  In the Basque country the Workers' Socialist Party won nine Congress seats; the Basque nationalist party eight; the Democratic Centre Union, seven; the Basque left, one; and the neo-Francoist Popular Alliance, one."
  Mr. Donald Anderson: Will the hon. Gentleman give way?
  Mr. Evans: When I have finished this point, I will give way to the hon. Gentleman.
  "In the Senate the autonomous Front, comprising the Workers' Socialist Party, the Basque nationalists and others won 10 seats and the Democratic Centre Union five. These results were an overwhelming victory for the movement in favour of autonomy. …
  In Catalonia, the other area with strong aspirations to autonomy, a similar move is taking place. The election results there, as in the Basque country, were a clear victory for the forces favouring autonomy. The Workers' Socialist Party, which formed an electoral pact with the Catalan Socialist Party specifically over autonomy, won 15 Congress seats. …
  In the Senate almost all of the 16 seats went to the parties favouring autonomy, including the Socialists."
  Mr. Anderson: The fundamental point that the hon. Gentleman misses is that the autonomous parties in Spain, whether the Catalan or Basque parties, are winning seats, whereas, at the last General

  909
  Election, over three-quarters of Plaid Cymra candidates lost their deposits. There lies the essential difference. In Spain they want autonomy; in Wales they have rejected it.
  Mr. Evans: The hon. Gentleman would not like to see Wales enjoying self-government even if my party won all 36 seats there. He opposes self-government for Wales on principle.
  Among the facts that emerge from the article that I quoted from The Times are, first, the strength of Basque and Catalan nationalism—
  Mr. Anderson: By contrast with the strength of the hon. Gentleman's party?
  Mr. Evans: Labour Members must wait until the next General Election. If they want to see what is happening they need only look at the happening they need only look at the results that our party has been achieving in local elections. It has won a higher proportion of the seats than our friends in the Scottish National Party in Scotland. We have done extremely well and we are making tremendous progress. Our position will be still further improved in the next General Election and the next round of local elections.
  A further point that emerges from the article that I quoted is the positive response of the Spanish Government to the demand for autonomy from the nations of the Basques and Catalans. A third point that emerges—which some Labour Members will not like—is the close liaison between nationalists and Socialists. Already in this context Spanish democracy is beginning to show signs of greater maturity than British democracy, but it is still very new and the power of the Army lurks in the background there.
  The influence of British leadership could be considerable. A swift advance of Scottish and Welsh autonomy could not fail but help Spain. It could have a profound effect on Europe in leading to a more flexible European order. Therefore the nationalism of Wales and Scotland must be seen not in a narrow British context, but against the background of Europe and the world.
  Mr. Robert Hughes: Am I right in thinking that the hon. Gentleman recently visited the conference of the Scottish National Party, where he swore eternal Celtic brotherhood in the fight against English imperialism? Does he not now feel nauseated that they then should have said to him "But watch it. No Welshman will get a halfpence worth of Scottish oil"?
  Mr. Evans: I do not think that that is a true representation of what our SNP friends have said. No doubt that point will be answered later in the debate.
  I repeat my point about the value of British leadership in Europe. Welsh and Scottish nationalism must be seen against a European and world background, and that is how Welsh and Scottish nationalists see themselves. A recent book of note by Tom Nairn says that
  "the Welsh national party is without doubt the least parochial or 'narrow nationalist' mass movement in British politics".
  It is true that we have always seen our country and our nationalism against a wider background than the background of these islands alone. But the move towards full national status for the small nations of these islands must start somewhere.
  Of the two parties which contend for Government status, the initiative can come only from the Labour Party. The Tories have opposed almost every advance that has been made—
  Mr. Gwilym Roberts: Irrespective of the views of individual Labour Members on devolution—I do not want the hon. Gentleman to dwell on that—he has stated that devolution can come only with a Labour Government. Can he explain for what conceivable reason he and his party voted with the Conservative Party on a vote of confidence to bring down the Government and to establish a Tory Government?
  Mr. Evans: That vote of confidence concerned the whole record of the Government, and nobody who knows the facts about Wales can express any confidence in a Government with such a record, although I shall not pretend that the alternative is any better.
  It is a matter of historical fact that the Tories have opposed almost every advance towards giving more power to

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  the people, from the Reform Act of 1832, past the Chartists and the story of Ireland, to the Welsh Radicals at the end of the nineteenth century, to disestablishment, and, in this century, their opposition even to a Secretary of State for Wales and the establishment of the Welsh Development Agency. The opposition of the Conservative Party now to any concession on self-government for Wales or Scotland is consistent with its historical reactionary opposition to more power for the people.
  Modern Welsh Conservatives are no more burdened with a sense of loyalty to Wales than were their fathers and forefathers. It is not that this loyalty has been eroded—it never existed. One is not surprised that they are as unaware of the long and fascinating past of Wales as they are unconcerned about ensuring a national future for Wales, and that they are strangers to the value of Welsh civilisation and to the quality of life that that represents. The chauvinist ethos of past British imperialism still dominates their attitude.
  Mr. Russell Johnston: In view of what the hon. Gentleman has been saying, very philosophically, about the present Conservative Party in Wales, will he give an opinion whether, in this circumstance, it is better for the Liberal Party to co-operate with the Government in seeking to establish a measure of self-government for Wales, or whether it is better for his party to co-operate with the Conservatives in seeking to prevent it?
  Mr. Evans: The best thing that can happen for the future of Wales is that Welsh nationalism should have a bigger representation in this House. That is why we should welcome an election as soon as possible, but we are not likely to have one very quickly.
  This attitude of the Conservatives did not matter so much when the State was weak and peripheral, but now the State has become dominant and almost all-powerful. It is now the nation which is peripheral, and as such its very life is threatened.
  That is what we in Wales are now fighting for—the life of the nation.
  Despite this, there is reason to think that a Tory Government led by the right hon. Lady the Leader of the Opposition
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  would provide the biggest boost that Welsh nationalism could possibly have. It would unite radicals and nationalists in Wales as they have never been united before, just as they are united now in the Basque country and amongst the Catalans.
  The choice for the Welsh people between Labour and Conservatives in Wales is like the choice between Scylla and Charybdis. It is seen not only in the history of unemployment, depopulation and migration from our country over generations, but in almost every aspect of our country's life today.
  I have asked a series of Questions which have adduced answers such as the following. The gross domestic product for England still far exceeds that for Wales. The estimated income and wealth per head is still considerably higher in England than in Wales. The activity rate for males in England is 81·6 per cent. and in Wales it is 78·5 per cent. For females in England the figure is 43·27 per cent. and for females in Wales it is 35·7 per cent. Hidden unemployment is thus worse in Wales than it is in England. Thirty-one per cent. of English schools were built wholly or partly before 1903. In Wales it is 37 per cent.
  The expectation of life is lower in Wales than in England. Expenditure on housing has been considerably lower per head of population in Wales than in England throughout the years. Information is available on this. According to a parliamentary answer given to me, about 5 per cent. of the total stock of housing in England is estimated to be unfit for use, while in Wales the figure is 10 per cent. Almost twice as much has been spent per mile on roads in England as on roads in Wales during recent decades. Again, according to the Answer that I was given a short while ago, £5,469,000 has been spent on civil aviation aerodromes in England and Scotland compared with £182,000 in Wales. In England more than 2,000 miles of railways are electrified while not a single mile of railway has been electrified in Wales. In Norway 58 per cent. of the railway track has been electrified and in Sweden the figure is 62 per cent.
  In spite of the situation that I have described, the Government have not yet devised an economic development plan for

  913
  Wales. Such a plan has not even been attempted. If one looks at cultural matters one finds that the Government know well that television is doing the most damage to the Welsh language today especially among children and young people. The Government have decided that Wales should have the use of the fourth television channel, and yet they are taking no action. However, in Western Germany the Government have set up an English television system for the British troops in recent years at a cost equivalent to that which would have to be spent on a Welsh television channel.
  In these circumstances, Wales urgently needs a Parliament of its own. Such a Parliament should be more than a strong voice. It should be a legislature with adequate economic powers. That has been demanded by the NUM, the Transport and General Workers Union and the Welsh TUC. Such a legislature would give Wales a place in all the institutions in Brussels. The people of Wales must become responsible for their own lives. We have a form of representative Government, but most colonies had a form of representative Government in the past. Our demand is for responsible Government and, just as each human being must have responsibility for his or her own life, so must a nation be responsible. Wales and Scotland are nations. That was recognised in the dead Scotland and Wales Bill and by the Kilbrandon Commission. What is needed, and is lacking, is the will to allow Scotland and Wales to act as nations.
  I must admit that we are sceptical about the Government's intentions—in spite of their declarations. If the Government yield to the demand for two Bills we shall take that as an indication that the Government are cynically playing for time. There has already been a delay of a year and if there is more delay there will be grave consequences for the economic, social and cultural life of Wales. There is reason to suspect that the Government will continue to play for time while the gallonage of oil flowing from off the shores of Scotland mounts by the million. The Government could even delay the measure long enough for it to be bogged down in the House of Lords. The Prime Minister might then decide that it was time for a General Election and would go
  914
  to the country saying that the Government had kept their word, had done their best, and had acted according to their manifesto promises. The Government would claim that it was the House of Lords that had held the measure back.
  It is not surprising that we are rather cynical about the Government's intentions because we have had long experience. We know what hapened to the home rule all round movement and what has happened since the early 1960's. It is since then that the Labour Party has decided that we must have an elected Assembly or Council. We know what has happened since the Crowther or Kilbrandon Commission has been sitting. We recall that during the last 25 years—while Wales has remained constitutionally in the same place—some 36 countries of the British Empire have received self-government The one thing that would encourage a sense of trust in the Government would be for them to introduce an early timetable motion for another Scotland and Wales Bill and for them to make that Bill an issue of confidence.
  4.55 p.m.
  Mr. Robert Mellish: I believe that I am right in saying that the hon. Member for Perth and East Perthshire (Mr. Crawford), who will reply to the debate for the Scottish National Party, has only just arrived and that he has therefore missed the two opening speeches of the debate by the so-called nationalist party leaders. The hon. Gentleman has not missed anything but a first-class comedy act.
  I cannot believe that this is supposed to be a censure motion. I wish that the procedures of the House were broadcast on television and radio so that people could see the performance of these two great leaders of the so-called great national parties and hear them orating. I never heard such rubbish. There was not a single mention of the Government's economic policies or of the national parties' alternatives. Instead there was an argument about whether the Government have introduced devolution plans
  One point that I have not heard mentioned is that if the motion were carried the Prime Minister's salary cut by half—and I assume that that is a motion of censure, because I know of nothing more terrifying—the Government resigned and

  915
  the Tories became the Government of the day, the nationalists would be further away from devolution than they ever have been in their lives. That is the stupidity of the argument. I much regret that those speeches were not broadcast so that decent Welsh and Scottish people could hear the stupidity that has been talked by Scottish and Welsh national party leaders and their supporters today.
  Mr. Douglas Crawford: I wonder whether my right hon. Friend took the point that was made by the hon. Member for Carmarthen (Mr. Evans). The hon. Gentleman said that he envisaged that if there were an election and a Government formed who were led by the present Leader of the Opposition, that would lead to the break-up of the United Kingdom. That is what the national parties were thinking of in tabling a censure motion.
  Mr. Mellish: That only goes to show how thick they are, does it not? Of course I heard the hon. Member for Carmarthen (Mr. Evans) mention that, and I understand it. I bitterly resent that the hon. Member for Carmarthen said that there are those of us in the House and in the country who are not multinational. I was born in London and have lived here all my life and I have news for the hon. Member for Carmarthen: we have more Welshmen and Scots in London than there are in Scotland and Wales. We Londoners have had to put up with something over the years. I understand that conditions in Scotland and Wales in past years under consecutive stinking lory Governments have driven these people south to obtain work and decent conditions. However, to say that we are not multinational—well! There is not a street in my constituency—
  Mr. Teddy Taylor Mr. Teddy Taylor (Glasgow, Cathcart) rose—
  Mr. Mellish: They were lousy, stinking Tory Governments.
  Mr. Teddy Taylor: Could the right hon. Member for Bermondsey (Mr. Mellish) tell me from his long memory of politics when under a Tory Government unemployment in Scotland was as high as it is today?
  Mr. Mellish: My memory goes back a considerable while. The poverty of
  916
  the 1930s should never be seen again in this country. The slogan of the Labour Party yesteryear was "Work or maintenance". At least the Government have carried out the promise of maintenance. Indeed, the argument today is not so much about unemployment as about the rate of unemployment benefit being as much as is received by those at work who are low paid and about that equality being removed.
  I have seen and lived through the poverty of yesteryear and I have seen the stinking record of Tory Governments. It was that which brought the Scots and the Welsh to London. The national parties are impertinent to talk against this Labour Government, knowing that their motion today could bring in a Tory Government and knowing the history of Tory Governments. The national parties would do that and claim that it was in the interest of the Welsh and the Scots.
  Mr. Crawford Mr. Crawford rose—
  Mr. Mellish: All right. But it had better be good.
  Mr. Crawford: I assure the right hon. Gentleman that it will be good. It matters not one jot or tittle what party is in control of this House. If the majority of people in Scotland and Wales vote for self-government, this House cannot gainsay them.
  Mr. Mellish: The hon. Gentleman can claim to know more about Scotland than I could ever hope to know. But I cannot believe that the intelligent, decent people who live in Scotland accept that as a simple statement and do not give a tuppenny damn whether there is a Labour or Tory Government in this House just because they are concerned only with self-government. I do not believe it; I cannot believe it. Certainly with the great traditions of the Welsh I would not take it from any Welshman on the Opposition side of the House that that is what is in their minds.
  I have said what I think about that lot on the Opposition Benches and on the nationalist Benches. I hope that the silly motion is defeated. It is not really worth discussing. However, we might as well talk about that as anything else, I suppose.

  917
  Now, may I talk about devolution as I see it as an ex-Chief Whip? I believe that the Government made a great mistake in introducing the devolution Bill without a timetable motion in this Session of Parliament. I know what was said—that it was asking too much to introduce the guillotine motion. I have always argued that with an issue of this kind there has to be a different form of timetable motion. It cannot be the one that we usually have, which says that certain parts of a Bill must be dealt with at a certain time, when the Chair will rise and the guillotine fall. That type of motion must be out. This is a great constitutional matter and a considerable amount of time must be given to it.
  Devolution involves changing the constitution of our country and therefore must be considered carefully. What type of guillotine motion are we talking about? I have always believed that we should say to my hon. Friends and Conservative Members who are anti-devolutionists "The Government are to bring in a devolution Bill." I never supported that principle, but once the Government brought in the Bill, I decided to support it on Second Reading and I would have supported a guillotine motion.
  Supposing that the next devolution Bill is introduced in November of this year, just after the Gracious Speech, I suggest that the Government say that the Bill will have a Third Reading on 3rd June 1978. On so great an issue it is important that we have the time to discuss it. The Government should say that on 3rd June 1978 the Chair will rise, irrespective of the state the Bill is in, and put the Question, "That the Bill be read the Third time." That is the sort of guillotine I would propose.
  There is no man or woman in the House who could deny that this issue is not worthy of a lengthy debate, whether they are for the Bill or against it, whether they are Londoners, like me, who are aghast at the thought of Scotland and Wales claiming more power than London, or regional Members. On a matter of this kind a lengthy period should be given for debate.
  I say to my right hon. and hon. Friends on the Government Front Bench "All right, you have had one try and
  918
  you have mucked it up. You have messed that right up. If you really believe you are to introduce another Bill, which will have to be in the Gracious Speech, and are hoping that, with a bit of luck, somehow it will work out all right, you are wasting your time unless you go for a guillotine." I have listened to many of the debates on devolution, although I have never taken part in any of them. I concede that there is a special case for a referendum in Wales and for a separate Bill for Wales. It may be that that is the way we should tackle the situation.
  I do not expect the Tories to be constructive about anything. They are concerned only with a General Election. They hope and pray, almost hourly, for such an event. The Leader of the Opposition is on her bended knees at night praying to her favourite saints, hoping that there will be a General Election soon in case the economic conditions improve and she does not get power.
  The lack of patriotism of that shower over there is incredible. They do not want the economic position to improve. The very thought that Britain will get out of its financial problems is a disaster for the Tory Party so much are the Tories concerned with power. Patriotism means nothing to that silly crowd.
  What the Scottish and Welsh nationalists do not understand is that the Tories are like—I was about to say "bugs in the bed" but I cannot say that. There will always be Tories with us, no matter what we do. I say to those who have tabled this motion "Watch your actions carefully if you want devolution. You will not get devolution by a change of Government or by silly motions and stupid speeches."
  5.5 p.m.
  Mr. Russell Johnston: It is an excellent thing that the nationalist parties in the House should have a whole day to raise the questions which they believe to be the most important. However grudgingly and insufficient is the recognition of the Labour and Conservative Parties that attitudes different from their own not only exist but are able to attract significant support among the electorate, any movement at all is welcome.
  This recognition is all the more a comment on the sluggish illogicality of the

  919
  situation when the Liberals, with about 5¼ million votes at the last election against about 1¼ million votes polled by the nationalists, receive only a half-day for debate compared with the nationalists' whole day. This is not a criticism of the nationalists. They might reasonably remark that our parity with them in Scottish Estimates is unreasonable. It is simply an observation that this Parliament is not very good, as an institution, at reacting quickly to political change. The two parties which are accustomed to take turns in Government have been rather slow to respond to democratic change as expressed in the ballot box.
  While I am still in the business of not criticising the nationalists, let me say that I do want to criticise their choice of motion. The hon. Member for Edinburgh, North (Mr. Fletcher), who has left the Chamber, quoted the Daily Record. May I take the opportunity to do likewise? After all, it has the greatest circulation in Scotland. Stewart MacLauchlan, the political columnist of that paper, suggested that it would have been better for the nationalists to concentrate specifically on unemployment, hoping in this way to win some support in the Division from unhappy Labour Members. I do not think that that would prove anything at all. We know perfectly well that there are Labour Members who are rightly unhappy about the unemployment situation, in precisely the same way as we in the Liberal Party are unhappy, and in the same way as those in the Tory and the nationalist parties are unhappy.
  It is old-fashioned to argue that somehow one group of people in politics is more concerned about unemployment than another. I do not argue that at all. If the nationalists have the opportunity of a day to present their case it is reasonable for them to adopt a general approach. I do not criticise that. Let me consider the motion. One could say that it is not exactly devastatingly original. It is obvious, if one does not see any way of working with a Government that one is unlikely to have much confidence in that Government and thus might sympathise with the idea of reducing the Prime Minister's salary.
  The important question is whether, under our system, which allows a Government to go on for five years, that Government is under an obligation, faced
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  with by-elections and opinion polls which are not very good, to go for a General Election. That is the argument with which we are faced and with which we are being presented day in and day out.
  It was not an argument that appeared to have a great effect upon the Conservative Government in 1962 and 1963, as I recall. I was an active candidate in the field at the time and, naturally enough, as all candidates in that situation did, I was calling for a General Election. The Conservatives were being hammered in the opinion polls and by-elections. They did not then take the view that this necessarily meant that they had some obligation to go to the country.
  It is a piece of absolute utter nonsense, not to mention humbug, to suggest that a Government unpopular in mid-term, operating within a constitution in which it is normally accepted that a Government can run for five years if they can maintain their majority in the House, have any moral obligation to call a General Election. That is humbug. There is no precedent for it and no justifiable argument to support it.
  Mr. Teddy Taylor: I take it from what the hon. Gentleman has said, with what might be some significance, that the Liberals are determined to keep the Government in power until the last possible moment for the full five-year term.
  Mr. Johnston: I ask the hon. Gentleman not to run on ahead of me—although that is not something that he often does, anyway. I shall come shortly to the matter that he has raised.
  Mr. Teddy Taylor: Tell me.
  Mr. Johnston: I should like to keep the hon. Gentleman in suspense.
  Mr. Teddy Taylor: I bet.
  Mr. Johnston: I am not a betting man at all, but if I were I would normally take bets that I would win.
  I return directly to the motion and the speech with which the right hon. Member for Western Isles (Mr. Stewart) introduced it. It is very important to disentangle the reality from the rhetoric. It is worth saying—and I am here being critical of the Labour Benches—that if at present we had a Tory Government—let us imagine that prospect—and if everything else was exactly the same, exactly the same

  921
  unemployment figures, the same deprivation figures that the right hon. Member for Western Isles quoted, the teacher surplus and the rest, the attacks made upon the Government by the right hon. Member for Western Isles would have been cheered by Labour Members. That is a fact, and we ought to remember that if we are to take any lesson out of the present situation and perhaps work out some better way of doing things.
  Mr. Bucban: I have been listening with great interest to the most serious contribution that we have had from the Opposition side of the House. However, with all due respect, I think that the hon. Gentleman is wrong in his last remark. We would not have welcomed a speech that suggested that the only unemployment with which we were concerned was Scottish unemployment, that the only transport problems with which we were concerned were Scottish problems and that the only children with whom we were concerned were Scottish children. On the contrary, we take a rather better view than that, as I think the hon. Gentleman accepts.
  Mr. Johnston: Let me put it another way. I am sure that the hon. Member for Renfrewshire, West (Mr. Buchan) will accept that if we were having a debate on the Scottish economy, with a Conservative Government in power, and speeches critical of the Government on these issues were being made, there would be rather less reticence on the Labour Benches.
  The Liberal view, which was determined in March when we entered a short-term agreement with the Government—which is now under further discussion—is that it is reasonable and rational in a Parliament in mid-term, following two General Elections in one year, to try to find agreement, if we can, about tackling the serious and difficult problems that the right hon. Member for Western Isles catalogued. That is our opinion. It is not an opinion which some have regarded particularly sympathetically, but that is our opinion.
  Given an acceptance of the gravity and the deep-seated nature of our economic problems, we think that to look for ways of working together is more important than emphasising differences, magnifying failures and exaggerating expectations. It
  922
  was for these reasons that, despite many differences in objectives, we looked for areas of agreement with the Government and are continuing to do so.
  I want to spend a little time in looking at the motion, specifically in regard to its effects if it were carried.
  Mr. Timothy Raison: I have been listening carefully to what the hon. Gentleman has said. May I ask him specifically about one of the issues of agreement, the issues under discussion? If there has been one point that has been reiterated by Liberal spokesmen over and over again in the last three years, it is that there should be a continuing statutory incomes policy. Liberal speaker after Liberal speaker, the last Liberal manifesto, and so on, have all made the point that it is absolutely essential to have a statutory incomes policy. The Government claim that they have never had a statutory incomes policy, although, of course, there is a statute that embodies such a policy. However, if the Government now have no form of incomes policy, will the Liberal Party smile and run along with them or stand by the policy that Liberals have enunciated so frequently?
  Mr. Johnston: It is perfectly true that we fought the last General Election on a statutory incomes policy. It is equally true that in entering the agreement with the Government we said that we looked to the Government's success in achieving some form of phase 3 negotiations with the trade unions. We did not say—and we recognise the situation, as successive Governments of both major parties have recognised it—that one could ask in the present circumstances for a statutory prices and incomes policy, because it would have been quite lunatic to try to do so. That is the short answer.
  I return to what I was saying. I should like to look briefly at the motion and its effects if it were carried on two things—devolution and economic matters, which are of fundamental importance.
  I come first to devolution. If the current opinion polls are true—one can never be certain of that—a General Election now, after the necessary formalities taking between three and five weeks would result in a nationalist majority in Scotland—God preserve us—and a Conservative majority in the United

  923
  Kingdom. That is what the polls tell us. I am not commenting on whether they are true, but that is the spectacle that is laid before us as a tasty bite. I am talking about devolution at present, and the choice for Scotland offered would be all or nothing—literally so. "All the way with D. Stewart"—which unfortunately does not rhyme—or "Not so steady with Teddy"—which does rhyme.
  There is conclusive evidence, I think, that across the board people in Scotland want self-government, want it to be established effectively, and want it firstly within the ambit of the United Kingdom and, secondly, within the ambit of the EEC. There is a lot of evidence to argue that that is so.
  I accept that the situation in Wales is not exactly the same. The Leader of Plaid Cymru knows that that is so. The degree of pressure for Welsh self-government is different, and it is different in each party. That is the fact of the matter, and we should recognise it.
  Liberals were criticised very much by nationalists for voting against the guillotine on the original double-headed devolution Bill. We were rather categorised as traitors to the whole self-government cause. [Interruption.] I thought that the applause would be rather louder.
  I remember that Margo MacDonald descended on my constituency—she is a lady who will be within the recollection of the House—rather like Brunhild from Valhalla and told my constituents that she regarded me as a reasonably decent chap but one who could never be forgiven for his betrayal and his killing of the Bill. One rather got the impression that if I had voted for the guillotine she would never have rested until she had canvassed the last constituent in the furthest isle to vote for me.
  The reality of the matter was that on the guillotine vote the nationalists were prepared to accept anything, because it suited their political book. Our opinion was, and remains—this is what we have been trying to do in the last three or four months—that we regard the discussions that we have been having with the Government on whether an effective devolution Bill can be established and whether we can reach some reasonable compromise—and I spoke about the area for compromise when we had the first debates
  924
  on the original Bill—as having been throughout of a constructive and positive nature. Having condemned us for voting against the guillotine motion, it is not reasonable to condemn us for trying to work with the Government to make things better. The SNP cannot have it both ways.
  Mr. Wyn Roberts: The hon. Member obviously follows the opinion polls. Does he also follow the policies implied by the opinion polls and the implied demise of the Liberal Party?
  Mr. Johnston: I have indicated that I have no great faith in opinion polls. I regard them as transitory. They are a reflection of matters as they are at the moment. I do not deny that the Liberal Party is under pressure. That is a fact.
  Mr. Anderson: The hon. Member mentioned a young lady who had chided him for not supporting the Bill. Is she the same young lady who says that she wants not devolution in Scotland but independence?
  Mr. Johnston: I think that she is. Obviously the hon. Member for Swansea, East (Mr. Anderson), like so many others, asks a question only when he already knows the answer.
  I turn to the economy. That is an important matter. I was concerned that neither the right hon. Member for Western Isles nor the hon. Member for Carmarthen (Mr. Evans) spent much time on that subject. The whole of the United Kingdom is engaged in a difficult situation. The Government are seeking to control inflation and negotiating with the trade unions. There is also the problem of the level of price and wage increases next year. All those matters will affect each of us and each of our constituents. They are tied in with the future of the country.
  In March we faced the possibility of a General Election immediately before the Budget and some months before an attempt to negotiate Phase 3. Her Majesty's loyal Opposition failed to produce any coherent strategy for prices or incomes and they have still failed so to do. It is not many days since they led the House through many weary hours in their attempt to prevent any type of price control. In that situation, whatever the differences—and we recognise that differences exist—we believed that it was better in the national interest as we see

  925
  it to try to work with the present administration.
  We have not yet had the delectable pleasure of listening to the hon. Member for Glasgow, Cathcart (Mr. Taylor). I shall wait for that promised moment. We are in negotiation with the Government and we wish to find agreement. Unless that is our aim there is no point in entering negotiation. First, we want to see an effective and acceptable devolution Bill on the statute book. We do not want any messing about. We want something that will work. We also want to see the economic problems of the United Kingdom resolved without the bitterness of which the Grunwick dispute is but the tip of the iceberg.
  5.25 p.m.
  Mr. Norman Buchan: I thought that this was to be a serious debate. We must thank the hon. Member for Inverness (Mr. Johnston) for injecting a rational tone into the debate. I do not think that I have ever attended a debate involving a confidence motion that was put forward in a worse manner. It is a shame for Scotland. There is a strong argument about Scottish unemployment. There is an even stronger case to be made against the Government's economic policy. It was not made.
  Why was the decision made to have this debate? Was it merely because the Scottish National Party is on a popularist trend? Was it because nationalists allied themselves with the Tories or because they want to provoke a General Election? None of those possibilities makes sense. Ally themselves with the Tories? The Tories have come out against devolution. Was it because they object to the failure of the devolution Bill? Whoever else's fault it was, it was certainly not the Government's. The Scottish National Party Conference recently came out in favour of total independence rather than devolution.
  Do the Scottish nationalists think that they can now convert the Tories into believing in complete independence? What other explanation have we? We are still waiting to hear why they wish to reduce the Prime Minister's salary. I have a decided interest here because I am one who at another time cut his salary because of disagreement with his
  926
  own Government's policy, so I have certain rights. We still do not know which policies they would put in the place of present policies. The first requirement of a no confidence motion is to demonstrate why no confidence exists. They have failed to do that. The corollary to a no confidence motion is that the party proposing it must suggest a better alternative. We have not had an alternative. I wonder whether the SNP is fit to form an alternative government.
  If there is a growth industry in Scotland today, it is in the publication of books about Scotland. I recall that "Scotland 1980" and "Input-Output Analysis" by the Allander Institute were hailed in advance by the SNP as proof of their case. They said that those publications would demonstrate the successful viability of an independent Scotland. The input-output analysis was going to prove that Scotland was in surplus. But that did not happen. Indeed "Scotland 1980" is not a good book. It is the first attempt for some time to try to make an economic analysis of the possibilities of an independent Scotland. It was drawn up by people outside the SNP although they were sympathisers of that party. They made the best possible assumptions. They assumed the continued membership of the EEC and that Scotland would get 70 per cent. of oil revenues.
  The SNP promised that with the oil revenues they would abolish not only hypothermia but virtually old age. They regarded the book as a blueprint for their policies. Then they discovered that none of this can be done, that oil revenues cannot be used immediately to increase wages, nor to create social benefits. A horse and cart has been driven through the entire SNP policy, and we have had silence ever since. I should have liked to hear a withdrawal of the SNP's premature hailing of that book, with all its weaknesses, of which it has plenty, or at least a withdrawal of the previous welcome to it.
  The truth is that the SNP is in a fundamental difficulty in relation to the economy—a difficulty which it has never faced. The United Kingdom economy is now a highly integrated economy. This is rather different from the question of centralised decision-making. There is also a much deeper structural integration

  927
  of the entire United Kingdom economy. Second, there is the new phenomenon of the development of the multinational company. Third, there is the intermeshing between Government institutions and the economy itself.
  All these factors create a paradoxical situation for the Scottish National Party. The integration will remain even if Scotland goes separate. The intermeshing of the remaining nine-tenths of government, that is, English and Welsh government, with the single economy will remain. All the Scottish nationalists will succeed in doing by withdrawing any say on their part in the single United Kingdom economy will be to reduce the influence of Scotland upon that economy and, by definition, put Scotland into a neo-colonialist position. The truth is that that which they believe they can operate with more independence they will in fact be unable to operate at all. That is the reality facing them.
  Mr. Russell Johnston: Is not the argument which the hon. Gentleman is putting vis-à-vis Scotland and the United Kingdom the same basic argument vis-à-vis the United Kingdom and the European Community?
  Mr. Buchan: No. I pointed to three strands, and one of them is extremely important, the intermeshing of Government institutions with the economy. That still existed as we entered the EEC and, since I believe that some of our national interests are rather different from those of the EEC as a whole, I want that continued intermeshing to remain in a United Kingdom context. Whether it will if the hon. Gentleman and his party have their way is another question, but that is another reason why I am opposed to our further involvement in the EEC. But I am dealing with the situation as it is, not with the situation which the hon. Gentleman and some of his right hon. and hon. Friends wish it to be.
  The truth is that there is hardly a problem to which the right hon. Member for Western Isles (Mr. Stewart), the Leader of the SNP, referred which would be easier of solution if Scotland was a separate State. Thus, the Scottish National Party is led into an increasingly contradictory position. I heard the hon. Member for Perth and East Perthshire (Mr. Crawford), in one four-line ques-
  928
  tion, enunciate, on the one hand, a call for devaluation of the green pound and, on the other, a call for a strengthening of the Scottish pound. This, of course, would bring about the worst of all possible worlds—higher prices for the farmer and therefore a bashing of the housewife, with higher import costs for the farmer—showing that the SNP is the only party which can succeed in enunciating in four lines a policy which would clobber both farmer and housewife. This sort of thing goes on all the time.
  How is the SNP shown up by its record in facing these difficult and subtle problems? There is a simple solution for it. It could recognise the inhibitions which such a position creates and say that it is prepared nevertheless to go along with it. But it does not do that. It is basically a Poujadiste populist party, and either through intellectual failure, which is a considerable feature within the party, or through a deep ingrained dishonesty, it is impelled to believe that, because anything which it enunciates is in its interest as a party, it must be true. In fact, the truth is that SNP has a bad record of populism.
  I recall the Scottish nationalists' attacks on the Aircraft and Shipbuilding Industries Bill, a Bill vital to the well-being of thousands of working people in Scotland, on the Clyde, in Aberdeen and in Dundee. Not only did they not support it but they treated it with the grossest contempt. Moreover, they contemptuously rejected the protests made to us by workers in the industry. They contemptuously rejected the protests made to them by the Scottish Trades Union Congress. I was astonished to hear the right hon. Gentleman quote the STUC this afternoon in support of his case after what he and his colleagues did to the telegrams arriving from the STUC, calling them bogus, tearing them up and throwing them across the Floor of the House of Commons. That is another indication of the SNP's attitude.
  The same sort of thing happened when we were discussing a Bill in Committee at a time when a group of workers, 5,000 of them at a factory in my constituency, were fighting for the expansion of the electricity generating industry. The SNP energy spokesman attacked the idea of more money going under that Bill to our generating programme, although his policy would have meant an immediate cut in the Scottish electricity generating

  929
  industry and consequently a threat to the jobs of 5,000 Scottish workers.
  We see the same problem facing the SNP when it asks for separation and ignores the relationship between industry in Scotland and the nationalised industries in the United Kingdom as a whole. A separate Scotland would mean that Babcock and Wilcox would close at once, although 80 per cent. to 90 per cent. of the output is for English and Welsh nationalised industries. That would all be finished tomorrow.
  We see it also where the SNP is coming to power in local councils. In my district, one of its first propositions was to call for the postponing of the arts centre in Paisley, yet during its campaign it had had that project as a matter of criticism of the existing district council, saying that it had failed to build an arts centre. The moment it came to power the SNP led the attack against it. Incidentally, on the very same afternoon it demanded that the Renfrew District Council should pay for the hire of bands for the SNP for its Wallace Day celebrations.
  We see the same attitude displayed towards Chrysler, where 7,000 workers were fighting to preserve their jobs. The SNP spokesman who turned up at the factory where a fight was going on for Scottish jobs and Scottish industry arrived in a Datsun. When the workers objected to this as a pretty poor gesture, he said "It is not my Datsun; it is my wife's. I drive a Volvo." That sort of insensitivity and stupidity, if I may say so, parallels the insensitivity and stupidity of SNP policies generally.
  As regards Chrysler, the SNP produced, I think, four contrasting and contradictory solutions. It was opposed to the Government's solution. It then voted for the Government's solution. It then said that the whole of Chrysler in the United Kingdom, except at Linwood, should be closed down, ignoring that we should then have had no cars because the engines came from Coventry. This was more than just stupid and insensitive, for many of the workers in Coventry—this is a regrettable fact, and the reasons are not palatable—came from Scotland, and a good many of the shop stewards and workers' leaders in Coventry are Scots. The SNP said that Coventry should go
  930
  to the wall. That is hardly a nice thing to say to the children and relatives of other Scots workers at Chrysler in Scotland.
  Mr. Crawford: My right hon. Friend the Member for Western Isles (Mr. Stewart) was attacked and challenged about the date, place and time of a statement which he attributed to the right hon. Member for Kilmarnock (Mr. Ross). Would the hon. Gentleman give us the place, date and time at which the statement about Coventry which he attributes to the SNP was made?
  Mr. Buchan: Yes, the place was here, and before the debate is finished I shall give the hon. Gentleman the precise Hansard reference, if I have opportunity.
  Mr. Crawford: And the quotation?
  Mr. Buchan: Yes, the quotation was that "Coventry should go to the wall". That was it, and many hon. Members now here heard it. The hon. Gentleman shall have his quotation. We on this side do not make assertions of that kind without the record to bear them out. I can take the matter a little further if the hon. Gentleman wishes to provoke me. The SNP spokesman on the motor car industry, after voting for it, attacked the settlement and said that the £162 million should have been used to plant trees in Scotland. That was the sort of opinion which he was prepared to enunciate in this place, and I shall produce the date for that, too.
  As I say, we see evidence of the SNP attitude at district level. We see it, for example, in its opposition to the Craigmillar festival. It shows a hatred for any cultural manifestation in Paisley, and we see the same attitude in Edinburgh. There was also the SNP attack in Edinburgh. When the populist line was to be on the ratepayers' side, the SNP attempted to stop old people's concessionary fares. We do not hear a similar argument in areas where there is a predominance of council problems.
  There are also the errors of omission of the SNP. Nothing has been more shameful in the great intellectual tradition of Scotland than the succession of letters which appeared in Scotland's national newspaper, the Scotsman, throughout January and February, which were directly racialist, Anglophobic and

  931
  printed without demur or editorial comment, but, furthermore, were printed without demur from the SNP. Not until months later did a member of the SNP, Professor MacCormick—not Iain but Neil—demur about the tone of the letters.
  The mainspring of many of the arguments of the leadership of the SNP is Anglophobia. I heard Margo MacDonald say that if she had a holiday, she would like to go to see the Basques or to see the Catalonians in Catalonia. Has she forgotten that the hon. Member for Moray and Nairn (Mrs. Ewing) was one of the few members of the European Parliament who failed to support a motion condemning the Franco Government—incidentally, a movement led by the Pope—for their killing of five Basques by garrotting in Madrid? That was a shameful moment for Scotland.
  We remember the SNP's silence about a football match which took place in Chile when, in spite of opportunity after opportunity, its members failed to show where they stood. Two days before the game, the SNP's Chairman, Billy Wolfe, had the impertinence, in a letter, to criticise British Ministers for not objecting to the match. They had objected. But we heard nothing from the SNP until that moment. [Interruption.] If it is not true, please tell me—
  Mrs. Winifred Ewing: Read Hansard.
  Mr. Buchan: Tell me the place, time and quotation. The SNP is a contemptibly populist party, and it is time that it recognised it.
  Mrs. Bain: Plainly the hon. Gentleman does not study Hansard very frequently. Presumably he was absent when the hon. Member for West Stirlingshire (Mr. Canavan) asked a Question about the Scottish Football Association and Chile and my right hon. Friend the Member for the Western Isles (Mr. Stewart), in a supplementary question, supported him.
  Mr. Buchan: I should like to see the wording of that. The first official comment on the game was made by the Chairman of the SNP about three days before the match.
  Mrs. Bain: Wrong again.
  Mr. Buchan: Appeals were made to the SNP—and I know because I led the
  932
  campaign. [Interruption.] Let us have less of this nonsense. The whole of Scotland knows the position.
  We know the attitude of the SNP even on matters affecting Scotland, and not only the shipbuilding industry. Its Members talk most about prices in Scotland, yet last week, in the vote on the Price Commission Bill, they refused to support the Government's attempt to introduce price control and abstained. In Committee they voted with the Tories to block the expenditure of more money on consumer advice centres for Scotland. The SNP has a tawdry record. It is a shameful record, and it gives little credence to a motion of this kind.
  Mrs. Bain: What about the Lib-Lab pact?
  Mr. Buchan: I am not proud of the Lib-Lab pact. I am against it. I do not think that we should have entered into an agreement of that kind. I am a Socialist and I want to achieve a Socialist majority which will follow Socialist aims. That will not happen through proportional representation.
  Almost the first thing for which Councillor Stuart Ewing of Glasgow called was the creation of a public house in the city chambers. He said that the purpose was to prevent other councillors from having to go across the street for a drink. He gave us great reassurance by saying that he was a strict teetotaller, like the rest of his family.
  Even more damning is the SNP's notorious canvasser's manual. If someone at the door says "I like Willie Ross", canvassers are told to answer:
  "A fine man! Then ad lib!"
  The manual also says:
  "The Golden Rule is: 'Find out the Voters views First' …".
  One then tells them the benefits they will get by voting SNP on the basis of these views. One finds out the
  "motivating interests and needs of each Voter before trying to sell"—
  I like the word in a political context—
  "the benefits to them and then showing him that he must vote SNP to get them.…. The advantage of this technique is that it is flexible"—
  [Laughter.] I have not finished the quotation; hon. Members are pre-empting my punch-line—
  "while sounding natural and believable."

  933
  When an interviewer ends an interview, he should say
  "'Can I put you down as a Scotland Supporter then' (Smiling)".
  The SNP compares politics with the selling of a car. The manual sets out what one needs to do. One shows how
  "related benefits might be presented to a particular Voter. It simply involves putting the 'product feature' and the derived voter's benefit into a compact and easily understandable sentence using the conjunction '… which means that …' Examples. Having found that the customer desires a high performance car for frequent motorway business trips, the sentence might come out thus: 'This car is fitted with the latest model V8 engine which means that you can maintain high cruising speed to get there quickly …' Similarly, having found that the Voter has some distance to travel to work each morning, the sentence might be delivered thus: 'The SNP is very concerned about inadequate public transport in Scotland which means that we are committed to act in the interest of all commuters such as yourself, Mr. Smith.'"
  The approach is certainly flexible. I hope that it is natural. I am afraid that it is not at all believable.
  Then there is the curious business of the Tories' support for such a party as the SNP and such a motion as this in such a situation. They had to learn their populism somewhere. I do not believe that they have learned it from the great tradition of the democratic intellect in Scotland. It puzzles me trying to discover from where they have gained their skilful opportunism. We have an example on the Opposition Front Bench, the hon. Member for Glasgow, Cathcart (Mr. Taylor),
  "Who in the course of one resounding tick
  Runs the whole gamut politic
  And in the course of the succeeding tock
  Runs just as briskly backwards round the clock."
  The hon. Gentleman started this Session of Parliament as a devolutionist. He is ending it as a true blue Unionist.
  Now that the Opposition have rejected devolution, I hope that the hon. Gentleman today will take the opportunity of saying that he is committed to devolution. We want some explanation for the Opposition's vote today. Are they seeking to ally with the SNP in introducing an even tougher devolution Bill or in order to help illustrate how they should make allies even with those with whom we disagree most profoundly?
  934
  It has been a shoddy experience this afternoon. The SNP are a very poor lot. There must be better people available. I wish the SNP would find them and send them here.
  Mrs. Winifred Ewing: As my right hon. Friend the Secretary of State for Scotland criticised my right hon. Friend the Member for Western Isles (Mr. Stewart) for not developing serious themes, and as so far the hon. Member for Renfrewshire, West (Mr. Buchan) has only attacked the SNP, I was wondering at what point of his speech he would get on to developing serious themes.
  Mr. Buchan: In the first place, the hon. Lady was not here. Secondly, I note her reassurance that my right hon. Friend is her right hon. Friend. But I give about as much credence to what the hon. Lady said as I gave to the statement of the councillor in Glasgow who wants to see a pub in the city chambers.
  5.51 p.m.
  Mr. Teddy Taylor: The hon. Member for Renfrewshire, West (Mr. Buchan) has done the same as everyone else in the debate. Everyone has said that all the speeches except his own have been rotten. Quite frankly, the hon. Gentleman's speech did not add a great deal, apart from showing his rather poisonous hatred, which is a rather sad thing, for the SNP.
  I do not believe that the kinds of issue raised today, and the arguments put forward by the nationalists and others, will be beaten simply by calling names. We should be looking at the motion seriously, and looking also at the ways in which we can solve Scotland's problems.
  The right hon. Member for Western Isles (Mr. Stewart) was accused by the Secretary of State for Scotland of saying nothing new. The Secretary of State said nothing new in his rather lengthy speech. It is a sad reflection on the utter complacency of the Government that, faced with all the problems, the record unemployment and the bankruptcy of economic ideas, we have, on what should have been a major occasion, the Secretary of State saying nothing new.
  We had the advantage of hearing from the hon. Member for Carmarthen (Mr. Evans), who talked about many problems in Wales, including a low expectation of

  935
  life. According to what my Welsh colleagues have told me, the comment about a low expectation of life cannot be applied to the hon. Gentleman's speech, which I am told he has been making for 30 years with hardly a change.
  The right hon. Member for Bermondsey (Mr. Mellish) talked about the bad times under Tory Governments. Here again, the Government have to face up to the responsibility that there has not been a time in Britain when unemployment and inflation, to my knowledge, have been as high as now. That is the way in which we can judge the success of a Government.
  However, the motion is about reducing the salary of the Prime Minister—a subject which no one seems to have mentioned in any great detail. Perhaps it is rather ungracious of the House to suggest that the Prime Minister's salary should be reduced when, as an above-average wage earner, he must have suffered from the policies of his own Government.
  The Prime Minister has a basic salary of £20,000, plus a parliamentary allowance of £3,000, plus other allowances coming to £2,500, and certain other benefits. According to my calculations, he has seen his take-home pay reduced to less than £9,000 at 1974 prices. The main reason is that during the three years of the present Government we have seen inflation running at record levels, largely because the pound has been reduced to 56p in real value compared with when the Government came to power.
  Mr. Canavan Mr. Canavan rose—
  Mr. Taylor: We are far from satisfied with the Prime Minister, and the sad fact is that his Administration has been marked by a continuous stream of optimistic forecasts, followed by a continuous stream of damaging measures and policy failures.
  Mr. Canavan Mr. Canavan rose—
  Mr. Taylor: We heard the Prime Minister's latest forecast on Sunday, when he said that things are going to get a good bit better. When we are considering the position after three years of a Labour Government and in particular the record of the Prime Minister, we have to ask where is the evidence of all these remark-
  936
  able prophecies that things are going to get better.
  There was the famous Healey inflation rate of 8 per cent. at the time of the 1974 General Election. This, too, has never happened. Indeed, the position has got much worse.
  There was the statement from the Prime Minister in March 1976 that he regarded the present levels of unemployment as intolerable and unacceptable. A few months later he said that he would reduce unemployment. Since then, in the country as a whole it has gone up by 800,000, and the number of school leavers seeking jobs has increased by 12 times. If we exclude school leavers altogether, the numbers of unemployed in Scotland and the rest of the country are about twice what they were when the Government came to power.
  Another good guide is living standards. According to parliamentary answers which I received on Wednesday of last week, real living standards for the average British family have gone down over the entire period. People are worse off in real terms.
  As to tax, the Prime Minister said that something had to be done for middle management. The average family in Britain now finds that, whereas it was paying less than £8 a week in income tax when the Government came to power, it is now paying more than £17 a week.
  I can well recall, as no doubt can many hon. Members, the Prime Minister attacking us by saying that the Conservative Government had piled up an alarming amount of overseas debt. But whereas in March 1974 the overseas debt was about £3 billion, it has since increased to over £16 billion.
  When we look at the international assessment of the Government, we find that the pound has gone down by a quarter in three years. We therefore have unemployment and prices rocketing, real living standards going down, production static, and growth non-existent. We certainly cannot have confidence in a Government who have created this kind of position.
  I am also worried a great deal about the extent to which the Prime Minister appears almost to have given up the battle against the Left-wing takeover of the Labour Party.
  Mr. Buchan: Oh!
  Mr. Taylor: It is a very real worry for democracy as a whole when we find standing for the National Executive of the Labour Party a Labour Member who wrote the kind of article that we saw in the Morning Star last week. This should interest the hon. Member for Inverness (Mr. Johnston), in view of his party's pact with the Government. In this article the hon. Member wrote:
  "I propose that the Communist Party stops contesting against Labour candidates electorally in local and national elections and, clears the way to seek re-affiliation to the Labour Party ".
  One of our greatest fears is that the Prime Minister, by abandoning the principle of collective responsibility and by enabling the Left wing gradually to take over the National Executive and all the other organs of the Labour Party, is paving the way for a Left-wing takeover of the Labour Party to such a degree as will certainly not be good for democracy.
  I am afraid that the Prime Minister has just been stumbling along, hoping that his economic sins, like those of the hon. Member for Inverness, will be washed away in a flood of oil.
  Mr. Russell Johnston: I certainly hope that my sins will be washed away. As the hon. Member for Glasgow, Cathcart (Mr. Taylor) indicated that his quotation was of relevance to me, will he say who wrote the article and when?
  Mr. Taylor: It was a Labour Member of Parliament, the name of whose constituency escapes me for the moment. The hon. Member concerned is standing for the National Executive of the Labour Party. He is a prominent Member of the House. The article is rather significant of the move of the Labour Party to the extreme Left. This is what worries me about the Lib-Lab pact. I hope that the hon. Member for Inverness has thought about it, and also his electors.
  The only real achievement of the Lib-Lab pact is to give the Prime Minister an opportunity of choosing the right date for the Socialists to hold a General Election. If by chance they are returned with an overall majority, all the moderation that the hon. Gentleman and his colleagues may think they have persuaded the Labour Party to accept will
  938
  be thrown away. Instead there will be five years of red-blooded Socialism.
  All the hon. Gentleman is achieving by this silly and rather shoddy pact is to save the Liberal Party for a short time from extinction and to give the Socialists the opportunity to choose their right time for the General Election, so that we shall have five years of real Socialism and not the kinds of policies that we are having at the present time.
  Mr. Russell Johnston: I apologise for interrupting again. The hon. Gentleman has been somewhat swingeing in his comments. With regard to the article that he quoted I would say that that member of the Labour Party in no way approved of the agreement between the Labour Government and the Liberal Party. To blame us for the views expressed in that article is a lot of rubbish.
  Mr. Taylor: We shall get some idea of what the feeling about the Liberal Party is if that particular hon. Member—the hon. Member for Ealing, Southall (Mr. Bidwell)—is successful in the National Executive elections. The hon. Member for Inverness may know that the party that he is propping up has a new proposal for choosing the party leadership in which the National Executive, the unions and party members will be taking part. The hon. Member for Inverness is not, in fact, creating moderation in the Labour Party. All he is doing is propping up the Government so that they can stagger along on Liberal crutches until they come to the right time for an election. I can assure the hon. Member for Inverness that at that point all the Liberal ideas about moderation will be thrown out of the window.
  Mr. Roy Hughes: The hon. Gentleman has spoken in support of democracy. Does not he consider the proposals for extending the franchise of the Labour Party leadership stakes, so to speak, an extension of democracy?
  Mr. Taylor: They could well be in certain circumstances. But I believe a lot of my hon. Friends, and a lot of other people regard them as just a series of moves by the extreme left of the Labour Party to take over the party. Whether this is a democratic move or not, the hon. Member for Aberdeen, North (Mr. Hughes) has a long enough experience of

  939
  the Labour Party to be aware that in the Labour Party is a group of people who want to make sure that after the next election, whatever the result, the Labour Party that emerges will be quite different from the Labour Party that we now have in the House of Commons.
  We have members of the Labour Party, like the hon. Member for West Stirlingshire (Mr. Canavan) and the hon. Member for Renfrewshire, West (Mr. Buchan), who want red-blooded Socialism. All that the Liberals are doing is creating a situation in which there is the conceivable possibility of wild extremists, like those two hon. Members, taking over our country.
  Mr. Buchan: Since the Prime Minister also objects to a takeover by the extreme Left, why is the hon. Gentleman trying to halve his salary?
  Mr. Taylor: In my view, the Prime Minister has given up the fight. By abandoning collective Cabinet responsibility and by allowing all this to go on, the Prime Minister has either given up the fight or is even less effective than I thought him to be.
  I must make it absolutely clear that, unless something unexpected happens in later speeches, we shall be voting for the SNP motion tonight as an indication of our total contempt for the Government and our condemnation of their shameful policies that have brought economic misery. However, that in no way means that we support the economic policies advanced by the nationalists which, we believe, would make a serious situation a great deal worse.
  The SNP proposes a separate Scottish currency and tight exchange controls. At its recent conference it added a wealth tax, a higher capital gains tax and a local income tax to that list. As industry and commerce in Scotland and England are closely integrated, the establishment of a totally different economic system in the two countries would damage most of our industries and involve them in considerable expense.
  If, as is proposed, a separate Scottish currency would rise in value in comparison with the English pound, it would be difficult if not impossible for labour-intensive industries in Scotland, and for most of our engineering, to compete in the
  940
  English market unless there was a dramatic rise in productivity or unless wage levels in Scotland were reduced. That is not just a personal view. The fact is that since the SNP published its financial policies not one major Scottish industrialist or prominent trade union leader has stated that the plans would improve employment and prosperity in Scotland. In fact, many have indicated that in their view the policy would inevitably destroy jobs and prosperity. [Interruption.]
  Can the hon. Member for Dunbartonshire, East (Mrs. Bain) name one prominent Scottish industrialist or trade union leader who says that SNP economic policy will help employment in Scotland? I know of none. If the hon. Lady knows the names of such people, I should be glad to know.
  Mrs. Bain: Stick around.
  Mr. Taylor: It must be obvious to those with even the most basic business knowledge that the introduction of a wealth tax in Scotland, which would not apply south of the border, and the introduction of a higher capital gains tax in Scotland than in England would undoubtedly spark off a flight of capital and, therefore, of jobs from Scotland.
  I can imagine a situation in which we have a wealth tax in Scotland, but not in England, and a high level of capital gains in Scotland, but not in England, which would mean that capital and jobs would disappear. There are firms like Yarrow Shipyards. Where are they to achieve orders and work? It is pretty clear that all this will involve a considerable loss of jobs and make the situation, already serious as a result of Socialist policies, even worse.
  I asked the hon. Member for Dunbartonshire, East whether she knew of one industrialist who thought that SNP policy would help the economy. The SNP has been making rather desperate attempts to say that some people in prominent positions in business and industry think that it will help. One example is the Scottish clearing banks. On 7th January this year I received a letter from the hon. Member for Perth and East Perthshire (Mr. Crawford). It was signed not by him but on his behalf by a lady whose name I cannot make out but whose first name was Rosie. In that letter the hon. Member for Perth and East Perthshire,

  941
  in talking about nationalist policies and the clearing banks, said:
  "The thinking behind their comments accepts that self government will be of benefit to all the people of Scotland. There are only one or two matters of technical detail which still have to be worked out. The SNP looks forward to their continuing help over these matters of technical detail."
  Here we have it in writing. Here we have the clearing banks saying that not only will SNP policy help Scotland but that they will work out the details with the SNP.
  That rather surprised me. I wrote to the secretary of the clearing banks, a Mr. Sutherland, and he told me that this was utterly untrue. He said that he had had no contact of any sort with the SNP and that there had been no discussion. The words he used were:
  "The first thing that has to be said is that there has been no liaison of any kind whatever between the clearing banks and any political party on this subject."
  I replied to the hon. Member for Perth and East Perthshire and asked him a number of other questions. He had been kind enough to set out some of the SNP policies. I asked what this would mean if some of my hon. Friends went on a holiday to Blackpool. I asked whether they would have to get foreign currency from the bank. I asked a number of serious questions about the effect on jobs, but I never got a reply to my letter.
  We also have the life companies. It had been suggested by the hon. Member for Perth and East Perthshire—I understand that his constituency includes the headquarters of that excellent life company, the General Accident Company—that in some way they approved of the SNP's plans and felt that they would make things better. No sooner had this happened than the life companies issued a statement saying that in their view the SNP's plans would damage their business, 90 per cent, of which was done south of the border, and would involve, unfortunately, additional premiums and lower bonuses.
  We have a state of affairs in Scotland in which industry and commerce do not think that the SNP's policies would help and, in addition, neither the clearing banks nor the insurance companies think that they would help. Although we Conservatives agree with the SNP in this joint
  942
  motion because we both think that Socialism is bad, we have to ask the SNP tonight who are the people who believe that its policies will not make matters worse.
  It is generally accepted that members of the SNP tend to be masters of distortion. Of that there is no better proof than this astonishing document, the party's canvassing manual, to which the hon. Member for Renfrewshire, West referred. It begins by setting out the principles which should be followed in canvassing. It says that what voters like is, first of all, sincerity and, secondly, people who agree with them. Canvassers should indeed follow both objectives scrupulously. It goes on to explain how this is done. For example, if an SNP canvasser comes across a Liberal household, the canvasser should stress the moderate nature of the SNP. However, if the canvasser then comes to a Labour household, he should point out that many of those in the SNP used to be Labour. Then, if the canvasser comes across a Conservative supporter in a Labour constituency, the voter should be advised that the only way to defeat Socialism is to vote for the SNP. But what about the minorities in Scotland, such as the one mentioned by the hon. Member for Renfrewshire, West? It says that if a canvasser meets someone in Scotland who says "I like Willie Ross", the answer that he should make is "He is a fine man".
  This manual should be compulsory reading for anyone who is tempted by nationalist propaganda. It is the worst example of deviousness and unscrupulousness that I have ever encountered. In comparison with this manual, Dr. Goebbels and Machiavelli would qualify for Sunday school prizes.
  Therefore, if the nationalists put forward a motion saying
  "We disapprove of Government policies because Socialism does not work and has brought disaster to the country",
  in order to be consistent the Conservative Party must support that motion. However, in so doing it must be made clear that we Conservatives believe that nationalist policies would make matters worse.
  Fortunately, however, we are not choosing between a Labour Government and a nationalist Government. There is

  943
  a third choice, which is much better. If we could have a General Election, we should have the opportunity to apply Conservative policies, which would be of great benefit to Scotland and to the country as a whole. A Conservative Scotland would undoubtedly be a more prosperous Scotland, as it has always been. We would restore incentives, which would make a major difference to job creation. A Conservative Scotland would also offer more opportunities. We would cut taxation, as we have always done. A Conservative Government would offer freedom of choice in Scotland in housing, education and in all other fields in order to encourage the individual. A Conservative Scotland undoubtedly would also be a safer Scotland. A Conservative Government in Scotland would strengthen the bonds of union.
  In our view, this Government have failed. That is why we shall vote against them tonight. However, we wish to make it clear that we believe that the answer to our problems as a nation does not lie in following SNP policy. It lies in the restoration of Conservative Government and good government which will bring back prosperity and restore the real values of our nation.
  6.15 p.m.
  Mr. William Ross: It was James Maxton who was once accused of trying to ride two horses at the one time. He replied "If you can't do that, you shouldn't be in the circus at all." We have had a typical circus speech from the hon. Member for Glasgow, Cathcart (Mr. Taylor). It is true that he did not say an awful lot about devolution. General Cathcart having led the Tories in retreat from Perth, I can well understand his reticence.
  Among others, he said in his election address that he was for an elected Scottish Assembly. However, he managed to outmanoeuvre people who stuck by that and succeeded in getting them removed from the Opposition Front Bench. I am waiting with interest to discover whether he will support his party's three-line Whip on direct elections. Then we shall see whether he has found yet another devious way round a personal difficulty. He has been consistent for a long time about the Common Market and its effect on Scotland. Will he throw that consistency
  944
  away and let us see yet another performance of the kind that we saw today?
  I am concerned not about the Lib-Lab pact but about tonight's Fory-SNP pact. The hon. Member for Cathcart can argue as much as he likes, but he will be supporting the SNP and the speech—or non-speech—of the right hon. Member for Western Isles (Mr. Stewart).
  Mr. Teddy Taylor: The motion.
  Mr. Ross: He will be supporting a motion put foward by the SNP for purely SNP reasons. If there is a measure of cynicism in the document from which he quoted, there is more than a measure of cynicism in the attitude that he is taking in leading his party that way tonight.
  The right hon. Member for Western Isles was not really fair to himself in tying himself to a script. I do not know whether he wrote it. I hope very much that he did not. I know that he can do far better than he did today.
  Tonight we face what is virtually a vote of censure. It is an attack on the Prime Minister, although we did not hear from the right hon. Gentleman any attack on the Prime Minister. But I assume that, by attacking the Prime Minister, the right hon. Gentleman thinks that he is attacking the whole Government, thereby making a comprehensive condemnation. But it fell far short of what I expected.
  We have serious problems in Scotland. We have serious problems still in terms of the deprivation of parts of the country. But the same problems exist elsewhere, in places such as London and Liverpool. This is what angers many of my English colleagues. It seems to be of no concern to the SNP to try to find solutions to problems which are common to people throughout the United Kingdom and, indeed, far wider than the United Kingdom.
  One development that I abhor as a Scot is that we should have a party which is now gaining a measure of success in Scotland purely on emotions and on turning into ourselves, whereas as a nation we always looked out beyond our own needs and beyond the satisfaction of those needs with purely selfish policies. Deny it as they like, there is more than an element of Anglophobia in SNP members' statements. I heard of them even at Wembley—"If you hate the so-and-so English, clap your hands." There was no pride for

  945
  any true Scot in that kind of behaviour. Yet there are certain members of the SNP who encourage it. When young terrorists who have taken some of their speeches seriously end up in the courts, the SNP says "We disown them. We have now expelled them." Who is responsible for that kind of feeling? Is it to the benefit of this country?
  Mr. Donald Stewart: Which country?
  Mr. Ross: This country—the United Kingdom. Scotland is part of the United Kingdom and a proud part. No SNP Member is a better Scot than I am just because he wears a kilt. I do not need to wear a kilt to prove that I am a good Scot.
  I regret the cynicism that is contained in the document which has been quoted for use by SNP doorstep canvassers. We heard about the reply that was given when my name was mentioned—namely "Willie Ross is a fine man." I well remember during an election campaign in Dundee hearing a voice over a loud-speaker—it so happened that our candidate was a man from Sheffield, an Englishman—proclaiming time after time, "The Labour candidate is an Englishman." When the broadcaster stopped for breath, I began reciting Robbie Burns
  "A man's a man for a' that!"
  When I stopped, the other voice took over with the phrase "Willie Ross is an Englishman." [Interruption.] It may be amusing, but it is a serious matter.
  That is the worst feature of this kind of stuff. It seeks to sell a party as one would seek to sell soap powder or a car. No wonder the Glasgow Herald said that as an exercise in political cynicism the manual was breathtaking. The manual suggests that canvassers should find out what the people want first and then say that the SNP will give it to them.
  Is the right hon. Member for Western Isles proud of that? Does he agree with is? This document is being put out to all SNP canvassers. Before they go on to the doorsteps they are told to find out as much as they can about the person whom they are canvassing. How are they to do it? The manual says that it should be done by
  "Personal observation and experience—friends and acquaintances, local newspapers,
  946
  local libraries, cafes, public houses and hostelries."
  In other words, find out what a man wants and what his needs are, then go to the door and say "Yes, we and we alone will provide it". That kind of approach is disgusting.
  Mr. Buchan: And dangerous.
  Mr. Ross: Yes, it is dangerous, too. But, sadly, it is successful. The SNP members are selling emotions, and they are selling them with fervour. In political terms they are the equivalent of the political hooligans of today when they adopt such platforms.
  We have our problems and we should have used this debate to go into them. I am concerned about unemployment in Scotland, because the level is dangerously high. I believe that we should ask the Government to return through the SDA, or through the grant system by the Secretary of State for Scotland, a considerable share of the money lost to Scotland through loss of the regional employment premium. We should use that wisely together with the proposals announced last Monday by the Secretary of State for Industry. The figures published last month are not properly comparable with those of the previous year because of the change in school leaving age, but those figures are far too high. I hope that my right hon. Friend the Secretary of State for Scotland will turn his mind to that matter.
  In my consituency the rate of unemployment is 8·7 per cent. We now face the possibility of losing a very important firm in the area. The firm is that of Glenfield and Kennedy, and it changed hands in 1966, having been taken over by an American firm, Crane. At one time the firm employed between 3,000 and 4,000. The work force is now down to only a thousand. It provided engineering jobs and other skilled work in Scotland—work which we cannot afford to lose.
  Mr. Crawford: I am afraid that I have the unpleasant duty to tell the right hon. Gentleman something he may not already know. I was told a few minutes ago that the thousand workers at Glenfield and Kennedy are to be given their redundancy notices tomorrow. That is a disgraceful indictment of a system that involves taking control of Scottish industry from

  947
  Scotland and sending it to London, America, or anywhere else. I am sorry to tell the right hon. Gentleman that this now looks to be a fact.
  Mr. Ross: The hon. Gentleman is not telling me very much that I do not already know. I have been working on this matter with trade unions, Ministers and officials, and I know that they have spent every minute of their time trying to solve this problem. The hon. Gentleman must appreciate that those who have put the firm into receivership are the parent company, namely, the American concern. They and they alone are responsible for that.
  Mr. Crawford: It gives us no pleasure that this has happened.
  Mr. Ross: I hope that it gives the hon. Gentleman no pleasure. I certainly hope that we do not land in the same situation again. The Government have been trying to mount a rescue operation. I appreciate that they have many obligations and are responsible in these matters to this House.
  The hon. Gentleman and the SNP voted against us when we sought to give money to industry in this House. They were concerned in a motion to reduce the salary of my right hon. Friend the Secretary of State for Industry. That related to British Leyland and Chrysler. The SNP voted with the Tories. The hon. Member for Perth and East Perthshire (Mr. Crawford) should know that. He has got to live with what he has done. The same thing applies to the Scottish Development Agency. Although the SNP attempted to emasculate that agency, it will now probably want us to use that body with new powers.
  Mr. Crawford: Will the right hon. Gentleman give way? I am being attacked.
  Mr. Ross: No. The hon. Gentleman took far too long last time. It was the hon. Gentleman and members of the Standing Committee opposite who voted with the Tories to emasculate those provisions.
  It surprised me that the hon. Member for Cathcart did not take the opportunity in his remarks to tear apart the illusory SNP policy. There was not a single item of policy contained in the speech of the right hon. Member for Western Isles,
  948
  whether it be related to Kilmarnock or anywhere else. [Interruption.] SNP Members laugh, but perhaps they can tell me one idea that was advanced by that right hon. Gentleman. I took down practically all the points in his speech and I found not one positive or constructive suggestion.
  It is easy to understand why we had no policy from the right hon. Gentleman. The reason is that SNP Members have no political philosophy because they cannot agree among themselves. We all remember the statement made by Margo MacDonald—that the SNP was a Socialist party. Then, apparently, the hon. Member for Clackmannan and East Stirlingshire (Mr. Reid) said: "No it is not. It is a Social Democratic party." Again, the reply of the SNP's chairman, Mr. William Wolfe, was "No comment".
  We can see the SNP's cynicism contained in the manual. I repeat that the SNP has no political philosophy.
  Mr. Crawford: Put on a new record.
  Mr. Ross: It is not a new record; it is a good old one. I am sorry that the hon. Gentleman was absent when his record on Chrysler was commented upon by my hon. Friend the Member for Renfrewshire, West (Mr. Buchan). But in the municipal elections the SNP claimed that it had saved Chrysler. I certainly do not remember any SNP member standing by my side or sending messages of support to Labour when we battled successfully on that issue.
  Mr. Crawford: We voted for it.
  Mr. Ross: The SNP view from the hon. Member for Banff (Mr. Watt) was that the money would be better spent on planting trees.
  Mr. Crawford: No.
  Mr. Ross: The SNP also voted against us on the nationalised industries. There was a great danger of the Scottish and Welsh nationalists making this debate a laughing stock. That would do Scotland no good.
  I am glad that my right hon. Friend took up the point of the teacher training colleges. So far I have not received any reply from the SNP Bench as to what we should do about the falling birth rate. I do not blame the bachelors or the young married men without families, but the fact

  949
  is that there has been a dramatic fall in the number of children being born, and this will inevitably affect the schools. There was no constructive suggestion from the Scottish nationalists, only the assertion that the Government were wrong.
  This applies to the hon. Member for Cathcart. It is no good his saying that he will keep all the colleges open. He is the man who proclaims the need for economy. He is a hatchet man on some things. Hon. Members opposite have not faced up to the problem. They have not been fair to the people of Scotland. I hope that they are not suggesting that we should train more and more teachers for the unemployment queues. The hon. Members cannot have it every way—he cannot argue that we should cut the amount of money going to local authorities and then expect local authorities to spend more money on training teachers when he knows that we already have a superfluity of them. I hope that my right hon. Friend will go forward with his proposals for dealing with deprivation so that in areas where teachers are required they will be forthcoming and that the money will be provided for that. He said that he is discussing this question.
  So far today I have not heard any justification for a reduction in the salary of the Prime Minister.
  My right hon. Friend avoided mentioning the matter of the pie and beans promise at the municipal elections, when this great patriotic and royalist SNP, as it proclaims itself to be, announced that a certain gentleman was to become Lord Provost of Glasgow when the SNP had won all the seats there. The threat was that he would change the Royal Jubilee lunch menu and that it would be pie and beans. The hon. Lady the Member for Moray and Nairn (Mrs. Ewing) has an awful lot to live with.
  We had a wonderful exhibition from the SNP Bench two months ago on the subject of the Shetlands when we were discussing the devolution Bill. I shall never forget it. The hon. Lady proclaimed that the Shetlands had the right to independence and that if that meant getting all their oil wells, they could have them. The hon. Member for Clackmannan and East Stirlingshire said "No", that he doubted very much
  950
  whether under international law the Shetlands were entitled to them.
  Somebody must have given some information to the hon. Member for Argyll (Mr. MacCormick), because I can remember that he came crashing into the House and disagreed with the hon. Lady and with the hon. Member for Clackmannan and East Stirlingshire. The hon. Member for Argyll said that the only islands that had a right to independence were the Western Isles and that the people of Shetlands had a language that—I will not describe what the hon. Member said about the language, but it was a language that none of them could speak.
  Mrs. Winifred Ewing: Will the right hon. Gentleman tell us his policy?
  Mr. Ross: Our policy is the policy of the United Kingdom. It is the Shetlands policy, too, that we should use the benefits of the oil for all the people of this country. That is our way.
  I hope that everybody appreciates the absence of policy and the conflicts of policy on the part of the SNP. Taking that together with the advice to its canvassers, one begins to understand exactly the difficulty the party is in.
  There is one awkward question on the document. If the person at the door says
  "The SNP is too inexperienced"
  the reply is to be this:
  "The party has been on the go since 1930."
  That is the right phrase "on the go ".
  " We now have experts in all fields, advising our MPs quietly on policies."
  The experts had better stop advising them quietly and start shouting because it has not got across to the MPs yet.
  I end with this quotation from the document:
  "Everyone has commented on the high standard of our MPs."
  That is a lie, because I have not. After the speech we heard today from the right hon. Member for Western Isles, I shall not make the comment.
  6.35 p.m.
  Mr. Iain MacCormick: It is remarkable that during the speeches of the last three speakers, one theme has continually arisen. It is the theme that the right hon. Member for Kilmarnock (Mr. Ross) is a fine man. This remark I can attribute to three hon. Members. One is

  951
  the hon. Member for Glasgow, Cathcart (Mr. Taylor), one is the hon. Member for Renfrewshire, West (Mr. Buchan), and it will come as no surprise to many hon. Members to hear that the third was the right hon. Member for Kilmarnock himself. I shall not join in the plaudits which have been bandied about the House, because I felt that the right hon. Member for Kilmarnock was guilty today of using a turn-around in his speech. He lampooned the Scottish National Party, as various other Members of his party have done today, as being a party infused pretty well only with emotion and, indeed, with emotion mixed with a good deal of duplicity as well.
  I think that the case of the Scottish National Party today, not just in the House but throughout Scotland, is that the boot is on the other foot. The Scottish National Party has become in the eyes of hundreds of thousands of Scots the only party that can set forth a proper case for the future of Scotland and that can set it forth without descending into the realms of mad, passionate emotionalism such as we see more and more from the Labour and Conservative Benches. I should have thought that the whole tenor of this debate is that this is not the SNP faced with a really constructive opposition.
  This is the SNP—indeed, the people of Scotland—faced with the threshing, dying agonies of some former monster which, in the case of the Conservative Party, has already become a very small one and which, in the case of the Labour Party, at the next election in Scotland will be shown to be a very small one.
  Before I stood up to make this speech I took the trouble to read over what I have said on the subject of devolution in the House over the past three years or so. I found that in March 1974, when I made my maiden speech, not only myself but all the members of the SNP Bench were prepared to approach the whole idea of devolution with some respect and co-operation, because we genuinely believed, in our stupidity at the time, that the Government meant what they said about giving Scotland, and Wales their own elected legislative assemblies. We said that, not only in those balmy days before the Scotland and Wales Bill eventually made its appearance; we went on saying it, and
  952
  we went on proving it in the way in which we voted in the House. The last time that I spoke on the subject of devolution was when we were debating the Scotland and Wales Bill, and we were still able to say that because at that time the Bill might still have become law, a position which I regret is no longer the case.
  That is not something that I regret simply as a matter of nature. It is something that I regret because it proves to me that not only the Conservatives have gone back on what they said they would do, but so has the Labour Party. They did not approach that Bill as people who really believed in what they were doing. They approached it only as people who felt they were forced, as an electoral bribe to the population, to introduce it.
  It ill behoves anybody who is a member of such a party, and it ill behoves even the right hon. Member for Kilmarnock, after the most schoolmasterly oration that he has just delivered, to speak about any duplicity in a political party when they have all been tarred with this in a real sense—in a sense in which the Scottish National Party certainly has not.
  The Minister of State, Privy Council Office (Mr. John Smith): The hon. Gentleman is the first Scottish National Party Member to speak since reference was made to the canvassing manual. Will he confirm that this manual was issued by the SNP and tell us what he thinks about it?
  Mr. MaeCormick: I have not seen the said document. I am prepared to accept that it was issued by the SNP, but not having seen it I cannot comment, except on the particular paragraph referred to by the right hon. Member for Kilmarnock. I do not agree with that paragraph.
  As I said, the SNP was prepared to co-operate on the Scotland and Wales Bill. We were always honest about it and made it quite clear that we were co-operating not because we saw the Bill as an end in itself but because we saw it as part and parcel of the dynamic process of greater measures of self-government and, eventually, independence. It is quite amazing that any reasonably educated hon. Member could pretend to be surprised that that was our aim. The

  953
  aim of our party has always been independence for Scotland. I have been a party member since the 1950s, and every single one of my membership cards states the aim in black and white. If any hon. Member wants confirmation of this he should buy one and become a member, or borrow one from a friend, and he will see that this is so.
  I turn now to the remarks of the hon. Member for Renfrewshire, West. The former Chief Whip, the right hon. Member for Bermondsey (Mr. Mellish), said that this debate was a joke thing, and I was reminded of this remark during the speech of the hon. Member for Renfrewshire, West. The last time I heard the hon. Member speak was on the radio, when he talked about folk music. I thought his speech was quite funny, but it would have been even funnier had it been set to music, and had he been allowed by the rules of the House to sing it.
  One of the most unfortunate parts of his remarks and of those of the right hon. Member for Kilmarnock was their harping on about this idea of Anglophobia. They trotted out as an example the claim that the SNP set up a loud-speaker and said nasty things about an Englishman who was standing for the Labour Party in Scotland. I would not put it past either of them to say nasty things about the various Englishmen who stand for the SNP in Scotland. I am sad to be accused of Anglophobia. I am married to an Englishwoman, and I suppose that my children are half English. Anglophobia is not a thing that characterises the SNP. I and all my colleagues would dissociate ourselves entirely from any idea that this is so.
  Mr. Buchan: If that is the case, why in January, February and March, when there was a sustained campaign of Anglophobia and racialism conducted in letter after letter in The Scotsman, did the hon. Member and other members of his party not take issue with it instead of leaving that to people like me?
  Mr. MacCormick: This is descending to the level of farce. There is no such campaign in Scotland and there never has been a sustained campaign of racialist Anglophobia. I do not recognise that
  954
  there ever was such a thing, so how can I refute it?
  Mr. Buchan: The hon. Member's brother recognised it.
  Mr. MacCormick: The hon. Member for Renfrewshire, West said—and the mind boggles—that if we had independence in Scotland it would put us in a neo-colonialist position. If he is prepared to extend that argument, it would apply to any small country that was independent. It would even apply to the United Kingdom within the Common Market. The Scottish National Party is quite certain, speaking not from an emotional point of view but from common sense, that once we have independence we shall end that sort of thing. Once we get a chance, Scotland will have a strong economy, and the people of Scotland will be allowed to realise their true potential.
  Those people who say that a strong Scottish pound is a bad thing should go to West Germany and tell the people there that a strong economy and deutschemark is something to dread and will weaken their position. I would certainly not agree with that.
  I refer now to the remarks of the hon. Member for Inverness (Mr. Johnston) who is my parliamentary neighbour. When he speaks of pacts and compromises he should think of the rather sordid pact that the Liberal Party has with the Labour Party. He should not confuse genuine compromise from an independent position with the kind of compromise that means selling one's side down the river. I have a feeling that that is exactly what the Liberal Party has done.
  Ever since I came into the House there has been an ongoing debate on devolution. Once it was conducted on a fairly high level and I thoroughly enjoyed it. This debate today has not been enjoyable at all. It has been characterised by cheap jibes, corny jokes and rotten complacency on both Front Benches. I do not suppose that I can say that the Conservative Front Bench was complacent because it scarcely mentioned the whole question of devolution—for obvious reasons.
  Mr. Russell Johnston: Since the hon. Member has now moved to the Conservative Party I should like to take him up on his earlier point. He said that the

  955
  agreement that the Liberal Party had reached with the Government was sordid. Could he please justify the use of that very harsh word? I do not dispute his right to argue the case for an independent Scotland. I do not agree with it, but I still do not dispute his right to argue it, I do not regard our pact as being sordid. Will the hon. Member recognise that I and my colleagues in our negotiations with the Government on devolution have been seeking to get something a little nearer our federal position than was previously offered?
  Mr. MacCormick: I cannot see the agreement as anything other than an attempt to save both parties' skins. It is an attempt to buy a few more months, and I cannot find anything good to say about it. The Liberal Party had the chance to support the timetable motion. Had it done so I believe that we would have been a lot closer to devolution than we are today. Any other argument is fatuous.
  The complacency of the Government Front Bench is striking. When I think of the tragic mess of the transport system in the part of the country that I represent, the tragic mess of the unemployment figures, and the tragic mess of education in Scotland, and I see the complacency written all over Ministers' faces, I am reminded of a primitive man trying to hammer a screw into a plank of wood. I see a grin on the face of the hon. Member for Glasgow, Cathcart, but he reminds me of a primitive man trying to pull the screw out with a pair of pliers.
  I wish that more Scots people were here today to witness this debate. I am sure that if they were here to witness the way in which the SNP has been unjustifiably attacked they would vote for us in greater numbers—as I am sure thye will do anyway. I agree wholeheartedly with the hon. Member for Inverness in that I believe that there will be a majority of SNP seats in Scotland after the next election.
  6.50 p.m.
  Mr. Donald Anderson: I agree with the hon. Member for Argyll (Mr. MacCormick) in that I, too, wish that many more people from Scotland and Wales were listening to the debate, either directly or by means of television, so that they might witness the farce of
  956
  this Scottish National Party motion and see how its Members will emerge from the debate with bloody noses and several black eyes.
  It is difficult to reconcile his call for reason with the impassioned speech made by the hon. Member for Argyll, and his call for honesty with the sheer cynicism of that electoral manual issued on behalf of his party. The hon. Member for Glasgow, Cathcart (Mr. Taylor) is not in his seat, but the sheer cynicism of the Conservative-nationalist pact which we have seen and shall be seeing in the Division Lobby tonight boggles description.
  This might have been a great Parliamentary occasion, for it is effectively a motion of censure on the Government. However, I am confident that the people of both Wales and Scotland will not be impressed by what has been said today. Virtually every hon. Member who has spoken began by saying that he proposed to criticise the non-constructive nature of the speech that preceded his and proceeded to give something of a knock-out speech.
  I am confident that my right hon. Friend the Prime Minister lost no sleep last night fearing the loss of half of his salary. I am sure that he is treating the debate just as it deserves to be treated by the House, by turning up at the end to register his vote and leaving that as his sole contribution.
  The real worry of the nationalists is that the Government have not delivered and will not deliver Wales and Scotland to them. My right hon. Friend the Member for Kilmarnock (Mr. Ross) said that he detected a certain negative anti-English sentiment in much of the propaganda put forward by the nationalists in Scotland. In the same way, my Welsh colleagues and I see a similar negative provincialism and a retreat into their own shell or valley based on anti-English feelings arising from so much nationalist propaganda in Wales.
  There is a simplistic approach to politics as a whole on the part of many Welsh nationalists. Not for them the problem of the allocation of scarce national resources, not for them the matter of priorities within a limited budget, and not for them the matter of IMF restraints or demographic problems regarding the future of our colleges of

  957
  education. They can choose to ignore the world context and the problems of peripheral areas, not just in this country, but over the whole of the European Continent and elsewhere.
  In their brave new world of unlimited resources they can mutter the panacea of independence, or the formula parroted by the hon. Member for Carmarthen (Mr. Evans) of "Commonwealth status", which, apparently, is independence in more palatable dress, in the hope that the real issues and problems of politics will disappear. The SNP is now on record as wanting independence.
  The Welsh nationalists do not use the word "independence", but it may be that during the debate they will get closer to it. The nationalists fail to recognise that Welsh people do not want independence. They do not want separation. They do not want to create artificial barriers because they are sure that they will suffer most. At least the Scots have oil.
  It is perhaps interesting to note that this great parliamentary occasion, which the nationalists promised us today, now has, during the mid-part of the debate, only one SNP Member and two Plaid Cymru Members present. That is hardly a tribute to the interest which they expressed as having in this debate.
  Mr. D. E. Thomas: Will the hon. Gentleman note that on the Government side there is only one Welsh Member of Parliament and the Secretary of State?
  Mr. Anderson: Two Welsh Members of Parliament and the Secretary of State. I have already made the point that the Prime Minister and others of my right hon. and hon. Friends are treating this silly debate in the manner that it deserves.
  We in Wales do not have oil. As I understand the policy of the SNP on independence, it is not to share the oil with us in any fraternal way. We are confident that the building of new frontiers will not help the people in Walees any more than frontiers would help the structural problems of those in the North-East of England or on Merseyside where there are similar problems. We believe that it is a callous view on the part of the nationalists to imagine that an unem-
  958
  ployed man on Merseyside or in the North-East of England is essentially different from his counterpart in Wales or Scotland.
  We have witnessed the way in which the nationalists can pick and choose their statistics bolstered by the mass of parliamentary Questions which they put down at great expense. Frequently they could get the answers by a little diligent research in the Library. If an answer suits them, it is trumpeted in the media in Wales, helped by their friends in the media.
  The hon. Member for Carmarthen used examples from Scandinavia, ignoring the only comparable example in unemployment terms—Ireland, the independent country on our doorstep.
  The nationalists refuse to look at the overall British position—for example, the viability of mines in South Wales compared with productivity in Yorkshire. They always look at the problems arising from the union and fail to see the benefits. For example, they talk about charging for our water across the frontiers, but forget the benefit that we have received and are receiving from the immense oil and gas riches which lie in the North Sea.
  There are difficulties in abundance in Wales. Unemployment is at an obscenely high level. There are communications problems. There are industrial scars, which have blighted the landscape in Wales for decades. There are long waiting lists for houses. So much housing in Wales is of poor quality. However, I am sure that my right hon. Friend the Member for Bermondsey (Mr. Mellish) could point to areas in the inner city of London—North Kensington, Brixton and other areas—where the quality of housing and multiple deprivation is a far greater problem than it is in any part of Wales. That is something that the nationalists refuse to accept. We have problems in abundance in Wales. There is the tragic problem of youth unemployment and under-utilisation of our national resources. Such problems cannot be solved by the magic wand—the panacea of independence. They can be assisted only by working together as a unit within the United Kingdom.
  The nationalists' solutions are irrelevant, yet they gain mammoth publicity in Wales by their instant opposition to anything put forward by the Government.

  959
  I take as an example the instant opposition by the hon. Member for Carmarthen to the White Paper on Transport, which was published last week. Almost before the White Paper had been published the hon. Gentleman went rushing off to the Press with an instant letter to the Secretary of State for the Environment, in which he said:
  "There are no plans anywhere in this White Paper for the substantial investment Wales needs in our railways if we are to maintain, leave alone improve, existing services. London "—
  part of the Anglophobia is the way that the Welsh nationalists use the word "London", in a pejorative sense—
  "neglect of Welsh railways seriously threatens the future of important links such as the Mid-Wales line, the Swansea to Fishguard services, and the Cambrian Coast line".
  There is nothing in this instant letter, probably penned before the hon. Member for Carmarthen had a chance to read the White Paper, about the new emphasis in it on the needs of transport in rural areas, which will be particularly relevant to Wales. Indeed, there is nothing about the new powers given to the counties for co-ordinating transport needs. Nor have we heard anything from the nationalists about the measure of devolution and real decentralisation of power which I thought they wanted. They said nothing about the fact that under this Government there has been no loss of rail track mileage in Wales, and the spirit of the White Paper makes such a loss appear far less likely.
  On anyone's estimate there has been a substantial change of spirit from the consultation document on transport last April and last week's White Paper. That change has not been reflected in any way by the instant opposition which was immediately broadcast throughout the media in Wales by the hon. Member for Carmarthen.
  A similar thing happened with housing. In the housing White Paper there is a new spirit of devolution which our people will recognise. It involves decentralisation to county units with which people can identify.
  Throughout the attitude of the nationalists there is a spirit of doom and gloom. They appear to live in an unreal world, which I and my Labour colleagues do not recognise in Wales.
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  When I leave London to travel to Wales I normally go by high-speed train. The London to South Wales line was the first line in the United Kingdom on which the high-speed train was established. It has made an enormous improvement in communications. I also see the M4, which my right hon. and learned Friend the Secretary of State has preserved against all the odds in the climate of public expenditure cuts. When I travel to my constituency I pass Llanwern, which has benefited from vast new steel investment. I also pass Port Talbot which has just had an enormous vote of confidence in its future by the Government's announcement of £835 million of steel investment. On my way to Swansea I go through the Swansea Valley and see how that valley is being transformed by the new Government grants, which are now channelled through the Welsh Development Agency.
  This is the picture which I and the people of Wales see. They see the transformation under this Government. They read so frequently in the Press about the instant opposition in housing, education and transport, and they see the contrast between the nationalist gloom and doom merchants and the real achievements brought about by the Government. Those achievements receive scant coverage in the Welsh Press because of the way they are reflected by the media and the way in which they are so often tainted and distorted by the nationalists. This positive picture hardly comes through.
  The Government, in the hurricane season, at a time of escalating world oil prices and massive unemployment throughout the Community, have contained the position and in some ways improved it. They have made a massive attack on the awful unemployment figures, but last week's announcement received little support from the nationalists. We cannot win. When my right hon. and learned Friend announces a new programme of advance factories to prepare for the upturn the nationalists divert attention to the factories that arc unlet. My right hon. and learned friend cannot win with the nationalists. He would still be criticised if he did not produce the factories.
  In spite of the enormous problems in Welsh housing, can the nationalists deny that we are housed better than we have

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  ever been? Can they deny that in terms of new building programmes and slum clearance there has been a vast transformation of Welsh housing and a massive investment in our industrial future? There is also the saving of Shotton. If the Government had not a few months ago produced their policy on steel, the closure of Shotton would have begun this year. That is something for which we had no praise from the nationalist gloom and doom merchants. The M4 shows the real and proper priority. It links us with our markets in the South-East and Birmingham, and is far more important than the wholly irrelevant North-South link, unifying the nation, which the nationalists would have us undertake.
  With all these problems I believe there is a new mood of confidence in Wales. It stands in sharp contrast to the speech of the hon. Member for Carmarthen, which ranged from the Basques to the Catalans and hardly mentioned the salary of my right hon. Friend the Prime Minister, which is said to be the subject of debate. That confidence is certainly frightening the nationalist parties, and this motion is for them a motion born of frustration. They see the Government's policies coming to fruition and they ally themselves with the Conservative Party, a party which a few months ago, by its opposition to the Water Charges Equalisation Bill, prevented Welsh ratepayers from gaining £4 million or so this year. They are unusual comrades in arms, and they are making a new pact, a Conservative-nationalist pact. It is an odd combination, which will not be lost on the electorate in Wales.
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): I should tell the House that 10 hon. Members would like to catch my eye before the winding-up speeches begin at 9 o'clock. If they are all to be satisfied that will mean about 12 minutes each.
  7.7 p.m.
  Mr. D. E. Thomas: The debate was referred to earlier as a joke debate or a light-hearted debate. That was the tone of the opening speech of the Secretary of State for Scotland and of certain other Labour contributions. For us, however, the whole point of making this wide-ranging criticism is our concern
  962
  over the Government's failure to deliver the goods on all aspects of its economic and social programme.
  We selected the specific criticism of the Prime Minister because he and his immediate predecessor must bear most of the responsibility for the economic and social failures of the Government's policies. Of course, some responsibility must also devolve itself to the Secretary of State for Wales and the Secretary of State for Scotland. As Cabinet Ministers they carry a joint responsibility for the failure of the Government's policies in Scotland and Wales.
  The Government's programme must be measured not against what was achieved by the Conservatives when they were in Government but against the real needs of Scotland and Wales. Similarly, the policy initiatives taken by the Government recently must be measured not against what might have been produced by a Conservative Government but against the background of what has happened to transportation in Wales under successive Governments since the war.
  The hon. Member for Swansea, East (Mr. Anderson) specifically criticised references by my hon. Friends to the transport review White Paper. We attacked that White Paper because yet again it creates a false transfer of power. It will nominally give county councillors responsibility for maintaining future rail services, but will it give them the resources to maintain them? Will the transport supplementary grant contain an element for maintaining the Cambrian coast line when it goes to Gwynedd County Council, Powys County Council and Shropshire County Council? Can we expect the full support of Shropshire County Council to maintain the Shrewsbury to Aberystwyth railway? I hope that we can. What will it mean in terms of resources to have a transfer of responsibility which will not be matched by a transfer of resources through the transport supplementary grant?
  Another worrying aspect of the transport White Paper is that the system whereby passenger railway closures have been advertised and made the subject of inquiries through the Transport Users' Consultative Committee seems to be under threat. This is not specified in the White Paper, but we are told that Government and parliamentary scrutiny of

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  procedures on rail closures is to be repealed. What precisely does that mean? Does it mean the end of the system which was responsible for maintaining the Cambrian coast line? It was the public inquiry at Harlech, the excellent advocacy of the Secretary of State on behalf of the liaison committee and the activities of the action group of local people that maintained that railway. It is precisely public answerability through the system of inquiry that has enabled local groups to protect transport services. I object forcefully to a White Paper that will result in that basic democratic right being withdrawn. This was brought up by the hon. Member for Swansea, East (Mr. Anderson).
  Mr. Anderson: Although there are points of concern, the tone of the White Paper is substantially better than that of the consultative document because it gives new impetus to rural transport—buses and trains—and that is of considerable importance in Wales. However, we have heard nothing of this from the nationalists.
  Mr. Thomas: The White Paper ought to be better—because the consultative document was cirticised by us all. We put in a major and lengthy criticism. To that extent we accept the White Paper, but we must, in a constructive way, criticise policies from the point of view of the needs of the Welsh economy and community. We reserve the right to continue our criticism, strident though it may seem to the Secretary of State and other Labour Members. We are here to represent the critical interests of the people of Wales, and we shall continue to advocate our cause in that context.
  Speaking specifically—not about transport or those aspects of economic policy that have already been covered by previous speakers—I want to take a more wide-ranging view of the position of the Welsh economy and not just in the last three years under the present Government. I want to go further back and to look at the economic plight of Wales and the initiatives of Government in the context of the regional needs of Wales.
  The hon. Member for Swansea, East mentioned that there had been an increase in the number of jobs provided in Wales through the advance factory programme. Indeed, 70,000 jobs were created through
  964
  the initiative of regional policies in Wales in the 10-year period up to 1975. However, in the same period 110,000 jobs were lost, and we must balance what was created through regional policy with what was lost. There was a 10 per cent. drop in male employment in Wales between 1965 and 1975. There was a general downward trend in the United Kingdom, but it was more severe in Wales. Between 1973 and 1974 the number of male employees in Wales fell by 2·3 per cent. compared with only 0·9 per cent, in the whole United Kingdom. Similarly, there has been a trend throughout Britain for an increase in female employment, but the rate of increase in Wales has been lower than in the United Kingdom.
  In the Welsh economy there is a lower rate of economic activity. That has been so under successive Governments. A smaller proportion of the Welsh population is at work than there is among the whole population of Britain, and the proportion is smaller than in nearly any other English region. The male economic activity rate in Wales, according to the 1971 census, was 78 per cent., while the figure for the whole of Britain was more than 81 per cent. There was also a lower activity rate for females, and there has been consequent job loss, with the result that we have a 36 per cent. female activity rate in Wales compared with 43 per cent. throughout Britain. The Secretary of State is checking my figures. They come from Welsh Economic Trends No. 3, Table 8.
  The Secretary of State for Wales (Mr. John Morris): I was not checking the hon. Gentleman's figures but commenting that that part of his speech was a repetition of the speech of the hon. Member for Carmarthen (Mr. Evans).
  Mr. Thomas: It was a development of that speech, and there will be further developments, if the Secretary of State will bear with me, of the analysis that was given by my hon. Friend the Member for Carmarthen (Mr. Evans).
  We see, therefore, that there is a sharper decline in the male activity rate in Wales and an increasing female activity rate which is far lower than the increase for the whole of Britain. Not even the most populous Welsh county has a female activity rate anywhere near that of England.

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  What does this mean? It means that the heartbeat of the economy is slower. We have a lower level of growth and income. The comparison that we wish to make tonight is not between what has been achieved by the Government and what might have been achieved under any other Administration, but between what has been achieved and what Wales needs. It is on those criteria that the Government must be judged. Low economic activity means that older people—and we have many, particularly in the valleys and industrial areas—find it difficult to obtain work, as do the young school-leavers. It is virtually impossible for many disabled people in Wales to find work. That is what happens when there is lower economic activity and higher structural unemployment.
  Of course, our lower economic activity results in lower incomes. An analysis of the position in Wales shows that the gross domestic product per employee is high. So the low level in income cannot result from the level of productivity of our workers. It results from the number of people at work. The level of the gross domestic product per head in Wales is £300 below the figure for England and £150 below the figure for Scotland. The Welsh figure is 5 per cent. below the average in the assisted regions and almost 25 per cent. below the average in the unassisted regions throughout Britain. These continuing low-income problems are a result of the lower rate of economic activity and the high rate of unemployment.
  The unemployment rate does not fall below 2 per cent. in good periods and it has only occasionally dropped below 4 per cent. in the last 10 years. The Welsh unemployment figures are worse than those in the English regions, with the exception of the North-East. Our argument is that the position in Wales, with structural unemployment and low economic activity, indicates that we need far more effective intervention to tackle our economic problems.
  After repeated demands from my party, the Government have created the Welsh Development Agency. That agency has the power to invest and create wholly-owned subsidiaries. It has not used that power. It has failed to use the power given to it by this House and, as far as
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  I am aware—the Secretary of State can perhaps answer this later—neither he nor his hon. Friends have advised the agency or guided the agency, telling it, as they can do, that it should use this power.
  When 20 people enter an empty advance factory in my constituency, as happened a fortnight ago, and take over that factory as a gesture, it is an act of desperation by a community which has turned to successive Governments and failed to find an initiative to create employment in areas of high unemployment. I make no apology for referring again to the 50,000 sq. ft. advance factory in Blaenau Ffestiniog. I did so in my first speech in this House and have done so in most of my other speeches on economic policy. That factory is a monument to the failure of regional policy under successive Governments. I press the Secretary of State to say that he is prepared to tell the WDA that it ought to use its powers to set up wholly-owned subsidiaries in such situations.
  I know that the Secretary of State will reply that such a matter is up to the commercial judgment of the WDA Those of us who have spoken to the agency know that, regrettably, it is more interested in operating as a public sector merchant bank than in taking direct initiatives. We have seen examples of the way in which the Northern Ireland development Agency has taken such initiatives. In my view the WDA should be directed to use some of its budget for research and project design to ensure that employment is created in areas of high unemployment.
  Mr. John Morris: To get the record straight, I am sure that the hon. Gentleman will concede that in the period in which it has been in operation the Welsh Development Agency has already taken shares in some companies and given loans to half a dozen or more of them. If my recollection is correct, one of the firms it sought to help in its early days in this way was in the hon. Gentleman's constituency. Regrettably, the circumstances were such that it was not right for it to do so. I do not think that the hon. Gentleman should get away with castigating the WDA in this way.
  Mr. Thomas: I am castigating the WDA specifically for its failure to use

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  its powers to set up wholly-owned subsidiaries. This ought to be part of its strategy. I believe in flexible public enterprise and so, apparently, does the Prime Minister—or so he told the right hon. and learned Gentleman in Aberyst-wyth on Saturday. If the Prime Minister believes in flexible public enterprise, let us see it in action. When we have unemployment of over 10 per cent. as we have in Gwynedd, and when there is a 50,000 sq. ft. building which has been empty for four years, the policy of flexible public enterprise should include setting up wholly-owned subsidiaries. I shall continue to castigate the WDA until it does this.
  Mr. John Morris: The hon. Gentleman knows that the terms of the Act do not prohibit such ventures. It is, as he said, a matter for the judgment of the WDA. In the right circumstances I should give the agency every encouragement. It is for it to decide on the ventures it will seek to support. In the short time that it has been in existence it has been collecting together the appropriate staff to ensure that the right commercial decisions are taken. Already a number of decisions have been taken, affecting firms from Prestatyn to Rhyl and down to Newport. I believe that the very first firm it sought to help was in Dolgellau. Is that right?
  Mr. Thomas: That is right. The Secretary of State knows that I was involved in discussions with his hon. Friend on this issue. I welcome the partial intervention of the agency in crisis situations and the use of expansion capital for specific firms. I also say that where participation with the private sector does not appear to be successful or possible the agency should take action. I am glad that the Secretary of State has said that he will support such an initiative.
  Mr. Dafydd Wigley: The Secretary of State has said that he would welcome such initiatives where the circumstances were appropriate. How far does my hon. Friend feel that unemployment in Wales should rise before circumstances are appropriate?
  Mr. Thomas: My hon. Friend has made a good point. What we have to accept is that the WDA needs to be advised more strongly by the Wdsh Office. In my time I have been critical of the
  968
  intervention of Welsh Office bureaucracy in certain administrative matters. But in this aspect of industrial policy the guidelines drawn for the agency, or at least the form of advice which the Secretary of State is able to give it. should be more forceful.
  The relative failure of regional policy has caused and causes deep individual distress and social and community decline in large areas of Wales. The heady talk in "Wales: the Way Ahead" about the swelling resources of the United Kingdom being made available to Wales are dead words. Indeed, the whole concept of "Wales: the Way Ahead" is dead.
  There was a time when the Secretary of State's predecessors went about Wales extolling the virtues of their national plan. It may be that the job shortfall calculation in the plan was rather short of the mark—about 15,000, if I remember correctly—when compared with the actual shortfall of 220,000. Despite the fact that the figures may have been inaccurate, the intention of national planning for Wales was enshrined in Welsh Office policy. Now, apparently, my hon. Friend the Member for Caernarvon (Mr. Wigley) is told in successive parliamentary answers that no plan can be forthcoming and no planning is to be expected. Apparently national economic planning in Wales is not to be, although we have regional and strategic planning in England as part of Government strategy. Counties in Wales in structure planning are to work within the context of "Wales: the Way Ahead". Perhaps the Secretary of State can give us his latest view on national planning in the Welsh economy and say whether he now believes that there ought to be an attempt to develop beyond "Wales: the Way Ahead".
  I have mentioned the job shortfall calculation. The Plaid Cymru economic plan—my hon. Friend the Member for Caernarvon was one of its authors—had its calculations justified in a later study sponsored by the Welsh Office. It was then found by Moore and Rhodes that the shortfall calculation that we had of between 200,000 and 250,000 new jobs to provide a full solution to deal with the structural and economic problems I have talked about was correct.
  This is our basic criticism of Government policy. There has been a failure

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  to set a target to tackle economic deprivation in Wales. We find that the position is the same in specific areas. If we look at Mid-Glamorgan and the document produced by the Mid-Glamorgan County Council dealing with "Position and Prospects", we find that a study of the industrial position showed that in the early 1960s there was 8 million sq. ft. of floor space provided in the advance factory programme in Britain as a whole. Of that 20 per cent. went to Wales, with 30 per cent. of that figure going to Mid-Glamorgan, representing 25 factories. Between 1965 and 1975, there were 2,500 jobs provided in advance factories in Mid-Glamorgan, so the document tells us. During the same time, 15,000 jobs in the coal industry disappeared. What has happened with the advance factory programme in Mid-Glamorgan has happened throughout the old industrial areas of Wales.
  The position in the constituency of the Under-Secretary of State—the hon. Member for Rhondda (Mr. Jones)—is very similar to the position in Blaenau Festiniog, in my area, where there has been a failure to replace jobs lost in the extractive sector by new jobs in manufacturing industry. When the Secretary of State and his hon. Friends announce to the Welsh Grand Committee, as the Secretary of State always does, the number of feet of floor space in advance factories that he and his civil servants have created over the last year, he should also remind that Committee, and Wales, of the actual number of jobs created by the advance factory programme so far and should compare that with the number of jobs that are needed.
  It is because of this relative failure of the economic programme of the present Government that we criticise the Prime Minister. Indeed, we would criticise any Prime Minister of an Administration in London who failed to create the conditions of recovery and development in the Welsh economy. We have been equally critical of successive Governments that have failed to deliver the economic goods. Should the hon. Member for Pembroke (Mr. Edwards) ever arrive at the Welsh Office, we shall certainly be even more critical of him than we are of even the right hon. and learned Gentleman's Administration. As a party, we have been
  970
  advocates of effective economic planning in Wales. Our view is increasingly being justified.
  Mr. Nicholas Edwards: Now that the hon. Gentleman has joined in this indiscriminate criticism, I hope that he will allow me to put a question to him. He has been talking for a very long time and very realistically about the many problems of Wales and he has been drawing attention to the fact that they are widespread and are found in parts of England as well. He has said that there is high unemployment in practically every county in Wales. He has criticised the Government's economic policies, and he said that he would criticise Conservative policies. However, he has not explained to the House how he would provide the jobs, except, apparently, by setting up State-owned bodies under the auspices of the Welsh Development Agency. But if the situation is as bad as he says it is, and if unemployment is as widespread, if the problem is so great and so many jobs have to be found, does he think that the resources in terms of money and manpower would be available to solve the problem in that way? What is the economic solution preferred by Plaid Cymru?
  Mr. Thomas: The economic solution preferred by Plaid Cymru is the creation of an effective Welsh Government with full economic planning and law-making powers.
  Mr. Nicholas Edwards: What would they do?
  Mr. Thomas: The creation of such a Government would enable us to undertake programmes of development and to take the kind of imaginative decisions taken by the right hon. and learned Gentleman the Secretary of State when he decided to fund the M4, for example. My hon. Friend the Member for Carmarthen has been demanding for years, since he first became a Member of this House, dualling of the strategic routes and an increase in the number of dual carriageways, and effective 24-feet distance visibility for the rest of the trunk road network.
  Let me make clear once and for all that we have always advocated a figure eight in the Welsh road network. If the hon. Member for Aberdare (Mr. Evans)

  971
  reads our economic plan, he will see that there we advocate dualling out north and south and a far improved dual carriageway to Merthyr, and getting 24-feet distance visibility from there north. We are not advocating a major motorway network at present, but—
  Mr. Ioan Evans: All the economic activity of Wales is bound up with the rest of the United Kingdom. That is why the Secretary of State is right to give priority to east-west roads rather than to the theoretical conception put forward by the hon. Member for Carmarthen (Mr. Evans) of having roads running north-south. The economic activity is east-west, and Wales with the rest of Britain.
  Mr. Thomas: I am slightly concerned in the context of expenditure on roads, that we are now to see a major extension of the A55, which will result in the linking up of two special development areas. I would want to see the Welsh Office consider devoting at least some resources to improving our through links in Wales to the markets in the Midlands of England and to Europe and beyond. We in Plaid Cymru have always argued for the improvement of our roads to the markets and for the improvement to good distance visibility standards of the A470.
  Mr. Michael Roberts: The hon. Gentleman refers to the desirability of more roads in Wales. Few will dispute that proposition. Of course, we must work out where the money is coming from. The important thing is priorities. The hon. Member referred to the imaginative decision to extend the M4 as a major priority, but his hon. Friend the Member for Carmarthen (Mr. Evans) has always advocated not the extension of the M4 but a north-south road. Where does Plaid Cymru stand on this matter?
  Mr. Thomas: I have always referred to that point and stated clearly that our position is that there must be an improvement in roads east-west and north-south, but that the level of improvement should reflect the need. What we have argued for is a dualling east-west and up to Merthyr and an improvement up to recognised standards on the A470.
  Before I am further delayed by interventions which clearly indicate a failure
  972
  to read our economic plan, and having been delayed rather longer on the economic aspects than I intended, I turn finally to the social position in Wales which follows directly from the low level of economic activity. It is a fact that in Wales one family in three is living below the official poverty line. That proportion is worse than in any other region or nation in the United Kingdom. If one takes the officially defined poverty line as the supplementary benefit level plus 40 per cent., one finds that there are 330 families per 1,000 in Wales who are living below that level, as compared with 240 in England. We have 240 families living at the level of supplementary benefit plus 20 per cent. No other region in Britain has more than 270 families per 1,000 in the band of income which is below the supplementary benefit plus 40 per cent. level.
  That is the vicious indictment of the failure of successive Governments to bring a decent level of income to our people. That is why the level of public expenditure in Wales, particularly on social security, is higher than it is in other parts of Britain.
  When the Secretary of State and members of his party so proudly go about Wales saying "Public expenditure in Wales is higher per capita than it is in England" they do not bother to tell us why. One of the major reasons why per capita public expenditure is higher in Wales, apart from capital expenditure on nationalised industries and looking specifically at current expenditure, particularly on social wage items, is that so many families in Wales are dependent on the income maintenance programmes of successive Governments. It is because so many families in Wales are unable to get an adequate level of income from work, and because more of them are unemployed or sick, that we have a higher level of social expenditure in Wales.
  The other item of social expenditure which needs "subsidy" from central Government is housing. Public expenditure on housing in Wales is 10 per cent. below the level in England. That is totally unacceptable. It indicates not only a failure in the private sector but a far greater failure in the public sector.
  Let us examine the average annual number of dwellings completed per thousand

  973
  population from 1969 to 1974. The figure for Scotland was seven dwellings per thousand, for England was 5·9 dwellings per thousand, and for Wales 5·4 per thousand. In the public sector the figures were 2·5 per thousand for England, 5·0 for Scotland, 4·7 for Northern Ireland and 1·9 for Wales. The position will become worse with the rounds of public expenditure cuts which have been announced already. We shall get to the position in which the per capita spending on housing in Wales will be down to £29 in 1979–80 compared with £43 in England. That is totally unacceptable.
  Wales is a country where the housing is older and the unfit dwellings number twice as many as those in England. The poor housing record for Wales is equalled only by its economic situation.
  The Secretary of State must explain what he is doing in the inter-departmental discussions that he is having with his colleagues about public expenditure for housing. He must explain why he has not secured adequate funds for Welsh housing. I do not mean the odd additional £5 million that he receives when he finds that certain moneys are not being spent. I mean in terms of the programme for the 1980s. Why are the schedules not higher than they are for England? The Welsh need is greater. I do not apologise for asking for a housing subsidy, for Wales because conditions there are a legacy to the performance of successive Governments and their inadequate housing programmes.
  To my party this debate has been about the failure of the economic and social record of this Government. We make no apology for seeking to reduce the salary of the Prime Minister. We take the view that no Prime Minister in London deserves his salary, nor will he until we have effective transfer of power from Westmister to Cardiff to enable the Welsh people to tackle their own problems.
  Internationally the Labour movement has always been confused about the national question. I do not wish to go into a philosophical argument on that question. In the Labour and trade union movements in many areas of the world a radical, useful and powerful alliance has developed between the forces of social change and the forces of national change.
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  Wherever we look, whether it is to the Third world or the Basque country, it is a powerful alliance between the forces of the Left and the forces of national recovery that have resulted in change.
  We are seeing that alliance being forged in Scotland in the SNP and the Scottish Labour Party and, increasingly, in Wales within Plaid Cymru and within those in the trade union and Labour movements who favour the greater transfer of power. That kind of alliance when it achieves power in Wales will be unstoppable because for too long it has been used as lobby fodder for this Parliament. As we move into the 1980s this political change in Wales will be more dramatic than anything that has been seen in Westminster.
  7.45 p.m.
  Mr. James Sillars: We have seen wrangling between Members of the Scottish National Party, the right hon. Member for Kilmarnock (Mr. Ross) and the hon. Member for Renfrewshire, West (Mr. Buchan). Until a few moments ago the debate showed how remarkably inept are the SNP at determining political tactics. We have a Government who are wide open to attack and yet, because of the choice of the motion, the attack was not made.
  We have a Government who claim to be Socialist. When they came to power, they gave a number of pledges, one of which was made by the Chancellor of the Exchequer during an important television interview: he said that he would never introduce a wages policy. The Government have done that. The Government told us about the social contract, which they said was designed to hold living standards but which has lowered them. When the Government came to power, they said that unemployment was 1 million under the Conservatives and that would never happen again. Now it is 1·4 million.
  The former Secretary of State for Scotland, the right hon. Member for Kilmarnock (Mr. Ross), said that if Scottish unemployment went up over 100,000, he would feel it necessary to resign. He did not. Yet the SNP allows him to give its members a lecture this evening. We have a Socialist Government who are waiting to be rescued by

  975
  capitalists in the United States, West Germany and Japan. They are hoping that our economic problems in the United Kingdom will be solved in time for the Labour Government to be returned to power.
  The hon. Member for Swansea, East (Mr. Anderson) lectured the two nationalist parties about wanting resources beyond our capability. That is not the problem now. Some industries are running at 20 per cent. below capacity. In the construction industry there are a large number of unemployed, a huge mountain of bricks, plenty of sand and free water. There are plenty of housing schemes and yet the Socialist Administration cannot put them together to use available resources.
  The right hon. Member for Kilmarnock demonstrated his lack of economic knowledge when he referred to Glenfield and Kennedy. What does he expect Glenfield and Kennedy and other firms to be doing? When he was in the Cabinet he agreed to a deflationary policy and cuts in expenditure that were bound to create problems in the engineering industry. The other cuts in Scotland and other parts of the United Kingdom are the faults of this Administration and its supporters. Remarkably, the attack has been made in the other direction, which no doubt shows the parliamentary skill of right hon. and hon. Members as well as the ineptness of those who promoted the motion
  It was not the most apposite motion to table in present political circumstances. It would have been better to narrow the attack to something specific and definite, such as the level of unemployment and the process of de-industrialisation which is taking place in every part of the United Kingdom, apparently unknown to the Government. Even when the country has been flooded with oil and when the City of London has provided more in industrial assistance, the process of de-industrialisation will create a wider and wider gap between the rich and the unemployed. It would be better for an attack to take place on that particular problem.
  Mr. Sydney Bidwell: Has it occurred to my hon. Friend, when he considers the ineptitude of the nationalists on this occasion, that they would have done far better to propose that the salary of the Leader of the Opposition be
  976
  cut in half, since she is a trenchant opponent of any devolution process?
  Mr. Sillars: I regard us as having a Tory Labour Prime Minister and a Tory Tory Leader of the Opposition. But that is really quite immaterial.
  I shall now give one or two facts to show how serious is the nature of our unemployment today and how serious is the process of de-industrialisation. I have Hansard here for the debate in July 1973 on the Scottish economy, when the Labour Opposition, as they then were, went full tilt at the Conservative Government, and rightly so, at a time when there were 93,000 unemployed in Scotland. We have now passed beyond that point. Indeed, I argue that we are nearly at the point of no return and that, unless unemployment is soon dramatically reduced, we shall not be able to overcome the problem for at least a decade.
  At one time it could be said that Scotland could export its unemployment. It could export it to the more expansionist parts of England, to South Africa, Rhodesia, New Zealand, Australia, Canada and the United States. For one reason or another, those avenues of escape are now cut off, and we have to solve the problem within our own industrial society. If we allow unemployment to go well beyond its present state, there will be no possibility in the foreseeable future of our pursuing the economic policies which would create the rates of growth required to take us below even 100,000. I believe that the situation is as serious as that.
  We now have 38,500 people who have exhausted their unemployment benefit, yet there used to be only a total of 45,000 unemployed in the Scottish economy. Scotish unemployment is now almost 80 per cent. higher than it was when Labour took office in February 1974. In May there were nearly 30,000 construction workers unemployed, an increase of 52·2 per cent. over February 1974.
  For the 186,000 unemployed in Scotland there are only 19,526 jobs notified as vacant, and for the 1·39 million unemployed in Great Britain there are only 193,826 jobs notified as vacant. That is a very bad state of affairs for unemployment as a whole.
  In youth unemployment, however, the situation is far worse and will continue

  977
  to be bad despite the programme announced last week by the Secretary of State for Employment. There are now 75,922 young people under the age of 25 unemployed in the Scottish economy. This is the most dynamic and vital section of society—young people between J6 and 25 years of age—we say to them "Work hard at school, stick at your lessons and stimulate your educational ambitions", and then, when they have their qualifications, all that society has to offer 75,000 of them is an idle place in the dole queue.
  When we do that, we invite enormous social difficulties. We invite an increase in vandalism, in violence and in antisocial behaviour. The hon. Member for Glasgow, Cathcart (Mr. Taylor) would probably say that the answer to that is the birch, the stocks, or the gallows. But that has never been, and never will be, the answer. Our problem is not that unemployment excuses the anti-social behaviour but that among some elements of our young people it is bound to be a factor which creates it, and unless we are prepared to get full employment among our young people the rest of society will be in for a pretty difficult time over the next decade, and deservedly so.
  The process of de-industrialisation is very worrying, too. In the book "Scotland 1980" there was a contribution from someone who, I believe, is a member of the Labour Party, pointing out that manufacturing now occupies only 30 per cent. of the Scottish economy—the lowest proportion in living memory—and the process is continuing. Last year Strathclyde Region produced a regional survey showing a job loss potential of 70,000 in manufacturing between 1976 and 1983—a constant process of de-industrialisation. Between 8th March 1976 and 31st May this year we have had 106,000 redundancies notified in Scotland. Strathclyde took out of that total almost 51,000, and with what is happening to Glenfield and Kennedy and various other employers, we are on our way to the appalling target which was mentioned by the Strathclyde Regional Council.
  Unemployment and de-industrialisation are matters more worthy of a motion that the proposal to reduce the Prime Minister's salary, and would be far more pertinent and effective. However, the
  978
  motion we have before us allows us to range over the Government's vices and virtues in economic and social terms, and it allows folk such as myself to pick out one redeeming feature, namely, the Prime Minister's speech to the Parliamentary Labour Party on the question of the Scottish Assembly in which, for the first time, he made a statement committing the Government almost to a vote of confidence issue on the passage of the Bill in the next Session of Parliament.
  I regard that as an extremely important statement by the Prime Minister, which in itself warrants the present Government continuing in office until such time as we see whether the right hon. Gentleman and the Parliamentary Labour Party really mean it for the second time round. [Laughter.] Yes, I believe, on balance, that the devolution Bill next Session will have a far better chance of passing than many people imagine. At the end of the day, it will be passed not out of idealism or a compulsive need to honour an election pledge but out of the basic motive of political man, the need to survive. If the devolution Bill does not survive next Session, neither will the Government, and I believe that this has been borne in upon a great number of members of the Parliamentary Labour Party since February this year when the guillotine motion failed. That is why I shall vote with the Government tonight, to try to sustain them in office until we see whether, second time round, they actually do it.
  It is highly important that there be a Scottish Assembly established. I believe that profound changes are going on in the government of the United Kingdom, and it would be far easier to regulate relations between the people of Scotland and the rest of the United Kingdom if there were an institution north of the border to do their constitutional speaking for them. For my part therefore, I am prepared, as it were, to stretch the generosity of my hon. Friend the Member for Paisley (Mr. Robertson) and myself right through to October or November until we see whether the Government will make it this time.
  7.59 p.m.
  Mr. Wyn Roberts: The hon. Member for South Ayrshire (Mr. Sillars) suggested that we might have had a better debate had it been devoted to a specific

  979
  subject. There is in fact a specific subject, but that subject, the Prime Minister, is not here. It is curious that he is not here. One might say that he is escaping scot-free. I suppose that he may be recovering from the decision of the miners at Tynemouth, or he may have such disrespect for those who are criticising him today that he does not feel that he should attend.
  The Prime Minister was certainly in optimistic mood in the bracing air of Aberystwyth over the weekend, and I wish to comment on his speech there. Apparently, he could see a break in the ice surrounding us and
  "a way out into the open waters of sustained economic growth"
  as he put it. He did not say who had led us into the ice-pack. Presumably, that is best forgotten.
  But I do not think that the British people—including the people of Wales—will forget. The Prime Minister knows that, when the time comes, they will rightly be reminded of the facts of record inflation, disheartening taxation and deep and abiding unemployment. His main ambition now clearly is to avoid the day of reckoning. It is equally clear that he is prepared to go to any lengths to procrastinate having to present himself and his Government for the judgment of the people.
  When the time comes, the people will be reminded of the Government's record. They will be reminded of the last month's unemployment figures—8·7 per cent. in Wales compared with 7·3 per cent. in the rest of Great Britain, and 9·3 per cent. in the special development areas. Those figures, like Banquo's ghost, will haunt the Prime Minister and the Government for a long time.
  It is curious that in his speech the Prime Minister promised the decade of opportunity ahead not as a consequence of Government policies but as a result of the advent of oil revenues. He took an optimistic view of those revenues at £7 billion. My understanding is that the oil revenues will not produce that kind of benefit until the peak of 1985; but I suppose that anything goes at a party conference in Aberystwyth. Nor did the Prime Minister spell out the uncertainties attached to oil revenues and the dangers, especially in terms of inflation, of a rapid change in our economic prospects.
  980
  The matter that I wish to stress is that the Prime Minister's bait to the electorate is blatantly materialistic, and it will be on offer to us whether he is in office or not. The oil revenues will flow whatever party is in office. The right hon. Gentleman was not concerned only to lay bait for the electorate. He was also concerned about perpetuating the support which he receives from the Liberal Party. In this respect I thought that he revealed an astonishing readiness to sacrifice his party's principles—a readiness equalled only by the Liberal Party's willingness to compromise when and since it supported the Government in the vote of confidence some weeks ago.
  The political situation has deteriorated since then. The Liberal Party and the Labour Party are less ready to face an election now than they were then and the pressure to continue the Lib-Lab pact is consequently stronger. Hence the 10 points of the Leader of the Liberal Party and the Prime Minister's crumbs of comfort to the Liberal Party in his weekend speech. They are likely to turn out to be iron rations for survival, as the Liberal Party will discover on Thursday.
  Hardly any party was left without some tempting morsel in the Aberystwyth speech. Plaid Cymru must have been attracted by the remarks about decentralising nationalised industries. Even we in the Opposition are pleased by the acknowledgment of a place for Voluntary organisations in the Welfare State system. I imagine that the Left wing might have felt a twinge of delight at the promise of some degree of industrial democracy.
  But where does all this party-political bartering get us? Where does it get the people of this country? Where does it get the people of Wales, the 80,000 unemployed to whom I referred, and the 50,000 to 60,000 people on the housing waiting lists?
  I well remember the enthusiasm of the Secretary of State for Wales for his Welsh Development Agency when he introduced the Bill. I wonder how he feels about it now. It is said in its latest statement of policy that it is to build 3½ million square feet of factory space in the next five years. Assuming that that plan is completely successful and that all the factories built are filled, it will provide

  981
  employment for about 16,000 people when we already have empty factories such as the one referred to by the hon. Member for Merioneth (Mr. Thomas) and no fewer than 80,000 unemployed. It is estimated that over the next 10 years 180,000 jobs will be needed.
  What are the Government and the WDA doing about this matter? They are turning to private industry and seeking to encourage it. I agree with that policy, but it seems to be standing some Socialist principles on their head. We understood from the Government that the salvation of this country, the answer to everything, was more and more nationalisation. Suddenly we find that they are putting their faith in the encouragement of private industry.
  On 10th March last year the Welsh Grand Committee was told that the Secretary of State for Wales had secured an extra £20 million to £30 million for Welsh housing. We hear that that money has not been spent. The Government try to shift the responsibility for that on to the local authorities. But no one is completely convinced. We acknowledge the great need for housing in Wales. We have a high percentage of unfit housing. How was it that the Government did not discover until the financial year was over that the much vaunted £20 million to £30 million had not been spent? Who is at fault? I suspect that it must be the Government, and yet they have never acknowledged that fault.
  What of the future? Devolution is an attempt by the Government to divert criticism to local national assemblies for the failure and inadequancies of central Government. The Government would like debates of this sort to take place in Cardiff and Edinburgh, well away from this Chamber. The people of Wales have recognised that devolution is an attempt to divert criticism from this place.
  As for our attitude, we say that over the years Wales certainly has had its fair share of available resources. The provisional expenditure figures per head for 1975–76 are £732 for England, £826 for Wales and £928 for Scotland. I am not saying that we could not do with more. We can always do with more. My criticism of Plaid Cymru is that it wants the earth but will never acknowledge that what it wants must be provided by the United
  982
  Kingdom Treasury. Wales does not have the resources to maintain the figure that I have quoted, let alone the expenditure to which the hon. Member for Merioneth alluded. He asks for not only an east-west road in the South, but simultaneously an east-west road in the North and a road down Mid-Wales. His party never tells us from where the money for such developments will come.
  I understand that the devolution Bill, or Bills, will occupy our time again next Session. The Government are waiting for the oil to flow in sufficient quantity to enable them to bribe the electorate into giving them another five-year lease of life.
  I have one further comment to make on Plaid Cymru's attitude and on the speech of the hon. Member for Carmarthen (Mr. Evans). He never seems to be able to accept that anyone can love Wales who is not a member of his party. He makes Welsh-speaking Wales a far smaller Wales than I know it to be. With all his talk about the Basques, the Catalans and so on, he makes Wales very small.
  I remind him of that great line of Welsh poetry about
  "all the air things wear that built this world of Wales."
  Even Welsh Wales is a much bigger world than he thinks it to be.
  Mr. Gwynfor Evans: Will the hon. Gentleman tell us how he and his party intend ensuring a national future for Wales?
  Mr. Roberts: Indeed, we have a very sensible policy. It is a developing policy. If the hon. Gentleman cares to read our policy documents, he will see that we cherish all things Welsh quite as much as, if not more than, he does.
  What really concerns me about the present position is the way that parties—especially the Labour Party—are abandoning their traditional positions on matters of principle simply to survive. In other words, principle is being sacrificed to expediency, and this cannot augur well for the future of our political life.
  How we can have a Labour Party that cannot pursue Socialism and yet is content to remain in office is something that few can understand. It is only explicable in terms of a personal desire for power

  983
  that is totally alien to the traditions of this country and the integrity of our party political system. But, of course, the Lib-Lab pact is only a temporary feature. It cannot last for ever—only as long as it suits the Government and until they are in a better position to win an election. How the Liberals can believe that that will be the best time for them as well I frankly do not know.
  If the Labour Party were by any chance to win the next election, the Liberal Party would be in no position to restrain the onward march of the Labour Members below the Gangway. The present Prime Minister might not be leading that Government. The Labour Party might then be very differently led and committed to extreme forms of Socialism. Is that what the Liberal Party wants? Typically, the Liberal Benches are empty. Liberal Members contribute to the debate, but they are not here to listen to the speeches of others.
  That, I submit, is what the Liberal Party should be considering—what it is really supporting in the long term rather than in the present. I do not think that we can have an even moderately honest and sincere Government in this country in the present circumstances—honest and sincere in the sense that it reflects broadly the wishes of the majority of people in this country. It is because the Prime Minister is at the centre of the present situation and responsible for the political bartering that is going on that I shall vote for a reduction in his salary.
  8.14 p.m.
  Mr. James Molyneaux: I apologise to the House, and particularly to the right hon. Gentleman the Leader of the Scottish National Party, for my absence in the early stages of the debate. This was due to a long-standing engagement in Northern Ireland combined with some delay in air communications.
  The intended effect and object of the motion is to bring this Parliament to an end at the earliest possible moment. If my right hon. and hon. Friends believed that an election in the near future would be in the interest of the Province we represent, we should, of course, be supporting the motion, but we shall not be doing so because we are convinced of the opposite. In the last three months it has at last been recognised by all the parties
  984
  in the House—with the negligible exception of one individual who is opposed to the parliamentary union itself—that Northern Ireland is under-represented in this House and that steps ought to be taken without delay to remedy that under representation.
  Last Thursday the Secretary of State for Northern Ireland indicated in the House that the first of these steps, the establishment of a conference under the chairmanship of Mr. Speaker, was imminent and that the Government hoped to see its work commenced this month. I think that the whole House would agree that, now this decision has been taken and the steps to implement it set in train, the undertaking to the electors of Northern Ireland ought to be fulfilled with as little delay as possible.
  Certainly, from the point of view of Northern Ireland, this Parliament ought, if possible, to be the last in which the under-representation is perpetuated. This obviously depends upon the period which Mr. Speaker's Conference will require for its deliberations and the further period which the Boundary Commission for Northern Ireland will need for its consequential work. But, on the most pessimistic view, these two periods together are likely to be much less than the remaining statutory life of this Parliament. You will understand, therefore, Mr. Deputy Speaker, in these circumstances, why my party is unwilling to see this work interrupted while progress is being made.
  There is another consideration, which weighs heavily with us. I told the House last Thursday that my party is determined, if possible, not to see the so-called direct rule renewed in its present form. It is no secret that the Secretary of State for Northern Ireland, on behalf of the Government, is actively engaged in studying the next constitutional step for Northern Ireland. It would be no service to anyone except ill-wishers of the people of Northern Ireland—and I am convinced that there are very few such people in this House—if this work were at this point in time to be interrupted by the upheaval of a General Election and possibly thrown back into the melting-pot altogether in consequence.
  It is for these reasons that, in pursuance of our duty to the people of Ulster, my right hon. and hon. Friends and I will

  985
  not be found in the "Aye" Lobby tonight.
  8.18 p.m.
  Mr. Ioan Evans: We have had a very thoughtful contribution from the hon. Member for Antrim, South (Mr. Molyneaux). I hope that my right hon. and hon. Friends on the Government Bench will take note of what has been said and that due consideration will be given to it. In fact, the hon. Gentleman's speech, though brief, stood out from the various speeches that we have had in a debate which, as was said at an early point, has almost bordered on farce.
  It is a great pity that, when we have this device to give minority parties the opportunity to have a day of parliamentary time, they should not have seized upon the opportunity to have a reasonable debate. To choose the device of seeking to reduce the Prime Minister's salary, and then to make the type of contribution that we have had from the nationalist Benches, has been a waste of parliamentary time.
  It was said at the outset by the right hon. Member for Western Isles (Mr. Stewart) that this was independence day, and that it was appropriate that we should have the debate on this day. Presumably, what we have had from the two nationalist parties is their declaration of independence. Presumably they are arguing that they want independence for Scotland and for Wales.
  It is very intresting to have this revelation from the three Welsh nationalists, because in the past they have denied that theirs is a separatist party which wanted to break away and to create a completely separate political and economic unit in Wales, apart from the rest of Britain. It is, indeed, very interesting to have this on the record this evening, and to find the hon. Member for Merioneth (Mr. Thomas), who used to shake his head in the devolution debates, now sitting quietly and listening to what has been said.
  But the most disturbing factor tonight has been the references by Conservative Members to the Lib-Lab pact. This day—4th July—will be remembered as the day when we had a Tory-nationalist pact. I do not know whether it will be remembered for long. I am not sure
  986
  whether that pact will survive the night or whether it will last much longer than the Division in the Lobby.
  It is interesting that the hon. Member for Glasgow, Cathcart (Mr. Taylor), who is an ardent anti-separatist, will lead his colleagues into the Lobby behind the two nationalist parties which have been arguing for independence and the breakup of the United Kingdom on the Floor of the House. In fact, the hon. Member for Cathcart talked about the economic situation as if it were completely and entirely the result of Government policy. He knows that that is not the case. He knows that Western Europe is passing through an economic recession. Although we have problems of unemployment and the cost of living, these problems are common to Western Europe.
  In 1964, when the Labour Government came into office, they inherited a £353 million debt from the Tories. By 1970 the Labour Government had transformed that into a surplus of £733 million. That was the achievement of the previous Labour Government. Yet in four years the last Tory Government, before they tried to cut their losses and go to the country before they needed to do so, had transformed that £733 million surplus into a debt of £3,347 million. The last Tory Government left us with a balance of payments deficit of over £2,000 million a year and with record interest rates. Under this Government interest rates have come down from 15 per cent. to 8 per cent., but under the Tories we had record interest rates. We also had a 28 per cent. growth in money supply deliberately caused by the Tory Chancellor of the Exchequer.
  The hon. Member for Conway (Mr. Roberts) talked about the Prime Minister's speech at Aberystwyth this week. He said that when offshore oil flowed it would be a bonus for the economy. He implied that it was wicked for politicians to say that this will go into manufacturing industry. But that has been part of the problem of decline in the United Kingdom as a whole. We must recognise that one of the problems that has faced this Government has been the four-fold increase in the price of oil. That means that we have had to cut back on public expenditure, and on various other things, which have been deplored more by Labour Members than by the Tories.

  987
  Whereas my colleagues have disagreed with the Government in cutting back on public expenditure, all that the Tory Opposition have said is "We want more cuts. It is not enough." Of all the cuts in public expenditure, there is only one that the Tory Opposition regret, and that is the cut in defence expenditure. They want defence expenditure increased, but they say that public expenditure in toto should be cut back.
  The hon. Member for Cathcart said that there would be a Left-wing takeover of the Government. That is a joke if ever there were one. What this country has seen is a Right-wing takeover of the Tory Party. The hon. Member for Cathcart and the hon. Member for Pembroke (Mr. Edwards), who will be summing up the debate, are two examples. They are not just a couple of Globtik advisers but people who are in the Right-wing section of the party. We have only to remember the way in which they removed the right hon. Member for Sidcup (Mr. Heath) from office. Now we have the present Leader of the Opposition. We saw her political Svengali last night on television trying to make political capital out of the Grunwick dispute. Now an anti-trade union campaign is being waged. One can just imagine what will happen if the Tory Party comes back into office.
  The hon. Member for Cathcart rightly dubbed the two nationalist parties as being parties of all things to all men. There is no basic political philosophy with the Welsh nationalists and there is none with the Scottish nationalists.
  Mrs. Bain: Rubbish.
  Mr. D. E. Thomas Mr. D. E. Thomas rose—
  Mr. Evans: The hon. Gentleman never gives way to me but I shall give way to him.
  Mr. D. E. Thomas: I always give way to the hon. Gentleman. If I did not do so on this occasion it was because my speech was rather long. The basic political philosophy of my party is to have control by the community of its own resources. That is a very basic philosophy.
  Mr. Evans: The hon. Gentleman must give it greater meaning. Some people say that Plaid Cymru is a Socialist party. But when it tries to get Liberal and Tory votes, that is soft-pedalled. We get Margo
  988
  MacDonald saying "We are a Socialist party" but then we get: the right hon. Member for Western Isles saying "We are not a Socialist party". The Scottish National Party is all things to all men and so are the Welsh nationalists. I shall be posing a question to the hon. Member for Merioneth (Mr. Evans) as to how he will vote tonight. I shall be quoting something from what he has said.
  I first come back to the right hon. Member for Western Isles. He referred to today as being the day of the American declaration of independence. The two nationalist parties equate themselves with former colonial territories and say that Scotland and Wales are colonies.
  Mr. D. E. Thomas: Internal colonies.
  Mr. Evans: I do not look upon Wales as being a colony of the United Kingdom. We have the Prime Minister, who represents a Welsh constituency. The deputy Prime Minister represents a Welsh constituency. Mr. Speaker represents a Welsh constituency and is a Welshman and in the other place, before we abolish it, we have the Lord Chancellor, who is a Welshman, sitting on the Woolsack. In the Cabinet the Foreign Secretary and Home Secretary are of Welsh extraction. This talk of Wales being a colony is nonsense. I am pleased to see the hon. Member for Carmarthen present. The hon. Gentleman has talked about 36 countries having received independence in recent years.
  Mr. Gwynfor Evans: Self-government.
  Mr. Ioan Evans: Do the hon. Gentleman and Plaid Cymru now believe in independence?
  Mr. Gwynfor Evans: Plaid Cymru does not speak of independence. It speaks of freedom, and it has its own philosophical and political reasons for doing so That has been the history of the party from its beginning.
  Mr. Ioan Evans: Where do they stand? Before the hon. Member for Carmarthen returned to the Chamber, I put the question to the hon. Member for Merioneth—
  Mr. D. E. Thomas: With respect, I did not intervene. But our position is quite clear. We believe in the inter-dependence of countries within the United Kingdom

  989
  and within the greater context of Europe and the Third world. In fact, we are more an inter-dependent and internationalist party than the Labour Party.
  Mr. Ioan Evans: That is what this Parliament is all about. It is to maintain the inter-dependence of the British people and to deal with problems of inter-dependence whether they are in England, Wales, Scotland, Cornwall or anywhere. What is more, we must start solving them by looking at fundamental political and economic problems and not considering matters in a geographical context. Where are we to stop? If we had independence for Scotland tomorrow, we might have a sudden demand for independence for the Western Isles.
  Mr. Donald Stewart: No.
  Mr. Evans: The right hon. Member for Western Isles (Mr. Stewart) says "No". But, following the Balkanisation of Britain, we might face a demand for the Balkanisation of Scotland. If there is logic in saying that one part of a geographical area should break off from the whole, there is no reason why the part which breaks off should not itself splinter.
  Mr. Donald Stewart: When the hon. Gentleman was at school in Wales, I am sure that he was asked the same question as pupils in England, Ireland and Scotland, namely: what are the British Isles? The answer was "England, Scotland, Ireland and Wales". These are the four countries. Did not the hon. Gentleman learn that in school?
  Mr. Evans: Yes, of course. But what we have to remember is that we never thought in school that we would split up and that we would be separate.
  Mrs. Bain: The hon. Gentleman should speak for himself.
  Mr. Evans: I would never attempt to speak for the hon. Member for Dumbartonshire, East (Mrs. Bain). He would be a foolish man who tried to do that. But, although we have England, Scotland, Wales and Ireland, we have heard reasons put forward why they should break up politically.
  But I return to independence. Earlier, the right hon. Member for Western Isles
  990
  referred to the independence of America. The Americans had cause—
  Mr. Donald Stewart: So do we.
  Mr. Evans Mr. Evans. They were colonies. They were not represented in this place. The right hon. Gentleman is represented—
  Mr. Donald Stewart: We voted for the guillotine. It did not make any difference.
  Mr. Evans: Those former territories in the old British Empire, the American colonies, said "No taxation without representation". But the Scottish people, the Welsh people, the English people and people in Northern Ireland have taxation and they have representation.
  I ask the right hon. Member for Western Isles why he and his colleagues did not come clean today and table a motion saying "We want an independent Scotland and we want an independent Wales", instead of tinkering about with the Prime Minister's salary. It may be that they wanted the Tories with them to give them a big vote in the Division later tonight.
  Mr. John Mendelson: My hon. Friend should not underestimate the hon. Member for Glasgow, Cathcart (Mr. Taylor). Judging from his speech and the level of hypocrisy which he reached in it, he might well have supported a motion calling for the separation of Scotland.
  Mr. Evans: My hon. Friend is being a little unfair. I thought that the hon. Member for Cathcart made a very good contribution. In the course of it he accused the nationalist parties of being all things to all men. At the end, he said "Me, too". That is what the hon. Gentleman has done. He intends to go into the Division Lobby with the nationalist parties. I hope that they have an enjoyable conversation. They may discuss their tactics for the next debate on devolution.
  The hon. Member for Carmarthen made a grave reference to Spain. Of course, there are differences. Just as Britain has different countries here, so they have in Spain. But what the hon. Gentleman did not say was that when General Franco was commanding in the Spanish Civil War he called himself a "nationalist"

  991
  and led the Nationalists against the Republicans.
  Mr. Donald Stewart: The hon. Gentleman apparently finds something odd about the word "nationalist". Is he aware that the name of James Connolly is as highly regarded in Scotland as it is in Ireland? He was a Socialist, but he found no contradiction in standing up for his own country.
  Mr. Evans: That may have been James Connolly's vision. But I believe that, if the people of Southern Ireland had fought to change the economic system rather than thinking that their political and econ-mic salvation lay in dividing Ireland, with all that has followed since, it would have been far better for the people of Ireland as a whole.
  The Government face a number of difficulties. We have problems of unemployment, living standards and other difficulties. But the answer to these problems lies in changing the economic system. The answer is to move to a Socialist society. I believe that those who try to suggest that the solution lies in changing geographical boundaries do a great disservice to the country.
  We have heard in this debate contributions by Scottish and Welsh nationalists, but we now know that a nationalist body has been formed in England. [HON. MEMBERS: "No."] Yes. Following the split in the National Front, we now have a nationalist party here in England. It is as militantly racist as is the National Front. The leader of that new faction says that he wants to make his party in England the respectable party of English nationalism. So we shall have not only Scottish and Welsh nationalists but English nationalists, too.
  We need to know whether the alliance between the nationalists and the Tories will be a permanent feature. I do not know who is to sum up for the nationalists because there has been a change in batting order. But whoever is to speak for them should say whether this is to be a permanent feature or a one-off affair for the purposes of publicity in Scotland and Wales.
  The nationalists have chided the Liberals for joining with Labour to sustain the Government.
  Mr. Donald Stewart: Labour has a pact.
  Mr. Evans: Has not the SNP a pact with the Tories?
  Mr. Stewart: No.
  Mr. Evans: I am pleased to hear that there is to be no pact with the Tories. It is disturbing to hear the hon. Member for Carmarthen say that a Government led by the present Leader of the Opposition will give a big boost to nationalists in Wales. He has not retracted that statement. Is it a manoeuvre in order to bring about a General Election earlier rather than later? I do not think the Welsh nationalists will return to this House with a majority in Wales. I am sure that Plaid Cymru Members are wondering whether they will be back here next time. If any of them do return, I am certain that it will not be on an increased majority. Are the Welsh nationalists engineering a political crisis so that we can go to the country because they believe that they will gain some political advantage in the return of a Tory Government?
  I turn to the remarks of the hon. Member for Merioneth and in this context I wish to quote the Western Mail:
  "Worries that Plaid Cymru is becoming too identified with the Tories in opposing Labour at Westminster have been expressed at the party's National Council. The debate focused on the vote of confidence in the Government when Plaid voted against, following the failure of the devolution guillotine motion. Some party leaders said … that this action had been used with effect by Labour in some areas during the recent county council election campaign."
  I confirm that. People were annoyed that Plaid Cymru Members went into the Division lobbies with the SNP seeking to bring down the Government. Furthermore, we won three seats from the Plaid Cymru in the local elections recently. The Western Mail then quotes a candidate as saying:
  "There have been a number of occasions where they could have abstained. Their reasons for voting against have been genuine enough but nevertheless the impression has been created that there is a liaison."
  The article concluded.
  "Many felt that Labour would campaign on a platform of 'Keeping Thatcher out at all costs' and try to identify Plaid Cymru as far as possible with the Conservatives."

  993
  There is no need for us to identify them with the Conservatives. They have identified themselves. The hon. Member for Cathcart has said that they intend to follow them into the Lobby. Are they to ask them to be removed? If not, they are working in collusion.
  Of course we can make criticisms about public expenditure cuts. Do the Scottish and Welsh nationalist party Members stand up in the House and say that we shall be better under a Tory Government as regards public expenditure cuts? So it is crocodile tears on public expenditure cuts. If they are to engineer the return of a Tory Government, it will be public expenditure cuts with a vengeance.
  Mrs. Winifred Ewing: The trouble with Scotland is the limited choice to which the hon. Member has just referred. It has too limited a choice between two London-ised parties. That is precisely why we are the only party that really wants an election—and the sooner the better.
  Mr. Evans: When I realised that the hon. Lady had come back to the House, I reckoned that there must be a very limited choice in Scotland. The hon. Lady will witness in Scotland not only a resurgence of Labour, but the Tories will have a resurgence and the seats that the SNP won from the Tories last time may well be won back by the Tories at the next General Election.
  Mrs. Bain Mrs. Bain rose—
  Mr. Evans: The hon. Lady must wait. We can have only one hon. Lady interrupting at a time. My right hon. Friend the Member for Kilmarnock (Mr. Ross), who was a first-class Secretary of State for Scotland—even the canvassing literature of the nationalists admits that—started by quoting Robert Burns, and I think that I should finish by making a quotation from Burns:
  "For a' that and a' that,
  It's coming yet, for a' that,
  That man to man the warld o'er,
  Shall brothers be for a' that."
  It is regrettable that the Scottish nationalists, joined by the Welsh nationalists, do not seem to want us to live as brothers on this small island. That is the way backwards for the people of Britain.
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  I am glad that we have had this opportunity to see where we stand with nationalism. It is deplorable and regrettable that the Tory Party, seeking every device to get power, is prepared to associate itself with this mischievous motion.
  8.43 p.m.
  Mr. Alexander Fletcher: The hon. Member for Aberdare (Mr. Evans) surprised me a little in parts of his speech. I should have thought that he had heard enough quotations from the canvassing manual of the SNP not to waste his time trying to establish whether the Scottish nationalists are Conservative, Liberal, Tory, or anything else. They are always trying to please their audience, except when they are speaking in the House of Commons.
  One of the most important speeches that we have heard in this debate was also one of the shortest, and that was the speech by the hon. Member for Antrim, South (Mr. Molyneaux). I am sorry that the hon. Member thinks that a General Election would put Northern Ireland's constitutional situation into the melting pot. I am sure that he knows that the Conservative Party supports, on the basis of trying to work as well as it can with the governing party, the aim of achieving a solution to Ireland's constitutional problems generally. I cannot see how the hon. Gentleman can believe that to keep this Government in office, considering all the damage that they have done to the economic prospects of people in Northern Ireland and elsewhere in the United Kingdom, can be in any way helpful to his constituents.
  Mr. Molyneaux: We had two years, from 1972 until 1974, under a Tory Government during which time absolutely no progress was made except for some ill-fated, ill-starred experiments which collapsed. But, to give the present Government their due, they are at least making progress. I have said that it does not make sense to interrupt that progress as long as it continues.
  Mr. Fletcher: I hope that the hon. Member would agree that, although the constitutional question in Northern Ireland is important, he was sent here on wider issues than that. I am sure that the economic prospects for people in

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  Northern Ireland are at least as important as the constitutional aspects of the Government's performance. The hon. Member's contribution was relevant to the whole debate today, particularly on devolution.
  One of the problems of the way this Government are trying to tackle constitutional change in the United Kingom is that they are trying to find a solution for Northern Ireland, then they are looking at Wales and trying to find a different constitutional solution, and then looking at Scotland in a different light yet again. If we are to make any worthwhile changes in the constitution of the United Kingdom they should be based on a system that has relevance not to the separate parts of the country, but to the United Kingdom as a whole.
  In opening the debate the right hon. Member for Western Isles (Mr. Stewart) said that he would speak for Scotland. I wish he had done so. The political debate in Scotland needs to move away from the sterile constitutional arguments of nationalism. These have been plaguing political debate and making it more meaningless than constructive.
  The Scottish National Party is no more ready than the Government to face up to the real problems of Scotland that are crying out for the attention of hon. Members. SNP Members are only interested in nationalism and in the structure of Government. They are obsessed with constitutional change and with providing jobs for the boys—and girls—of the SNP. To achieve their personal ambitions they need to look to a new system of structure of government, because they simply cannot make the grade under the present system.
  The right hon. Member for Western Isles complained at length about the social and economic problems facing Scotland. He spoke about old people, under-privileged people, lack of opportunities for school leavers, and high unemployment. He is entitled to complain about these things in the terms of his motion, but I object to the way in which he allocates blame, particularly when he talks of betrayal—a favourite word of the nationalists—because most of those complaints are about devolved subjects such as housing, education, local government and law and order.
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  This weekend we saw serious reports of how dangerously near the West of Scotland was coming to a total breakdown in law and order—
  Mr. Donald Stewart: I did not mention law and order.
  Mr. Fletcher: If the right hon. Member was interested in talking about subjects that concern the people of Scotland, he would have mentioned law and order, because that is one subject in which they are most interested.
  If subjects like housing and education have been neglected, as the nationalists claim, and if there has been betrayal, this betrayal has taken place in Scotland. It has been betrayal by Scots. That is not unusual, as anyone who has studied Scottish history will know. But it is not something for which the right hon. Member can blame the English.
  The right hon. Member also mentioned the latest estimates for figures of the balance of trade with England. These prove once again that England is by far Scotland's biggest and most important customer. Yet the Scottish National Party would withdraw Scottish representation from this House. The hon. Member for Argyll (Mr. MacCormick) was very keen on "complicity" and suggested that this was a weapon in the armoury of other parties but one that was not used by the SNP. He did not attempt to explain why the SNP runs away from any comparison with the Irish Republic. He made constant references to Scandinavian countries and other small countries in Europe, but not to the closest and most realistic example of "independence" that has ever taken place within the context of the United Kingdom. I can only assume that the facts are much too embarrassing for the hon. Gentleman and his colleagues.
  Mr. MacCormick: Does the hon. Gentleman think that in any election or referendum the people of the Irish Republic would ever consent to come back under the governorship of this place?
  Mr. Fletcher: The hon. Gentleman should know that one of the rules of this House is not to answer hypothetical questions. However, several Irish Members of Parliament at the European

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  Parliament have several times said that the one mistake that they made was to withdraw their representation from this House.
  Mr. Crawford: Who?
  Mr. Fletcher: Several Irish Members have said that to me at the European Parliament.
  Mr. Crawford: Name them.
  Mrs. Winifred Ewing: Will the hon. Gentleman give way?
  Mr. Fletcher: No. Quite recently—
  Mrs. Winifred Ewing: Will the hon. Gentleman give way on this point?
  Mr. Fletcher: Quite recently, during the Irish elections, one Irish Member of Parliament said that the Irish Republic enjoyed so little autonomy that the Union Jack might well still be flying above the Post Office in Dublin.
  Mrs. Winifred Ewing: Will the hon. Gentleman give way?
  Mr. Fletcher: I am not giving way. I had hoped that the right hon. Member for Western Isles—
  Mrs. Winifred Ewing Mrs. Winifred Ewing rose—
  Mr. Deputy Speaker: Order. It must be clear to the hon. Member for Moray and Nairn (Mrs. Ewing) that the hon. Gentleman is not giving way.
  Mr. Fletcher: I had hoped that the right hon. Member for the Western Isles would have taken this opportunity to think again about his recent reference to Scots and anti-Scots at the SNP conference in Dundee. It is bad enough to try to divide Briton against Briton—the Irish example should have taught the SNP the terrible dangers that lie ahead on that score—but it is even worse to try to divide Scot against Scot with the possible repercussions that could flow from that.
  When the SNP shouts about independence, I look for evidence that a so-called independent Scotland will be more tolerant and free than or as tolerant and free as the country in which we live now, and I see no such evidence.
  Mr. Donald Stewart: Does not the hon. Gentleman call that hypothetical?
  Mr. Fletcher: Not in the least. Freedom is real in Britain today. To examine the political posture of SNP Members and to inject it into the independent Scotland that they talk about is extremely difficult. Listening to their speeches and reading their letters in the Press I cannot imagine a so-called independent Scotland half as free or tolerant as the Scotland in which we live today.
  I turn now to one or two reasons why, despite those remarks about the SNP, I shall support the motion tonight. I believe that even such a motley party as the SNP can occasionally say something to which it might be worth paying attention, and tonight it has done that.
  The reason why I support the motion is simply that the Prime Minister has presided over a time of considerable constitutional change and, I think, damage. He has allowed party interests to become supreme to the interests of Parliament, of Cabinet Government and of the individual. This week's Second Reading debate on the European Assembly Elections Bill is the latest example of the Prime Minister's irresponsibility over constitutional matters.
  The absence of proper Government support for the police doing their job at the Grunwick dispute is just another instance where the interests of the individual are totally unimportant to the Government when compared with the interests of the Labour Party. The Prime Minister has not only abdicated his responsibility for Cabinet Government: he has allowed parliamentary government to become subservient to outside bodies such as the TUC and the National Executive Committee of the Labour Party.
  It is not just the Prime Minister's incompetence or his disregard for the constitution that has induced me to support this motion. It is his failure to take the one constitutional step which the country would like him to take, his cowardice in not calling a General Election and putting his Government's record to the test of public opinion. If he had the courage to do that, he would have much more claim to his office as Prime Minister and much more claim to his full salary.
  The right hon. Gentleman has not even put in an appearance this evening to defend himself against the charges that

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  have been made. It is therefore all the more important that all Opposition Members—and certainly Conservative Members—should on this one occasion this evening support the Scottish National Party.
  8.56 p.m.
  Mr. David Knox: Like my hon. Friend the Member for Edinburgh, North (Mr. Fletcher), I support the motion, and I shall vote for it quite happily. I do not accept the argument advanced by some hon. Members that, because the motion has been put forward by the Scottish National Party and Plaid Cymru, we should not support it. However bad those two parties may be, they are nothing like as bad as the Government.
  This has been a very disappointing debate on the motion to reduce by half the salary of the Prime Minister. I am astonished that the right hon. Gentleman has not participated in the debate, and even more astonished that he has been absent throughout it. I have a certain respect for the Prime Minister, and I am surprised that he should show such disrespect to the House on this occasion.
  I support the motion for reasons not necessarily identical to those advanced by the nationalist parties. I am surprised that more hon. Members have not discussed the United Kingdom dimension to the motion. I support the motion simply because the Government of which the Prime Minister has been head has been a bad Government, and he must take the major part of the responsibility for that. The right hon. Gentleman may argue that part of the responsibility rests with his predecessor and I would not deny that, but he has been a prominent member of the Labour Government for the last three years, so I do not think that he can avoid responsibility for the state of the country today.
  The Government have been in office for three years, and by any standards they have been a bad three years, the worst three years since the war. No matter by what standards the Government's performance is measured, whether by jobs, prices, the balance of payments or economic growth, they do not have one success story. No one would deny that the Labour Party inherited difficulties when it came into office. Oil prices had quad-
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  rupled immediately before, with the inevitable serious consequences. The Conservative Party has always recognised that, which is more than can be said of Labour's attitude to the increases in commodity prices in the last two years of the last Conservative Government. I do not deny the difficulties that the Government had when they came into office, but they encouraged a wage and salary explosion during their first 15 months of office which led to increases of 30 to 40 per cent, which led eventually to the price explosion of 1975–76.
  To a large extent, most of the problems that the Government have suffered in the economic sphere since then have been due to their inadequacies at that time and to the dismantling of the incomes policy of the previous Conservative Government. Of course, in July 1975 they reintroduced an incomes policy, but had they not abandoned the policy of the previous Conservative Government, they would never have got themselves into such a serious situation. We should not have had hyperinflation, the present level of 1½ million people out of work, and our present large balance of payments deficit. We should also not have suffered from nil economic growth throughout that period. During the past three years there has been no growth in this country, which means that living standards have declined and that the social and public services are lower than they need to be.
  Today we have private and public squalor and much of the responsibility for that must rest with the Labour Party. It is therefore perfectly reasonable that the Prime Minister should share in some of this private squalor by having his salary cut.
  So far I have spoken about the economy. The Prime Minister can pass the buck to his predecessor to some extent in that matter, but he cannot do so with devolution or his Government's attitude to Europe. I do not wish to go into the whys and wherefores of devolution Suffice it to say that devolution was the major measure introduced by the Government in this Session of Parliament. We were assured that it would reach the statute book. Now it is as dead as a duck. We are now promised it for next year. Anyone who believes that will believe anything.

  1001
  I am most concerned about the attitude of the Government to Europe. The attitude of most British Governments to Western Europe since the end of the war has left much to be desired, but the attitude of the present Government during the past three years has left most to be desired. This country entered the Common Market on 1st January 1973. We entered on terms that would have been acceptable to the previous Labour Government—if we are to accept the word of formers Ministers in that Government. In the period immediately leading up to our joining the Common Market the Labour Party changed its mind and attitude to Europe and then opposed our entry.
  Then the right hon. Member for Bristol, South-East (Mr. Benn) thought up the idea of a referendum. So, after the 1974 election, we started the process of renegotiating our entry. That having been concluded, the referendum took place two years ago and it resulted in confirmation of our membership of the Community. In the two years that have followed the Government have done nothing to play a proper and full part in building a new Europe. Indeed, their former colleague, Roy Jenkins, made that point with some force in Glasgow at the weekend.
  The Government have dragged their feet particularly over direct elections to the European Parliament. I appreciate that we shall be discussing that matter later this week.
  In all the Common Market discussions and the great debate on the issue the anti-Marketeers made a great deal of the excessive bureaucracy in the Community. Those of us who supported our entry into the EEC believed that direct elections to the European Parliament would help to democratise the Community and the Commission, and to make the whole process of European decision-making more sensitive to public opinion. We also believed that, because this country had a longer experience of democracy and the workings of democratic institutions than other member countries of the EEC, we should give a lead. However, as a country we have dragged our feet.
  The Prime Minister, in his present office and as Foreign Secretary, has also dragged his feet, so that we now find ourselves not giving a lead but following behind. The Bill that will provide for
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  direct elections has just been introduced to the House, within less than a year of the date when the legislation must come into being. In my judgment, and that of most strong Europeans, we should have given a lead on this matter. On his failure on this score, if on no other the Prime Minister should be condemned. There is every justification for his salary being halved, and I shall happily vote for the motion tonight.
  9.5 p.m.
  Mrs. Margaret Bain: Before I turn to many of the points which have been raised in the debate I should like to endorse a comment made by the hon. Member for Leek (Mr. Knox), who commented on the notable absence of the Prime Minister throughout the whole of today's proceedings. The Scottish people, if they were doubtful about the Government's commitment to them and needed any convincing that that commitment is less than half-hearted, will have found that absence a remarkable demonstration. I am sure that they will draw their own conclusions from the right hon. Gentleman's absence.
  Instead of the Prime Minister we have been treated to an array of second-class substitutes—on both Front Benches. We have had the Westminster puppets who dance the tune for which they are paid. The Conservative Party, as the official Opposition, cannot condemn the Government outright because of the Prime Minister's failure to appear, since the Leader of the Opposition has not seen fit to appear in the Chamber either.
  Mr. Raison Mr. Raison rose—
  Mrs. Bain: The hon. Gentleman has hardly been here at all today.
  One of the more unfortunate parts of this debate—
  Mr. Teddy Taylor Mr. Teddy Taylor rose—
  Mrs. Bain:—has been the entirely predictable reactions of Labour and Tory Members. I feel on many occasions, when the SNP or Plaid Cymru raises any issue, that I could write the speeches of Labour and Conservative Members for them. The lack of originality in their contributions is in direct relation to the declining fortunes of their parties in Scotland and Wales.
  Mr. Rifkind: When the hon. Member is criticising Conservative and Labour Front Benches for lack of originality in their speeches would she indicate one original remark in the speech of the leader of her party, the right hon. Member for Western Isles (Mr. Stewart)?
  Mrs. Bain: I would never expect the hon. Member for Edinburgh, Pentlands (Mr. Rifkind) to describe anything said by anyone in my party as original. The Opposition and the Government wish to split the friendship, respect and mutual trust of those in the nationalist parties who seek democracy for their countries. That trust of which I speak so obviously exists on these Benches. I joined the Scottish nationalist movement when listening to a speech by the hon. Member for Carmarthen (Mr. Evans), because I admired his integrity, his standing and his views. I have not altered my opinion in any way just because there is a different emphasis in our national outlooks.
  The point that is extremely difficult for our opponents to accept is that there is an alternative dimension in British politics. They wish to continue with their monolithic parties and monolithic Stales, refusing to recognise the differences and to accept that these differences are, in themselves, worthwhile.
  The Secretary of State for Wales, who refused to give way to me earlier today, should bear in mind what the Secretary of the Scottish Labour Party has recently said and then ask himself whether the Scottish National Party presents an alternative to the people of Scotland. She said on radio that what the Labour Party in Scotland must hope for, if it is to survive, was a revival of the Conservative Party.
  It is much more worth while for hon. Members to address themselves to what has frequently been said by the hon. Member for Oswestry (Mr. Biffen), who is perhaps one of the most honest Conservatives in this House. He has said that an effective union must have the trust and support of the constituent parts of that union. Surely the very existence in this House of 14 Members from nationalist parties is an indication of the lack of trust and support of the constituent parts. The hon. Member for Oswestry has stated that the option open to Scotland is that of a separate Scottish State or the status quo. This is a view I entirely endorse.
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  The gesturing we have seen today makes that crystallisation of options much mere clear in terms of internal constitutional change within the United Kingdom. We in Scotland and Wales are not afraid to welcome the responsibilities, challenges and opportunities of independence, even if the Labour and Conservative Parties are afraid to do so. That is because we shall not accept the alternative option, which is the continuation of being poor regions of a declining United Kingdom.
  Our movements are not unique in the modern context. There is an international trend towards recognition of small nation States, and indeed the United Nations Organisation has doubled its membership since its establishment because small countries have been recognised as nation States. I ask hon. Members who oppose what is happening in Scotland and Wales, and who oppose the democratic aspirations of those peoples, to address themselves to that fact and to question themselves when next they praise what they call freedom fighting in other countries and what they condemn in Scotland and Wales.
  I turn to the official Opposition, because it was very obvious that the hon. Member for Glasgow, Cathcart (Mr. Taylor) had deep psychological worries about joining the Scottish National Party tonight in the Lobbies. But it should not, of course, be particularly difficult for him to rationalise his position, because he is recognised as one of the best contortionists in Scotland. As the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing)—the Under-Secretary of State for Scotland—has said, the hon. Member for Cathcart thought of joining the SNP. It is greatly to the advantage of the SNP and a tribute to our great sense that we did not accept him as a member.
  Mr. Teddy Taylor: Perhaps the hon. Lady would freshen my memory on that point.
  Mrs. Bain: If the hon. Gentleman would care to write to my party chairman, Mr. William Wolfe, I am sure that he would be able to fetch the letters out of his file.
  The hon. Member for Cathcart resorted to his usual scaremongering and presented no positive policies from the Conservative Party except the same old clichés that we have heard before—"We shall cut

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  taxation, give freedom of choice and emphasise the individual." No definition was given. Indeed, the hon. Member was aided and abetted later in the day by the hon. Member for Edinburgh, North (Mr. Fletcher), who used, as usual, his tactics of innuendo, allegation and hypothesis.
  Of course, these people are extremely worried because the SNP has presented itself as the official opposition not only in this House but in Scotland, and because, of course, we are the only party that genuinely seeks a General Election and is genuinely trying to bring a better standard of living to the people of Scotland.
  The hon. Member for Cathcart had great fun talking about a canvassing manual proposed by the SNP. Of course, in the Conservative Party in Scotland, its members do not bother producing canvassing manuals because they have no canvassers. I remind the hon. Gentleman of one of the resolutions that appeared in the Conservative Party's agenda at Perth this year. I cannot remember which constituency forwarded it, but I am sure that the hon. Gentleman will remember. This is an indication to hon. Members of the state that the Conservative Party in Scotland is in. The resolution read:
  "That this Conference believes that a Party organisation would be a good thing."
  It is no wonder, indeed, that the Glasgow Herald correspondent at Perth found it necessary to take himself elsewhere to amuse himself because the discussion was on such a low level.
  Of course, the Conservative Party has little cause for optimism in Scotland. One reflects on the fact that the right hon. Lady the Leader of the Opposition is on record as saying that there is no place in British politics for a third party. How true that is in the Scottish context! The most recent opinion polls show the SNP as having 38 per cent., the Labour Party having 28 per cent. and the Conservatives all of 23 per cent. The hon. Member for Cathcart, in his new-found rôle as Shadow Secretary of State for Scotland, always tries to say that in the district elections held recently in Scotland the Conservative Party experienced a great revival. That was not so, as one finds if one analyses the results in a truthful manner, because the SNP gained 38·4 per cent. of the votes cast, the Labour Party
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  gained 338 per cent. and the Conservative Party gained 25·1 per cent. The Liberal Party, perhaps as a result of its pact, gained 1·7 per cent.
  Mr. Teddy Taylor Mr. Teddy Taylor rose—
  Mrs. Bain: Perhaps the hon. Gentleman will let me complete my analysis of the district election results.
  All in all, the Conservatives had a frustrating time. They achieved a minuscule improvement in their share of the vote—0·4 per cent.—but their actual vote fell by 5 per cent. In Edinburgh the Tory vote held amost static while in Glasgow it fell by 9·4 per cent. In Dundee, which was wide open for an anti-Labour swing and with no SNP challenge, the Tories could register only one gain, and failed to take overall control.
  Mr. Harry Selby: In which constituency did they drop their vote? In Govan.
  Mrs. Bain: I am sure that that was because the people in Govan recognise the amazing contribution made to the Scottish economy by the hon. Member for Glasgow, Govan (Mr. Selby).
  In Aberdeen they did not make a single gain. In the new towns their intervention turned out to be a very damp squib. Their only successes came as a result of split votes, where the SNP took more votes from Labour than from the Conservatives.
  Mr. Teddy Taylor Mr. Teddy Taylor rose—
  Mrs. Bain: I shall not give way to the hon. Member just yet. With respect to the hon. Member—and I do not have a great deal of respect for him—I have not yet finished with him.
  The situation must be seen against a background of landslide Tory gains in the English local elections with 1,335 net gains.
  Mr. Teddy Taylor: Despite the hon. Lady's distortions of the figures, does she accept that as a result of the municipal elections the Conservative Party now controls councils covering more than half of the Scottish population? Does she accept that in Glasgow where the SNP holds the balance, its only contribution to local government is to give a contract to direct labour over the head of a private firm and to propose the opening of a public bar in city chambers?
  Mrs. Bain: In those areas where the SNP already has control as opposed to being a major representative group they have shown good results in terms of administration and management of resources. The low ebb of the Tories is due to their failure on devolution.
  Mr. Raison: I am interested in the argument about whether the Prime Minister's salary should be cut. I cannot see that anything that the hon. Lady is saying has anything to do with that.
  Mrs. Bain: Perhaps the hon. Member does not appreciate how much I am trying to put at rest the mind of his hon. Friend the Member for Cathcart who is so worried about how the Conservative Party are doing.
  In July 1967 the Sunday Post, a well-known paper in Scotland, reported the hon. Member for Cathcart as saying,
  "I think it's a good thing the Scottish Nationalists are making Parliament more aware of Scottish grievances."
  "…I think there's something to be said for a Parliament in Edinburgh"…Scotland's too far from Whitehall where there's a tendency to view our problems as theoretical difficulties rather than something affecting five million people."
  "The Scottish Secretary is almost a Government in himself. Maybe that's the attraction now. He's responsible for a fantastic variety of Scottish interests, from health to fishing. Vet we can only ask him questions one day every six weeks.'
  Now it is every four weeks. The hon. Member went on:
  "This is simply not enough to cover the tremendous amount of ground. The Scottish Grand Committee does meet every Tuesday and Thursday. But we're not allowed to ask questions then. It boils down to this—Scots don't get a fair say in the running of their country."
  In May 1972 the hon. Member reaffirmed his support for a Scottish Assembly in the House of Commons. In December that year he asked the Secretary of State to provide a report on the progress towards a Scottish Assembly. In May 1974 he attacked people in the Conservative Party who were against an assembly for Scotland because it would be dominated by the Labour Party. He said:
  "If we have so little faith in ourselves that we believe we cannot capture the hearts and minds of the people of Scotland then we do not deserve to succeed as a party."
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  In October 1974, in his own constituency manifesto, the hon. Member for Cathcart said:
  "We will establish a Scottish Assembly to ensure that decision making is removed from London. There will be a separate Scottish Budget controlled by the Secretary of State."
  Now we come to the back-track. In July 1975 the hon. Gentleman said:
  "Conservatives must rethink their devolution policy if an Assembly means more bureaucracy and taxation"
  In October 1975, speaking to his constituency association, he said
  "Those who claim that the setting up of the Assembly will of itself preserve the Union are living in cloud-cuckoo-land."
  Then, when he joined the "Keep Britain United"campaign, this is what the hon. Gentleman said:
  "The time has come to speak out against the cost of an Assembly and the danger that it would lead to the break-up of the United Kingdom."
  The truth is that the Conservative Party has no commitment to an elected Assembly in Scotland. There are so many different views within the Conservative Party that it has to have a variety of spokesmen on the issue. One of its Front Benchers wants a Select Committee to waste time on the issue. The hon. Member for Oswestry says that the choice is between independence and the status quo. The hon. Member for Aberdeen, South (Mr. Sproat) wants Scottish Members of Parliament to meet in Scotland occasionally—presumably, at airports or some such place. The hon. Member for Edinburgh, Pentlands wants a federal system, but he does not want it to be called a federal system in case people call him a Liberal.
  So much for the Conservative Party. I turn now to the Government. In his opening speech, the Secretary of State for Scotland made some cheap remarks about the difficulties which my hon. Friend the Member for Argyll (Mr. MacCormick) had in reaching this place to take part in the debate. It is all very well for those hon. Members who live in or near London and have no more than a journey on the Underground to get here; it is a very different matter when one lives in a remote area such as Argyll, where the transport problems have been totally

  1009
  ignored by both this Government and their predecessors.
  The Secretary of State said that wages in Scotland were coming into line with those in England. That has never been denied by members of the Scottish National Party. But the right hon. Gentleman knows as well as I do that the best gauge of wealth is average household income. That must be the criterion used if we are to draw comparisons of that kind. In 1975 the Family Expenditure Survey showed that the Scots had 95·2 per cent. of average household income in England, 85·5 per cent. of that in the South-East, and 966 per cent. of the United Kingdom average. So there is still a gap, and we wish to see it put right.
  In 1975 Regional Surveys showed that the cost of living in Scotland was 5½ per cent. higher than the average for the United Kingdom, and during that year house prices rose by twice the United Kingdom average, while food cost 5 per cent. more in Scotland and transport costs were 3 per cent. higher.
  I turn now to the speech of the hon. Member for Renfrewshire, West (Mr. Buchan). He said that it was not the Government's fault that the devolution Bill had not been put on the statute book. I shall go into that in more detail later. If the hon. Gentleman is trying to rationalise himself out of a situation in which his own party cannot make this an issue of confidence, I find it difficult to accept that his Government cannot bear responsibility for the failure of devolution. As for the hon. Gentleman's statement that the SNP at its conference in Dundee this year suddenly announced itself as in favour of independence, I can only wonder how politically involved the hon. Gentleman has been during the past decade. I was under no illusion that I was joining a party committed to anything other than independence.
  Mr. Buchan: With respect—and with some envy, I should add—I must remind the hon. Lady that I have been involved in these matters for a great deal longer than she has, and I know of the permanent commitment to independence. In saying that I did, I had in mind, for example, the statements of the hon. Member for Clackmannan and East
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  Stirlingshire (Mr. Reid), who said that there was no guarantee that the SNP would any longer support a devolution Bill in the House, and, second, the decision of the conference itself, which was not to go for devolution as a first step but to go for independence only instead. That is what was new.
  Mrs. Bain: The purpose of the motion is to bring forward a General Election with the possibility of moving to independence that much more quickly, because Scotland can no longer afford the Westminster connection. Independence is not a luxury but an essential for Scotland.
  The hon. Member for Renfrewshire, West also spoke about the book entitled "Scotland 1980". He made the basic and classic error of assuming that the working assumptions of the economists were sacrosanct. One of the working assumptions was that North Sea oil would come under Scottish sovereignty with a settlement allowing 30 per cent. of the revenues to England. That is not necessarily sacrosanct. Equally it is not sacrosanct that Scotland will be an individual member of the EEC. These matters have to be decided in an independence situation.
  The right hon. Member for Kilmarnock (Mr. Ross), in his usual schoolmasterly way, made comments about the lack of constructive suggestions from these Benches, particularly on education. He should read the speeches made from these Benches on the subject of education, since most of the constructive suggestions made to the Government have come from us.
  I refer the Secretary of State, for the umpteenth time, to the question of pupil-teacher ratios against class size and ask him to address his mind to the question of the development of composite classes. I quote to him the view of the Dundee local association of the EIS. It wishes
  "to make it clear that the increasing use of composite classes is a direct result of the enormous cuts in educational expenditure in the region, and is symptomatic of a serious deterioration in educational standards."
  Against that background, it is not good enough to say that we have the best pupil-teacher ratios ever. On the question of colleges, we have advocated the development of in-service courses, particularly against the background of frequent

  1011
  reports such as the Dunning, Munn and Pack reports. Three major reports in one year. If Scottish school teachers are to be able to participate fully in the development and implications of EEC membership in-service courses must be extended.
  I have already referred in several other speeches to teacher unemployment, and I shall not bore the House with the statistics. They are recorded in Hansard. However, i should like to refer to a letter which I received today from Bob McClement, Scottish Secretary of the National Association of Schoolmasters, who, I believe, is still a Labour councillor in Glasgow. Referring to the statistics which I elicited from the Government last week, he writes:
  "I would go as far as to say that, including teachers on pension, there are more qualified teachers in Scotland who are not employed in teaching than there are in teaching. Why, then, do we still fail to do something for the deprived areas?"
  On the question of unemployment, which is one of the major issues in society, the Government must stand condemned. "Back to work with Labour" was what they promised in 1974. The Conservative Party need not think that its record on this issue is particularly good. The right hon. Member for Sidcup (Mr. Heath) said, in his party's manifesto for Scotland in 1970:
  "Too many Scots have left because life seems better elsewhere. I remember coming to Glasgow after the hurricane and seeing the hardship which Socialist delays and muddles brought to the people of Scotland. That was typical of the way the Socialists have treated Scotland."
  By January 1971 unemployment had increased to 113,000. That was when the right hon. Member for Kilmarnock made his classic statement. By the time that the Tory Government fell in 1974, we had a three-day week, unlit streets and un-heated workplaces. We know the record of the Labour Party in government on this issue, yet it claims to be the party which protects working people.
  The Scottish National Party has made several constructive suggestions in various debates in the House in an attempt to solve the unemployment problem. They have been rejected out of hand by the Government. The Secretary of State for Scotland refused categorically to give an answer to my hon. Friend the Member for Aberdeenshire, East (Mr. Henderson) when he challenged him on
  1012
  the effects of the Common Market on employment opportunities in Scotland. In the comparisons which the SNP makes with other small nations, we consider countrie swhich are not in the EEC and which manage their own resources for themselves.
  Other suggestions we have made are that there should be a 10 per cent. flat rate on VAT and that small businesses should have a £15,000 annual turnover before VAT becomes applicable. We have also advocated an increased budget for the Scottish Development Agency.
  Finally, and briefly—because, if the standards of today are anything to go by, I am sure that the Minister who is to close the debate will have many interesting suggestions to make to us, and I should not like to miss the opportunity of hearing yet more promises—I make passing reference to devolution.
  On four occasions today during his opening speech the Secretary of State for Scotland refused to give way to my hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. Reid), who wished to put a question to him on the Government's record on devolution. Since the Secretary of State refused to give way, I now put these questions to the Minister who is to reply to the debate.
  If the Bill is on, in terms of devolution, why do the Government refuse to make it an issue of confidence? If, indeed, the Bill is on, why has work ceased on the High School in Edinburgh? Perhaps the refusal of the Government to give way to my hon. Friend is due to their poor record on this issue.
  The Under-Secretary of State for Scotland, who is sitting on the Front Bench smiling, said on 30th January 1975:
  "It is wrong to say there has been a slippage. We are bang on target, and if anything we are ahead of schedule. I see nothing to suggest we will not publish the devolution Bill by the beginning of November."
  In the same interview he stood by the timetable to have the Bill on the statute book in July 1976 and first elections to the Assembly by the end of 1976 or early 1977. He said that he would allow up to six months for the transfer of powers and that the Assembly could be in operation by mid-1977.
  I could go through many other points, made by such people as the previous

  1013
  Lord President of the Council and the previous Prime Minister, but I come back to the Prime Minister whose salary we are seeking to reduce today.
  Mr. Gwynfor Evans: Where is he?
  Mrs. Bain: Where is he, as my hon. Friend the Member for Carmarthen (Mr. Evans) has just said? In August 1976 the Prime Minister said in Glasgow:
  "It is the Government's desire that Parliament should come to a conclusion on these matters in the forthcoming session and I am confident it will do so."
  There is no confidence left on this particular Bench in the empty promises of Prime Ministers, Lord Presidents of the Council, Secretaries of State or, indeed, Shadow Secretaries of State. We wish to see elections taking place in this country so that the people of Scotland and Wales can decide for themselves their own opinion of both these monolithic parties and establish real parliaments with real powers in our nations.
  9.33 p.m.
  The Secretary of State for Wales (Mr. John Morris): I find it difficult adequately to describe this debate. I thought at one moment—indeed, for the greater part of the speech of the hon. Member for Dunbartonshire, East (Mrs. Bain)—that we were discussing something wholly different. I thought that she was proposing a manuscript admendment to the motion on the salary of the Prime Minister, and that we were to discuss instead the salary of the hon. Member for Glasgow, Cathcart (Mr. Taylor). Or, if it was not a manuscript amendment, I thought that it was a printing error, because she spent the greater part of her speech dealing with the Tory Party. We had this strange attack, paragraph by paragraph and page by page. Nevertheless, to my great surprise, I find that the Conservative Opposition intend to vote in the nationalist Lobby tonight.
  One of the wisest remarks of the debate came towards the tail end, in the intervention of the hon. Member for Aylesbury (Mr. Raison), when he questioned the hon. Lady as to what her speech had to do with the Prime Minister's salary. I find it exceedingly odd that the guidance and advice which have flowed from the major Opposition party to its supporters is to come here at
  1014
  10 p.m., or shortly before, in order to vote with the Scottish National Party tonight. It must be one of the most colossal errors of judgment of all time by the Conservative Party.
  Mrs. Bain: The Secretary of State really cannot condemn the Opposition, since his own Benches have been empty all day.
  Mr. Morris: I hope that the hon. Lady will do me the courtesy of listening to what I have to say. What I am seeking to say is that she did not debate the Prime Minister's salary. She spent the overwhelming part of her speech discussing the conduct of the Opposition and the hon. Member for Cathcart, to the great amusement of the hon. Member for Aylesbury.
  I would advise the Opposition Front Bench immediately to call for a Shadow Cabinet so that it can consider its position. It will find it difficult to explain to its supporters, having regard to the vindictive nature of the attack that we have just heard, how on earth it finds itself in the same Lobby as the nationalist parties.
  Mr. Raison: I entirely admit that we are in a very rum situation. In these bizarre circumstances it seems sensible to adhere to that old-fashioned tradition and vote on the motion. That is what we shall vote for tonight rather than all the rubbish which has been talked.
  Mr. Morris: The hon. Member for Aylesbury is right to say that we are in a rum situation, but it is he who is in a rum position and not us. If the Opposition, having perpetrated this colossal blunder, find themselves in the nationalist Lobby tonight, they will remind me of the old infantry regiment whose motto was "Loyal to the end".
  The nationalist parties have put down a motion, which has not been supported by one iota of evidence, that we should reduce the Prime Minister's salary. We heard the case for Scotland. It was mainly an attack against the Conservative Opposition. That was adumbrated by one speaker after the other.
  I shall try to deal with some of the points that have not been covered by my right hon. Friend the Secretary of State for Scotland, but I hope that the House

  1015
  will understand if I concentrate on the Welsh points made during the debate.
  Right through these two Parliaments, from March 1974, the constant cry of the nationalist parties is that this Government do not mean business in what they say about devolution. This was the theme in the debate on the Queen's Speech, a debate which hon. Members of the nationalist parties would like to forget. It was a theme that recurred time after time. The White Paper was derided and decried as a delaying tactic. It was said that consultation had been meaningless and that even the Bill itself had been somewhat insincere.
  I find it odd that the hon. Member for Carmarthen (Mr. Evans) is not winding up the debate tonight. I thought that in a debate concerned with minority parties there would have been equality of treatment and that the hon. Member for Carmarthen would have had the privilege of winding up the debate rather than being stuck in the middle. Perhaps we shall have some explanation at some stage.
  It is all very well to have meaningless slogans. It is my recollection and impression that the slogan of the Welsh nationalists was to have a Parliament for Wales in five years. That was 25 years ago. The hon. Member for Dunbartonshire, East set out the position of the SNP. It is still for independence. The hon. Member for Carmarthen shakes his head. I am glad to note the difference of approach between the two nationalist parties.
  The hon. Member for Dunbartonshire, East says that the SNP is proud to advocate independence, but the hon. Member for Carmarthen says "No". What Plaid Cymru stands for is Commonwealth status. The hon. Gentleman Soes not deny that. The SNP wants a separate army, air force and navy and a seat at the United Nations. Of course, in the Summer Recess we hear of their international negotiations, as we did two years ago for setting up large sheep deals with countries such as Libya. That is a policy of separatism, and both nationalist parties stand for the break-up of the United Kingdom.
  The Government's proposals have nothing to do with that unhappy doctrine. They stand at the opposite pole. Far
  1016
  from seeking a break-up of the United Kingdom, the moderate and sensible proposals that we have made are designed to achieve the reverse—to enhance and to deepen the unity of the United Kingdom and to strengthen those bonds that have kept us all together so long and that most of us value so highly.
  The nationalists tell their critics that there would be trading links with England. Who in his right senses could imagine that there would not be? But once the argument is properly faced, it is a separatist policy for which they stand. It is independence as far as independence can go, and their latest slogans are "Scotland first" and "Wales first"; it is Scotland's oil and no one else's; Scotland could be rich, and who cares for England or even for little Wales?
  In their calmer moments, I hope that the Welsh nationalists will explain to the people of Wales how much they stand to lose if they do not share in the wealth of the North Sea. If by some stretch of the imagination this bonanza, as the Scottish National Party would have it, were cornered by a separate Scotland, all the roads, pensions and schools which would be paid for out of Scottish oil would be the "perk" of Scotland. Nothing would come to England or to Wales.
  If one takes the argument a stage further, what if the Scots have their oil, the English have a share, but a separate independent Wales is unlucky in the Celtic Sea? Nothing would be obtained for Wales. This is what the break-up of the United Kingdom stands for, and this is what the nationalist party in Wales has a duty to explain.
  It was endearing to hear the hon. Member for Dunbartonshire, East say that she was converted by the hon. Member for Carmarthen and that this was why she became a nationalist. Perhaps one day she will tell him how the SNP seeks to repay this great evangelical mission in terms of the lack of fruit that Wales would enjoy from the discovery of oil.
  There should be no doubt about the Government's determination to carry through legislation on devolution in the next Session of Parliament. We are the first Government to put devolution firmly on the political agenda of Parliament and of the country, and we are presently preparing legislation which will be an

  1017
  essential feature of the Government's programme in the next Session. We are working on the form and content of that legislation with the aims of simplifying the details wherever possible and of making our proposals more widely acceptable in the House.
  Mr. Crawford: On that very point—
  Mr. Morris: I am afraid that I have not the time to allow the hon. Gentleman to intervene. I have a great deal of ground to cover in the short time at my disposal. Unfortunately, the hon. Member for Dunbartonshire, East went a little over her time.
  The proposal to reduce the salary of my right hon. Friend the Prime Minister is an all-embracing motion to cover the whole of the Government's record. I have no doubt that that record is a good one in Wales. Of course, we suffer from far too high levels of unemployment. But this is not a Welsh problem only. It is not a Scottish one only or even an English one. It is a European problem. Indeed, it is a problem right across the developed world.
  What should be recognised is the efforts that the Government have made to ameliorate unemployment. Without the whole catalogue of measures that we have carried out there would have been 37,000 people in Wales without jobs. That is the achievement of the temporary employment subsidies, the work creation schemes and all the other measures introduced by this Government, and it is evidence of our care, our compassion and our understanding of this major problem.
  Without our priorities—and I see that the hon. Member for Merioneth (Mr. Thomas) has just returned to the Chamber, and I must tell him that I found his speech incomprehensible—there could be thousands of people with no separate homes, of insufficient or grossly inadequate homes in Wales. Again, there is more to be done, and I would be the first to admit it. But if the Labour Government were not in power and if the trends of the last Tory Government were confirmed, there would be an appalling housing situation in Wales.
  In terms of road building, for example, we inherited stagnation. We got on with the building of the M4, a project which had been promised completion by 1976.
  1018
  We set up the Welsh Development Authority in the teeth of Tory opposition. We also set up the Development Board for Rural Wales when the last Tory Government had killed off the efforts of Labour to find a solution to part of the Mid-Wales problem. Once they killed that off, they offered nothing in the years that followed.
  That basically is our approach. At the beginning of the debate we saw a double act provided by the right hon. Member for Western Isles (Mr. Stewart) and the hon. Member for Carmarthen. The Tory Party is adopting a strange approach this evening in supporting that double act. Tory Members will be the biggest political contortionists of all time if they go into the Lobby with the nationalists. The Tories will have their faces in one direction and their feet in the other. As one of my distinguished compatriots once said:
  "I would be glad to have their explanation on the morrow of this."
  The two nationalist leaders in this House in that double act were then joined, somewhat strangely, by the hon. Member for Cathcart who, rightly and properly, spent all his time washing his hands of the policy of the SNP. Nevertheless, his speech concluded with the statement that he would support the nationalists in the Lobby. I find that attitude absolutely incomprehensible. It is quite beyond my understanding.
  The hon. Gentleman then said "I support this motion because it will mean an election". In fairness to the hon. Gentleman, I must quote the whole of his statement, namely: "I support it because it would mean the election of a Conservative Scotland". What will the SNP gain from a Conservative Scotland? Indeed, what will Plaid Cymru get out of a Conservative Wales? Will either party be met in any of its claims? Will it obtain those claims under a Conservative Government? Of course not.
  I found it incomprehensible at the opening of the debate to hear the right hon. Member for Western Isles mention the reserves who would help him in the Lobby. There are the reserves—the Tories. They have perpetrated this colossal piece of political misjudgment in support of a motion which substantially, in its terms and in the way in which it

  1019
  has been put before the House, is an attack on the Opposition.
  In Wales—and I am confident that the position is exactly the same in Scotland—over the years the Conservatives have offered nothing.
  Mr. Crawford Mr. Crawford rose—
  Mr. Morris: The hon. Gentleman can make his own Conservative speech at some other time when he explains to his electors why he wants a devolution measure that contains more than the Government measure had to offer, but yet is willing to support a Conservative Government who will deny him all of that.
  Mr. Crawford Mr. Crawford rose—
  Mr. Morris: No. I want to continue.
  I wish to deal with the point made by the hon. Member for Carmarthen. He said that the only initiative for devolution would come from the Labour Party: nothing would come from the Tories. Why do he and his colleagues find them-salves time after time in the Lobby with the Tories? It is not the first occasion. It happened in the Division on the Gracious Speech in 1974. It happened on the vote of confidence the other night. It happened as regards the SNP—it may well be that it happened for the Welsh nationalists, too, I know not—on the Dock Work Regulation Bill, on the National Enterprise Board, on the Aircraft and Shipbuilding Industries Bill, and on the Community Land Bill.
  Time after time the two nationalist parties have found themselves in the Opposition Lobby—in the Tory Lobby. This is what they must explain to the people of Wales and of Scotland.
  Mr. Crawford Mr. Crawford
  rose—
  Mr. Speaker: Order. The hon. Member must resume his seat. Clearly the Secretary of State does not intend to give way.
  Mr. Morris: I am not sure of the hon. Gentleman's antecedents in this matter. Obviously, he wants to make a speech in support of the hon. Member for Cathcart. I am sure that he will have other occasions on which to do so.
  I understand why the two nationalist parties are determined, not for the first time, to bring down the Government. The
  1020
  reason was enshrined in the words of the hon. Member for Carmarthen, who made tonight the biggest admission of all time, namely, that a Tory Government under the right hon. Lady the Leader of the Opposition will give the biggest boost of all time to nationalism in Wales. That is what it is all about. It is in exactly the same way as one of the officials of the nationalist party in Wales said in the 1960s—it was reported at the time—words to the effect that the more unemployment there was in Wales, the better it was for nationalism. The Welsh nationalists were prepared then, as they are now, to make political capital out of human misery. That is their record now.
  Mr. Teddy Taylor: The Secretary of State has referred to the subject of unemployment and the Tories. Can he recall a time when unemployment in Scotland or in Wales was as high as it is under the present Socialist Government?
  Mr. Morris: The hon. Gentleman knows—one of my hon. Friends made the point in an earlier speech—the record of the Tory Party in the 1930s. The hon. Gentleman, who objects to separatism and to independence, is the last person to say that the figures for Scotland or for Wales can be treated separately. He knows, I know and everybody else in the House knows that we are interdependent in the matter of unemployment. We know that we are part and parcel of the economy of the United Kingdom.
  Short of separatism, short of independence—as I understand it, the hon. Gentleman opposes that, unless tonight he has again changed his heart; some of the allegations made by the hon. Lady may be true: I know not—the economy of Wales and that of Scotland cannot be divorced from the economy of the rest of the United Kingdom.
  My right hon. Friend the Member for Kilmarnock (Mr. Ross) mentioned the difficulties of Glenfield and Kennedy in his constituency. We all know how concerned he is and how involved he has become in this issue. I think that my right hon. Friend is aware that Ministers and officials in the Scottish Office have been having intensive discussions over the past two weeks with Crane Limited—the ultimate owners in the United Kingdom—exploring various possibilities for the

  1021
  rescue of Glenfield and Kennedy and thus the preservation of jobs at Kilmarnock, about which my right hon. Friend is concerned. Only very short notice was given by Crane Limited of the decision to close the Glenfield and Kennedy factory at Kilmarnock.
  Contrary to the statement issued by the company, no viable proposition to continue the business came forward from any quarter. Of the two propositions referred to by Crane Limited, one was put forward only on 27th June and was withdrawn after preliminary discussions between the company and officials. The other proposition, in the company's view, held no prospect of securing a viable project and therefore of continuing employment.
  I understand that the receiver has been appointed today for the company and that officials of the Scottish Economic Planning Department will have talks with him. The Government stand ready to assist in any scheme that will allow the business, or any part of it, to be continued on a viable basis. I thought that my hon. Friends, and particularly my right hon. Friend the Member for Kilmarnock, would want to hear that information.
  In our programmes for advance factories, in the setting up of development agencies, and in the rate of building in Wales we have taken vital steps to plan and provide for the future. I make no apologies when advance factories are empty for a short period. They are there to prime the pump—ready for when business wants to expand. If it is the policy of the Welsh nationalists to stop building advance factories, perhaps they would tell me so, and I will know what to tell the people of Merioneth, Caernarvon and right across Wales.
  This Government have lifted the programme of house building from the low
  level of our predecessors, and the tragedy is that, having obtained increased resources running at £30 million in one year and £20 million in each of the three subsequent years, local authorities are not able to spend the money that has been made available to them. For example, in Merioneth there has been underspending.
  I have read with great interest some of the comments made on the vote of confidence when the nationalist parties voted with the Tories. On the last occasion one of the Welsh nationalist propagandists said:
  "What we did on the vote of confidence was to confuse a lot of our potential supporters in the Labour and trade union movements."
  Those are the words of the hon. Member for Merioneth. The record shows that this has happened time after time—on the Queen's Speech and then on the vote of confidence. The hon. Member went on to say that in his view this impression was reinforced in the valleys in the recent district and county election campaigns.
  The picture in Wales is that the nationalist party has aligned itself with the Tories. The Tories tonight will make the biggest mistake of all time in supporting the nationalist parties. I am confident that when we return to face the electors, the Prime Minister and his colleagues in Wales and many more will be returned to Parliament because we are determined to build a better and more just society. There would be no greater tragedy for Wales or for Scotland if we did not utilise properly the opportunity of the find in the North Sea for the benefit of Scotland, England and Wales as well.
  Question put,
  That the salary of the Prime Minister be reduced by half:—
  The House divided: Ayes 271, Noes 300.

  Division No. 187.]

  AYES

  [9.59 p.m.

  Adley, Robert

  Benyon, W.

  Brooke, Peter

  Aitken, Jonathan

  Berry, Hon Anthony

  Brotherton, Michael

  Alison, Michael

  Biffen, John

  Brown, Sir Edward (Bath)

  Amery, Rt Hon Julian

  Biggs-Davison, John

  Bryan, Sir Paul

  Arnold, Tom

  Blaker, Peter

  Buchanan-Smith, Alick

  Atkins, Rt Hon H. (Spelthorne)

  Body, Richard

  Buck, Antony

  Awdry, Daniel

  Boscawen, Hon Robert

  Budgen, Nick

  Bain, Mrs Margaret

  Bottomley, Peter

  Bulmer, Esmond

  Baker, Kenneth

  Bowden, A. (Brighton, Kemptown)

  Burden, F. A.

  Banks, Robert

  Boyson, Dr Rhodes (Brent)

  Butler, Adam (Bosworth)

  Bell, Ronald

  Bralne, Sir Bernard

  Chalker, Mrs Lynda

  Bennett, Sir Frederic (Torbay)

  Brittan, Lecn

  Channon, Paul

  Bennett, Dr Reginald (Fareham)

  Brocklebank-Fowler, C.

  Churchill, W. S.

  Clark, Alan (Plymouth, Sutton)

  Hutchison, Michael Clark

  Pym, Ht Hon Francis

  Clark, William (Croydon S)

  Irving, Charles (Cheltenham)

  Raison, Timothy

  Clarke, Kenneth (Rushcliffe)

  James, David

  Rathbone, Tim

  Clegg, Walter

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

  Rawlinson, Rt Hon Sir Peter

  Cooke, Robert (Bristol W)

  Jessel, Toby

  Rees, Peter (Dover & Deal)

  Cordle, John H.

  Johnson Smith, G. (E Grinstead)

  Rees-Davies, W. R.

  Cormack, Patrick

  Jones, Arthur (Daventry)

  Reid, George

  Costain, A. P.

  Jopling, Michael

  Renton, Rt Hon Sir D. (Hunts)

  Critchley, Julian

  Joseph, Rt Hon Sir Keith

  Renton, Tim (Mid-Sussex)

  Crouch, David

  Kaberry, Sir Donald

  Rhodes James, R.

  Crowder, F. P.

  Kershaw, Anthony

  Ridley, Hon Nicholas

  Davies, Rt Hon J. (Knutstord)

  Kimball, Marcus

  Ridsdale, Julian

  Dean, Paul (N Somerset)

  King, Evelyn (South Dorset)

  Rifkind, Malcolm

  Dodsworth, Geoffrey

  King, Tom (Bridgwater)

  Roberts, Michael (Cardiff NW)

  Douglas-Hamilton, Lord James

  Kitson, Sir Timothy

  Roberts, Wyn (Conway)

  Drayson, Burnaby

  Knight, Mrs Jill

  Rodgers, Sir John (Sevenoaks)

  du Cann, Rt Hon Edward

  Knox, David

  Rossi, Hugh (Hornsey)

  Durant, Tony

  Lamont, Norman

  Rost, Peter (SE Derbyshire)

  Dykes, Hugh

  Langford-Holt, Sir John

  Royle, Sir Anthony

  Eden, Rt Hon Sir John

  Latham, Michael (Melton)

  Sainsbury, Tim

  Edwards, Nicholas (Pembroke)

  Lawrence, Ivan

  St. John-Stevas, Norman

  Elliott, Sir William

  Lawson, Nigel

  Scott, Nicholas

  Emery, Peter

  Le Marchant, Spencer

  Shaw, Giles (Pudsey)

  Evans, Gwynfor (Carmarthen)

  Lester, Jim (Beeston)

  Shelton, William (Streatham)

  Ewing. Mrs Winifred (Moray)

  Lewis, Kenneth (Rutland)

  Shepherd, Colin

  Eyre, Regnald

  Lloyd, Ian

  Shersby, Michael

  Fairbairn, Nicholas

  Loveridge, John

  Silvester, Fred

  Fairgrieve, Russell

  Luce, Richard

  Sims, Roger

  Farr, John

  McAdden, Sir Stephen

  Sinclair, Sir George

  Fell, Anthony

  MacCormick, Iain

  Skeet, T. H. H.

  Finsberg, Geoffrey

  McCrindle, Robert

  Smith, Dudley (Warwick)

  Fisher, Sir Nigel

  Macfarlane, Neil

  Smith, Timothy John (Ashfield)

  Fletcher, Alex (Edinburgh, N)

  MacGregor, John

  Speed, Keith

  Fookes, Miss Janet

  MacKay, Andrew James

  Spence, John

  Forman, Nigel

  Macmillan, Rt Hon M. (Farnham)

  Spicer, Michael (S Worcester)

  Fowler, Norman (Sutton C'f'd)

  McNair-Wilson, P. (New Forest)

  Sproat, Iain

  Fox, Marcus

  Madel, David

  Stainton, Keith

  Fraser, Rl Hon H. (Stafford & St)

  Marshall, Michael (Arundel)

  Stanbrook, Ivor

  Fry, Peter

  Marten, Neil

  Stanley, John

  Galbralth, Hon. T. G. D.

  Mates, Michael

  Steen, Anthony (Wavertree)

  Gardiner, George (Reigate)

  Mather, Carol

  Stewart, Rt Hon Donald

  Gardner, Edward (S. Fylde)

  Maude, Angus

  Stewart, Ian (Hitchin)

  Gilmour, Rt Hon Sir Ian (Chesham)

  Maudling, Rt Hon Reginald

  Stokes, John

  Gilmour, Sir John (East Fife)

  Mawby, Ray

  Stradling Thomas, J.

  Giyn, Dr Alan

  Maxwell-Hyslop, Robin

  Tapsell, Peter

  Godber, Rt Hon Joseph

  Mayhew, Patrick

  Taylor, R. (Croydon NW)

  Goodhart, Philip

  Meyer, Sir Anthony

  Taylor, Teddy (Cathcart)

  Goodhew, Victor

  Miller, Hal (Bromsgrove)

  Tebbit, Norman

  Goodlao, Alastair

  Mills, Peter

  Temple-Morris, Peter

  Gorst, John

  Miscampbell, Norman

  Thatcher, Rt Hon Margaret

  Gower, Sir Raymond (Barry)

  Mitchell, David (Basingstoke)

  Thomas, Dafydd (Merioneth)

  Grant, Anthony (Harrow C)

  Moate, Roger

  Thomas, Rt Hon P. (Hendon S)

  Gray, Hamish

  Monro, Hector

  Thompson, George

  Grieve, Percy

  Montgomery, Fergus

  Townsend, Cyril D.

  Griffiths, Eldon

  Moore, John (Croydon C)

  Trotter, Neville

  Grist, Ian

  More, Jasper (Ludlow)

  van Straubenzee, W. R.

  Grylls, Michael

  Morgan, Geraint

  Vaughan, Dr Gerard

  Hall-Davis, A. G. F.

  Morgan-Giles, Rear-Admiral

  Viggers, Peter

  Hamilton, Michael (Salisbury)

  Morris, Michael (Northampton S)

  Wakeham, John

  Hampson, Dr Keith

  Morrison Charles (Devizes)

  Walder, David (Clitheroe)

  Hannam, John

  Morrison, Hon Peter (Chester)

  Walker, Rt Hon P. (Worcester)

  Harrison, Col Sir Harwood (Eye)

  Mudd, David

  Wall, Patrick

  Harvie Anderson, Rt Hon Miss

  Neave, Airey

  Walters, Dennis

  Havers, Rt Hon Sir Michael

  Neubert, Michael

  Warren, Kenneth

  Hawkins, Paul

  Newton, Tony

  Watt, Hamish

  Hayhoe, Barney

  Nott, John

  Weatherill, Bernard

  Heath, Rt Hon Edward

  Onslow, Cranley

  Wells, John

  Henderson, Douglas

  Oppenheim, Mrs Sally

  Welsh, Andrew

  Heseltine, Michael

  Page, John (Harrow West)

  Whitelaw, Rt Hon William

  Hicks, Robert

  Page, Rt Hon R. Graham (Crosby)

  Wiggin, Jerry

  Higgins, Terence L.

  Page, Richard (Workington)

  Wilson, Gorden (Dundee E)

  Hodgson, Robin

  Parkinson, Cecil

  Winterton, Nicholas

  Holland, Philip

  Pattie, Geoffrey

  Wood, Rt Hon Richard

  Hordern, Peter

  Percival, Ian

  Young, Sir G. (Ealing, Acton)

  Howe, Rt Hon Sir Geoffrey

  Peyton, Rt Hon John

  Younger, Hon George

  Howell, David (Guildford)

  Pink, R. Bonner

  TELLERS FOR THE AYES

  Hunt, David (Wirral)

  Price, David (Eastleigh)

  Mr. Dafydd Wigley and

  Hunt, John (Bromley)

  Prior, Rt Hon James

  Mr. Douglas Crawford.

  Hurd, Douglas

  NOES

  Abse, Leo

  Archer, Rt Hon Peter

  Ashton, Joe

  Allaun, Frank

  Armstrong, Ernest

  Atkins, Ronald (Preston N)

  Anderson, Donald

  Ashley, Jack

  Atkinson, Norman

  1024

  1025

  Bagier, Gordon A. T.

  Freeson, Reginald

  Mason, Rt Hon Roy

  Barnett, Guy (Greenwich)

  Freud, Clement

  Maynard, Miss Joan

  Barnett, Rt Hon Joel (Heywood)

  Garrett, John (Norwich S)

  Meacher, Michael

  Bates, Alf

  Garrett, W. E. (Wallsend)

  Mellish, Rt Hon Robert

  Beith, A. J.

  George, Bruce

  Mendelson, John

  Benn, Rt Hon Anthony (Wedgwood)

  Gilbert, Dr John

  Mikardo, Ian

  Bennett, Andrew (Stockport N)

  Ginsburg, David

  Millan, Rt Hon Bruce

  Bidwell, Sydney

  Golding, John

  Miller, Dr M. S. (E Kilbride)

  Bishop, Rt Hon Edward

  Gould, Bryan

  Miller, Mrs Millie (Ilford N)

  Blenkinsop, Arthur

  Gourlay, Harry

  Mitchell, Austin Vernon (Grimsby)

  Boardman, H.

  Graham, Ted

  Molloy, William

  Booth, Rt Hon Albert

  Grant, George (Morpeth)

  Moonman, Eric

  Boothroyd, Miss Betty

  Grant, John (Islington C)

  Morris, Alfred (Wythenshawe)

  Bottomley, Rt Hon Arthur

  Grocott, Bruce

  Morris, Charles R. (Openshaw)

  Boyden, James (Bish Auck)

  Hamilton, James (Bothwell)

  Morris, Rt Hon J. (Aberavon)

  Bradley, Tom

  Hardy, Peter

  Moyle, Roland

  Bray, Dr Jeremy

  Harper, Joseph

  Mulley, Rt Hon Frederick

  Broughton, Sir Alfred

  Harrison, Rt Hon Walter

  Murray, Rt Hon Ronald King

  Brown, Hugh D. (Provan)

  Hart, Rt Hon Judith

  Newens, Stanley

  Brown, Robert C. (Newcastle W)

  Hattersley, Rt Hon Roy

  Noble, Mike

  Buchan, Norman

  Hatton, Frank

  Oakes, Gordon

  Buchanan, Richard

  Hayman, Mrs Helene

  Ogden, Eric

  Butler, Mrs Joyce (Wood Green)

  Healey, Rt Hon Denis

  O'Halloran, Michael

  Callaghan, Rt Hon J. (Cardiff SE)

  Heffer, Eric S.

  Orbach, Maurice

  Callaghan, Jim (Middleton & P)

  Hooley, Frank

  Orme, Rt Hon Stanley

  Campbell, Ian

  Hooson, Emlyn

  Ovenden, John

  Canavan, Dennis

  Horam, John

  Owen, Rt Hon Dr David

  Cant, R. B.

  Howell, Rt Hon Denis (B'ham, Sm H)

  Padley, Walter

  Carmichael, Neil

  Howells, Geraint (Cardigan)

  Palmer, Arthur

  Carter, Ray

  Hoyle, Doug (Nelson)

  Pardoe, John

  Carter-Jones, Lewis

  Huckfield, Les

  Park, George

  Cartwright, John

  Hughes, Rt Hon C. (Anglesey)

  Parker, John

  Castle, Rt Hon. Barbara

  Hughes, Robert (Aberdeen N)

  Parry, Robert

  Clemitson, Ivor

  Hughes, Roy (Newport)

  Pavitt, Laurie

  Cocks, Rt Hon Michael

  Hunter, Adam

  Pendry, Tom

  Cohen, Stanley

  Irving, Rt Hon S. (Dartford)

  Penhaligon, David

  Coleman, Donald

  Jackson, Colin (Brighouse)

  Perry, Ernest

  Colquhoun, Ms Maureen

  Jackson, Miss Margaret (Lincoln)

  Phipps, Dr Colin

  Concannon, J. D.

  Janner, Greville

  Price, William (Rugby)

  Conlan, Bernard

  Jeger, Mrs Lena

  Radice, Giles

  Cook, Robin F. (Edin C)

  Jenkins, Hugh (Putney)

  Rees, Rt Hon Merlyn (Leeds S)

  Corbett, Robin

  John, Brynmor

  Richardson, Miss Jo

  Cowans, Harry

  Johnson, James (Hull West)

  Roberts, Albert (Normanton)

  Cox, Thomas (Tooting)

  Johnson, Walter (Derby S)

  Roberts, Gwilym (Cannock)

  Craigen, Jim (Maryhill)

  Johnston, Russell (Inverness)

  Robinson, Geoffrey

  Crawshaw, Richard

  jones, Alec (Rhondda)

  Roderick, Caerwyn

  Cronin, John

  Jones, Barry (East Flint)

  Rodgers, George (Chorley)

  Crowther, Stan (Rotherham)

  Jones, Dan (Burnley)

  Rodgers, Rt Hon William (Stockton)

  Cryer, Bob

  Judd, Frank

  Rooker, J. W.

  Cunningham, G. (Islington S)

  Kaufman, Gerald

  Roper, John

  Cunningham, Dr J. (Whiteh)

  Kelley, Richard

  Rose, Paul B.

  Davidson, Arthur

  Kilroy-Sllk, Robert

  Ross, Stephen (Isle of Wight)

  Davies, Bryan (Enfield N)

  Kinnock, Neil

  Ross, Rt Hon W. (Kilmarnock)

  Davies, Denzil (Llanelli)

  Lambie, David

  Rowlands, Ted

  Davies, Ifor (Gower)

  Lamborn, Harry

  Ryman, John

  Davis, Clinton (Hackney C)

  Lamond, James

  Sandelson, Neville

  Deakins, Eric

  Latham, Arthur (Paddington)

  Sedgemore, Brian

  Dean, Joseph (Leeds West)

  Leadbitter, Ted

  Selby, Harry

  Dell, Rt Hon Edmund

  Lee, John

  Shaw, Arnold (Ilford South)

  Dempsey, James

  Lestor, Miss Joan (Eton & Slough)

  Sheldon, Rt Hon Robert

  Doig, Peter

  Lever, Rt Hon Harold

  Shore, Rt Hon Peter

  Dormand, J. D.

  Lewis, Ron (Carlisle)

  Short, Mrs Renée (Wolv NE)

  Douglas-Mann, Bruce

  Lipton, Marcus

  Silkin, Rt Hon John (Deptford)

  Duffy, A. E. P.

  Lomas, Kenneth

  Silkin, Rt Hon S. C. (Dulwich)

  Dunlop, John

  Loyden, Eddie

  Sillars, James

  Dunn, James A.

  Luard, Evan

  Silverman, Julius

  Dunnett, Jack

  Lyon, Alexander (York)

  Skinner, Dennis

  Eadie, Alex

  Lyons, Edward (Bradford W)

  Small, William

  Edge, Geoff

  Mabon, Rt Hon Dr J. Dickson

  Smith, Cyril (Rochdale)

  Ellis, John (Brigg & Scun)

  McCartney, Hugh

  Smith, John (N Lanarkshire)

  English, Michael

  McDonald, Dr Oonagh

  Snape, Peter

  Ennals, David

  McElhone, Frank

  Spearing, Nigel

  Evans, Fred (Caerphilty)

  MacFarquhar, Roderick

  Spriggs, Leslie

  Evans, loan (Aberdare)

  McGuire, Michael (Ince)

  Stallard, A. W.

  Ewing, Harry (Stirling)

  MacKenzie, Rt Hon Gregor

  Steel, Rt Hon David

  Faulds, Andrew

  Maclennan, Robert

  Stewart, Rt Hon M. (Fulham)

  Fernyhough, Rt Hon E.

  McMillan, Tom (Glasgow C)

  Stott, Roger

  Fitt, Gerard (Belfast W)

  McNamara, Kevin

  Strang, Gavin

  Flannery, Martin

  Madden, Max

  Strauss, Rt Hon G. R.

  Fletcher, Ted (Darlington)

  Magee, Bryan

  Summerskill, Hon Dr Shirley

  Foot, Rt Hon Michael

  Mahon, Simon

  Swain, Thomas

  Ford, Ben

  Mallalleu, J. P. W.

  Taylor, Mrs Ann (Bolton W)

  Forrester, John

  Marks, Kenneth

  Thomas, Jeffrey (Abertillery)

  Fowler, Gerald (The Wrekin)

  Marshall, Dr Edmund (Goole)

  Thomas, Mike (Newcastle E)

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

  Marshall. Jim (Leicester S)

  Thomas, Ron (Bristol NW)

  1026

  1027

  Thorne, Stan (Preston South)

  Ward, Michael

  Williams, Sir Thomas (Warrington)

  Thorpe, Rt Hon Jeremy (N Devon)

  Watkins, David

  Wilson, Alexander (Hamilton)

  Tlerney, Sydney

  Watikinson, John

  Wilson, Rt Hon Sir Harold (Huyton)

  Tinn, James

  Weetch, Ken

  Wilson, William (Coventry SE)

  Tomlinson, John

  Weitzman, David

  Wise, Mrs Audrey

  Tomney, Frank

  Wellbeloved, James

  Woodall, Alec

  Torney, Tom

  White, James (Pollok)

  Woof, Robert

  Tuck, Raphael

  Whitehead, Phillip

  Wrigglesworth, Ian

  Urwin, T. W.

  Whiteock, William

  Young, David (Bolton E)

  Varley, Rt Hon Erie G.

  Willey, Rt Hon Frederick

  Wainwright, Edwin (Dearne V)

  Williams, Rt Hon Alan (Swansea W)

  TELLERS FOR THE NOES:

  Wainwright, Richard (Colne V)

  Williams, Alan Lee (Hornch'ch)

  Mr. Frank R. White and

  Walker, Harold (Doncaster)

  Williams, Rt Hon Shirley (Hertford)

  Mr. David Stoddart.

  Walker, Terry (Kingswood)

  Question accordingly negatived.

  BUSINESS OF THE HOUSE
  Ordered,
  That the Passenger Vehicles (Experimental Areas) Bill [Lords] may be proceeded with at this day's Sitting, though opposed, until any hour.—[Mr. Ashton.]

  PASSENGER VEHICLES (EXPERIMENTAL AREAS) BILL [Lords]
  As amended (in the Standing Committee), considered.
Clause 1

  PUBLIC SERVICE VEHICLE LICENSING: DESIGNATION OF EXPERIMENTAL AREAS
  10.16 p.m.
  Mr. Peter Fry: I beg to move Amendment No. 1, in page 1, line 10, after "State", insert
  'after consulting the relevant Traffic Commissioners'.
  Mr. Speaker: With this we may also discuss Amendment No. 3, in page 1, line 13, at end insert
  'after having consulted the relevant Traffic Commissioners for the area'.
  Mr. Fry: In Committee we had a brief discussion of the relationship between the local authority and the traffic commissioners. I have tabled these amendments because I believe that this fairly innocent-sounding piece of legislation denotes a new departure in public transport. It does so because it begins to forge a totally new relationship between the Government and local authorities, whose duties under Sections 2 and 3 of the Local Government Act 1972 are at last being recognised and it is now expected that they will fulfil those responsibilities.
  There is another party in this issue, namely the traffic commissioners. When I pressed the Minister in Committee on the future rôle of the traffic commissioners he said:
  "The general rôle of Traffic Commissioners was considered in the course of our general review of transport policy, and we will make our views on that plain when we publish them. I cannot, therefore, go into that general problem now."—[Official Report, Standing Committee F, 16th June 1977; c. 85.]
  1030
  I believe that since, in the interim period, we have had the Government's White Paper on transport policy, it is relevant, before dealing with the final stages of this Bill, to examine where the Government stand with regard to the traffic commissioners and their relationship to local authorities and the Government. In what is in many ways a readable, if somewhat lengthy, document, the Government have said in their White Paper various things which do not take us very much further than the kind of comments that have already been made.
  For example, paragraph 147 of the White Paper says,
  "The licensing system will be modified so as to make it easier for cost-effective local transport arrangements to be introduced."
  It says very little more than that at that time.
  In paragraph 150 the White Paper goes on to say,
  "there is already a case for some more general modifications of the licensing law. The Government will now consult widely about proposals for early legislation."
  In paragraph 152 the White Paper goes on to say, on the subject of community buses,
  "they must remain within the jurisdiction of the Traffic Commissioners."
  Finally, paragraph 156 states,
  "The Government proposes also to amend the licensing criteria in section 135 of the Road Traffic Act 1960 so as to provide that the Traffic Commissioners should have regard, in making their decisions, to local authorities' policies and plans for local transport. But … overall responsibility for licensing is best left with them as separate and independent bodies."
  I suggest that if the Government mean what they said in those last few words, one must question very seriously indeed how far they intend the present experiments to go, because it is quite clear that only by giving the county councils a very real share in and a very real responsibility for deciding on the kind of routes and the kind of vehicles that can be used for public transport, particularly in rural areas, is there any hope of the alleviation of a problem of which I think the whole House is perfectly well aware.
  With respect, I would say that the words of the White Paper are all very laudable but are still somewhat vague. It is time that the Minister came forward

  1031
  with a somewhat more definitive statement on how he sees the role of the traffic commissioners in the new set-up. I must make it quite clear that, for my part, I happen to feel that the traffic commissioners still have a most useful role to play. I am aware, however, and I am sure that the Minister is aware, that there are very strong feelings on this subject in many parts of the country, and indeed, there are some county councils and many county councillors who would wish totally to sweep away the rôle of the traffic commissioners in any respect in relation to road service licensing.
  I do not think that we can possibly pass this measure tonight until we get some indication from the Government as to how they intend to allocate the rôles of themselves, through the Secretary of State, and of the local authorities and the traffic commissioners. I happen to believe that we are perhaps starting to make very fundamental changes in the public transport system. Frankly, the kind of advice and comment that I hoped for in the White Paper is not there. Too much of it is still in the future, yet the problems of rural transport and the problems with which the traffic commissioners are having to deal become every day more urgent.
  I am quite well aware that there is to be a certain degree of additional support for rural transport. A figure of £15 million has been mentioned. But the Minister knows as well as I do that this is no more than a stopgap. It will do no more than support the present level of services until more fundamental reforms can take place.
  If we are to have a situation in which, through the Bill as it now stands, all county councils can apply to the Secretary of State for experimental areas to be created, we shall have them making their sets of suggestions and we shall have the Secretary of State in the position of deciding whether to allow those experiments to take place, and at present we shall still have the traffic commissioners continuing in their traditional way, making judgments on the same set of criteria that has been established in many areas.
  As I drew to the Committee's attention, the kind of criteria that have been set out in the schedule for local authorities to use when considering what kind of experi-
  1032
  ments to undertake bears a very strong similarity to the criteria that the traffic commissioners are required to use under existing legislation. The purpose of the amendment is to probe the Government's attitude. It is all very well to say in Committee that we should wait for the White Paper. The Government must come clean to a greater extent than they have done so far.
  I am entirely in favour of this new partnership being created, but there is a danger in the Bill as it stands of there being a degree of uncertainty, particularly about the rôle of the traffic commissioners, if the Government are as firm as they have been. I remind the House of the words in the White Paper:
  "Overall responsibility for licensing is best left with them as separate and independent bodies".
  How does the Minister reconcile this with the kind of experiment that undoubtedly will be asked for and made if the Bill is to have any long-term effect? I look forward with interest to what the Minister says in reply to the amendments.
  Mr. Hal Miller: I, too, should like to see clarification about the extent of the traffic commissioners' jurisdiction. Will it be possible under this legislation for local authorities to designate areas in which parents might make arrangements for their children to be conveyed to and from school?
  I bring to the attention of the House a case in my constituency where parents attempted to club together to hire a taxi to take their children to school. The case was referred to the traffic commissioners and the parents were refused permission to continue this practice. That case is relevant to the Bill.
  Are the traffic commissioners to be consulted about applications of this kind? Would such a scheme be permitted under the Bill? The case to which I referred was within the three-mile limit.
  As the House will recall I attempted to pilot through the House a Bill to amend these provisions. Can the Minister say whether in his opinion such use by parents would be allowed whether or not it was within the three-mile limit, or whether the local authority might be allowed on their behalf to make such arrangements over the three-mile limit?
  Mr. Peter Temple-Morris: I support everything that has been said by my hon. Friends the Members for Wellingborough (Mr. Fry) and Bromsgrove and Redditch (Mr. Miller). I want to return to the main point made by my hon. Friend the Member for Welling-borough who asked the Minister for clarification about the rôle of the traffic commissioners.
  The whole purpose of the White Paper is to increase the power and influence of the county councils. When he made his statement on the White Paper I asked the Secretary of State about which rôle will prevail. How can we reconcile the increased power of the county councils and the continued r61e of the Commissioners? They are two forces. It is not clear which will prevail.
  One can only presume from the Secretary of State's answer that he will back up by legislation the rôle of the county councils. Nevertheless, the commissioners will have the final say. Unless we get some assurance we can only assume that the same old rôe of the traffic commissioners will continue.
  One of the things that are absent from the commissioners' criteria is a separate reckoning of public need. I do not have the papers with me, but I know that the traffic commissioners have to consider various criteria, and among them is public need. Public need is not a paramount criterion, and I suggest that it should be. If it were, we should never have had the calamitous occurrence in Oxfordshire recently when the county council had to wait a whole year for a relatively simple decision on something which it wanted to do, to innovate, improve and introduce a scheme much on the lines of the experiments we are now discussing.
  I shall not go into the matter at length now, and we may have to return to it later. All I ask the Under-Secretary to give is some idea where the county council stands vis-à-vis the traffic commissioners. That is what my hon. Friend the Member for Wellingborough is after, and that is what I am after, too. If anything, although I tend to agree with my hon. Friend on most transport matters, I am perhaps a little more critical of the traffic commissioners than he is, and, left entirely to myself, I should bear more on the side of the county council. How-
  1034
  ever, I should be happy to join my hon. Friend if the Under-Secretary would say something about the traffic commissioners giving more weight to what the county councils will have to say. Otherwise, if I may say so, the proposals in the White Paper will be a nonsense.
  10.30 p.m.
  Mr. Sydney Bidwel]: As he sees them, what effect does my hon. Friend the Under-Secretary think these measures will have on the licensed cab trade? He will be as well aware as I am of the problems which are worrying workers in that trade. Although they support the general idea of diversification of public transport facilities, they are anxious about their existing situation and the proliferation of irresponsible usage of private vehicles, if I may so put it, for public purposes. Could my hon. Friend reply on that?
  The Under-Secretary of State for Transport (Mr. John Horam): I shall gladly reply to my hon. Friend the Member for Ealing, Southall (Mr. Bidwell) if he will bear with me until I have dealt with the more general matters raised by the Opposition.
  I agree with the hon. Member for Wellingborough (Mr. Fry) when he says that the traffic commissioners have a useful rôle to play. Those were his words, and I heartily endorse them in whatever scenario we view this matter.
  One has to distinguish between two situations here. First, there is the situation under the Bill in which experiments take place in particular areas. There the traffic commissioners have one rôle, and I shall come to that. On the other hand, we have the general situation throughout the country, which is largely the matter dealt with in the White Paper. I gather that the hon. Member for Leo-minster (Mr. Temple-Morris) was principally concerned about that.
  As regards the general situation, the proposal in the White Paper was that, in reaching their decisions and judgments, the traffic commissioners should take account of local county plans for transport. That was the general point. At present, as hon. Gentlemen know, they take account of a number of matters—the level of fares, the degree of need and factors of that kind. This would be an addition to the considerations which they

  1035
  have to take into account at present, that they should pay regard to the local transport plan as set out by the county council concerned. That is the only way in respect of their general rôle that the traffic commissioners will be affected.
  Mr. Fry: Will the hon. Gentleman bear in mind that at present the traffic commissioners have considerable powers over fares? Does he foresee a situation in which the county council—which, after all, will be asked to pay the bill if subsidy is necessary—can have some say in fares? If things are left as they are, the traffic commissioners can decide who has a road service licence, and they also have a strong say in the fares which people will have to pay and, therefore, on the profitability of the bus company running over a particular route.
  Mr. Horam: The situation would remain as it is today, except that in coming to their decision on fares as well as on other matters the commissioners would have to pay regard to the county plans. Plainly, as is stated in the White Paper, this is a matter for consultation. We shall be consulting in due course. In fact, in the next week or two letters will be sent to the county authorities asking for their views on the areas to which it is right to extend the new provisions. That is the general answer to the question of the overall rôle of the commissioners.
  Inside that rôle we are talking about particular areas in which the experiments are to take place. In those areas the commissioners will be informally represented on the working groups which will be set up to conduct the experiments. I mentioned this matter in Committee. We thought it right to take account of their experience and advice, but clearly it would be wrong for them to be formally represented on the working groups. There is therefore no uncertainty about their rôle, which is to offer help and advice to local working groups. Nationally, it will be a matter for further consultation on the broad principle set out in the White Paper. I hope that that makes the general position clear.
  Taxi-sharing schemes such as the one which constituents of the hon. Member for Bromsgrove and Redditch (Mr. Miller) wanted to conduct would come within the range of possibilities if a local authority was empowered by the Secretary of State
  1036
  to conduct an experiment in its area and provided all the necessary authorisations were obtained for it. Schemes are being conducted in the four areas in which there are Government experiments. In those four areas there are one or two examples of taxi-sharing schemes. Certainly they are allowable under the legislation.
  Mr. Hal Miller: The Bill refers to a limit of five seats for commercial vehicles, but, with the later amendment, the number of seats for private vehicles not used for other purposes would be 16. Will the hon. Gentleman anticipate the discussion on the amendment and say what numbers of schoolchildren might be carried?
  Mr. Horam: The commercial minibus does not come within the scope of the Bill. However, special authorisations could be given for taxis normally carrying three, four or five people. I am looking to see whether there are any taxi-sharing schemes. In fact, there is one. I have a reference here to
  "hospital transport schemes which may involve hire cars, private cars or minibuses to tackle the problems of people in remote areas who need to get to centralised hospitals in towns to attend clinics",
  and so on. That is analogous to the point mentioned by the hon. Gentleman.
  In answer to my hon. Friend the Member for Ealing, Southall, may I say that the Department of Transport is not responsible for the hire cab business. Therefore, I cannot speak with authority on that matter. However, the relaxations of the licensing laws for taxis will apply only in the four areas in which we are conducting experiments. That has always been the case.
  The general safeguards for the taxi business—to which I know my hon. Friend attaches importance, as I have in the past and still do—are maintained except in these particular areas where we are relaxing them with the agreement of the cab trade, which is represented on our working parties and has agreed to all this legislation. We are doing it in these cases and in no others. I think that the general situation maintains itself.
  The hon. Member for Wellingborough put this forward as a trailer, as it were, to put these particular matters on the rôle of the traffic commissioners. In many respects I should be happy to agree to

  1037
  his amendments, because obviously we shall certainly consult the traffic commissioners, but, as it happens, they have come rather late in the day. There is, unfortunately, a technical flaw in them, in that they should be attached to subsection (5), where we deal with the people whom the Secretary of State should consult before agreeing to designate an experimental area. They are also somewhat redundant in view of the fact that the Secretary of State now has to agree to an experimental area if the county council wishes to have one, although he retains power to authorise particular schemes. To that extent, therefore, consultation of this kind is slightly redundant.
  For these reasons, if the hon. Gentleman will accept my assurance, which will be on the record, that we shall certainly consult the traffic commissioners in the experiments which we conduct, I hope that he will feel able now to withdraw his amendment.
  Mr. Fry: In view of what the Minister has said, I think it probably will be right for me to ask leave to withdraw the amendment, but I should like to make this final point: if these experiments which are forecast in the Bill are to be meaningful, I still think that some of the questions that my hon. Friends and I have asked will require much more firm and concrete answers than we have received from the Minister tonight.
  I am aware that the Government are feeling their own way on this point, but the day will come when a much clearer delineation of the various powers and responsibilities will be required. I am delighted to see that the Minister nods his head. I am glad that the Government realise that this is required.
  I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Mr. Horam: I beg to move Amendment No. 2, in page 1, leave out lines 12 and 13 and insert—
  'The Secretary of State, if requested to do so as regards any such area by the local authority concerned, shall so designate the area in question.'.
  Mr. Speaker: With this we may take Government Amendments Nos. 4, 5 and 6.
  Mr. Horam: These amendments are concerned with provisions which were inserted into the Bill in Committee by the Opposition and are purely to tidy up the drafting. I said in Committee that I should be happy to accept the amendments dealing with the extension of the period covered by an order designating an experimental area, even though it is perhaps unnecessary, because clearly we would not cut off a promising scheme in its prime. None the less, it is sensible for the Opposition perhaps to build in this point, and I can accept that.
  I also undertook to give serious consideration to the amendment concerning the designation of an experimental area at the request of the local authority. I still feel, as I said in Committee, that the provision introduced is in a sense redundant. It has been clear all along that my right hon. Friend the Secretary of State would be prepared to consider designating experimental areas at the request of any local authority concerned which had proposals for experiments which fitted in with the basis on which we are working.
  In my view, therefore, these amendments will make no difference in practice to what will happen as a result of the Bill. However, I do not seek to reverse the decision of the Committee. The present amendments, therefore, merely introduce certain minor drafting changes to make it quite clear that a local authority could request an experimental area to be designated only in its own territory—an obvious point but one that we should like to clarify. If any county council wishes to apply its own resources to the conduct of experiments of this kind, to complement our programme, my right hon. Friend would use his powers under the Bill to facilitate this, always providing that the experiments will genuinely add to the evidence that the Government's programme is designed to collect.
  As I have explained a number of times already, this is not a Bill to facilitate random patchwork modification of licensing law across the country but to enable certain experiments to be carried out under controlled conditions, to provide hard evidence of the effects of certain modifications of licensing. Against this background I am prepared to accept the provisions.
  10.45 p.m.
  Mr. Norman Fowler: As the Minister said, this amendment and this change result not from the will of the Government but from a defeat that they suffered during the Committee stage. From the point of view of the Opposition, the victory was an important one. I believe that it will probably prove to be one of the most important changes in the Bill.
  The Minister says that it will not make much difference to his Government's policy. We would agree with him that very little will make much difference to his Government's policy, or lack of policy, in this area.
  But the Conservative Opposition consider that what we have here is a change of substance and of very real importance. It was perhaps not the Government's best day when they lost this important vote, but we shall gloss over the circumstances of that morning, because in spite of a great deal of huffing and puffing from the Under-Secretary, the Government had the good grace to accept the will of the Committee.
  I believe that the result is significant and important, particularly to those living in country areas. What this amendment has done is to convert the model of the Bill, which the Under-Secretary produced and represented to the House, to something which is of considerably greater importance. What the Undersecretary intended and wanted was a modest little measure confined to four areas of Britain, two in England, one in Wales and one in Scotland. That was the limit of the Government's ambitions, and even then they thought that they were taking an enormous leap into the dark.
  The amendment enables not just four experiments but any local authority to run experiments in this country. Let us remember what the Bill allows and what it envisages. The schemes already approved and put forward by the Government include community minibus services, shared cars, postbus services, lifts for payments. My hon. Friend the Member for Wellingborough (Mr. Fry) has received an assurance about schemes to help with school transport.
  We would have hoped—I say this frankly—that we could go even further in the Bill. We would have liked to
  1040
  see commercial minibus services allowed as well. It was a disappointment that the Government did not concede that point also, but it came as no surprise considering the Government's stone-walling attiude over the last three and a half years.
  At any rate some progress has been made in the Bill and even more progress has now been made because of the amendment. It means that experiments can be run by any county council, by the GLC and by regional councils in Scotland as well. The potential of the change is quite clear and very considerable.
  First, it means that county councils which have asked to be allowed to run experiments, and have been refused by the Department of Transport, can now put up proposals again. This means that a county council like Oxfordshire, for example, which had its proposals refused, can now resubmit its plans.
  Secondly, it means that other county councils can now turn their attention to running experiments to see what progress can be made, and to see how they should go forward at local level. To that extent, our victory in Committee represents a victory for the local authorities and a victory for the local people.
  But one matter should be made clear. By a later clause, the Secretary of State still retains a power of veto. Despite a proposal that is put forward, the Secretary of State can refuse permission for a scheme to go ahead. It needs no great powers of forecasting to see that the potential of the Bill will not be realised under this Government. Indeed, it will not be realised until we have a Conservative Secretary of State for Transport who is dedicated to seeking change and making progress.
  A Conservative Government will want to use this Bill to the full, and we shall appreciate and value the advice of all outside expert bodies in this work. But I hope that the Under-Secretary will agree that, in the final analysis, Parliament is sovereign. The aim of an incoming Conservative Government will be to work in the closest consultation with the elected members of local authorities in devising new schemes to help local people solve their own transport problems.
  This is a significant Conservative victory. It takes a step along the path

  1041
  to better transport services for the public. Its greatest benefit will be for the country areas, but it need not necessarily be confined to them. This clause, passed by the Opposition, has now been accepted by the Government. We look forward to operating it to the maximum.
  Mr. David Watkins: As my hon. Friend the Under-Secretary said in introducing this group of amendments, their effect is to modify the amendment carried by the Opposition in Committee, where they were, as usual, more concerned to embarrass the Government than to amend the Bill constructively. That was the tenor of the speech of the hon. Member for Sutton Coldfield (Mr. Fowler) tonight, as it was so often in Committee.
  The Government amendment seems to be a compromise to try to make the best of a bad job. Like all such compromises, it raises queries which are even more serious than the bad job on which it seeks to improve. My hon. Friend said that he felt that there would be no difference in practice. But, although the hon. Member for Sutton Coldfield referred to that remark, he also spoke of a later clause containing a power of veto, and it is about that that I want to ask my hon. Friend.
  The hon. Member for Sutton Coldfield laid great stress on the fact that the effect of the amendment was to extend the powers of the Bill to any local authority, irrespective of whether it covered rural or urban areas. It is clear that the amendment extends powers to non-rural areas and that, if any non-rural local authority makes such a request, the Secretary of State has a mandatory obligation to accede to that request. However, the whole object of the Bill is to deal with transport in rural areas, and it seems contrary to the spirit and intention of the Bill to apply it to urban areas as well.
  I want also to express concern about the machinery for consultation, especially in urban areas, with existing licensed operators. My hon. Friend referred earlier to the cab trade, which is represented on the working party and which has a considerable number of other reservations. Although I have no direct contact with the trade, I believe that its representatives have co-operated closely and played a constructive rôle in the formulation of the Bill.
  1042
  I am disturbed that existing facilities could be damaged owing to lack of consultation, and this is an important side effect of the amendment. The object of the Bill was to improve services in rural areas, and the effect of the amendment will considerably undermine that position by extending these provisions to urban areas. Therefore, I hope that the Minister will clarify the situation. I am concerned that the effect of the amendment will place a mandatory obligation on the Minister to make arrangements in areas which might not necessarily lead to an improvement in the service—and that would be contrary to the spirit and intention of the Bill.
  Mr. Roger Moate: It is not always easy to fault any remark made by the hon. Member for Consett (Mr. Watkins), but on this occasion he is in error to a considerable extent. If he says that the Bill is designed primarily for rural areas, he has failed to understand the Bill.
  The definition of "local authorities" is set out on page 4 of the Bill as follows
  "'Local authority'… means, for England and Wales, a county council or the Greater London Council".
  One would not normally regard the GLC as being a rural area. Although the term "rural experiments" has been widely used, I submit that the Bill has never been limited to rural areas.
  The amendment has drawn attention to the fact that this is a wide-ranging Bill, which is all to the good. But the hon. Gentleman might almost have been talking about a different Bill. He certainly appeared to be talking about a different Committee stage when he suggested that the Opposition were trying to embarrass the Government. He obviously forgot what happened on the morning in Committee when the amendment was passed. The Government could not even provide a quorum. Far from embarrassing the Government, the Opposition after a short delay provided enough Members to allow the Committee to continue. We were being most helpful.
  Mr. David Watkins: Is the hon. Gentleman pretending that the Opposition were not waiting outside the Committee room until the last possible minute before entering the Committee?
  Mr. Moate: I am sure that the hon. Gentleman would agree that it is the duty of the Government to maintain their business and to see that there is a quorum. He can hardly suggest that we were seeking to embarrass the Government because our efforts kept the Committee going.
  The hon. Gentleman then sought to argue that we were tabling a destructive amendment, but since the Government are now accepting our amendment he cannot have it both ways. Does the hon. Gentleman intend to vote against his Government's amendment, or will he accept it? Acceptance by the Minister demonstrates the sheer sound common sense of the amendment that was carried in Committee.
  The Minister deliberately underplayed the effect of the amendment. Powers of this kind can mean little, and it depends how they are interpreted. I hope that the amendment, which will allow any county council to apply these provisions in an experimental area, will be taken up enthusiastically by county councils. If that happens, we could start to make a major impact on the problems of rural transport.
  Will the Minister say how he sees the amendment applying to county councils? In an earlier reply he said that he had to accept applications from councils. In introducing the amendment, he put forward one or to modifications and said that it was subject to the use of resources and so on. To what extent does he regard this as a mandatory obligation? In what circumstances could he refuse authorisation and under which procedure would that be undertaken.
  I hope that the Minister will confirm that such refusals will be rare or will never happen. We want these experiments to get off the ground on a wide scale throughout the country.
  11.0 p.m.
  Can the Minister confirm also that if a county council decides to submit an application for an experimental area the contact is direct between the county council and the Department of Transport and does not go through the steering committee. Although the steering committee may have to evaluate the results of the experiments, I am sure that it is
  1044
  right, if we are to get speedy action, that county councils, using their local knowledge of what is needed, should be able to get on with the job and submit the proposals to the Department and obtain a speedy decision.
  The steering committee has become so committed to its four areas and its 16 schemes that it might be hesitant about approving many more schemes involving many councils. I hope that the Minister will say that it will be his decision and not the decision of the steering committee and that action can be taken speedily.
  Will the Minister comment also on the question of the extension of period. Again he has shown great judgment and has been of assistance to the House in accepting the sensible suggestion that a local authority may apply for the extension of the period of an experiment which seems to be working. As the clause is drafted, it presents two options. The second option is that the Secretary of State can extend the period at the local authority's request. That leaves the first option, which means that the Secretary of State can extend a scheme not at the request of the local authority. I wonder why the Minister foresees the need for such a power. Does he really foresee a situation in which a local authority might not request an extension and he has therefore to impose an extension? That is the only logic I can see in having two alternatives. It is not a fundamental point, but I should be grateful for the Minister's clarification.
  Lastly, all these extensions have to be made by order which
  "shall be exercisable by statutory instrument, which shall be subject to annulment in pursuance of a resolution of either House of Parliament".
  As I understand it, every experimental area and every extension of period must be approved by order. If we are to have many experimental areas, we shall have many statutory instruments. This will be very much of a mixed blessing to hon. Members such as myself who serve on the Statutory Instruments Committee. I wonder whether we are right in this instance to have statutory instruments for every experiment and every extension of period. I hope that there will be many experimental areas, but does it make sense to have a separate statutory instrument for each one?
  Mr. Fry: I was amazed to hear the hon. Member for Consett (Mr. Watkins) refer to the Committee stage and the decision that was taken there. We frequently hear from the Minister and other Labour Members that the Government have a greater interest in promoting rural transport than we have. They had such a great interest in Committee that they could not maintain the necessary quorum. They needed our help to ensure that this puny little Bill got as far as it has. I am astonished that the hon. Member reminded the public of the great interest the Labour Party took in the Bill.
  The Minister made a remark which caused me some concern. He will correct me if I am wrong, but I think he said that he thought that the amendment would make no difference in practice. If he thought that it would make no difference in practice, why did he object to the amendment initially? If it will make no difference in practice, I shall be interested to know, in answer to the questions my hon. Friends have asked, how the Government now intend to interpret the Bill.
  The Minister will admit that this was a very modest measure as originally phrased. The great advantage of the amendment moved and accepted in Committee, and now endorsed by this Government amendment, is that it will give a great number of county councils the opportunity to make meaningful experiments.
  The Minister either has to say tonight that he does not want a lot of county councils to make meaningful experiments, in which case he has made a nonsense of accepting the intention of the amendment accepted in Committee, or he has to say that he does accept that many county councils will put forward experiments and that he will accept this. There is considerable difference between that and what was in the Bill as originally drafted.
  I hope that the Government will not drag their feet, because by their own admission in their own White Paper they have granted a further £15 million to support public transport in rural areas. According to some budgets, that is not a lot of money, but in terms of the rural transport budget it is a large amount,
  1046
  and it is a measure of the very real crisis in many rural areas today. In putting forward that figure the Government have committed themselves to an ongoing subsidy of considerable proportion to maintain rural transport. With experiments such as those that can be brought about by the Bill, we could find that sum of money reduced in the not-too-distant future.
  All of us who are aware of the difficulties of public transport know perfectly well that the loss in rural areas is a flea-bite compared with that in urban and semi-urban areas. Therefore, it is essential in a Bill that proposes to experiment and reduce the cost to the public purse that there should be included the possibility of experiments in urban and semi-urban areas. This is in the interests of the taxpayers and users of public transport, and, far from decrying the fact that we have widened the Bill by the amendments we suggested, I would have thought that hon. Members would congratulate the Opposition on turning the Bill into a more meaningful measure.
  Mr. Temple-Morris: If I could add to the good will that flows towards the hon. Member for Consett (Mr. Watkins), I shall say how much we enjoyed his contribution and his cry on behalf of the urban areas. However, we appreciate that his constituency is mixed; he has a foot in the rural camp and a foot in the urban camp.
  This particularly puny Bill, as my hon. Friend the Member for Wellingborough (Mr. Fry) has described it, is not a menace to the stability of urban areas. As the buses roll in and out at 9 o'clock, 9.10 or 9.15, the provisions of Clause 2(3) will enable owners of private vehicles generally to do what they have done for a long time—pay each other for the privilege of driving to work together. My hon. Friend the Member for Consett—
  Mr. Watkins: It is very welcome to see the Opposition taking this interest in urban transport. It is the first time in the proceedings on the Bill that they have spoken with emphasis on this matter. In earlier stages they were concerned only with rural transport.
  Mr. Temple-Morris: I ask the hon. Member's forgiveness. Just now I called him my hon. Friend, when I should have

  1047
  referred to him as the hon. Member. Although he is a friend personally, he is not a friend in the political perspective. He has sought to make a political point, when I was being rather more charitable to him. Urban areas have had quite enough. This is something that benefits rural areas.
  Thanks to hon. Members on this side of the House we have carried this amendment which extends the authority that was previously extremely limited. Local authorities up and down the country will have the chance to put forward these experiments. If an urban area wishes to put one forward, good luck to it. The Secretary of State has the ultimate authority and if an urban authority can get within the terms of the Act and do something, good luck to it. But we are concerned with rural areas.
  Oxfordshire has been mentioned. Some years ago, at a late hour of the night, I made a plea on behalf of Herefordshire and Worcestershire that the then Undersecretary of State—this was at a time when the Government were setting up experimental areas—should consider Herefordshire and Worcestershire as a posssibility. It would be a great advantage now not only to Oxfordshire but to Herefordshire and Worcestershire, if they wish, to put through an experiment.
  I do not want to conduct a political vendetta. I thank the Under-Secretary for his charitable viewing of the amendment that we won in Committee and his acknowledging of the truth. I hope that he will do that whatever the parliamentary situation. I am sure that within the calm that prevails at this hour of the night on Report, he would not maintain or even pretend that the political situation is quite as hot as it was in Committee when he was dealing with accusations of delay, into which I shall not go now. We appreciate that the Labour Government in 1968 did certain things that, frankly, have helped rural areas, but we are dealing with a problem that has since developed and grown more acute. The Conservative Government had the foresight to do something about it in 1973, but that was not adopted. I do not want to go into those matters now. However, I think that we should be treated to the Under-Secretary's words in Committee when dealing with the accusations that were made by my hon. Friend the Member for
  1048
  Sutton Coldfield (Mr. Fowler) when he championed the cause of the Labour Government and Labour Party on transport in rural areas, which no doubt created delight on the Government Benches. The hon. Gentleman said:
  "Therefore, in bringing forward this Bill—the first to deal with these matters since that time"—
  in other words, he was claiming that there was no 1973 Bill; it was since the 1968 Act—
  "we are building on the sturdy rock of Labour concern for the rural areas on a continuous expression of careful concern."—[Official Re-port, Standing Committee F, I4th June 1977; c. 8.]
  I felt it right to remind the Undersecretary of those words and to ask whether he can live up to what he so vividly expressed upstairs.
  Local areas—even urban areas, if they wish, although the Bill is not built for them—now have a chance to do something creative. I do not fancy that any problem will be caused by urban areas. We now have a chance to do something, whatever county we may come from or represent. We are grateful that the Minister has given way, but we are conscious that this occasion would not have arisen but for our perspective and determination to push this amendment through in Committee.
  11.15 p.m.
  Mr. Horam: My hon. Friend the Member for Consett (Mr. Watkins), whose interesting remarks in Committee were made on another matter, not that which he raised tonight, was right in thinking that the genesis of the Bill was concern for rural areas.
  The Bill came about because the Government thought that there should be experiments with relaxations of the bus licensing law in four areas. Most of the experiments will involve changes and schemes that do not need the Bill. However, to make sure that everything could be considered, we brought forward the Bill to allow that to be done. We felt that if we made no distinction between urban and rural areas, we could in future, if necessary, look at the problems of suburban as well as urban areas under the provisions of the Bill.
  The first thought on the Bill arose from the desire for a fresh approach to the problems of the rural areas, and that

  1049
  is probably how my hon. Friend has fixed so clearly in his mind the thought that the Bill was about rural areas. None the less, it does not specifically limit the changes to rural areas.
  Mr. Robert Adley: Will the Minister assure the House, in view of what he said, that at no time will the Secretary of State seek to interpret Clause 2(6) in an unfavourable light merely because it might happen to relate to an urban rather than to a rural area?
  Mr. Horam: As I shall make plain later, our sole consideration in these matters should be that the experiments which are put forward by any authority, whether in a rural, urban or suburban area, are genuinely adding to the evidence that the Government programme is designed to collect, as well as taking account of factors such as the resources available for this sort of experiment. We shall have this broad consideration in mind and we would not necessarily make any distinction between urban and rural. But I agree with the hon. Member for Leominster (Mr. Temple-Morris) that it is in the rural areas that the most pressing need for such experiments clearly exists. We should therefore probably give them priority, but I do not think that it is necessary to make a distinction—and the Bill does not seek to do so—between the urban and rural areas.
  My hon. Friend the Member for Consett asked what consultations there would be with the public transport operators. As I have explained, the Bill came about because the steering committee which was controlling our experiments in the four selected areas felt that it was necessary. That committee is composed of representatives of the bus operators, the bus workers' trade unions, the taxi trade, users' committees, district and county councils, and all the various interests which might be relevant to local transport.
  I am sure, therefore, that a good criterion for an experiment, other than the four experiments we have set up, would be that consultation of that kind should be built into it. It is essential for the success of a scheme for all interests to
  1050
  be fully consulted and my hon. Friend may be assured therefore in that respect.
  My hon. Friend asked where in the Bill was the veto on schemes that were thought to be undesirable. It is in Clause 2 (6), by which any authorisation must receive the consent of the Secretary of State for Transport. There have always been two filters through which schemes must pass. The first is the designation of an experimental area. The second is the authorisation granted by the Secretary of State for any proposal within an experimental area. This could be, for example, that a particular route should be run by a bus on flexible timing, picking up at request points. We should consider such a scheme, and if it were thought right we should agree to it.
  My point in considering the exaggerated remarks of the hon. Member for Sutton Coldfield (Mr. Fowler), who has claimed a great deal more for the Conservative amendment passed in Committee than he is legitimately entitled to claim, is that we have always been prepared to accept experiments which were sensible and met our criteria. The amendment does not alter in one whit our power to do that because we still have the power to deny authorisation to schemes which we think are wrong in principle or undesirable in effect. That power remains.
  Therefore, there is no real change in the Bill. The hon. Member for Sutton Coldfield may huff and puff a great deal about this achievement, but at the end of the day the success of the experiments will simply depend on the enthusiasm of the people trying to run the schemes—whether local councils, operators or whoever else—and upon the common sense of the schemes. The hon. Member for Sutton Coldfield said that it would be radically different when a Tory Government came to office—if a Tory Government ever do. Indeed, things would be different if that Government decided to go for less sensible schemes than ours, but I shall not comment on that. We should certainly be prepared to accept any sensible schemes that met our criteria. That has always been the case.
  I said to the hon. Member for Welling-borough (Mr. Fry)—who has left the Chamber temporarily—that originally I objected to the amendment because it was not necessary. I still consider it to be unnecessary, but in a spirit of harmony I

  1051
  am prepared to accept the amendment on this occasion, although it does not make any change at all in the Bill.
  That is a perfectly sensible position. We shall see what happens and what is brought forward under any Government, Labour or Tory, in the nature of suggestions for further experiments. We shall consider suggestions on their merits as we have always been prepared to do. That also answers the question of the hon. Member for Faversham (Mr. Moate). These will be the criteria on which we shall look at schemes—simply whether they are practical, whether they will be rewarding and whether they will give the sort of hard evidence that our four schemes are designed to produce. Such evidence will be generally useful to local authorities wishing to mount schemes of their own and to make changes of their own.
  The hon. Member for Faversham also asked whether I thought it desirable that these orders should come to the House as Statutory Instruments for each experimental area. That is a matter of procedure, and I am sure that we should have been criticised in the reverse way had we not done this. The hon. Member for Faversham knows that these matters are sometimes contentious. The Government are sometimes accused of being over-solicitous in the interests of the House. More often we are accused of being neglectful. Perhaps we have been over-solicitous in this respect, but the House cannot criticise us for that.
  A point was made about alternatives for the extension of the period of the schemes—at the behest of the Secretary of State or of the local authority. That is simply building on the amendment that was passed in Committee and there is no change. In practice it will simply be a matter of mutual agreement. Under our schemes the local authorities will be represented on the local committees and if it is thought desirable for a scheme to go beyond two years I am sure that that will be a matter for general consent in the committee or otherwise and that a decision will be made accordingly. In practice, there is not much difference between the two approaches. I am sure that that covers the points that the Opposition have raised.
  1052
  The hon. Member for Leominster made a final flourish in talking about the sturdy rock of Labour concern for rural transport which I mentioned. Indeed, that is our position, because if one looks at the history of the changes in bus licensing that have been made by successive Governments one finds that the only changes of substance have been made by Labour Governments. Changes have been made most recently by my right hon. Friend the Member for Blackburn (Mrs. Castle) and now by this Government in promoting and helping along matters by way of a Private Member's Bill, the Bill relates to the minibus, and now by this Bill, which is merely a part of our total approach. The positive achievements have been made by this Government. The rhetoric, the ideology, the lack of reality, the to-ing and fro-ing—
  Mr. Norman Fowler: Before the Minister goes into orbit, will he say frankly whether he believes that it was right, given what the Government have said in the White Paper, for them to kill the reforms in the 1973 Bill which the Conservative Government left behind.
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. I am not able to follow how that could possibly come within the terms of this amendment.
  Mr. Norman Fowler: On a point of order, Mr. Deputy Speaker. I think that my remarks arose directly from the Minister's remarks.
  Mr. Deputy Speaker: If I did not hear what I should have heard when the Minister was speaking it does not make what the hon. Gentleman was saying any more in order.
  Mr. Horam: Opposition Members should not tempt me to go down these paths of rhetoric. The hon. Member for Sutton Coldfield having been called to order, perhaps we should exercise more discretion. I believe that the success of the experiments and the success of the Government's approach to experimentation will depend on the nature of the schemes put forward and the common sense with which the general willingness to experiment is expressed.
  Amendment agreed to.
  Amendments made: No. 4, in page 1, line 22, after "State", insert—
  (a)'.
  No. 5, in page 1, line 24, after "effect", insert—
  '; and
  (b) if requested by the local authority whose area is or contains the experimental area designated by such an order to extend or further extend the period for which the order is to have effect, shall so extend or further extend that period accordingly.'.
  No. 6, in page 2, leave out lines 3 and 4.—[Mr. Horam.]

Clause 2

  POWERS OF LOCAL AUTHORITIES IN RELATION TO EXPERIMENTAL AREAS
  Mr. Horam: I beg to move Amendment No. 7, in page 2, line 36, leave out "twelve" and insert "sixteen".
  Mr. Deputy Speaker: With this we may also discuss Government Amendment No. 9.
  Mr. Horam: In Committee I gave an undertaking that I would introduce amendments in the same spirit as an Opposition amendment designed to increase the maximum seating capacity of private vehicles covered by the Bill. The Opposition amendment was technically defective and was withdrawn. As my hon. Friend the Member for Consett (Mr. Watkins) said in Committee, minibuses with larger seating capacities than 12 are now readily available. It was said by hon. Members on both sides of the Committee that it was right that private vehicles of this kind should be covered by the Bill. In moving the amendment in Committee, the hon. Member for Sutton Coldfield (Mr. Fowler) noted that the same point had been raised on the Minibus Bill. It would be in the interests of clarity and consistency if the maximum number of passengers were increased to 16.
  Mr. Norman Fowler: This is a change which resulted from another sensible and far-reaching proposal made by the Opposition in Committee and which the Government have had no alternative but to accept. We congratulate them on their good sense.
  Mr. Moate: I wish to ask the Minister about the difference between the
  1054
  figure 16 referred to in Amendment No. 7, and the number of less than 16 referred to in Amendment No. 9. Am I not right in saying that in one instance we are referring to a number less than 16, which can only mean 15, whereas in the other instance we are talking about a figure 16? Can the Minister explain this?
  Mr. Horam: The difference can be explained if I say that by inserting the two separate provisions, one for a vehicle with the maximum size permitted, which is 16 passengers and a driver, and the other for a smaller vehicle, we can conduct some experiments which relate only to a vehicle with 16 passengers—that is, experiments relating only to vehicles of that size—without simultaneously giving the right to experiment with vehicles smaller than that. Equally, we can grant experiments for vehicles—a taxi, for instance, or a private car—which may be smaller than the maximum size permitted. It is simply that, and no more. In this way, it enables us to distinguish between two different types of experiment, which gives flexibility to the sort of scheme that we have in mind.
  I hope that that explains the point to the hon. Gentleman.
  Mr. Moate: Not at all.
  Amendment agreed to.
  11.30 p.m.
  Mr. Horam: I beg to move Amendment No. 8, in page 2, line 39, leave out from 'to' to end of line 40 and insert
  'such one or more private vehicles or commercial vehicles as may be specified in the authorisation'.
  In Committee on 16th June, the hon. Member for Faversham (Mr. Moate) said in relation to this subsection that it would
  "be helpful to know whether the word 'specified' is intended to apply to commercial vehicles."—[Official Report, Standing Committee F, 16th June 1977; c. 64.]
  That was the intention. The present amendment seeks to make it clear beyond any doubt.
  Mr. Adley: The Minister was perhaps hoping that the extreme brevity of his remarks would clear up the point raised by my hon. Friend the Member for Faversham (Mr. Moate) and a number of us in Committee, but I do not think that he has cleared up the point this evening. I hope that he will take it in the right

  1055
  spirit if I say that I think that the Government must make the position a deal clearer than it is now.
  The Bill makes frequent reference to public vehicles, private vehicles and commercial vehicles. However, having discussed the Bill as presently drafted—as I have had a chance to do now—with, for example, the chief executive of Dorset County Council, I find that he is not at all clear, as I am not, precisely what the Government intend and how they intend to interpret the Bill in its use of the word "private". Does the Minister mean that "private vehicle" is private in relation of "public", or does he mean private in relation to commercial"? There is a significant difference of interpretation.
  The Government amendments were not available until the end of last week, and that has put a number of us in considerable difficulty. Clearly, in a complex, albeit brief, piece of transport legislation, one seeks, certainly on the Opposition side of the House, to consult the people who will be called upon to operate the legislation. When I went to Dorchester on Friday to see the chairman of the county council in whose area much of my constituency lies, the chief executive of the Dorset County Council, Mr. Kenneth Abel, raised a number of questions with me, particularly in relation to the buses that are actually owned by the Dorset County Council.
  I confess that this was not a point that had occurred to the Opposition, and I do not think that it had occurred to the Government. A number of local authorities, as defined by the Bill, actually own their own vehicles, and additionally, a number of local authorities are operating bus services on vehicles which are owned by private operators but which are under contract to the county councils.
  Therefore, I want to quote the letter that the chief executive of the Dorset County Council has written to me, which I received this morning, in relation to the question of private vehicles and public service vehicles. Mr. Abel says,
  "Under existing legislation, the County Council are not able to use their fleet of school buses to pick up fare paying passengers and the buses which operate under contract to the Council for school purposes can only do so under a permit system by the Traffic Commissioners.
  It is the policy of the Council to use public transport to take the children to and from
  1056
  school and their own vehicles are only used in those areas where no public transport exists and this is generally in the more isolated areas of the County. When there is spare capacity on these vehicles this could be used to take people to and from villages and hamlets to the nearest public service route, if not to the nearest town, and the suggested amendment to the Bill would permit Councils to do this."
  The suggested amendment was Amendment No. 13, which is not selected. The Government were so dilatory in producing their amendments that this was tabled too late. The letter continues:
  "Obviously the Council would not seek to set up in opposition to existing bus operators, many of whom are in receipt of revenue support from the County Council and District Councils. However, if the Council were authorised to carry fare paying passengers on their own vehicles and likewise the contract vehicles, it would be hoped that restrictions would not be imposed in the legislation limiting the Council's discretion."
  As we are not able to move Amendment No. 13, I ask the Government whether they have taken on board the position of county councils that own and, or, operate their own buses. If that has not been given specific consideration, does the Minister think that Amendment No. 13 could be considered in another place? I understand that that would be proce-durally possible. I should be grateful if the Minister could consider that. I am sure that Dorset County Council is not the only council that will be confronted with the problem of interpretation when they put forward transport experiments.
  On Second Reading the Minister said:
  "Where a vehicle is used in compliance with an authorisation, it will be treated as not being a public service vehicle. It will fall outside the public service vehicle provisions."—[Official Report, 27th April 1977; Vol. 930, c. 1419.]
  Dorset County Council buses are not public service vehicles. Under the Bill as drafted, will the council be able to apply for an transport experiment enabling it to charge fares on school buses that the Council owns or on buses that are under contract to it, in order to fill empty seats? If the council is unable to charge passengers for the use of school buses when there are empty places that could be filled, that is a waste of resources.
  The Minister should concentrate on that proposition, if he is concerned with the use of resources, rather than on dogma. It would be a valuable use of resources if county councils were allowed

  1057
  to use these buses and to sell seats to the public.
  The Minister has not yet answered another question which is relevant to the amendment and which concerns the limousine service. In Committee I asked him about it and I have written to him since then. If a county council were to put forward a proposal for an airport limousine service of the type that I described in Committee, would it be authorised to operate such a service, provided that the vehicle fitted at least one of the descriptions in the Bill? I realise that the Minister might find it difficult to interpret the Bill. There is more scope for the private vehicle than for the public vehicle or bus. That negates the point of the amendment that the Opposition moved in Committee.
  The Minister said at another stage:
  "I do not understand the difference between a commercial big bus and a commercial minibus, service, apart from the size of the bus."—[Official Report, 27th April 1977; Vol. 930, c. 1452–3.]
  It is the size of the bus or size of the passenger-carrying vehicle that we are discussing, so I feel that it is not unfair to press the Minister now to answer the question which I have asked on four separate occasions, on Second Reading, in Committee and in correspondence. Does he feel that a county council which put forward a proposal for a limousine-type service would be in order under the Bill as it stands?
  If the hon. Gentleman is unwilling or unable to answer tonight, will he say that, when the Bill goes back to another place, the Government spokesman there will give a precise answer? It is one of the questions which will be asked and, sooner or later, either the Government will have to answer or the courts will have to decide. I am sure that the Minister will agree that it is better that the Government's attitude on specific questions such as this should be made known now and that legislation drafted rather sloppily, as this has been in parts, should not be left to the courts for interpretation.
  Mr. Moate: The Under-Secretary pointed out that the object of the amendment is to tighten matters up and to close a possible loophole to which I drew attention in Committee I think that it probably achieves that objective, but I
  1058
  now have some regret at the Minister's apparent success. It will be recalled that the original point was made during a discussion on whether we should extend the Bill to allow the use of commercial minibuses or commercial buses generally. Like so many of his colleagues, the Minister threw up his hands in horror at the prospect of ramshackle pirate buses charging about the countryside competing for the custom of people in the rural areas. This spectre of the 1930s, as he saw it, terrified him although it would gladden the hearts of rural people to see buses rushing up to collect them.
  I pointed out to the Minister that as far as I could see, he had powers to prevent that sort of thing happening. First, he had the power to refuse authorisations, and, second, there was the power to reject applications because he could specify certain vehicles, He could certainly specify private cars. But it was not clear that he could specify vehicles to which the special authorisation should attach. It was only in that context that I made the point. The Minister now makes it clear that he will authorise specific vehicles. A special authorisation will attach to a specified commercial vehicle.
  As we do not have the general power for commercial vehicles, I would rather that we had a slightly wider Bill and that the Minister did not have the power to specify the individual commercial vehicles, because it seems to me that it would be desirable for a wider power to be introduced to allow such as the school bus operations, to which my hon. Friend the Member for Christchurch and Lym-ington (Mr. Adley) referred. In those circumstances, one would not wish to specify each and every commercial vehicle. Nevertheless, I recognise that the Government amendment is in line with the rather restrictive fearful philosophy expressed in the Bill, so perhaps in that context it makes sense.
  May we have one matter clarified? The amendment uses these words:
  "such one or more private vehicles or commercial vehicles as may be specified in the authorisation".
  The word "may" may mean different things in different contexts. Perhaps it is permissive, meaning that the commercial vehicles do not have to be specified. It could be argued that the amendment says

  1059
  that the council may specify the commercial vehicle or vehicles if it wishes. On the other hand, it might be interpreted as meaning that they have to be specified, in the sense of
  "such commercial vehicles as are specified".
  I think that it may not be quite as tight as the Minister intends it to be.
  Mr. Temple-Morris: I appreciate that this is a tidying-up amendment, and I wish only to add my voice to what has already been said by my hon. Friends. My hon. Friend the Member for Christ-church and Lymington (Mr. Adley) spoke of the problems of Dorset County Council, with which he took the trouble to get in touch over the weekend, and he said that other county councils might have been affected in the same way. Hereford and Worcester County Council is affected in the same way.
  In the past, at Question Time, I have said that in rural transport there should be co-ordination and the best possible use of whatever transport is available. Here we have—and I appreciate that it is better put in the starred amendment of my hon. Friend the Member for Christ-church and Lymington—a logical opportunity to fit in anything worthy of the word "experiment". Throughout the stages of the Bill there has been a shyness about the words "private enterprise" which does not seem to take account of the essential feature of experiments in rural transport. Unless we can join up the services available from private and public transport without any doctrinaire or dogmatic ideas, the experiment will not do the job for the people which it should be.
  11.45 p.m.
  That is the major failing of the legislation. We have conquered, fortunately—and I use that expression deliberately—one failing of the legislation. Another sad failing is the limited definition of "commercial vehicle".
  Mr. Adley: I am sure that my hon. Friend does not want to be antagonistic towards the Government, but if he reads Amendment No. 13 he will see that there is no question of the Government having to follow any dogmatic ideas.
  Mr. Deputy Speaker: Order. Amendment No. 13 has not been selected.
  Mr. Adley: I am well aware of that, Mr. Deputy Speaker, and I am not seeking to move it. I am merely referring to it.
  Mr. Deputy Speaker: Perhaps the hon. Gentleman will refer to it very briefly.
  Mr. Adley: Yes. The amendment refers to buses and services owned and operated by the county council. There is no question of private enterprise being called into play.
  Mr. Temple-Morris: My hon. Friend, as always, is very helpful in drawing attention to his amendment without moving it. His amendment is a model of political moderation and patience, and I wish that we could have had the chance to discuss it.
  Mr. Horam: The hon. Member for Christchurch and Lymington (Mr. Adley) has had his fill by smuggling Amendment No. 13 into this discussion. I appreciate that the reason may be that our amendments may have been tabled late. I apologise to the hon. Gentleman if he feels that he did not have sufficient time to consult about them before speaking tonight. None the less, it was useful that he was able to mention Amendment No. 13, because he made a valuable point.
  School buses with up to 16 passenger seats owned by local education authorities would come within the scope of the Bill under special authorisations, as they are not used for carrying passengers for hire or reward in the course of a passenger transport business and thus are private vehicles in terms of the Bill. Under such authorisations they could be enabled to offer seats to fare-paying passengers. Vehicles with more than 16 passenger seats might be eligible for a permit under Section 30 of the Transport Act 1968. What I am saying to the hon. Gentleman is that if the vehicles in Dorset about which he is talking are minibuses, they would come within the Bill.
  Mr. Adley: These are, in fact, ordinary double-decker buses purchased by the Dorset County Council. They would not at the moment come within the Bill. Will the Minister consider tabling a Government amendment in another place to give effect to the amendment to which I must not refer, to allow county councils, as the local authorities referred to in the

  1061
  Bill, to carry out the services which I suggested?
  Mr. Deputy Speaker: The Minister will be well aware of the fact that Amendment No. 13 was not selected.
  Mr. Horam: I am sorry, Mr. Deputy Speaker. I was trying to be helpful to the hon. Gentleman. The kind of bus about which the hon. Gentleman was talking could anyway carry fare-paying passengers under Section 30 of the Transport Act 1968. All the situations are covered and we do not need further amendments to the Bill. Airport limousines, if they have more than five seats, would not come under the Bill. If smaller than five seats, they would.
  The hon. Member for Faversham (Mr. Moate) asked about the use of the word "may". This is a matter of normal, simple, legal drafting. We are in no doubt about its meaning. It is too late in the day to do anything about it.
  Mr. Moate: Does "may" mean "must"?
  Mr. Horam: In effect, it means "will".
  I had better not be dragged once again down the rosy path of private enterprise which the hon. Member for Leominster (Mr. Temple-Morris) invited me to tread.
  Amendment agreed to.
  Amendment made: No. 9, in page 4, line 9, leave out 'twelve' and insert 'sixteen'.—[Mr. Horam.]

Schedule

  AUTHORISATIONS UNDER SECTION 2
  Mr. Horam: I beg to move Amendment No. 10, in page 6, line 15, at end insert—
  '(2) Paragraph 13 below applies in relation to the grant of a special authorisation.'.
  Mr. Deputy Speaker: With this we may take Government Amendment No. 11 and Government Amendment No. 12, in page 7, line 32, leave out from 'give' to 'passing' in line 34 and insert
  'the appropriate notice in one or more relevant newspapers; and where a local authority intend to revoke a special authorisation they shall also give the appropriate notice in writing to every district council, London borough council, parish council and, in Scotland or Wales, community council who will in the opinion of the local authority be affected by the revocation of the authorisation.
  1062
  (2) In sub-paragraph (1) above "the appropriate notice" means—

  (a) not less than 21 days notice of intention to consider a resolution or grant a special authorisation; and

  (b) not less than 56 days notice of intention to revoke a special authorisation.

  (3) Before '.
  We may also take Amendment (a) to Amendment No. 12, after third 'council', insert 'neighbourhood council '; and Amendment (b) to Amendment No. 12, leave out 'will' and insert 'may'.
  Mr. Horam: During the Committee proceedings on 16th June I accepted in principle Opposition amendments on similar lines to those which I now propose, with the proviso that the drafting be looked at. The present amendments reflect, I am sure, the spirit of what I accepted in Committee, namely, that longer notice be given in the case of revocation of a special authorisation, and that positive steps be taken to bring a proposal for such a revocation directly to the notice of local councils affected.
  Mr. Adley: I gather that, although my amendments (a) and (b) were tabled at the same time as the amendment which we were not allowed to discuss previously, in this instance, because of the wonderful ways in which this place operates, the amendments have been selected and I am able to discuss them.
  I first thank the Minister for abiding by the assurances which he gave to us in Committee, that he would table suitable amendments to take account of the proposal that we put, particularly the important one that there should be a period of 56 days before any service which has been started could be revoked.
  Amendments (a) and (b) are minor drafting amendments which I hope the Minister will agree to. I am sure that the omission of the phrase "neighbourhood councils" is not a malicious omission on the part of the Government. The Minister is aware that following the 1972 Local Government Act, which I do not want to discuss because it makes me feel ill, neighbourhood councils were established in certain areas and were part of the "publicly elected councils" which was the phrase used in the Opposition amendment that was moved in Committee.

  1063
  I would be grateful if the Minister would accept Amendment (a) because there is nothing malicious or hidden in it. It merely seeks to include all those publicly elected local authorities that it was our intention to include when we moved the amendment in Committee, which the Minister accepted in principle and said he was prepared to redraft himself.
  The second very minor point concerns the use of the word "may" instead of "will". I have no wish to be difficult on this point. I am sure the Minister will appreciate that the degree of influence of a local authority is not something that can always be laid down in hard and fast terms. I think the use of the word "may" is more appropriate than the word "will". I hope that the Minister will accept Amendments (a) and (b) to the Government amendment.
  Mr. Horam: I would comment on the two proposed amendments which I am glad we have had the opportunity to debate. With regard to the first, we are, of course, extending the powers of parish councils which are the statutory bodies that we shall consult. In accordance with the Local Government Act, to which the hon. Gentleman referred, most areas can constitute parish councils if they so wish. We feel that that is the appropriate body.
  Neighbourhood councils, I am afraid, do not always form themselves in the same way. Some follow a proper system of election and others are less formally constituted. We feel that neighbourhood councils would not necessarily be a representative of an area as the other bodies that we shall consult, like parish councils.
  I therefore hope that on reflection the hon. Gentleman will agree that in setting the limits as widely as we have—right down to the parish council, which we feel is the appropriate body—we are doing as much as we sensibly can. To add neighbourhood councils to the number of bodies which it is suggested should be consulted would be to add another not necessarily representative group in the community when we already have other properly and formally elected bodies to consult.
  Mr. Adley: With respect, I do not think the Minister is aware of what he is saying. Neighbourhood councils were set up under the 1972 Local Government
  1064
  Act in areas where there were no parish councils. In my own constituency neighbourhood councils were set up under the 1972 Local Government Act.
  Mr. Deputy Speaker: Order. The hon. Gentleman is able to make only one speech on this amendment. Is he asking the Minister a question or is he endeavouring to make a second speech?
  Mr. Adley: With great respect, Mr. Deputy Speaker, you are being rather harsh. This is an important point.
  Mr. Deputy Speaker: I am only the servant of the House and unless the rules are changed that is the situation in which I find myself.
  Mr. Adley: I am putting a question, Mr. Deputy Speaker.
  Mr. Deputy Speaker: The Minister may have resumed his seat and so is not available for further questions anyway.
  Mr. Adley: I am putting a question to the Minister. Is he aware that neighbourhood councils, as referred to in the amendment, are properly constituted elected public authorities under the 1972 Local Government Act in areas where there are no parish councils? The hon. Gentleman gave an assurance in Committee. He is not abiding by the spirit of that assurance if he does not allow the inclusion of neighbourhood councils where there are no parish councils. That applies to a few areas which were formerly borough councils in part-rural and part-urban areas, of which a small but not insignificant number were created by the 1972 Act. There is nothing untoward about this.
  12 midnight
  Mr. Horam: I am not suggesting that there is anything untoward about it. All that I am saying is that, as the term at present exists, neighbourhood councils can cover a heterogenous group of organisations, some properly elected and others not. Therefore, at the moment I feel that it would not be right to include neighbourhood councils in the scope of the Bill. Nevertheless, I recognise that there is considerable movement towards statutory neighbourhood councils. If legislation to this effect is passed, it would be appropriate to add neighbourhood councils to the Bill. But, at the moment, I feel that it would not. In view of that,

  1065
  I hope that the hon. Gentleman will feel able to withdraw the amendment.
  As for his second amendment, Amendment (b), I am quite happy to accept the change of wording which he recommends. I hope that he will be happy with that, too.
  Mr. Moate: I do not want to get too involved in drafting technicalities at this stage, but I wish to ask the Minister for some assurance on a couple of matters.
  It is difficult to follow, in drafting terms, the precise results of the two principal amendments, Nos. 10 and 12. In the case of Amendment No. 12, the Minister has all the drafting expertise available to him, and I suspect that on balance he is right. But I think that it would repay further study.
  Amendment No. 10 seeks to insert a sub-paragraph (2). In drafting terms, I presume that the earlier provisions will automatically become sub-paragraph (1), but, if we leave matters as they are and agree to Amendment No. 10, we shall have a sub-paragraph (2) but no sub-paragraph (1).
  Assuming that that is taken care of in some other way, we are then advised that paragraph 13 applies to this paragraph. Why is that necessary? Paragraph 13 is a general provision with clear general effect over the whole Bill. Why is it necessary to add a further statement that paragraph 13 applies to this paragraph?
  Paragraph 13 refers to resolutions passed by a local authority in pursuance of paragraph 2, 3 or 10, but not in pursuance of paragraph 5. If we are making paragraph 5 subject to the provisions of paragraph 13, resolutions of a local authority passed under paragraph 13 should also refer back to paragraph 5.
  With the acceptance of Amendment No. 12, matters become rather complex. We seem to be introducing two new sub-paragraphs, (2) and (3). However, we already have a sub-paragraph (2). I hope that it will be checked to ensure that it is correct before the Bill goes to another place.
  Mr. Horam: I shall check that the amendments as drafted are correct.
  Amendment agreed to.
  Amendment made: No. 11, in page 7, line 12, leave out from 'to' to end of line 13 and insert—
  'the revocation of a genera) authorisation or special authorisation'.—[Mr. Horam.]
  Amendment proposed: No. 12, in page 7, line 32, leave out from 'give' to 'passing' in line 34 and insert
  'the appropriate notice in one or more relevant newspapers; and where a local authority intend to revoke a special authorisation they shall also give the appropriate notice in writing to every district council, London borough council, parish council and, in Scotland or Wales, community council who will in the opinion of the local authority be affected by the revocation of the authorisation.
  (2) In sub-paragraph (1) above "the appropriate notice" means—

  (a) not less than 21 days notice of intention to consider a resolution or grant a special authorisation; and

  (b) not less than 56 days notice of intention to revoke a special authorisation.

  (3) Before'.—[Mr Horam.]
  Amendment to the proposed amendment made: (b) leave out 'will' and insert 'may'.—[Mr. Adley.]
  Proposed amendment, as amended, agreed to.
  12.7 a.m.
  Mr. Horam: I beg to move, That the Bill be now read the Third time.
  We have had a fairly long debate on the remaining amendments to the Bill, which also had a reasonably lengthy discussion in Committee.
  In introducing the Bill, I described it as a limited Bill with a particular aim. The aim is to facilitate a series of controlled experiments in rural transport in the first instance. Many of the experiments which we want to undertake could be done without the aid of this Bill. But the steering committee, which sets up and monitors the experiments, felt that it wanted clear ground, with no restrictions, on which to analyse and experiment as it felt fit. Therefore, to give it this scope we agreed to the steering committee's request that this Bill be brought forward. I hope that it will enable experiments to go ahead in a clear and systematic way which will yield valuable results.
  It is quite another thing, however, to talk about general changes in the licensing law. That will be the subject of separate legislation foreshadowed in the White

  1067
  Paper on transport policy on which we are now about to begin a process of consultation, and which I hope in due course will be debated in the House.
  Mr. Norman Fowler: When?
  Mr. Horam: That is quite a separate matter which is not within my ambit, but I hope that will occur as soon as we can manage it. My right hon. Friend the Secretary of State for Transport and I have said that we are anxious to have more discussion in the House on transport matters—more than we have had in the last few years.
  Within the ambit of our approach to rural transport problems, this Bill is a small piece of legislation. Indeed, it is a piece of a piece. It only facilitates experiments, and the experiments themselves are only a small part of our whole approach. It is, as it were, a sub-clause within a clause. It is not something on which we would rely as our major proposal. When the hon. Member for Sutton Coldfield (Mr. Fowler) claims, as occasionally he does, that that is our intention, it is apparent that he is on a mistaken hypothesis.
  The Committee cleared many of these points in its discussion and we believe that the Bill will now reflect the views of the Committee. This evening 11 amendments have been accepted and they all reflect the various strands of opinion in Committee both collectively by the Opposition and also by individual hon. Members. On the whole we can feel that the Bill now genuinely reflects the views of the Committee. Nevertheless, despite the changes that have been made, the principle of the Bill, and I am sure its practice, remain substantially unaltered from our original intention, namely that we should have controlled experiments which will yield us hard evidence on what is happening on the ground floor in rural transport.
  Hard evidence has been sorely lacking, despite the many words that have been spoken from the Government Benches and from the Opposition Benches. I hope that our task now is clear-cut. Having obtained the Bill tonight, as I hope that we shall, we shall go ahead as fast as possible, make a reality of the experiments, and obtain meaningful results that will provide a basis for future legislation and future practice in a way
  1068
  that will help all those living in rural areas.
  In those terms, I commend the Bill to the House.
  12.11 a.m.
  Mr. Norman Fowler: The Undersecretary was not full of enthusiasm about the Bill, nor did we hear from him many flowing phrases of the type to which we are accustomed from him.
  The context of the Bill is the Government's effort, if such it can be called, to improve rural transport. The Bill started life as a modest mouse of a Bill and now, because of the changes we have brought about to it, it is something a little more than that and with an incoming Conservative Government will be considerably more.
  Since we last considered the Bill, however, there has been a development which some of us at least believed would never happen. The Government have published their White Paper on Transport Policy. It has not received an altogether entirely ecstatic reception from the Press. A fairly typical response was that of the New Statesman, which said:
  "Frankly, no one expected Mr. Rodgers to inherit the whole body of Crosland's principles, still less to adhere unswervingly to the pledges made in the transport section of the Manifesto on which Labour won the election of October 1974. The title of the Manifesto Group was never much more than a catch-phrase; and, to be fair, election promises often have to be moderated in the light of political realities. Yet there is a point beyond which intelligent adaptation becomes sell-out and flexible development becomes cynical disregard of the Labour movement's purposes. Labour has been led into a major betrayal."
  Despite all the furtive briefings conducted by the Minister before the House of Commons saw the White Paper, the Press was not on the side of the Government.
  Of particular relevance to the debate and to the Bill is the Government's statement in the White Paper. As the Undersecretary said, the Bill is concerned essentially with improving rural transport. We have sought to amend and extend it so that it will cover areas, or could be made to extend to other areas, apart from country areas. We believe that its major work, at least initially, will be in rural areas.
  The White Paper says, that there are many places where so few people want to use existing public transport services

  1069
  that it does not make sense to attempt to continue to meet their needs by a normal bus service with professional drivers driving buses on fixed routes and with fixed stops. As a result, says the White Paper, the licensing system will be modified so as to make it easier for cost-effective local transport arrangements to be introduced. There we have it. It is the transport U-turn of all time.
  For the last three-and-a-half years the Government have been arguing that there is no case for reforming the licensing system. They claimed that we Conservatives had been overstating the case, and that we were far too ambitious in proposing changes. These, after all, were the same people who killed the changes in the 1973 Bill prepared by a Conservative Government. We have a situation in which the last three-and-a-half years have been wasted in rural transport, as in many other areas.
  Looking back, transport historians will make two comments about this period. The first comment will be on the delay. In three-and-a-half years the Government have done next to nothing to improve rural transport in this country. This Bill to which we are giving a Third Reading tonight, is their only contribution to date. The experiment now possible under this Bill is only possible because of a Conservative amendment.
  The major legislation of the period is the Minibus Bill, and although no tribute was paid to it in the White Paper, that was not a piece of Government legislation. It was introduced by my hon. Friend the Member for Wirral (Mr. Hunt). In these wasted three-and-a-half years the Government could have used the time to develop new transport services for the public. But they have thrown that opportunity away, and the losers have been the public.
  The second comment that will be made is that in the dying months of this Government, Labour has at least accepted the case for reform of licensing. The Government will not have time to do much, but at least they have accepted the principle, and the significance of that is that they have accepted our case for change. That means that at the end of this Bill tonight, when it receives a Third Reading there will no longer be any need to argue whether reform is necessary. The
  1070
  Government, in an act of death-bed repentance, have conceded that reform is necessary.
  The only argument now is about the extent of that reform. Only an incurable optimist would expect much from this Government whose transport policy up to now has been a mixture of lethargy and failure. It is a transport policy that has been spurned by many Members of the Labour Party, who regard it as a sellout and a betrayal.
  The significance of this Bill, together with the White Paper, is not in what its authors intended but in the opportunity it presents to a new Government. The White Paper gives us our case on the reform of the licensing system, and the Bill allows experiments throughout the country. What we now need is a new Government to grasp the exciting opportunities presented to us.
  12.18 a.m.
  Mr. Moate: As we now come to the Third Reading, I think that we can say once again that this is a pretty poor thing before us. Nevertheless it is a little better than it was when it started. While it is a feeble Bill, it offers two opportunities. The first opportunity is, as my hon. Friend the Member for Sutton Coldfield (Mr. Fowler) pointed out, for a new Government to build on to this and to repair some of the omissions that have been so evident throughout the proceedings.
  The other opportunity exists now. It is available to county councils throughout the country to introduce wide-ranging experiments. The Bill, as it was when it started on its way, would not have permitted that in any way. It was then limited, and it is now much wider. I hope that county councils will take advantage of this opportunity. I hope that they get the message, understand the scope of the Bill, seize this opportunity and press substantial schemes on the Minister soon.
  Personally, I doubt the value of limited experiments. I believe that there is a wide variety of needs throughout the country from one locality to another. It is of doubtful value to produce information from one locality and believe that it is universally applicable throughout the United Kingdom. If I am right in that, it follows that we need greater variety of local experiments and schemes.

  1071
  It is a significant achievement. We started with 16 puny experiments and now we can have many experiments.
  I should now like to make some nice comments about the Under-Secretary. Generally speaking, I think that he has been more sinned against than sinning. After all, he has been in his present office for only a short time. We cannot blame him for the three and a half wasted years of Labour Government. That is what we have had, but it is not his fault. He is desperately trying to tidy up some of the mess left by his predecessors.
  Generally, the Under-Secretary has been most helpful and courteous. It is a pity to waste compliments when the hon. Gentleman is not listening. I said that he had been most helpful to us in Committee, though I feel that he was limited by constraints not of his making. What concerns me is that the Government are constrained and will be constrained from reforming the licensing system by the shackles of an inherited burden of nearly 50 years of licensing restrictions and trade union interests—I do not decry those interests, because the trade unions are performing a legitimate job and they must be kept in perspective—and by the interests of conventional bus operators.
  Throughout we have been dominated by these constraints, not by any real determination to get to grips with the problems of rural transport. I do not blame the Under-Secretary for that. He has been moderate and helpful, although occasionally he has dived into ritualistic, partisan diatribes, which did not seem quite right coming from him. I felt that he was indulging in those matters to please the hon. Member for Bolsover (Mr. Skinner) and other fellow Members of the Manifesto Group.
  I think that the Minister would have gone further than he went if he had had the opportunity to do so. I fear that the Government will not give the Minister the chance to reform the licensing system. The only way to achieve a major change is to have a change of Government.
  One of the greatest ironies is that the White Paper pre-empts the Bill. The Bill is concerned with fairly minor experiments. It will take two or three years before we get the results of those experiments. Many hon. Members say that the time for experimentation is over. The Government say "No. We must work
  1072
  slowly towards changes in the licensing system to see whether they are necessary." Yet we now have a White Paper that states that it is clear from the early stages of the experiments that there is already a case for more general modifications of the licensing laws. That is a splendid transformation. The light has at last dawned. If we understand that before we conduct the experiments, what is the use of going ahead with them?
  I hope that the experiments will go ahead and produce interesting evidence. However, I feel that this is a case of too little, too late. The crisis in transport in rural areas has overtaken the Bill. The Government stand indicted of three and a half wasted years. They should have acted sooner. To come forward with the proposition that they now see a general need for modifying the licensing laws when they abandoned a similar proposal three and a half years ago is a devastating indictment. This puny Bill makes little or no amends for the failures of the last three and a half years.
  12.24 a.m.
  Mr. Robert Banks: I intervene briefly at this late hour. First, I should declare an interest. In my weekend mail I discovered a document which invited comments on an experiment in local transportation. I now find myself encompassed as a human guinea pig in an experiment to be undertaken under the terms of the Bill.
  I should explain that my house lies three miles from Ripon. The experiment which has been devised in advance of Parliament giving its approval to the Bill, is for a taxi service to operate to draw people who require transport to Ripon from the area in which I live towards the neighbouring village of Masham. Masham lies some seven miles north of Ripon in the opposite direction to that in which I would wish to go if travelling to Ripon. Having got to Masham, the service would connect with a bus service to Ripon and a further nine miles of travelling from Masham to Ripon would complete a journey of 16 miles and land me in Ripon. It will be an interesting experiment, but the document invites comment and no doubt I shall be making my comments on it.
  While we recognise the Minister's burning enthusiasm and zeal in getting these

  1073
  experiments under way, is he not jumping the gun, since Parliament has as yet not passed the Bill? Expenditure is being incurred in setting up this arrangement in advance of Parliament having passed the Bill and that would appear to me to be overstepping the mark. I hope that the Minister will explain how this decision was made without the authority of Parliament.
  I hope that he will confirm that these experiments must be designed to consider the cost effectiveness of some of the journeys. Certainly the three-mile journey from Ripon is reasonable enough, but if the service is to take a round-about route of 16 miles in order to get to Ripon, that underlines the need for the experiments to be considered carefully in view of the fuel consumption and subsidy entailed.
  12.27 a.m.
  Mr. Adley: The Bill has been a tug-of-war between the Labour Party's attitude that Whitehall knows best and the Conservative Party's attitude of setting the people free—the Liberal Party being absent, as usual. My notes for this speech were written beforehand, confident that the Liberal Members would be their usual invisible selves when there was work to be done. Transport is important to local people, but I suppose that it is not a glamorous and headline-catching subject, so we should not express surprise at the Liberal absence.
  I am sorry that the Minister did not complete his undertaking about the Conservative amendment moved by me in Committee on 16th June. I ask him only to have another look at column 93 of the Committee proceedings for that date and to decide whether what he said tonight is in accordance with the undertaking he gave then.
  We regret that in Committee the Government resisted the removal of the restrictions on the size of vehicles. That was indicative of their attitude throughout the Bill. Like the Kremlin, the Labour Government are afraid of freedom. However, the Conservative amendments have transformed this small Bill and we look forward to transport committees of county councils releasing their pent-up enthusiasm for experiments when they realise the opportunities that the Bill opens up for them.
  1074
  The Bill started as a crumb. Thanks to the Conservative Party we now have half a loaf. Half a loaf is better than none, and so we support the Third Reading.
  12.30 a.m.
  Mr. Horam: By leave of the House, may I speak again to inform the hon. Member for Harrogate (Mr. Banks) that the money for the schemes will come out of the Department's research budget and that it will be a quite separate matter. Indeed, it is very small in amount.
  Mr. Ivan Lawrence: On a point of order, Mr. Deputy Speaker. Is it in order for the Minister to go on making speeches at 12.30 a.m. to make yet more party political points? There are a number of hon. Members, people in the Public Gallery and a number of other persons here who are concerned with the next debate. I respectfully ask the Chair whether it is in order for the Minister to make a speech.
  Mr. Temple-Morris Mr. Temple-Morris rose—
  Mr. Deputy Speaker: Order. I shall deal with one point of order at a time. The point of order that has been raised by the hon. Member for Burton (Mr. Lawrence) makes it clear that the Minister does not have the permission of the House to make a second speech. I therefore must put the Question.
  Question put and agreed to.
  Bill accordingly read the Third time and passed, with amendments.

  BRITISH FIRMS (TRADE WITH ISRAEL)
  Motion made and Question proposed, That this House do now adjourn.—[Mr. Stoddart.]
  12.31 a.m.
  Mr. Malcolm Rifkind: My debate has been slightly more accelerated than I had expected it to be a few seconds ago, and I ought to be grateful to my hon. Friend the Member for Burton (Mr. Lawrence).
  During the past 30 years the Arab States in conflict with Israel have pursued a policy of economic boycott against that State. In furtherance of that

  1075
  policy, substantial pressure has been brought upon British business men, as well as business men in other countries, to cease to trade with Israel to make that boycott more effective. There has been no doubt about the policy of successive British Governments. They have condemned and deplored the economic boycott against Israel. There has been much criticism of this Government and their predecessor, in that while they have condemned the boycott they have been prepared to tolerate it and have not taken action to make sure that British firms are relieved of the pressure that is being applied to them.
  I wish tonight to concentrate on a limited area where the present Government do not merely tolerate the boycott against Israel by Arab States, and its effect on British firms, but act in such a way as to further—however unintentionally—the application of the boycott. I refer particularly to the Foreign Office, which permits its officials to authenticate the discriminatory and negative certificates of origin that are required by certain Arab Governments, particularly Iraq.
  Certificates of origin are a perfectly innocuous and normal part of trading relations and in many respects they are essential to the whole business of trade between countries. The particular point with which I am now concerned is not to do with certificates of origin as normally applied where an exporter has to certify the origin of the goods—the country from which the goods he wishes to export originated. However, there are also negative or discriminatory certificates of origin, in other words, certificates that are required only for the Arab boycott. Exporters must certify not where the goods came from; this must certify the goods to ensure or guarantee that they in no way directly or indirectly originated in Israel.
  Normally the British chambers of commerce, as well as those in other countries, deal with the authentication of trading documents. However, to their credit, the British chambers of commerce have refused throughout the controversy to authenticate discriminatory or negative certificates of origin, on the ground that they have nothing to do with the limited objectives of trade but are to do only with a boycott that is not part of the policy of the British Government.
  1076
  Given that honourable decision, it is all the more regrettable that the British Foreign Office should permit its officials to authenticate discriminatory certificates of origin and to ensure thereby the success, or partial success, of this form of economic boycott. It is, perhaps, important to recognise the scale of the operation. When I first asked the Foreign Office through a parliamentary Question, about the number of discriminatory certificates of origin on which the signatures were authenticated by the Foreign Office I was told that the information was not available. However, when I conducted correspondence with the Minister of State and the Foreign Secretary, I was told that among a random sample of 2,000 export documents in 1976, 286 referred to export documents for Iraq of the nature of those that we are discussing tonight.
  Given that I was informed at the same time that the random sample of 2,000 documents represented 5 per cent. of the total number of such documents authenticated by the Foreign Office, it is not unreasonable to assume—I am sure that the Minister of State will correct me if I am wrong—that we are talking of approximately 5,000 to 6,000 documents required for the purpose of export to Iraq—documents authenticated by the Foreign Office, as required by the Government of Iraq. Therefore, we are not dealing with an insignificant number of export documents, we are talking of between 5,000 and 6,000 documents per year, simply with regard to exports to Iraq—discriminatory certificates of certain origin which the Foreign Office authenticates as to the signatures on the documents.
  I understand from the replies that I have received that the Foreign Office in no way disputes the facts as I aver them. What it insists upon is that in authenticating the signature of the notary public that appears on a discriminatory certificate of origin it is in no way approving or condoning the purpose of the document. The Minister of State, in correspondence with me, has assured me that in no way is the signature of the Foreign Office official on such a document to be taken as approving of the contents of the document. He goes on to say that the Foreign Office does not look into the

  1077
  background of the document, and that its sole concern is with the signature that appears on it and whether it is in order for the Foreign Office to authenticate that signature.
  I believe that such a justification, or attempted justification, is disingenuous at best and naive at worst. I do not believe that the Foreign Office or, indeed, any Government Department, can legitimately argue that it is appropriate to provide Government facilities irrespective of whether the purpose for which those facilities are required is in the public interest or in pursuit of Government public policy. Let me give one example. A few months ago we had some controversy about a sporting link with South Africa. Having failed to dissuade British citizens who wished to indulge in such sporting activities, the Government announced that they would not provide any official facilities that might be used during the sporting occasion in question. In other words, despite a lack of any illegality or any unconstitutionality in the activity taking place, because the Government reckoned that this activity was contrary to public policy they refused to provide Government facilities for the activity.
  All we are arguing is that, given that the Government deplore and condemn the boycott, the least that can be expected of them is that they withdraw the use of Foreign Office facilities for authentication of these documents. We can go beyond this because the Minister of State and other Ministers in the Foreign Office suggested that in no circumstances would the Government ever look beyond the signature on a document and in no circumstances would they ever consider the purposes for which the document was required or the nature of the document. However, in a letter dated 28th March of this year the Minister of State, who is to reply to the debate, said:
  "Foreign and Commonwealth Office officials only refuse to certify the signature and seal of a document in rare cases when illegality or fraud is suspected or the document has been signed by a person whose official capacity is not recognised by Her Majesty's Government, for example, an official of a régime which has not been recognised de jure."
  That paragraph is of considerable importance, because it accepts, for the first time as far as I am aware, that the Government do apply certain criteria
  1078
  before they are prepared to append the signature of a Foreign Office official to discriminatory certificates or any certificate of origin or other documents presented to them.
  According to the Minister of State in his letter, if it is believed that fraud or illegality may be involved, the Foreign Office will refuse to authenticate the signature, even if the signature is not fraudulent or believed to be illegal in any way. In other words, in certain circumstances the Government are prepared to look beyond the signature, to look at the nature of the document and, if it is believed to be or suspected of being illegal or fraudulent, to refuse to provide Foreign Office facilities. If the Government are prepared to look beyond the signature on these matters it would be a simple matter of practical convenience that they should also look to discover whether the business of the document is to pursue a policy or objective acceptable to them and, if it is not, to deny the facility requested at that time.
  I must say, again, that in correspondence with me, the present Foreign Secretary, who was then Minister of State, on 25th January this year, in defending the policy of the Foreign Office and in explaining that it was not approving of the contents of these discriminatory certificates of origin but merely authenticating the signatures on them, went on to say that this procedure of legalising documents for presentation in a foreign country is fully in accordance with international practice. The implication in that statement was that the present policy of the Foreign Office, far from being objectionable, was a policy that may be found in many other Western countries and is perfectly normal and perfectly unobjectionable. I am afraid that in so far as that implication was made it was incorrect and unjustified, because a number of countries refuse to allow officials of their Foreign Offices or State Departments to provide this sort of facility.
  The Dutch Government, for example, not only refuse to allow their officials to authenticate such documents but refuse to allow notaries in the Netherlands to participate in any way in discriminatory certificates of origin.
  Even more significant, the State Department of the United States of America

  1079
  has been very explicit in this matter. Perhaps I may quote from the regulation of the State Department with regard to authentication of documents. The regulations state as follows:
  "The Department will not certify a document when it has good reason to believe that the certification is desired for an unlawful or improper purpose. It is therefore the duty of the Authentication Officer to examine not only the document which the Department is aked to authenticate, but also the fundamental document to which previous seals or other certifications may have been affixed by other authorities. The Authentication Officer shall request such additional information as may be necessary to establish that the requested authentication will serve the interests of justice and is not contrary to public policy".
  It goes on to say,
  "In accordance with section 3 … of the Export Administration Act of 1969 … documents which have the effect of furthering or supporting the restrictive trade practices or boycotts fostered or imposed by foreign countries against countries friendly to the United States shall be considered contrary to public policy for the purposes of these regulations".
  In other words, the United States, as well as the Netherlands and one or two other countries, has explicitly forbidden its officials to participate in the authentication of documents when those documents are required for discriminatory purposes, for purposes in no way concerned with the legitimate interests of trade, and indeed, where those documents are required for a purpose contrary to the Government's official policy.
  All that I am suggesting in so far as the United Kingdom Government are concerned is that as a Government who have, quite rightly, deplored and condemned the boycott themselves, even if they are not prepared to take action to protect British business men from the boycott, as is presently being taken by the Governments of the United States, the Netherlands, Canada and France, the very least that we can expect of the British Government is that they do not positively facilitate the furtherance of the boycott. Indeed, in this one area, we can say, I am afraid, with absolute justification, that the Government do not merely fail to act but positively act in such a way that can only help the furtherance of an economic boycott against a country with which we have friendly relations and which is at present at the
  1080
  sharp end of an economic boycott that we deplore.
  I hope that the Minister of State will not simply go over the assurances about the Government's dislike of the boycott. I do not doubt that the Government dislike it. What we are concerned with is whether the Government are prepared to follow the example set by our Western allies and ensure that in no way will the facilities of the British Foreign Office be used in any way to continue a boycott which we deplore and condemn.
  12.44 a.m.
  Mr. Greville Janner: I am grateful to the hon. Member for Edinburgh, Pentlands (Mr. Rifkind) for this debate and I thank both him and my hon. Friend the Minister of State for sparing me a moment of the time.
  I rise to express the support of a very considerable number of hon. Members on the Government side of the House for the views that have been so eloquently put forward. This is not a party matter. Unfortunately, the policy that the present Government have pursued is one that they inherited from their predecessors.
  I have lobbied a series of Foreign Secretaries, of successive Governments. Each in turn has trotted out the same ridiculous rubbish about the authentication of a document being merely an authentication of a signature and having no effect in so far as the approval of the document is concerned. The authentication of this document is active connivance in a disgraceful activity which has been roundly and frequently condemned by the Foreign Secretary. The Government are regarded as active accomplices by both the proponents and the opponents of the boycott. They are not merely clapping a telescope to a blind eye but holding it clearly in place.
  Rubber stamps have their uses but they are dangerous weapons in a trade war. In this case they are used to put an imprimatur on an international impropriety. They should be burned.
  I hope that my hon. Friend will take this opportunity not merely to condemn once again the Arab boycott but also to say as a start that the Government will cease giving any seal of approval to these thoroughly improper and disgraceful documents.
  12.47 a.m.
  The Minister of State, Foreign and Commonwealth Office (Mr. Frank Judd): I should like to compliment the hon. Member for Edinburgh, Pentlands (Mr. Rifkind) on initiating the debate. I have been aware for some time of his deep and real anxiety about this matter. Matters relating to the Arab boycott are a subject of genuine and widespread public concern. However, misconceptions about the boycott and in particular about the Government's attitude towards it still exist. I shall give an example. To judge from the correspondence that I see, many firms and individuals seem to believe that the very act of trading with Israel may in itself render a company liable to be blacklisted by the Arabs. On the contrary, the boycott does not appear to interfere with exports—other than of war or strategic materials—to Israel by firms in non-Arab countries. But firms which misunderstand the position may needlessly be denying themselves the chance of doing valuable business in Israel.
  Another widespread misconception concerns the Foreign and Commonwealth Officer's certification service. I shall deal with this in a moment. I welcome this evening's short debate as an opportunity to put the record straight.
  First, I should like to make two small observations on the subject of the debate as the hon. Gentleman has set it down. He referred to the "Foreign Office". I hope he will not mind my pointing out that there has been no separate Foreign Office since October 1968 when it merged with the Commonwealth Office.
  That is a matter about which we feel strongly.
  The hon. Member refers to the Foreign Office's policy on the boycott. The Government's policy towards the boycott is indivisible. Various Departments of State assume primary responsibility for different aspects of that policy. But there is no separate Foreign and Commonwealth Office policy or Department of Trade policy. There is only the Government's policy. In practice there is close contact and co-ordination between the Foreign and Commonwealth Office and the Department of Trade which assumes primary responsibility for matters concerning the impact of the boycott on British companies, both individually and in general. The two Departments do not
  1082
  differ in their approach to the problems with which the boycott faces us.
  The Government's basic approach to the boycott has frequently been stated. It is that we oppose and deplore all trade boycotts which do not have international support and authority. Ministers have repeatedly stressed this in the most categorical language in the House and elsewhere. I apologise if I am telling the House something it already knows. But if I am to explain clearly the Government's attitude towards the boycott, it is important that there should be no misunderstanding about this basic and fundamental principle.
  None the less, the boycott is a fact of life which has been with us now for nearly 30 years and with which British exporters must deal. How companies act in specific cases must be a matter for their commercial judgment. This has been the accepted policy of successive Governments. The Government's role it seems to me is—while making clear its abhorrence of the boycott—and I underline that word—to do nothing that would further increase the difficulties of British firms dealing with the Middle East. Our aim as a Government is and must be to help expand British exports throughout the world. The boycott is an obstacle, a highly objectionable obstacle, to this, but one which we must help companies to surmount.
  We wish it were possible for British exporters to trade entirely freely with all countries of the Middle East and we hope that negotiations for a lasting and just peace in the area will bring this about. But until that hoped-for goal is achieved, the Government's efforts must be directed to ensuring that British firms can conduct their trade with the minimum of hindrance.
  I now turn to the subject of the Foreign and Commonwealth Offices certification service, and I know that many hon. Members are uneasy about this. Certification is a common international practice, and the procedures which the Foreign and Commonwealth Office follows in certifying signatures or seals on public documents are laid down internationally. There may be some variation from country to country in how these procedures are applied to various categories of document, but the procedures are, as I have said, internationally established

  1083
  and are set out in the 1961 Hague Convention for the Abolition of Legalisation. The Foreign and Commonwealth Office conforms to these procedures.
  Because the process of certification may be unfamiliar, it may help if I explain in rather more detail what it is and why it should be necessary. In many foreign countries, export and other documents are not acceptable unless they are signed by an official. These countries include many Arab States, but the Arabs are not the only people to require documents to be officially certified; nor are they the majority of such countries. In order to prepare documentation for its exports to such a country, a British firm arranges for the signature of a competent employee on the documents in question to be attested by a notary or chamber of commerce official. The Foreign and Commonwealth Office then certify the authenticity of the signature of the notary or chamber of commerce official, the capacity in which he has signed the document, and where appropriate the identity of the seal or mark which the document bears. This is necessary because the notary or chamber of commerce official's signature is not known in the foreign country in question. Indeed, in the case of Iraq and a number of other Arab States which are not parties to the Hague Convention, the Foreign and Commonwealth Office's certificate is itself not recognised until it has been countersigned by the appropriate Arab consul in London.
  Hon. Members may consider this a very bureaucratic and time-consuming procedure. I agree with them. It is our policy to try to reduce the need for certification of documents wherever possible. But we have to recognise that if we wish to do business with other countries, we have no alternative but to conform to their requirements in this matter of export documentation.
  Mr. Rifkind: The Minister talks about certificates of origin. Will he accept that the only discriminatory certficates of origin are those required in pursuit of the Arab boycott and that the British chambers of commerce have refused to associate themselves with authenticating these documents? If that is the view taken by the chambers of commerce, why do the Government take a different view?
  Mr. Judd: I was coming to the question of the chambers of commerce. I am afraid that the hon. Gentleman is misinformed. I have double-checked on this, and I have here at the Dispatch Box cases showing direct evidence that chambers of commerce have in fact signed such documents. So it is not true that chambers of commerce do not do it.
  Mr. Rifkind Mr. Rifkind rose—
  Mr. Judd: Will the hon. Gentleman allow me to continue? I shall deal with the matter. I have so far described the process of certification as it applies to all documents and all countries.
  It is the practice of most Arab States to require firms which do business with them to provide documents to show that they are not in breach of the boycott regulations. Such documents may be presented to the Foreign and Commonwealth Office for certification When this happens, it is only the authenticity of the signature of the notary or chamber of commerce official which is then certified by the Foreign and Commonwealth Office, in accordance with our standing procedures. I have some here signed by chambers of commerce. The Foreign and Commonwealth Office takes no account of or responsibility for the content of the document in question. We do not discriminate between documents of different classes, origins or destinations. Thus, the performance of this service is basically a technical measure to facilitate the flow of exports and in no way implies that the Government or the Foreign and Commonwealth Office condone or endorse the boycott.
  Critics of the Foreign and Commonwealth Office's practice in this respect sometimes claim that it may nevertheless be widely misinterpreted as officially condoning or conniving at the boycott. Although I do not question their sincerity of purpose, I ask such critics to consider at least the possibility that they themselves may be partially responsible for giving currency to this misconception. Certainly, Ministers and officials take every opportunity to make clear that this is, indeed, a misconception and that we in no way support the boycott.
  As I have already said, we have repeatedly stated our opposition to the boycott in categorical terms. I have done

  1085
  so tonight. I have also noted numerous instances when Ministers have stated the position on certification in reply to Questions in the House. Most recently my right hon. Friend the Foreign and Commonwealth Secretary stated it in reply to a supplementary question from the hon. Member for Pentlands on 15th June.
  In many countries this process is referred to as "legalisation". Because we want the public to be quite clear that our service adds nothing to the validity of the documents in question, and since the word "legalisation" might in English imply that some validation has taken place, we preferred to use the term "certification" instead.
  Certification is carried out in respect of some 40,000 documents a year. These cover a wide variety of subjects apart from the boycott. The Foreign and Commonwealth Office does not keep copies of these documents, nor records of their contents. Those who are concerned about economy in Government will be relieved to hear this. Since the Foreign and Commonwealth Office takes no responsibility for the content of the documents in question, it would hardly be appropriate to keep such records. But a statistical sample of 2,000 of these documents last year revealed that 60 per cent. of them related to exports to some 62 countries, including Israel. Of this 60 per cent., less than half—in other words, less than 30 per cent. of all the documents processed—related to exports to the Arab states.
  As I said earlier, countries vary in the application of certification procedures to various categories of documents. There is no common practice, even within the European Community on the certification of boycott documents. However, our practice is broadly the same as that of most other Western European countries, including France, the Federal Republic of Germany and the Netherlands.
  Having heard the report of a broadcast this morning, I was sufficiently concerned, because of my respect for the hon. Gentleman, to check today the situation with our embassy in the Netherlands. Our embassy has confirmed that the Netherlands Foreign Ministry still authenticates signatures on Dutch chamber of commerce boycott documents. In other words,
  1086
  Dutch practice is exactly the same as ours. In Canada, the Department of External Affairs countersigns signatures on export documents, including boycott documents.
  Foreign and Commonwealth Office officials refuse to certify a document only when they do not recognise the signature or the appointment of the official who signed it or when they suspect some fraud or illegality. In fact, since within the legal system as it operates it would be totally inappropriate to scrutinise them in detail, fraud or illegality can prove difficult to detect, though some cases have come to light.
  It is, of course, not illegal for British companies to provide the boycott-related declarations required under the import regulations of Arab States. Nor, with one exception, is it illegal, so far as I know, anywhere else in the world for firms to decide their response to the boycott in the light of their own commercial judgment. The one exception is the United States of America. We shall naturally study the practical effects of the recent United States measures, in due course, with close attention. But to be realistic about it, they do not necessarily provide a model for us. It is important to bear in mind that the United States economy is far less dependent on exports than our own or that of any Western European country. Were we convinced that it would be desirable to refuse to signatures on boycott-related documents, there would be administrative problems, but they would not in themselves be allowed to stand in our way.
  However, our practice in certifying the vast number of documents constantly presented to us is based on principle rather than expediency. We see ourselves as performing a technical legal service for British firms in their export drive. To refuse certification in certain cases would simply make life more difficult for them in dealing with important markets. It is impossible to make any meaningful assessment of the likely consequences of such a refusal for our exports to the Arab world, now running at an annual rate of £2½ billion, but they would hardly be likely to be beneficial to this country. We would not be justified in assuming that Arab States would simply agree to bend

  1087
  their import documentation requirements to accommodate us. If British firms found it difficult or impossible to comply with those requirements, there would be few sectors in which Arab States could not
  1088
  obtain substitutes for British exports from other suppliers.
  Question put and agreed to.
  Adjourned accordingly at One o'clock.

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  Cardiff Concert Hall
SCOTLAND
  Homosexuals
  Homosexuals
  Caledonian MacBrayne
  Caledonian MacBrayne
  Housing Amenities (Rating)
  Housing Amenities (Rating)
NORTHERN IRELAND
  Prisoners
  Prisoners
INDUSTRY Diesel
  Motor Cars
  Motor Cars
  Hitachi Company
  Hitachi Company
  "Trade and Industry"
  "Trade and Industry"
  Ken Wood and Sons Development (Cornwall) Limited
  Ken Wood and Sons Development (Cornwall) Limited
PRICES AND CONSUMER PROTECTION
  Sports Equipment
  Sports Equipment
  Consumer Advice Centres
  Consumer Advice Centres
  Price Code
  Price Code
  Food Prices
  Food Prices
TRADE
  European Community
  European Community
  Steel
  Steel
  Developing Countries
  Developing Countries
  Grunwick Processing Laboratories Ltd.
  Grunwick Processing Laboratories Ltd.
  Israel
  Israel
  Tourism
  Tourism
FOREIGN AND COMMONWEALTH AFFAIRS
  Jubilee Celebrations (Embassies)
  Jubilee Celebrations (Embassies)
  Nuclear Materials
  Nuclear Materials
  Republic of Ireland
  Republic of Ireland
  Yugoslavia
  Yugoslavia
  Diego Garcia
  Diego Garcia
  Rhodesian Paraplegics (International Games)
  Rhodesian Paraplegics (International Games)
  St. Helena
  St. Helena
  Helsinki Agreement
  Helsinki Agreement
  East European Countries (Embassy Personnel)
  East European Countries (Embassy Personnel)
EMPLOYMENT
  Unemployment Alleviation Schemes
  Unemployment Alleviation Schemes
  Steel Industry
  Steel Industry
  Retail Price Index
  Retail Price Index
  Petrol Stations
  Petrol Stations
  Redundancy Payments
  Redundancy Payments

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

BP SHARES: PENSION SCHEMES ALLOCATION
Lord BOYD-CARPENTER: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government why preferential treatment in respect of the disposal of shares held by Her Majesty's Government in the British Petroleum Company Limited is being given to applications made by or on behalf of United Kingdom occupational pension schemes; and whether it is intended that this shall set a precedent for giving preference to one category of citizens over another when other public property is being disposed of by way of sale.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): My Lords, the Government were concerned to give United Kingdom citizens every opportunity to take a stake, directly or indirectly, in this company. Occupational
2
pension funds, which represent so many individuals, were therefore accorded formal preference in the allocation; and, moreover, applicants who applied for up to 150 shares obtained in full what they applied for. The disposal of nearly 67 million ordinary stock units was wholly exceptional and does not set a precedent in any respect.
Lord BOYD-CARPENTER: My Lords, while declaring an interest as, unhappily, a very small shareholder in this company, may I put to the noble and learned Lord that there is here a question of principle affecting the disposal of public property? Has it not been the practice for many years, at least since the Crichel Down affair, that when the property of the State is disposed of all citizens have an equal opportunity to acquire it?
Lord McCLUSKEY: My Lords, in this matter, on the part of the Government there was a deliberate wish to favour the small investor. That is a wish which has been commended by many commentators, and indeed every member of the public could qualify as a small investor, come forward and obtain a preference. That was plain and the Government went to unprecedented lengths to ensure that members of the public were made aware of their right. Occupational pension schemes cover 14 million people in this country and I would respectfully suggest that the Government's action in disposing of this property in such I a way should not incur criticism.
Lord BOYD-CARPENTER: My Lords, whatever the merits of occupational pension schemes, and I share the Government's admiration for them, may I ask the noble and learned Lord whether there are not other bodies of equal merit, such as charities and the Church Commissioners? Will the noble and learned Lord, none the less, come back to the real point which I put to him earlier: Is not this a departure from the previous principle of equality of opportunity when Government property is disposed of? Will be answer the terms of my original Question: is it or is it not intended hereby to create a precedent?
Lord McCLUSKEY: My Lords, may I remind the noble Lord that this was not a sale of Government property direct to a member of the public, but was simply conferring a preference in the event of there being over-subscription. I would suggest that that matter ought to be looked at on its own merits.
Lord PAGET of NORTHAMPTON: My Lords, have we not reached the stage when it is quite difficult to find out who is a citizen of this country and who is not? Pension funds are a jolly good way of finding out, so are not the Government to be congratulated on their ingenuity?
Lord McCLUSKEY: We will accept congratulations even from our own Back-Benches, my Lords.
Lord THORNEYCROFT: My Lords, while fully understanding and agreeing with the importance of occupational pension schemes, may I ask whether the noble and learned Lord is saying that this will not be done again? Is that what he means when he says that this is a wholly exceptional situation? I cannot quite follow his reasons for saying that this is an exceptional case. On future occasions when public property is being disposed of, are we right in assuming that all potential shareholders will be treated in the same way?
Lord McCLUSKEY: My Lords, I do not think I said—or, if I did, I did not intend to say it—that it would not be done again. What I said and what I mean, and what I want to say quite clearly, is that this was an unprecedented sale, and I am sure that the noble Lord would not disagree with me in relation to that. This
4
was a sale of nearly 67 million units of stock for a price of about £560 million. That was unprecedented and it does not in itself set a precedent for other matters; each case of this kind requires to be looked at on its own merits.
Lord HARMAR-NICHOLLS: My Lords, does the Committee which used to sit under the chairmanship of the Chancellor of the Duchy, in order to recommend the disposal of Government property, still exist? If so, did it sit in this case and did it recommend the action that has been taken?
Lord McCLUSKEY: My Lords, if the noble Lord will look at the original Question, he will see that it concerned giving preference to one category of citizens over another. When considering that Question, I did not take into account the point which the noble Lord has raised, and I will, if he wishes, write to him on the matter.
Lord LEATHERLAND: My Lords, does my noble and learned friend agree that undue fuss is being made about this matter? Is it not a fact that, in every issue for the sale of shares, where there is extensive stagging individual applications do not get equal treatment? Is it not a fact, for example, that applicants for up to 500 shares may get a full allotment, that those for 1,000 shares may get three-quarters of their application, while those for 20,000 may get 5 per cent. of their application?
Lord McCLUSKEY: My Lords, on the second part of my noble friend's supplementary question, he is absolutely right. In relation to the first part, it may be that there is too much of a fuss; but, having regard to the scale of the operation and the fact that it is Government property, the Government welcome the opportunity to explain themselves in public, and I do not retreat from that.

ANGLO SOVIET MARITIME DISCUSSIONS
2.43 p.m.
Baroness WARD of NORTH TYNESIDE: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government to make a Statement on the recent visit of the Soviet Minister of Marine, Mr. Guzhenko, and in particular on the meeting of the Anglo Soviet Joint Maritime Commission recently held in London.
Lord ORAM: My Lords, the visit of the Soviet Minister of Merchant Marine, Mr. Guzhenko, provided the opportunity for some frank discussions on maritime problems. The issues raised with Mr. Guzhenko included Soviet under-cutting of freight rates, the provision of excessive capacity on certain liner trades, and the need for a fairer balance between United Kingdom and Soviet ships in our bilateral trades. Although we prefer a policy of co-operation rather than confrontation, we left the Soviet side in no doubt about the need for movement on their part in the search for mutually satisfactory solutions to current difficulties. Detailed discussion of these difficulties and of possible remedies was undertaken by officials within the Anglo Soviet Joint Maritime Commission. Further discussions will be held in the near future.
Baroness WARD of NORTH TYNESIDE: My Lords, I wish to thank the noble Lord very much for that Answer, and for his help in this matter. Can he say whether there was any indication that we are likely to get just and fair treatment as a result of this visit and the discussions which are going on, which are very important to our shipping interests, as well as to our national interests?
Lord ORAM: My Lords, as my original Answer indicated, we stated the British point of view very firmly. No agreements on matters of substance were reached, but we hope that the Soviet authorities will have noted the depth of our concern and will give urgent consideration to the various proposals that we have put forward. One of the next major steps will be to try to work out a set of principles to act as guidelines for the orderly development of maritime trade; at least, there was agreement to take it that far.
Baroness WARD of NORTH TYNESIDE: My Lords, I wish to thank the noble Lord again. Can he tell me how long I shall have to wait before I can put down another Question?
Lord ORAM: My Lords, I imagine that if there is a vacancy, the noble Baroness can put down a Question for tomorrow; I hope she will not. The meeting to which I have referred is to take place in August.

CROWN AGENTS: FAY COMMITTEE REPORT
2.45 p.m.
Baroness WARD of NORTH TYNESIDE: My Lords, I beg leave to ask the Second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will give an assurance that the report of the Fay Committee on the Crown Agents will be published in time for debate before Parliament rises for the Summer Recess.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, my right honourable friend the Minister for Overseas Development does not expect to receive the Fay Committee's Report for the next few weeks, and I am afraid that there cannot therefore be a debate before the Summer Recess. The report will be published as soon as possible after it is received.
Baroness WARD of NORTH TYNESIDE: My Lords, though I cannot thank the noble Baroness for that Answer, I should like to ask her whether the Government are quite certain that they are not holding back the Fay Report so that we cannot have a debate on the matter, having regard to the fact that Statements have been made from time to time that the Fay Report was to be produced? Does the noble Baroness not think that it is absolutely ridiculous that we have had to wait as long as we have, and that we still have to wait before we can even have a debate upon this very important matter? I am very much upset and annoyed.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I am deeply upset that the noble Baroness is very much upset, and gratitude, I am afraid, is the last thing I look for. But I must make clear one point which I have made many times previously in this House: no Minister has ever said that the Fay Report would be ready in under two years, and that probably it would be longer. I should like to remind the noble Baroness that I wrote to her in February saying that we could not expect the report until midsummer, and probably later.
Lord BROCKWAY: My Lords, in thanking my noble friend for that reply, may I ask whether she is satisfied that the past deficiencies and inefficiencies of the Crown Agents have now been remedied?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, it would take a very rash Minister to say that all inefficiencies have been remedied; and I will not go that far. But this Government, and previous Administrations, have done everything in their power to uphold the excellent institution of the Crown Agents, and to iron out the difficulties that have arisen.
Baroness WARD of NORTH TYNESIDE: My Lords, having regard to her last reply, does the noble Baroness agree that it would be in the interests of the Crown Agents to have the report, which will no doubt make various complimentary remarks about the Crown Agents in general? Does she agree that the Crown Agents are being held up in terms of getting satisfaction because of the problem of a few who have, perhaps, not been quite so helpful as they might have been? It is too silly.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I have had no complaints from the Crown Agents about the time it has taken; indeed, they specifically asked that such a complex matter should be gone into as thoroughly as Judge Fay thought necessary.

EEC COUNCIL OF MINISTERS: JULY BUSINESS
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, a Statement is being made in another place today about
8
business to be taken in the EEC Council of Ministers during July. I will, as usual, arrange for the Statement to be made available in the Official Report.
Following is the Statement referred to:
"With your permission, Mr. Speaker, I will make a Statement about business to be taken in the Council of Ministers of the European Community during July. The monthly forecast for July was deposited on the 22nd of June.
"At present four meetings of the Council of Ministers are proposed for July. Finance Ministers will meet on the 18th; Agriculture Ministers on the 18th and 19th; Budget Ministers on the 20th, and Foreign Ministers on the 25th and 26th of July; or possibly only on the 26th of July.
"At the Finance Council, Ministers will have their second quarterly examination of the economic sitution in the Cornmunity.
"Agriculture Ministers will be considering fisheries matters, together with proposals for a potato régime, the labelling of milk products and aid for producer groups.
"At the Budget Council Ministers will establish the draft Community Budget for 1978.
"Foreign Affairs Ministers will discuss the outcome of the European Council on the 29th and 30th of June, relations with Spain, Cyprus and Malta, the accession negotiations with Greece and possibly fisheries matters".

NORTHERN IRELAND (EMERGENCY PROVISIONS) (AMENDMENT) BILL
Brought from the Commons, read 1ª, and to be printed.
LONDON TRANSPORT BILL
Read 3ª, with the Amendments, and passed, and returned to the Commons.

HOUSE OF LORDS' OFFICES
2.50 p.m.
The CHAIRMAN of COMMITTEES (Lord Aberdare): My Lords, I beg to move that this report be now agreed to.

9
Perhaps I ought to draw your Lordships' particular attention to Item 2 of the Committee's report, concerning the Library. The Committee agreed to the recommendation of the Working Group on the Library that the Queen's Room should be converted into an Enquiries and Information Centre. I beg to move.
Moved, That the Third Report from the Select Committee be agreed to.— (Lord Aberdare.)
The Report was as follows:
1. COMPUTER FACILITIES
The Committee approved the appointment of a Sub-Committee and to its proposed terms of reference with the following Lords as members:—

Lord Darling of Hillsborough

Viscount Eccles

together with the Clerk of the Parliaments and with power to co-opt further Lords and to appoint their own Chairman.
The Committee also approved provision for the payment of expenses incurred by the Sub-Committee and for additional computer typing assistance.
2. LIBRARY
The Committee were informed that the Library Sub-Committee had considered the Report from the Working Group on the Library and supported the recommendation that the Queen's Room be converted into an Enquiries and Information Centre.
The Committee approved the recommendation and the proposals for implementing this decision.
The Committee were also informed of the appointment of Mr. D. L. Jones as Assistant Librarian.
3. PARLIAMENT OFFICE
The Clerk of the Parliaments informed the Committee of the promotion of Mr. C. H. Cumming-Bruce to Senior Clerk.
The Committee approved the appointment of two additional Personal Secretaries and an additional Clerical Officer.
4. HANSARD REPORTING STAFF
The Clerk of the Parliaments informed the Committee of the following arrangement of the Editorial staff on the retirement of Mr. C. W. H. Blogg, O.B.E., the Editor of Debates, on 1st July 1977:—

Mr. C. R. Stanton to be Editor in the place of Mr. C. W. H. Blogg;

Mr. D. A. Dumbreck to be Assistant Editor in the place of Mr. C. R. Stanton;

Mrs. M. E. E. C. Villiers to be Second Sub-Editor in the place of Mr. D. A. Dumbreck.

The Committee instructed the Clerk of the Parliaments to convey to Mr. Blogg their warm appreciation of his long and valuable services.
The Committee authorised:—

(a) increased charges under the agreement with Haynes Secretarial Services for the supply of typists for the reporting of Debates;

10

(b) revised attendance fees to temporary reporters.

5. OFFICIAL SHORTHAND WRITER
The Committee approved an increase in the fees payable to the Official Shorthand Writer.
6. REVISED SCALES OF PAY
The Committee confirmed the application of the following Civil Service Code Memoranda:—

CM/241 dated 12th April 1977;

CM/252 dated 1st June 1977;

giving supplements to pay to Officers and staff of the House of Lords.
7. SUPERANNUATION
The Committee sanctioned the payment of the following superannuation awards:—

(a) Pension and lump sum to Mr. C. S. A. Dobson, C.B.E., Librarian, who retired on 1st June, 1977;

(b) Pension and lump sum to Mr. C. W. H. Blogg, O.B.E., Editor of Debates, who retires on 1st July 1977.

8. DOORKEEPERS
The Committee approved the appointment of two additional Doorkeepers.
9. SUB-COMMIFTEES
Lord Wigoder was appointed to the Administration and Finance Sub-Committees in the place of Lord Amulree.
On Question, Motion agreed to.

COMPUTERS: CONSIDERATION OF COMMONS MESSAGE
The LORD PRIVY SEAL (Lord Peart): My Lords, I beg to move the Motion standing in my name on the Order Paper. A similar Motion has already been agreed to in another place. Your Lordships' House has just agreed the report of the Offices Committee appointing a Sub-Committee on computers, and it is desirable that this Sub-Committee should be able to meet jointly with any Sub-Committee of a Services Committee on the same subject. I beg to move.
Moved, that the Sub-Committee on Computers appointed by the Select Committee on House of Lords Offices shall have power to join with any Sub-Committee thereon that may be appointed by the Select Committee of the House of Commons on House of Commons (Services);
That the Sub-Committee shall have leave to agree with the Commons in the appointment of a chairman for any joint meeting;
That the Sub-Committee shall have power to appoint persons with technical knowledge either to supply information

11
which is not readily available or to elucidate matters of complexity relating to the matter referred to them; and
That the Sub-Committee shall have power to adjourn from place to place within the United Kingdom.—(Lord Pearl.)
On Question, Motion agreed to; and a Message ordered to be sent to the Commons to acquaint them therewith.

RENT BILL
Report received.
PROTECTION FROM EVICTION BILL
Report received.

NORTHERN IRELAND (EMERGENCY PROVISIONS) BILL [H.L.]
The LORD CHANCELLOR (Lord Elwyn-Jones): 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. 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.—(The Lord Chancellor).
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, may I ask one question before we part with this? We have just given a First Reading to a Bill from the Commons with exactly the same Title, except that it is an Amendment Bill. This is a Consolidation Bill. I merely want to ask the noble and learned Lord what relationship the two Bills have to one another; and, if indeed the Bill from the Commons is an Amendment Bill, whether it would not at some stage, and probably at this stage, be wise to include in the Consolidation Bill which is now going through this House any provisions which become law in the Amendment Bill.
The LORD CHANCELLOR: My Lords, I understand that the Bill to which the House has given a First Reading does involve Amendments which will be relevant to the present Consolidation Bill. My understanding is that when this Bill is referred to another place the Consolidation Bill, with which we are presently dealing, will be amended there to take account of the new Bill. The noble and learned Lord may feel that that is a satisfactory way to deal with what is purely a consolidation measure.
On Question, Motion agreed to.

LICENSING (AMENDMENT) BILL
Lord HARMAR-NICHOLLS: 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. 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 Harmar-Nicholls.)
On Question, Motion agreed to.

RENTCHARGES BILL
Report received.

UNFAIR CONTRACT TERMS BILL
2.56 p.m.
Report received.
Clause 1 [Scope of Part I]:
Lord JACQUES Lord JACQUES moved Amendment No. 1:
Page 2, line 1, leave out from beginning to ("subject") in line 2 and insert—
("(2) This Part of this Act is subject to Part III; and in relation to contracts, the operation of sections 2 to 4 and 7 is")
The noble Lord said: My Lords, Part III of the Bill contains various provisions exempting certain types of contract from the controls in Parts I and II.

13
This Amendment makes it clear that the provisions of Part I are subject to the provisions of Part III. An Amendment making a similar provision for Part II was introduced by my noble and learned friend Lord McCluskey during the Committee stage, and was accepted by your Lordships. I beg to move.
On Question, Amendment agreed to.
Clause 2 [Negligence liability]:
Lord JACQUES Lord JACQUES moved Amendment No. 2:
Page 2, line 26, leave out from ("notice") to ("a") in line 28 and insert ("purports to exclude or restrict liability for negligence")
The noble Lord said: My Lords, this is a drafting Amendment. If noble Lords wish for details, I shall be glad to supply them. I beg to move.
On Question, Amendment agreed to.
Clause 4 [Unreasonable indemnity clauses]:
Lord JACQUES Lord JACQUES moved Amendment No. 3:
Page 3, line 13, leave out subsection (2) and insert—
("(2) This section applies whether the liability in question—

(a) is directly that of the person to be indemnified or is incurred by him vicariously;

(b) is to the person dealing as consumer or to someone else")

The noble Lord said: My Lords, during the Committee stage a Government Amendment deleted the words "his own" from Clause 4 as being unnecessary and likely to cast doubt upon the meaning of the clause. The noble and learned Lord, Lord Hailsham, questioned whether the amended wording of Clause 4 made it quite clear that the negligence referred to was that for which the person in question was himself responsible, whether directly or vicariously. On reflection, it seemed to us that the wording was not wholly clear. The present Amendment has therefore been tabled for the avoidance of doubt. In addition, the noble Lord, Lord Lyell, indicated that he thought that subsection (2) was not clear. This Amendment, as well as dealing with the point made by the noble and learned Lord, Lord Hailsham, also clarifies the subsection. I beg to move.
Lord LYELL: My Lords, I should like to begin this afternoon's proceedings from these Benches by thanking the noble Lord, Lord Jacques, for his very brief and swift clarification of the points which we raised at an earlier stage. He is satisfied, so are we, and we should like to thank him.
Lord AIREDALE: My Lords, perhaps this is the moment at which I should speak to my Amendment No. 4, because my Amendment is an attempt to redraft the Amendment which is now being discussed. It is a drafting point, really. In the Amendment which is now being discussed, your Lordships will see that there is no word connecting paragraphs (a) and (b). I should have thought that it would be better drafting to have the subsection read as in the next Amendment, No. 4, which enables a connecting word to be inserted between paragraphs (a) and (b), so as to make the new subsection flow.
Lord JACQUES: My Lords, the noble Lord, Lord Airedale, has really changed his role in this House. His role is normally to have words deleted because they are not necessary. Here he wants to put words in; and, I might add, they are not necessary. In that sense, he is doing exactly the opposite to what he usually does. We are confident that our Amendment is perfectly clear, and we prefer it because it is shorter. The noble Lord very often takes that view.
On Question, Amendment agreed to.
Lord AIREDALE Lord AIREDALE had given Notice of his intention to move Amendment No 4:
Page 3, line 13, leave out subsection (2) and insert—
("(2) This section applies—

(a) whether the liability in question is directly that of the person to be indemnified or is incurred by him vicariously; and

(b) whether the liability in question is to the person dealing as consumer or to someone else.")

The noble Lord said: My Lords, after those fierce words from the noble Lord, Lord Jacques, I dare not move this Amendment.
Clause 5 ["Guarantee" of consumer goods]:
Lord JACQUES Lord JACQUES moved Amendment No. 5:
Page 3, line 23, after first ("by") insert ("reference to").
The noble Lord said: My Lords, may I say that I would only use those words to a friend; I dare not use them to anyone else. This is a purely drafting Amendment bringing Clause 5 into line with the rest of Part I of the Bill. I beg to move.
On Question, Amendment agreed to.
Clause 7 [Miscellaneous contracts under which goods pass]:
Lord JACQUES Lord JACQUES moved Amendment No. 6:
Page 4, line 23, leave out ("and (3)") and insert ("to (3A)").
The noble Lord said: My Lords, I hope that it may be to the convenience of the House that I speak to Amendment No. 7 in moving Amendment No. 6. At the Committee stage the noble Lord, Lord Lyell, made what I described as a gallant attempt to rephrase this subsection so as to get clarification. Unfortunately, I had to indicate to him that his Amendment was defective. I now produce an Amendment which achieves the purpose which the noble Lord had in mind and which, I hope, is not defective. I beg to move.
Lord LYELL: My Lords, we are very happy that the noble Lord, Lord Jacques, is being entirely consistent. He is removing inconsistencies and curing defects that we introduced into his Bill. We made an honest and gallant attempt to improve the Bill and our attempt has been crowned with success. We thank him for it.
On Question, Amendment agreed to.
Lord JACQUES Lord JACQUES moved Amendment No. 7:
Page 4, line 31, leave out subsection (3) and insert—
"(3) As against a person dealing otherwise than as consumer, that liability can be excluded or restricted by reference to such a term, but only in so far as the term satisfies the requirement of reasonableness.
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(3A) Liability in respect of—

(a) the right to transfer ownership of the goods, or give possession; or

(b) the assurance of quiet possession to a person taking goods in pursuance of the contract,

cannot be excluded or restricted by reference to any such term except in so far as the term satisfies the requirement of reasonableness".
On Question, Amendment agreed to.
Clause 8 [Misrepresentation]:
The Earl of SELKIRK The Earl of SELKIRK moved Amendment No. 8:
Page 5, line 16, leave out from ("1977") to end of line 17.
The noble Earl said: My Lords, this Amendment is an Amendment to a clause brought in from an entirely different Act of Parliament, the Misrepresentation Act 1967. This deals with innocent misrepresentation and not with fraud at all. It makes any restrictive practice in the clause, such as an error, subject to Clause 10, which is the reasonableness clause. This seems to be quite sensible; but it goes further than that. It changes the onus of proof on a different Act of Parliament in order to gain consistency with this Act of Parliament.
We had a long discussion on this Bill last time, but we did not really deal with this clause at all. We dealt with the main clauses, two other clauses, dealing with the question of onus of proof. Under this, "contract" applies to every kind of contract, so far as I can see, and is not in any way limited by Schedule 1. That is my interpretation. It is a different Act of Parliament.
Mr. Fraser, the Minister of Consumer Protection, says that any changes in the onus of proof should be backed with overwhelming and convincing arguments. In this case there was none. There was only one argument, and that was consistency with the Bill which we are discussing. This Bill is a separate Bill and it does not really deal at all with the main issue of the Bill on unfair contracts which we are discussing. It does not affect any other part of the Bill at all. What I do think is unwise is that purely on the grounds of consistency we should change another Act without considering the content of that Act at all. I do not know whether

17
changing the onus of proof alters any other part of the Misrepresentation Act. I am not sure. I find it hard to believe it does not have some effect. I do not know how it is worked. It does not apply to Scotland, but I think it unwise to change a clause in another Act purely for consistency in the existing Bill.
There was no argument about consistency particularly which makes it desirable. It has no bearing on the standard of practice. I should have thought it very much better to leave out these words and let the normal procedures go ahead. I do not think it matters very much, because if anyone wants to bring forward a case—a case where someone has received some error of information not in the contract but in some letters or some conversation beforehand—he will have to go to court and explain, in the first place, what is the information he has received and why he thinks it affects him fundamentally. He must do this in any case. He must make something which may be called a plausible case. I do not think it makes much difference; but if a decision here is going to be regarded as binding on other parts of the Act, I would object to it being included. I think it unnecessary to put it here. It will not affect anybody else and I think that changing one Act on the grounds of consistency with another is wholly wrong. I ask the House to leave out these words which change the onus of proof in the Misrepresentation Act 1967. I beg to move.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, it may be that the noble and learned Lord is about to do what I am now going to ask him to do. It may be that I am pushing at an open door. In my simplicity, I had thought that this was just one of the onus of proof Amendments which my noble friend is putting forward, but it was clear from the way he put his case that this is not so. Therefore, I hope that the noble and learned Lord will tell us exactly what is the argument for consistency before we part with the Amendment in one way or another.
The LORD CHANCELLOR: My Lords, I confess that I also thought and have assumed that this Amendment was directly interrelated with Amendments Nos. 12 and 33 and that it would enable
18
us to deal with the general question of the onus of proof at one and the same time. I confess that that is the approach I have made to the consideration of Amendment No. 8 and I would think that that is a convenient course. Perhaps the noble Earl, Lord Selkirk, would indicate whether he is, so to speak, taking a stand on a question of principle and distinction between Amendment No. 8 and the others or whether he would not agree that it would be convenient for us to discuss the general principle at one and the same time while taking a decision upon them at the appropriate intervals.
The Earl of SELKIRK: I think that this case is totally different from the others and that the word, "consistency" seems to me to have no bearing on it whatsoever. However, if the noble and learned Lord wants to do so, I have no objection. If he has no argument to put on this, then will be please give me the Amendment?
The LORD CHANCELLOR: My Lords, my proposal in this regard is to leave the Bill as it is. There then will be a consistent provision in the Bill for putting the onus of proof on those who seek to rely on the exclusion term in the contract. If it would be convenient for me at this stage to explain why we should do so, I should be willing to embark on that at this moment. I suggest, with respect, that that is the better course. There is a history to this matter of the duty of the burden of proof in the context of the reasonableness test. The history of the matter is as follows. Perhaps I ought to explain what I have just been reminded about. The Bill as it stands now does not change the law and we see no reason for amendment of the 1967 Act. If I may, I will come back to the general matters I was dealing with. When we considered the question of the burden of proof of reasonableness in Committee, there were three alternatives before us: the Bill as it now is, with the burden of proof on the person who seeks to rely on the exclusion term; the Bill as it was when it was originally introduced, with the burden of proof on the person who seeks to upset the term; or an intermediate alternative, which was to have one burden of proof for consumer cases, and another for cases not

19
involving consumers. That last suggestion, the so-called "split burden", attracted very little support in Committee. I submit that the House should now decide which of the first two alternatives should be applied. This is the view which the noble and learned Lord, Lord Hailsham of Saint Marylebone, took in Committee, and it is a view with which I agree.
The noble and learned Lord suggested in Committee that the right course for the House to pursue would be to decide on this question irrespective of Party politics and upon a free vote, and I agree with that because there is no dogma on any side on this matter. This would be convenient, as there has frankly been a certain amount of shifting of ground over the course of the Parliamentary passage—
The Earl of SELKIRK: My Lords, I do not want to interrupt the noble and learned Lord, but I moved a very limited Amendment. I have not spoken to the other Amendment. This being Report stage, I am inhibited from speaking more than once. I feel slightly embarrassed; I have not moved the Amendment to which the noble and learned Lord refers.
The LORD CHANCELLOR: My Lords, I do not want to embarrass the noble Earl. What I have said in reply to his limited submission on Amendment No. 8 is that the Bill as it stands does not change the law. If I may say so with respect, it is for the noble Earl to indicate why he wants to amend the 1967 Act.
The Earl of SELKIRK: My Lords, I do not want to press this; I have said I do not think that this is all that important except in so far as consistency is concerned. It is curious if the law is not being changed because that is exactly what happened in the other place; it was changed from one side to the other. It was changed from what I regard as the normal, ordinary procedure of law to the procedure which is not normal. If the noble and learned Lord feels that he wants to retain consistency, I must say that, if this is to be regarded as consistency, I object to it. However, I would rather take the argument on the main clause. This particular clause is not any part of
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the report of the Law Commissions of England and Scotland. It is something which is entirely separate and which has been imported into the Act. Therefore, many of the arguments in regard to this Amendment do not apply, though they will apply to the other Amendments. Therefore, I would rather take the argument on the Amendment which comes later than on this one.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, may I, with the leave of the House, make a suggestion? I had thought, and apparently the noble and learned Lord on the Woolsack had thought, that this simply involved the same point as the other Amendments. It was obvious to me from the way in which the Amendment was moved by my noble friend that he does not think that that is so, and that there is a separate point involved in the proposed text affecting the Misrepresentation Act 1967. I wholly agree with my noble friend that it would be much tidier if we decided the question of principle first, and that means postponing the discussion until we come to deal with the other Amendments. But perhaps the noble and learned Lord can tell us that he will look at this between now and Third Reading and, if there is a separate point, perhaps he will write to my noble friend and me indicating what the point is and how he views it. In the meantime, the House would be assisted in its business if my noble friend withdrew his Amendment at this stage without prejudice to what he may want to do on Third Reading.
The LORD CHANCELLOR: My Lords, I am very happy to follow the suggestion that the noble and learned Lord, Lord Hailsham of Saint Marylebone, has made. Indeed, I was about to make it before he so helpfully intervened. I hope that the noble Earl, Lord Selkirk, will be assured that he will not be prejudiced as regards the consideration of this point. If correspondence does not satisfy him, he can return to the matter on Third Reading. I should not want to embarrass him by giving an advance version of the opponent's view of the question of principle, and we look forward to hearing him in due course. In the meantime, if he sees fit to withdraw this Amendment, I shall be happy to proceed as has been suggested.
The Earl of SELKIRK: My Lords, I thank the noble and learned Lord the Lord Chancellor for what he has said. I am happy to withdraw the Amendment on the understanding that it does not prejudice any other decision to which the House may come at a later date. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
The LORD CHANCELLOR: My Lords, Amendment No. 8 is withdrawn. Amendment No. 9 is in the name of the noble Lord, Lord Lyell.
Lord LYELL: My Lords, I shall certainly have something to say when the noble and learned Lord has spoken; but I think that it would be presumptuous for me to adopt the posture of the noble and learned Lord on the Woolsack at this stage in my career!
The LORD CHANCELLOR: My Lords, it is apparent that I have now moved into the "Department of Utter Confusion", from which I hope to escape at the earliest reasonable opportunity!
3.17 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 9:
After Clause 9, insert the following new clause:
Arbitration of differences (consumer dealings)
.—(1) As against a person dealing as consumer, an agreement to refer future differences to arbitration cannot be enforced except—

(a) with his written consent signified after differences have arisen; or

(b) where he has himself had recourse to arbitration in pursuance of the agreement.

(2) Subsection (1) does not affect—

(a) the enforcement of arbitration agreements to which section 1 of the Arbitration Act 1975 applies (that is, arbitration agreements other than "domestic" within the meaning of that section);

(b) the resolution of differences arising under any contract so far as it is, by virtue of section 1(2) and Schedule 1, excluded from the operation of sections 2, 3, 4 or 7.

The noble and learned Lord said: My Lords, this Amendment relates to arbitration and, when we were considering this matter in Committee, I gave notice that we were contemplating the introduction of an Amendment to Clause 12 so that any agreement requiring a consumer
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to submit future differences to arbitration would be unenforceable unless the consumer consented to arbitration. This is the proposal which is now before your Lordships. I asked for comments on the proposal, as indeed did the Minister of State for the Department of Prices and Consumer Protection some weeks ago in another place.
During the debate which we had here, the noble and learned Lords, Lord Hailsham of Saint Marylebone and Lord Denning, spoke warmly in support of arbitration and against the proposal. I acknowledge with respect their learning and experience; but I venture to question whether they are right on this matter. The fact is that the Amendment would not in any way interfere with the process of arbitration as such. It would not make arbitration more difficult to administer; it would not make it less available. Were it to do any of those things, I should not support it. I believe arbitration to be an excellent way of settling a dispute; indeed, in some cases, arbitration is the best way of settling a dispute. The reputation that British arbitration has is due in no small part to the standards set and upheld by the Institute of Arbitrators.
I should also like to make it plain that this Amendment will not in any way interfere with the arbitration machinery in the county courts which has been such a warmly welcomed feature of recent reforms in the administration of justice. What concerns me is not that a consumer may be offered arbitration, but that it might be forced upon him when, for whatever reason it might be, he would rather go to court and have the dispute settled in court. All the Amendment would do is to ensure that, when a dispute arises, a consumer will be free to choose to go to court or use the arbitration service offered.
The Director General of Fair Trading believes that, in many cases, arbitration is preferable to going to law; but, in codes of conduct negotiated by his office, the consumer always has the choice. Once the choice is made to use arbitration, of course the ordinary law on arbitration applies. I hope that your Lordships will agree that the consumer's right to go to court rather than to use arbitration is not something which ought to be taken away from him by a discreet clause in a contract.

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If arbitration is cheaper and easier than going to court in a given case would be, and if a consumer has faith in its impartiality, then he will choose it. But, until the dispute has arisen, he should not be forced to decide which he prefers. This Amendment, I submit, safeguards a fundamental freedom of choice without in any way undermining or interfering with the normal process of arbitration, and I invite your Lordships to accept it.
3.20 p.m.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, let me, first of all, make two points. The first is that this matter is, of course, absolutely non-Party. There is no possibility of whipping on this and if a Division were to take place it would be an absolutely free vote. In the second place, I should disclose an interest in that I am a Fellow of the Institute of Arbitrators, and not just an honorary Fellow but, at any rate theoretically, a practising one who pays a subscription. So I have a direct financial interest although it is a pretty unusual one.
Having said that, I am myself persuaded that this proposal is a retrograde step. May I say just a word by way of introduction. Arbitration has been introduced into this country very slowly and rather hesitantly because of the jealousy of the courts in preserving their jurisdiction and their doctrine that to exclude the jurisdiction of the courts is a contract against public policy. I am speaking, of course, of the law of England. I am not sure that I know exactly what the history of the law is in Scotland.
From 1889 onwards, arbitration has been compulsory in a slightly modified sense. If you agree to refer disputes to arbitration—future disputes or actual disputes—and then bring an action in the courts contrary to your agreement to refer to arbitration, the courts still have jurisdiction to entertain that action and they occasionally do so. But under the provisions of Section 4 of the 1889 Act, which has since been replaced by subsequent Statutes, and ever since, the courts stay the action pending the arbitration as a matter of common practice, because they have found in practice both that arbitration is convenient in many circumstances—which the noble and learned Lord has
24
accepted to be the case—and also that people on the whole should be kept to their bargains, and where bargains are to refer to arbitration not less than in the case of other bargains.
Not only has that been the case, but subsequent commercial practice has been safeguarded expressly in the Amendment put by the noble and learned Lord, but none the less giving an indication of what international opinion is about the subject: that we have entered into a number of international commitments by Convention to make arbitration virtually compulsory where the parties have so agreed, without even the degree of discretion which our own domestic law has retained since 1889. So the tendency has been absolutely consistent, up to and including the moment at which I am speaking, to advance arbitration and to compel parties who have undertaken to submit their disputes, present or future, to arbitration, to abide by their decision.
There is, therefore, no absolute right to take things to court at the moment if you have agreed not to take them to court, and up to this moment that has been considered to be good public policy, either in domestic law, subject to the overall supervision of the court, or in so much of international law as the Conventions apply to, compulsorily and without the option. The noble and learned Lord, by a side wind, is now proposing to reverse the process on a limited class of contract. It is that which I describe as retrograde and retrogressive, since I believe that it is.
This Bill, which has had a fairly wide blessing during its passage through both Houses and particularly in your Lordships' House, does in fact protect consumers and others from the small print of clauses exempting suppliers of goods and services from the consequences of their negligence or breach of statutory duty. That is the purpose of this Bill and there is one clause—Clause 4, I think—which extends to clauses imposing an indemnity upon the user of goods and services so that they are also subject to the reasonableness test. But, at any rate prima facie, the agreement to refer future disputes to arbitration is not within the scope of what has hitherto been supposed to be the purview of this Bill at all. It came in rather later without, I think, adequate consideration from the Govern-

25
ment, and is now on the Report stage in the second of the two Houses through which this Bill must pass, proposed to be inserted by the Lord Chancellor.
I am myself convinced that, although it is a matter of limited importance, this is a retrograde step. As the noble and learned Lord, Lord Denning, said in the Committee stage when this was first outlined in debate to us, we, as a country, give much less respect to arbitration than almost any other modern industrial, commercial country. This proposal would make us even further out of step than we already are. As I say, nobody can pretend there is the slightest scintilla of Party politics about this—I happen to be speaking from the Opposition Front Bench, but I might equally well be speaking from the Cross-Benches or from the Government Benches so far as the value of my argument is concerned—but, as at present advised, I must tell the House that I am opposed to this Amendment.
Viscount HANWORTH: My Lords, I rise to support this Amendment. The noble and learned Lord, Lord Hailsham, has said that he considers it to be a retrograde step but, with all due respect, I do not think he has really made a very strong argument as to why it might be. His argument, if I am correct, is simply to say that we ought to be more in line with Europe. There are a great number of things, of course, which are not in line with Europe—
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, with respect to the noble Viscount, my main argument was that people should be held to their bargains and, if they promise to do something, they should keep their promise unless there is good reason for not holding them to it.
Viscount HANWORTH: My Lords, I was not for one moment disputing that. What is happening, of course, is that they are in a contract, and they really do not have a choice at all. If you are going on a holiday, for example, you are made to sign a form and we all know it is not very easy to cross out certain terms: it is just not accepted.
I, for one, would think that arbitration in many cases is excellent, but we have a very good alternative which in certain cases favours the consumer even more.
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There are 300 county courts which are able to operate the small claims procedure, and in certain cases that is cheaper. Moreover, it may be that arbitration occurs at some place far more distant than the county court would be, and there are cases of arbitration where there has to be documentary evidence. We all know there are a number of people who are not so good on paper, whereas if you go along to the county court you can get help with your case. You do not have to rely solely on the documents you produce. So what I am saying is that this Amendment is right. It leaves a choice to the consumer. I think that that is common sense and t he way that it ought to be.
Lord DARLING of HILLSBOROUGH: My Lords, I too should like to support the new clause. I agree with the noble and learned Lord, Lord Hailsham, that it would have been far better if there had been no reference to arbitration in the Bill. However, now that the reference to arbitration is in, I think we must look the facts in the face.
The new clause refers to persons dealing as consumers. In my view all the noble and learned Lord's argument would rightly be directed at an arbitration clause in a contract where the contract was between two traders or two manufacturers, hut not between manufacturers, traders and consumers. Many of the arbitration clauses which consumers sign—as my noble friend has just said—without fully realising the import of the arbitration clause, are denying those consumers the right kind of arbitration. They are accepting terms of arbitration which are, in fact, laid down for them by the traders' organisations. They themselves have had no part at all in drawing up the arbitration contract. In these circumstances, as the reference to arbitration is in the Bill I think that, in all fairness to the consumers and to the general public, it should be made perfectly clear that they have a right to refuse the arbitration terms that are laid down, if they wish, and go to the county court.
The argument that has just been put forward about convenience is most important. There are about 300 county courts in this country. I speak only for England and Wales again, but very few people are far away from a county court. Most of the arbitration cases that crop

27
up in implied contracts between a trader and a customer involve the customer, if the matter goes to arbitration, in travelling to London, getting documentary evidence and doing a great deal of hard work without the help that he ought to receive—in cases like this, the kind of help that he receives from the registrar of a county court. Therefore, I sincerely hope in justice and equity that the House will agree to this new clause.
Lord HAWKE: My Lords, I support my noble friend as regards this matter. In the distant past I used to be involved in selling cargoes of cotton and wool et cetera and where there was an arbitration clause one naturally expected, if there were a dispute, to go to arbitration. Any other course, such as this Amendment would provide, would have enabled a slippery customer to avoid payment while a long protracted law suit took place. All these big commercial contracts on commodities and so on are done on extremely fine margins, and on the expectation that one will be paid immediately or else receive very quick justice from arbitrators who always know the subject. Quite frankly, in matters of that kind I should much prefer to put myself in the hands of arbitrators than the courts, because I think that one would be more certain to get justice as it is known to be done in the particular trade in which one is engaged.
Lord DRUMALBYN: My Lords, I certainly agree with what my noble friend Lord Hawke has said in the realm of business. However, the problem is that a consumer will see a reference to arbitration in a contract; he will not really know what it entails or involves, but will put his name to it. In these circumstances, it seems to me that, certainly unless the meaning of arbitration is spelt out in the contract, the Amendment which the noble and learned Lord has moved should apply. However, it may be that there should be an exception where exactly what is meant by arbitration is spelt out in the contract.
Lord JACQUES: My Lords, I should like to follow up what the noble Lord, Lord Drumalbyn, has said. The position is quite different between when it is a consumer contract and when it is a
28
commercial contract. The Amendment deals only with consumer contracts. Let us consider for the moment its relevance to the Bill. The Bill is concerned with the small print terms which have reference to future liabilities such as negligence or breach of contract. One type of term found in small print is that all disputes in the future will be referred to arbitration. If it is relevant for the Bill to deal with the terms which are concerned with negligence and with breach, it is relevant for the Bill to deal with the terms that force upon the consumer arbitration as regards future disputes. The consumer view—it is pretty unanimous among the consumer organisations—is that at the time when the dispute arises the consumer should have the choice whether he goes to arbitration or to the court and should not have forced upon him something which has been in small print in a notice or a contract.
The LORD CHANCELLOR: My Lords, I think that it may well have been my fault that, in moving the Amendment, I did not explain sufficiently clearly its limited scope. It is limited, as has been said, to consumer agreements. It reads:
"As against a person dealing as consumer, an agreement to refer future differences to arbitration cannot be enforced except—

(a) with his written consent signified after differences have arisen; or

(b) where he has himself had recourse to arbitration in pursuance of the agreement".

I respectfully agree with the realistic way in which the noble Lord, Lord Drumalbyn, viewed the position of the consumer in this matter. In fact, for the consumer it would be in most cases a great advantage to go by way of arbitration in the county court, but with the right, if he wishes to do so, of course, to go to arbitration without the court arrangements.
The advantage of going by way of arbitration to the county court would be, as has been pointed out by my noble friend Lord Darling and, indeed, by the noble Viscount, Lord Hanworth, the excellent procedures which now exist for arbitration in the county court and which enable these disputes to be disposed of without the incurring of legal costs. If it went into ordinary county court proceedings outwith arbitration—strictly speaking, under the court arrangements—the consumer might well be entitled to

29
legal aid to which he would not be entitled in arbitration proceedings. He would also be entitled to the economies of scales of costs in the county courts, which are relatively cheap.
The emphasis of the Bill, frankly, is to help and protect the consumer. I should have thought that it is reasonable that he should be able to decide not at the time of entering into the contract, when the arbitration provision itself may be part of the small print, but when a dispute or difference has arisen between him and the supplier. At that stage he should be free to elect what he wants to do. That I regard as a fundamental principle.
Contrary to the view of the noble and learned Lord, Lord Hailsham, I do not regard this as a retrograde step. On the contrary, it would be in keeping with the whole trend of the use of arbitration through, and under the aegis of, the courts which have already helped thousands of people and which I suspect the noble and learned Lord himself would wish to encourage. I hope that, in the light of this explanation and the speeches that have been made, the noble Lord, Lord Hawke, will now be satisfied that it does not except his worry about commercial contracts at all because it does not affect them. I hope that the noble and learned Lord, Lord Hailsham, in view of the weight of opinion —or at least the quantum of opinion—will be disposed to withdraw this Amendment.
Lord McCLUSKEY: Before the noble and learned Lord, Lord Hailsham, replies, I should like to point out that I think that there is no separate Scottish point. Noble Lords will see that Amendment No. 24, to which we shall come, introduces for Scotland a similar new clause. I shall be moving that Amendment formally when we come to it. However, perhaps if we look at its wording, it will help to make the points which certain noble Lords have made. It refers to "an agreement to refer future differences to arbitration". The point of timing is, on the merits, surely all-important. When two commercial enterprises enter into a contract containing an arbitration clause, they both contemplate that in the future differences may arise, because that is what experience tells them. So they provide for a method of settling them, and they do it with their eyes open. But when a person who is simply a
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consumer enters into some kind of deal, he is not thinking of how things go wrong. He just wants to take his goods away, or to have the service. Therefore, there is a justification for drawing this distinction, and I support it by reference to the language in the Scottish new clause.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, by leave of the House, it will probably save time if I say a couple of words now. I still am completely unconvinced about this, but there are overwhelming arguments why I should not divide the House about it. I am not saying a word against the county court arbitration system; indeed, I think that the noble and learned Lord on the Woolsack might have remembered that I invented it. All the same, I think that this is a retrograde step, but I recognise that a very large number of Peers might come into the Chamber and vote with me if I were to divide the House, and the preponderance of speeches in the Chamber has been on the side of the Government, even if I discount the two Ministers who have spoken. In those circumstances, and having made my protest articulate, I do not propose to divide the House against the noble and learned Lord.
The LORD CHANCELLOR: My Lords, I apologise to the noble and learned Lord for not acknowledging the paternity of the arbitration court procedure. He founded it, and he is glad to know that his offspring is doing very well.
On Question, Amendment agreed to.
Clause 10 [The "reasonableness" test]:
3.42 p.m.
Lord LYELL Lord LYELL moved Amendment No. 10:
Page 5, line 34, at end insert ("only").
The noble Lord said: My Lords, it may be to the convenience of the House if, with this Amendment, I speak to Amendment No. 30 to Clause 22 which covers the analogous Scottish point. The purpose of the two Amendments is to attempt to remove an inconsistency in the Bill. Clause 22(1) applies to Scotland, and provides that in applying the test of reasonableness some

31
"regard shall be had only to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties to the contract at the time the contract was made".
Clause 10(1) applies to England and Wales, and omits the word "only". The reason for raising these two Amendments again is to seek a full explanation from the Government. My Lords, I beg to move.
The LORD CHANCELLOR: My Lords, this Amendment is, in the view of the sponsors and of myself, unnecessary and, I submit with respect, undesirable. It is true that, on first sight, the formulations of the test of reasonableness in Parts I and II appear to be inconsistent, but they are not. In no part of the United Kingdom will the courts, in applying the reasonableness test, be permitted to have regard to circumstances other than those mentioned in Clause 10(1) and Clause 22(1).
For England, Wales and Northern Ireland, the circumstances to which regard shall be had are expressed as part of the test. Clause 10(1) sets out the requirement of reasonableness. The requirement is,
"that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made".
That is the test and, obviously, the court is not permitted to have regard to any other circumstances.
The Scottish provisions are formulated somewhat differently. The test whether it was fair and reasonable to incorporate the term is set out in Clauses 15, 16, 17, 19 and 21. Clause 22 provides a general explanatory provision, and provides that in determining whether the incorporation of the term was fair or reasonable regard shall be had only to certain circumstances. Noble Lords may well agree that the word "only" is necessary there. If Amendment No. 30, to which the noble Lord has already spoken, were accepted and the word "only" was deleted, it could be argued that it was open to the courts to have regard to other circumstances. To sum up, I submit that the word "only" is unnecessary in Clause 10, but is essential in the different context
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of Clause 22. In those circumstances, I hope that the noble Lord will not press his Amendment.
Lord LYELL: My Lords, I should like to thank the noble and learned Lord for his very full explanation of my semantic point. I have understood about nine-tenths of what the noble and learned Lord said, and I am sure that he and the House will be happy to allow me to study the remaining portion of what he said at my leisure, and not at the leisure of the House. My Lords, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
3.47 p.m.
Lord HAILSHAM of SAINT MARYLEBONE Lord HAILSHAM of SAINT MARYLEBONE moved Amendment No. 11:
Page 6, line 5, at end insert—
("(3A) Where by reference to a contract term or notice a person seeks to restrict liability to a specified sum of money, and the question arises (under this or any other Act) whether the term or notice satisfies the requirement of reasonableness, regard shall be had in particular (but without prejudice to subsection (2) above in the case of contract terms) to

(a) the resources which he could expect to be available to him for the purpose of meeting the liability should it arise; and

(b) how far it was open to him to cover himself by insurance.")

The noble and learned Lord said: My Lords, I think I can propose this rather technical but important Amendment in rather few terms, because it only takes up a controversy which we had on Second Reading and pursued at rather greater length in Committee. If the House will forgive me for referring back to it, both the noble and learned Lord, Lord Denning, and I were concerned on Second Reading to deal with contracts, possibly by individuals or partnerships, where there was no possibility of insurance, and where, without going bankrupt, it might well be beyond the capacity of any single person without limited liability to meet the obligations which might arise.
I proposed an Amendment in Committee which would have dealt with that by way of adding to the guidelines in the Schedule. This was technically defective, for reasons which we discussed in Committee; so I withdrew the Amendment, the noble and learned Lord proving—I will not say unexpectedly or unwontedly

33
—particularly co-operative and sympathetic to the views behind the Amendment which I was then proposing. Since then, I have taken a certain amount of advice and, in particular, I should like to give a word of thanks to the noble and learned Lord himself and his staff for the assistance which they have given to me. This is the best that I can do. The draftsmanship is not mine, and that I would add as a word of commendation of it. I hope that, having pursued the matter thus far, we have now come near to a point where we are going to put something on the Statute Book which will be an improvement. My Lords, I beg to move.
Lord JACQUES: My Lords, we are grateful to the noble and learned Lord for pursuing this matter which, as he said, was raised by himself and the noble and learned Lord, Lord Denning, on Second Reading. I am happy to tell the House that the Amendment proposed by the noble and learned Lord has the support of both the sponsor and the Government, and I commend it to the House.
On Question, Amendment agreed to.
3.50 p.m.
The Earl of SELKIRK The Earl of SELKIRK moved Amendment No. 12:
Page 6, line 6, leave out subsection (4).
The noble Earl said: My Lords, the purpose of this Amendment is to restore the onus of proof to those who challenge as opposed to those who are challenged, as it at present stands in subsection (4) of Clause 10. Secondly, the point which has been made frequently is that there should be a division between consumers and business. As the noble and learned Lord the Lord Chancellor has told us, this point has not been accepted. Therefore, what is now proposed in the Bill will affect both consumers and all business interests, and it is the latter to which I want in particular to draw attention. What is curious is that no less a person than the Promoter of the Bill elsewhere and two Ministers have suggested that the issue should be further considered in your Lordships' House—that is, Mr. Fraser, the Minister of State, Department of Prices and Consumer Protection, and the Lord Advocate.
To go back, it is worth telling your Lordships that the Royal Commission
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were set the task of seeing how they could check exemption clauses. This is simply a label of convenience rather than any precise designation. It is all very well for us to think of a man who buys a ticket for a steamer, and the company repudiate any liability for damage or injury, whether or not it is caused by the negligence of their staff. This can be so easily struck at by the Bill that in a sense it is quite irrelevant to the Amendment. The Law Commission examined the position and how best they could control this kind of activity. They thought of imposing a total ban. However, they said that this would be too rigid. The Law Commission also considered going to the Restrictive Practices Court, but they thought that that would not work, either. They thought of prior validation by the Director General of Fair Trading and they thought, too, of giving very wide powers to Departments to lay down specific regulations. They discounted all those courses in favour of the principle of the Bill as we now have it—that is to say, a judicial decision regarding the reasonableness and fairness of the arrangements—but they were deeply concerned with several propositions which come into the question.
The first is interference with the freedom of contract, a matter of enormous importance to business in general. Secondly, on account of the uncertainty of the law there would certainly be marginally different opinions. Thirdly, there was the unreliability of contracts. The Law Commission had to balance these factors against the relative bargaining strength of the different parties, which, if one thinks about it, requires a very delicate balance, one which nobody should hurriedly conclude he can hold. Nobody has gone into this problem more thoroughly than the two Law Commissions who worked in very close concord, except for two or three rather minor points. I am going to read their conclusions which appear in their report at page 66:
"Both Commissions concur in recommending that a reasonable test is the appropriate form of control in these cases, and it is for the party challenging the exemption clause to show that it is not fair and reasonable".
This is a decision made by the parties who have examined the problem more closely than anybody else in the country. I believe I can say that in Scotland they are men who are held in the highest

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respect. I cannot speak of England, because I do not know, but I believe that exactly the same remark can be made about them.
Let us consider for a moment what happened. First, there was a private Bill, but there was no Second Reading debate. There was a short discussion in Committee which lasted just over 15 minutes. This discussion was largely based on the totally false assumption that they were speaking about consumer contracts. This is quite untrue; they were speaking about a wide range of contracts except those excluded by Schedule 1. A Division was taken, and if one adds up those voting on both sides they amounted to rather less than two figures. The Division put the onus of proof on to the party challenged to justify his position. After that, the alterations were made to the Bill, including the one to which I have just referred, purely on the grounds of consistency, without any discussion taking place.
I think that the decision to put the onus of proof on to the party who is challenged is a fundamentally dangerous principle so far as those who are engaged in business are concerned. Instead of a contract standing until it is challenged, no contract stands until it has been upheld by a judicial decision. This seems to me to place a fundamental difficulty in the way of assurance regarding the world of contract, with minor exceptions which may or may not arise.
Noble Lords may say that this applies to exemption clauses. An exemption clause is a condition. Almost anything might be interpreted as an exemption clause. I will give one or two examples, because I do not believe that anybody knows quite how far this Bill will penetrate, and it is for that reason that it should be regarded with considerable caution. Perhaps I may give indemnity as an instance. If a person discharges an indemnity by means of an extrajudicial settlement, that settlement can be challenged in the courts. At least, that is my interpretation, although the noble Lord may correct me if I am wrong. It means that if anybody enters into an agreement to pay damages, that agreement can be overturned by the court. I imagine that the result will be that there will be no extra-judicial settlements and
36
that delay and public expenditure will be involved in going to the courts. I believe that this is quite dangerous.
I am thinking also about continuing contracts. It is very common for us all to have continuing contracts for deliveries, on condition that the price will go up, if necessary. We all know only too well that that is exactly what is happening. That provision is struck out of the Bill by Clause 3. Anybody can challenge it for a number of different reasons, and if he refuses to pay the bill he will have to be brought before the court. This will happen very often, simply as a means of evading the contract as a whole. Clauses providing for liquidate damage can also be struck out because the damages may not be considered to be enough. These are just some of the problems and I have no doubt that, using their imagination, most noble Lords can think of a range of others which quite rightly could be mentioned.
For that reason, it is a matter of principle running through the whole range of the law of contract whether this is the right way to approach it. The law respects small people just as it respects large people. It would undoubtedly encourage litigation which I should have thought should in every way be discouraged. I am putting forward the point of view of business and contracts. I do not believe that changing the onus of proof will damage the consumer. I can see no reason why it should. There could be no difficulty in the case of the blatant example I gave earlier, no matter where the onus of proof lay. I do not believe that it would create any great difficulty. They would have no difficulty over papers. Certainly they can be provided very easily in the Scottish courts. In the end, what will happen is that there will be insurance against this liability and, directly or indirectly, the premiums will be charged to the consumer. I suggest, therefore, that very great care needs to be exercised over changing a long established procedure in the courts without adequate reasons being put forward.
So far as I know, the Law Officers in the other place certainly did not think that this would be a good change to make. May I add that on the whole we

37
are a consumer community. Probably that goes to the root of some of our present economic problems. This is placing an additional burden on those who produce and those who distribute goods in this country, and if that happens it is the consumer who will suffer in the end. We should be very rash if we added to the work of those who are involved in the productive, executive and economic work of this country without putting forward any convincing arguments. I believe that the normal procedure is right, and that is the procedure supported by both of the Law Commissions. I believe that we go against that procedure at our peril. I beg to move.
4 p.m.
Lord JACQUES: My Lords, I should like to put the layman's point of view on this question. If the consumer suffers damage it is his responsibility to show that such damage is due to negligence or some other similar act on the part of the other party to the contract. Quite properly it is his responsibility, so that the principal onus of proof rests upon the consumer. But once he has proved his point, if the other party to the contract comes along and says, "But I have a fair and reasonable exemption clause," it is surely up to that other party to show that his clause is fair and reasonable, and it is unreasonable to expect the consumer to have to show that that exemption clause is not fair and not reasonable. It is unfair because the other party knows exactly why he put the exemption clause into the contract. He knows the actual circumstances, he knows the facts about the case; he also knows the technical arguments behind the need for an exemption clause. To throw that burden upon the consumer, who cannot be familiar with those technical circumstances, is completely unreasonable and I hope the House will reject this Amendment.
Lord AIREDALE: My Lords, I should like to support the noble Lord, Lord Jacques, in what he has said. I think it is useful to look briefly at the Long Title to this Bill. It is
"An Act to impose … limits on the extent to which … civil liability … can be avoided …"
In other words, it is a Bill to impose limits on the extent to which one can set
38
oneself outside the reach of the law. If you seek to say: "In this instance I can properly set myself outside the reach of the law because what I am doing is reasonable," it seems right that the burden should be upon you to assert and to prove that what you are doing is reasonable, in order thereby to set yourself outside the reach of the law.
Baroness PHILLIPS: My Lords, I too should like to support the noble Lord, Lord Jacques. While I appreciate that this is a highly technical Bill, basically it is a consumer Bill. I am sorry to disappoint the noble Earl, Lord Selkirk, but the people who are behind this were seeking to put right something which has caused a lot of discomfort—I put it no higher than that. To give an instance, yesterday I was at a swimming pool where it is obligatory to hand over all personal possessions in a basket and they are then placed in the care of a cloakroom attendant. A very large notice tells you that the authority is absolved from all responsibility for fire, loss, acts of God or anything else, so if your clothes and possessions disappear there is nothing you can do about it. I cannot see why, in that instance, the consumer should be asked to prove that this is an unreasonable exemption clause, and I suspect that this is the kind of action that will be taken.
Lord BOYD-CARPENTER: My Lords, the noble Lord, Lord Jacques, did not do complete justice to the argument put by the noble Earl, Lord Selkirk. It will be in the recollection of the House that the noble Lord addressed himself solely to the question of the consumer, but as I understand the position the changing of the onus of proof applies not only to the strict consumer type of case but also to the ordinary business deal. It may well be your Lordships will feel that different considerations—if it be technically possible so to draft, and I stress that—should apply in those two cases. But with great respect to the noble Lord, Lord Jacques, he cannot just brush aside my noble friend's argument that this reversal of the normal elements of proof in strictly commercial and business cases at least requires some fairly solid justification.
With great respect to those who have spoken, I have not heard such justification. Therefore, as one who has been listening

39
to this debate and who came in with a wholly open mind, my disposition now, in the absence of any real evidence to the contrary, is to support my noble friend, who bases himself on the ordinary operation of the law that those who assert something have the onus of proof, and he is entitled to have a massive argument produced to show that in this particular case, because of the purposes of this Bill, that view is wrong. So far as the business type of case is concerned we have not had a scrap of evidence. If the matter remains that way and if my noble friend wishes to divide the House, I shall be with him in the Lobby.
Lord JACQUES: My Lords, before the noble Lord sits down I should like to point out that if there is a Division and he supports the Amendment he will be voting against the conception which I put to the House in regard to the consumer.
Lord BOYD-CARPENTER: My Lords, with great respect to the noble Lord, that is absolutely wrong. The noble Lord having failed to give any argument whatever about the commercial case, cannot really get out of it by then saying that those who take a different view from him are not supporting the consumer. It really is up to the noble Lord to answer his part of the case and not to indulge in that sort of argument.
Lord MORRIS of BORTH-Y-GEST: My Lords, I find myself very much in agreement with all that the noble Lord, Lord Jacques, has said. It is useful to approach this matter by remembering the situation with which we are dealing. We are dealing with the situation of somebody who is shown to have been negligent; the situation in which somebody is shown to have broken his contract. Also, in so far as it is relevant to refer to the misrepresentation point, we are dealing with somebody who is shown to have been guilty of a misrepresentation.
It seems to me that we are invited by the Bill to make new laws, but we either welcome the general proposal of the law or we take a different view. We could take the view, "Let freedom of contract never suffer any interference". I do not myself take that view. It seems to me that we are giving further validity to a new
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principle which has crept into the laws enacted by Parliament within the last few years, if somebody wants to excuse himself for his own negligence, if somebody wants to avoid the consequences of his own breach of contract, if somebody has been guilty of a misrepresentation and he says, "Oh, but I have put a clause in my contract saying that I am not to be liable", as I understand it, the principle of this Bill is that that should be allowed only if it is reasonable.
Where should the onus of proof lie? While seeing with admiration the persuasiveness of my noble friend Lord Selkirk, for myself my approach is that one almost follows the acceptance of the principle of this Bill. In the Sale of Goods Act in 1893 there were certain implied terms. If the noble and learned Lord on the Woolsack is going to speak in this debate, I hope he will correct anything that I say that may not be entirely correct. We had the principle in the Act of 1893 that there were certain implied terms. We have lived with that through all the years since 1893, and we have been very happy to do so. They were implied terms of merchantability and quality, fitness for the purpose.
Then, as I follow the argument, after an earlier report from the Law Commission, your Lordships and another place passed the Act in 1973 which somewhat altered the law. Although there had been a provision in the original Bill of Sales Act that it would be possible to contract out of the Act, I think Parliament in 1973 accepted the new principle that there are certain clauses from which people should not be allowed to escape. So in the 1973 Act it was said that a term exempting from liability, under Section 12, was to be void. That is very strong. A term exempting from liability, under Sections 13, 14 and 15, was to be void in the case of a consumer:
"… and shall, in any other case, not be enforceable to the extent that it is shown that it would not be fair or reasonable to allow reliance on the term".
There might have been a question, was it a sale to a consumer; and a subsection in that Act said:
"The onus of proving that a sale falls to be treated for the purposes of this section as not being a consumer sale shall lie on the party so contending".
This also follows very much the line of reasoning that was adopted when the

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Misrepresentation Act was passed. Originally there was no redress if misrepresentation had been innocent. Fraud, of course, was always heavily condemned by any court—there was always liability for fraud—but an innocent misrepresentation gave rise to great difficulty. The 1967 Act removed certain bars to rescission for innocent misrepresentation, and in sonic circumstances, where there had been a contract after a misrepresentation, enabled damages to be given for innocent misrepresentation. Then, by Section 3, it was enacted in these terms:
"If any agreement (whether made before or after the commencement of this Act) contains a provision which would exclude or restrict—

(a) any liability to which a party to a contract may be subject by reason of any misrepresentation made by him before the contract was made; or

(b) any remedy available to another party to the contract by reason of such a misrepresentation;

that provision shall be of no effect except to the extent (if any), that, in any proceedings arising out of the contract, the court or arbitrator may allow reliance on it as being fair and reasonable in the circumstances of the case".
So have we not for some years recognised that people should not be allowed to have complete freedom of contract, for if there is complete freedom of contract, even apart from fraud, one party to the contract is very often at a disadvantage. So we have introduced this principle of accepting what is fair and reasonable.
Your Lordships might say. "No, do not let us interfere with freedom of contract at all". But once we accept that, I for my part would feel it a natural step to say that it is to be justified by the party who comes to court and says, "Look, I have got a term here saying that I am not liable, though I have been negligent" or, "I have got a term here saying that I am not liable, though I have broken my contract"; or somebody may say, "Though I was guilty of misrepresentation, I have excluded liability". I find myself in complete agreement with the argument put by the noble Lord, Lord Jacques, in support of that point of view. Those who would introduce this exemption clause know why they have introduced it; it must be the easiest thing in the world for them to justify it. Is not that the fair way round, for them to justify it? They know the trade conditions. If it is something that is quite clearly fair and reasonable, what an easy task for them
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to show it is so. They have all the ammunition. They know the approach. I, for my part, would feel that it is a reasonable and natural step to say that it is for those who are seeking to rely upon these exemption clauses and who put them into the contract or arrangement to show that they have only done what is fair and reasonable.
The LORD CHANCELLOR: My Lords, the noble and learned Lord invited me to correct him if he was wrong on any matter of law or reference to any Statute. It would indeed be a very bold Lord Chancellor who would venture to do that. It used to be said in the Temple that the judicial decisions of your Lordships' House were infallible because they were final, but in the case of the decisions of the noble and learned Lord Lord Morris of Borth-y-Gest, it was said they were final because they were infallible.
I have given very careful thought to this matter since we discussed it in Committee. We are very grateful to the noble Earl, Lord Selkirk, for raising the issues again. They are not by any means simple, and I certainly do not take a dogmatic view. But having given it further thought, and having heard that explanation given, if I may so, in limpid clarity by the noble and learned Lord who has just spoken, I have come down in opposition to the proposal of the noble Earl, Lord Selkirk.
Your Lordships may like to know that since the Committee stage I sought the views of the two Law Commissions. The Law Commission for England and Wales saw much force in the arguments in another place against the burden of proof in the Bill as it was introduced originally in relation to Clause 2, the burden of proof resting on the person who seeks to upset the reasonableness term, at least where the victim was a consumer. I venture to think this is the area of difficulty: whether it should be extended across the board to the business contract as well. In their view, in the consumer context good arguments have been put forward for placing the burden on the person who relies upon the exemption clause. They took the view, and we have just heard it expressed, that the necessary technical and business information will be available to the person relying upon

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the exemption clause, the supplier, and the other party will be unable to challenge it.
This, and the general point that there should be a presumption against the exclusion or restriction of liability as against consumers, led them to suggest that the so-called "split" burden, which has not found favour in your Lordships' House, might be the solution. That, I think, would create a great deal of confusion, and I do not, frankly, think it would be practicable. The view of the Law Commission for England and Wales was that if it was impracticable, as I think the House may well think to be the case, the burden of proof should be placed in all cases on the party relying on the term. They found the analogy of the Misrepresentation Act 1967, and, earlier, the Railway and Canal Traffic Act 1854, to be helpful in this context.
It is right that I should say that the Scottish Law Commission, on the other hand, suggest that the decisions in another place should be reversed, and they have not shifted their ground. They stress that the Bill was put forward on the basis that a clause is valid until it is challenged; reversal of that, as in the Bill as it now stands, might, they thought, lead to an increase in litigation and in uncertainty. If exemption clauses do not have any effect unless they are brought to life in the courts, they thought, parties may refuse to comply with their contracts pending determination of the questions they wish to raise. They thought that the proponent of the term might be put in an unfair position in that he would not know what case he had to meet. They thought that the wide meaning to be given to an exemption clause might increase uncertainty over a wide range of different terms in contracts. Therefore, their conclusion was that the Bill should revert to its original form. I thought it right to inform the House of the up-to-date views of the Law Commissions upon this matter but, as I say, I have given great thought to it since the Committee stage and I conclude in supporting the view that the Bill should not be amended.
But I wonder whether it is primarily a legal issue after all. As I see it—and I think it has been put by the noble Lord, Lord Airedale, in this way—the funda-
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mental question is really whether our sympathies are to lie with the person who seeks to upset his own agreement or with the person who seeks—as the noble and learned Lord, Lord Denning, put it in Committee—to exclude the ordinary liability imposed by law. The noble and learned Lord, Lord Morris of Borth-y-Gest, put it that way just now. In the context of the Bill—which is carefully drawn so as to confer benefits only on persons who are economically inferior or who have suffered as the result of negligent conduct or disregard of basic contractual rights—I come down on the side of casting the burden on the person who is seeking to exclude the ordinary law. At the end of the day, I do not think that there is much dispute about the consumer's position in this context.
I believe that the case for the Bill in the context of negligence is very strong, and it would seem rather odd that a Bill designed in part to remedy the deficiencies in the law which have damaged consumers should cast a burden of proof upon them. As I do not regard the point as being of first importance in the business context, because businessmen are usually sensible about sorting out their differences without recourse to court proceedings, I think that this is an occasion where the arguments in favour of protection across the board should determine the point for the Bill as a whole.
The main argument which has been made against what I contend to be the better course is that, as it stands, the Bill will introduce a great deal of uncertainty. I doubt whether in practice that will arise. The experience that has followed the Misrepresentation Act 1967, where the same onus as is now proposed in the Bill applies, does, I think bear that out—short though the experience since then has been. Accordingly, I do not think that the uncertainty factor is a substantial one in the context of where the burden of proof is placed. The main significance of the burden of proof question is with regard to the pleading part. I am inclined to agree with the noble Earl, Lord Selkirk, about this; that is, that in the outcome of a case it may not be of determining influence. However, on the whole, my view on this matter—and, of course, it would be a matter for a free vote—is that, if the

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noble Earl presses his Amendment, it should be opposed.
Lord ROBBINS: My Lords, I should greatly reproach myself if I was thought to be opposing a measure designed in the interests of consumers. I freely admit that, in that respect, it may well be—as is apparently admitted by the Law Commissions of England and Wales—that the law needs amendment. But, with very great respect, and speaking as an amateur, I do not think that the noble and learned Lord the Lord Chancellor or the noble and learned Lord, Lord Morris of Borth-y-Gest, have completely met the arguments put forward by the noble Earl, Lord Selkirk.
I believe that, if the clause as at present drafted is passed, a great element of uncertainty as regards business transactions will necessarily be introduced. I believe that, as a consequence of that, there will be a great extension of insurance against such contingencies, and in that event the consumer will definitely suffer. Therefore, I humbly submit that there is a case for further consideration as to whether a distinction cannot be drawn between the ordinary course of business contracts, which I think can be left to take care of themselves within the framework of the law as it at present exists, and such cases as the noble Baroness, Lady Phillips, mentioned, where the unsuspecting consumer may easily be entrapped by notices and representations which obviously are not designed to carry the weight in the mind of the consumer which they should.
4.26 p.m.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I rise only to confirm what the noble and learned Lord the Lord Chancellor has said about the character of the vote, if there is to be a vote. It will be entirely free. It is very important that I should emphasise that, because, of course, the majority of persons inside the Chamber—and possibly outside the Chamber too—are members of my own Party. Therefore, it is absolutely vital that I should underline the fact that any vote that is taken should simply be a question of judgment as to the party upon whom the burden of proof in the se cases should rest. It is not at all an easy question to answer. Any attempt to
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answer it in a facile or superficial way is really doomed to failure.
Perhaps I could recall the history of the Bill. It has now been, I think, universally accepted that attempts by traders and suppliers to exempt themselves from the consequences of negligence, breach of contract—that is, breach of the terms of a contract which would otherwise be implied if nothing was said—or breach of statutory duty where that can be contracted out, have been a considerable abuse. The object of this legislation is to get rid of the abuse in the interests of those who receive goods and services, whether as consumers or sometimes in other capacities. There, I think, we were all at one.
But the particular road by which both Law Commissions have chosen to achieve this end is by imposing a test of "reasonableness" and not the various other alternatives which at some other stage of the debate were advanced for their consideration. On Second Reading, I expressed considerable caution about this test of "reasonableness", because the difficulty about the burden of proof arises not from the requirement that those who wish to escape the ordinary implications of law should have to prove the route by which they escape those implications. I believe that it arises from the difficulty of choosing "reasonableness" as the test and then saying to the person who wishes to escape from the ordinary implications of law, "You have got to prove that what you were doing is reasonable" when, as a matter of fact, that is one of the most difficult things to prove about anything in any circumstances that one cares to enumerate. That is where the legal difficulty is involved.
At that stage, both the Law Commissions and the law officers were in favour of the more cautious line of approach. They were beaten out of the field by the Conservative Party in the House of Commons in a very thinly represented Committee led by Mrs. Oppenheim and supported by the Labour Members of the Committee, so that the law officers received a defeat. This encounter has apparently led to a complete change of heart on the part of the Government, of the sponsors of the Bill and of the English Law Commission, although the Scots, with their character-

47
istic pertinacity, have continued to defend their corner. That is something one can only admire.
In this House the balance of legal talent has undoubtedly been with the Government in their new armour as the gallant protectors of the consumer and not with the Government in their old armour as the protectors of the sanctity of contract. The noble and learned Lord, Lord Denning, in an earlier debate, and the noble and learned Lord, Lord Morris of Borth-y-Gest, in the present debate, in a magnificent piece of legal exposition, have come down on the other side. Thus, the legal balance has rather shifted in favour of the sponsors of the Bill in their present stance.
I am not going to give a conclusive view because, if I began to do so—or even voted in any Division that there might be—I should be accused of departing from the absolute freedom of the Division, which I am particularly anxious to safeguard at the present time. But I would ask those who are so enthusiastic about the Bill as it now stands to bear in mind very carefully what the noble Lord, Lord Robbins, was saying, because, at the end of the day, it is a commercial, not a legal judgment that has to be made.
What are the interests of the consumer? Of course, if somebody has a suit which does not fit, his interest is to rely upon the implied term as to fitness, merchantability and the particular use to which the suit is to be put. The well-known articles of the Sale of Goods Act—which the noble and learned Lord, Lord Morris, inadvertently referred to as the Bill of Sales Act—cover the interest of the consumer in that type of case. But the interest of consumers in any given case is rather more difficult to define. It is that they should have a supply of goods or services at a reasonable price and in sufficient quantities. If the fact be, as I think it is, that, over the wide range to which this Bill will apply, the wise supplier of goods and services will insure against whatever liability there may be under the Bill—and that that will be the commercial reality in the vast majority of cases—we are really asking whether it is in the interests of consumers to give compensation by way of litigation in cases where they have a just complaint of negligence or breach of contract. Alternatively, we are asking whether it is in the interests of
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consumers to get a supply of goods at a slightly better price, because, of course, if the risk is one which will in fact be insured against, the injured consumer will be protected by the Bill but the premium will be passed on to the consumer in the form of a heightened price. There is no question in my mind that that is the commercial reality we are discussing.
Lord JACQUES: My Lords, would the noble and learned Lord not agree that that is fundamental to the whole Bill and not just to this Amendment?
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I do not think that it is fundamental to the whole Bill rather than just to this Amendment, although I would agree with the noble Lord, Lord Jacques, that it was very much in my mind to make the point on Second Reading that this was a factor that ought to be taken into account. It seems to me that this clause is precisely the point which may be the critical factor, and that is not true of the Bill as a whole.
I can only leave the case with the belief that those who have listened to this interesting debate should come to a conclusion. The matter was not adequately discussed in the Commons. The Commons certainly did not have the advantage which we have had in the course of our successive debates of listening to the speeches in this House on the subject. It only remains, if my noble friend Lord Selkirk pushes this to a Division, for the decision to be taken in accordance with the ordinary procedures of Parliament, with the provision that, so far as this Party and, I believe, the Government are concerned, the vote is an absolutely free one. I have not tried, and I shall not try, to make up other noble Lords' minds for them in what I believe to be a difficult but important decision.
Lord McCLUSKEY: My Lords, may I rise to my feet because the matter is entirely free? I am in a difficult position in that, if I say which way I would vote, I shall differ either from the Scottish Law Commission or from my noble and learned friend the Lord Chancellor. Let me try to suggest that the matter is of less importance than the debate has suggested. What is at issue is not sanctity of contract

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at all. Any of the contracts to which the Bill applies is at risk if it contains a clause which the court may regard as unfair and unreasonable. To that extent, a bad contract contains the seeds of its own destruction, regardless of where the onus lies.
We are concerned with one very limited matter. It is a highly technical matter; namely, onus of proof. The onus of proof arises when, and only when, parties are in court. If what is at issue is a question of fact, then the legal question as to whom the burden rests upon to prove that fact is an important one because that person has to gather the necessary resources together and produce the witnesses. If he does not prove his fact, he fails. However, what is at issue here is, in truth, not an ordinary matter of fact at all but a matter of judgment whether something is fair or whether it is reasonable. In these circumstances, once the court has been told what happened when the parties entered into the contract, it then makes a judgment not of ordinary fact at all but of reasonableness and fairness. Therefore, I am entirely with the noble and learned Lord, Lord Hailsham, in saying that, if there is a problem, it arises through the introduction of the test of reasonableness and not through the way the onus is put. For that reason, I would ask your Lordships to regard it as a technical matter and not a matter of great importance in which anyone is challenging important principles.
4.38 p.m.
The Earl of SELKIRK: My Lords, I must say with great respect that some of the replies to this argument are very thin. The noble Baroness, Lady Phillips, brought forward a glaring example and suggested that I would have stopped the consumer getting her benefit. Nothing could be more untrue than that. I might even have been rejecting the Bill completely. I welcome the Bill, but we have to get the balance right, and the consumers are not the only people who are deeply affected. In some ways, they are affected perhaps even less than some others. The noble Lord, Lord Airedale, said that this puts people out of reach of the law. That is not true. All sorts of things will arise in the ordinary course of business which will be profoundly
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affected by this. The Lord Chancellor said so. He said there would be uncertainty, and that affects all kinds of business, one way or another.
I hesitate to criticise the noble Lord, Lord Morris of Borth-y-Gest, but I wonder whether he really saw how far this might go? He treated people as if they were wicked, but many of these people are not wicked at all; we are talking about liabilities which arise in the ordinary course of business, liabilities which cannot be avoided. In any case where a liability of this kind arises, this provision can come into play. Indemnity is an obvious example, or the continuing contract which I mentioned. There is nothing wrong with that; it is the way in which business is conducted and in my view it is important it should be so conducted.
The noble and learned Lord, Lord McCluskey, said that it did not matter all that much. Does the word, "uncertainty" not matter? Is it of no consequence that many contracts of business are uncertain? Might that not have a slightly adverse effect on the structure of business and the ways in which it is conducted? Although there is a thin House, I think we should divide on this Amendment, because a point of major principle has arisen here.
I want to make it quite clear that, in my view, it will not affect adversely the consumers at all. If this was meant to be a consumers' Bill, which it is not—but, if it is, it is only partly so—it should have been made such a Bill and I would not have minded a split if it were essential. I recognise the difficulties of doing so, but it cuts wider than even the noble Lord, Lord Jacques, seems to think. No doubt the Consumer Council is enthusiastic, but this is supposed to be fair in a much wider context. If it is necessary to make a split, let us do so, but I fear that I must press the Amendment because it is one of very great importance to the whole business community of the country.
Lord SHEPHERD: My Lords, before the noble Earl, Lord Selkirk, presses the matter, I wonder whether he would consider making an appeal to the Government. Most of us who have listened to the debate on the Amendment, particularly those of us who are not lawyers, recognise

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the considerable dilemma which exists within the law and the way in which this provision may affect both business and the consumer. While I think the noble Earl would be right to press the matter to a Division, may I ask whether he would consider making an appeal to the Government to see if it is possible to devise some method within the Bill to meet the points which the noble Earl has made in terms of commercial law and practice? Such a method would not be in any way upset by this change but would meet the undoubted points advanced by my noble friend Lord Jacques and the noble and learned Lord, Lord Morris of Borth-y-Gest. I hope the noble Earl will make that appeal because I have a deep sense of unease as to which way I should vote.
Lord WAKEFIELD of KENDAL: My Lords, I support what the noble Lord, Lord Shepherd said. In view of the great interest and importance attaching to what has been said, I too have unease about which way to vote on this issue. I do not like sitting on the fence and I hope that my noble friend Lord Selkirk will accept Lord Shepherd's constructive and helpful suggestion.
Lord DRUMALBYN: My Lords, I wish to add my voice to the plea made to my noble friend Lord Selkirk by the noble Lord, Lord Shepherd. Many of us feel in difficulty over this simply because we feel that in a consumer case the onus of proof should lie on the supplier while in a business case it should lie on the person challenging the transaction. The noble and learned Lord the Lord Chancellor indicated that, in his view, this would cause confuson. I suggest that it is the quantity of confusion at which the Government should look and whether it is worth incurring that confusion to achieve, if I sense the opinion of the House, what noble Lords would like to achieve. Is it really the case that the confusion would be real and damaging? If not, surely it is possible to devise a formula which would put the onus of proof in the one case on the supplier and in the other case on the challenger.
The LORD CHANCELLOR: My Lords, perhaps I may be permitted briefly to address the House again. I pointed out the view of the Scottish Law
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Commission that confusion would be caused. My view is that the risk of confusion in the business contract field would not be great, for the reasons I gave; but it is also my view that confusion, if we had an attempt to distinguish between the class of consumer cases and the class of business contract cases, would be far worse, and then we should be in the department of utter confusion. We have considered the split burden idea—we considered it in Committee—and the view which emerged was that it was not practical, indeed that it would bear very hard on the small businessman who would bear the burden both to his consumer customers and to his suppliers; so the view which I thought emerged then was against the split burden.
Therefore, although no appeal has been directed towards me by the noble Earl, Lord Selkirk, I am afraid that, speaking frankly, I could not give any reassurance that further consideration would alter the position. That, I fear, is where the matter stands, and if the noble Earl, Lord Selkirk, decides to press the matter to a Division, then I think the House should come to a decision, and I say that without dogma on my part.
The Earl of SELKIRK: I hope the noble and learned Lord the Lord Chancellor is not accusing me of not appealing to him, my Lords. We had appeals in Committee, and although I thought the Lord Chancellor was very fair I thought he was also rather dogmatic in his approach. I feel very strongly about this issue and I feel that the anxiety which has been expressed is real and that the confusion which may result may be much greater than expected. We are in large part on unknown land here. I would certainly be willing to appeal to the Minister, but I do not know what procedure we might adopt. We have only the Third Reading to come. Could we defer this stage of the Bill to another day or adjourn it? Certainly I would welcome the opportunity of further discussion.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I too seek the leave of the House to speak again. I have given considerable thought to this matter, and if I speak shortly it is not because I have not given thought to it at considerable length. Sooner or later we must come to a

53
conclusion about this. It is a very nicely balanced argument, but there is in the end only one way of coming to a conclusion about it; that is, by voting on it. If my noble friend's Amendment is lost on a free vote, it will be open to him on Third Reading to propose the compromise which has been canvassed. If it is won on a free vote, then it will be open to the Government or the sponsors to propose the compromise which has been suggested on another free vote. But I believe that until
Clause 11 ["Dealing as consumer"]:
4.57 p.m.
Lord AIREDALE Lord AIREDALE moved Amendment No. 13:
one really knows where, after this prolonged debate, the balance of opinion lies, one will not be able to devise a compromise or identify the side which will have to put it forward.
4.49 p.m.
On Question, Whether the said Amendment (No. 12) shall be agreed to?
Their Lordships divided: Contents, 52; Not-Contents, 77.
Transpose Clause 11 to the end of Clause 3 as subsections 3 to 5 of that Clause.

CONTENTS

Aldenham, L.

Exeter, M.

Reigate, L.

Amory, V.

Fairhaven, L.

Robbins, L.

Auckland, L.

Fraser of Kilmorack, L.

Romney, E.

Avon, E.

Fraser of Tullybelton, L.

Ruthven of Freeland, Ly.

Balfour of Inchrye, L.

Gridley, L.

Sackville, L.

Berkeley, B.

Hereford, V.

Sandys, L.

Boyd-Carpenter, L.

Hornsby-Smith, B.

Savile, L.

Bridgeman, V.

Kinnoull, E.

Selkirk, E. [Teller.]

Brooke of Cumnor, L.

Long, V.

Strathclyde, L.

Brooke of Ystradfellte, B.

Lyell, L. [Teller.]

Strathspey, L.

Camoys, L.

Marley, L.

Teviot, L.

Cathcart, E.

Molson, L.

Trenchard, V.

Cottesloe, L.

Mottistone, L.

Tweedsmuir, L.

Cullen of Ashbourne, L.

Mowbray and Stourton, L.

Vickers, B.

Daventry, V.

Moyne, L.

Vivian, L.

de Clifford, L.

Northchurch, B.

Ward of North Tyneside, B.

Elliot of Harwood, B.

Nugent of Guildford, L.

Emmet of Amberley, B.

Orr-Ewing, L.

NOT-CONTENTS

Airedale, L. [Teller.]

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

Morris of Borth-y-Gest, L.

Amherst, E.

Evans of Hungershall, L.

Noel-Buxton, L.

Ampthill, L.

Greenway, L.

Oram, L.

Aylestone, L.

Greenwood of Rossendale, L.

Peart, L. (L. Privy Seal.)

Banks, L.

Grey E.

Phillips, B.

Barrington, V.

Hale, L.

Ponsonby of Shulbrede, L.

Beaumont of Whitley, L.

Hampton, L.

Popplewell, L.

Blyton, L.

Hanworth, V.

Rathcreedan, L.

Broadbridge, L.

Henderson, L.

Sainsbury, L.

Brockway, L.

Houghton of Sowerby, L.

Shepherd, L.

Brown, L.

Hylton-Foster, B.

Shinwell, L.

Buckinghamshire, E.

Jacques, L. [Teller.]

Sligo, M.

Burntwood, L.

Janner, L.

Stamp, L.

Byers, L.

Jessel, L.

Stedman, B.

Champion, L.

Killearn, L.

Stewart of Alvechurch, B.

Chorley, L.

Lee of Newton, L.

Stone, L.

Clancarty, E.

Leinster, D.

Strabolgi, L.

Clwyd, L.

Listowel, E.

Taylor of Mansfield, L.

Collison, L.

Llewelyn-Davies of Hastoe, B.

Thomson of Monifieth, L.

Craigavon, V.

Loudoun, C.

Vaizey, L.

Darling of Hillsborough, L.

Lovell-Davies, L.

Wallace of Coslany, L.

Davies of Leek, L.

MacLeod of Fuinary, L.

Wells-Pestell, L.

Davies of Penrhys, L.

Maybray-King, L.

Wigoder, L.

Douglas of Barloch, L,

Meston, L.

Wynne-Jones, L.

Douglass of Cleveland, L.

Monck, V.

Drumalbyn, L.

Morris, L.

Resolved in the negative, and Amendment disagreed to accordingly.

The noble Lord said: My Lords, this Bill is riddled with definitions in all kinds of places. Parts I and II each have their own interpretation clause, and, in addition to that, many of the clauses use terms which they proceed to define. For instance, line

55
1 of Clause 1 defines the term "negligence", and Clause 1 goes on to use and define the term "business liability". Clause 5 uses and defines the expression "in consumer use", and examples of other clauses in the Bill which make use of terms which they then proceed to define are Clauses 16, 26 and 27. But in relation to the expression "deals as consumer", a different pattern of work is used. The expression "deals as consumer" first occurs in Clause 3, but it is not there defined. Clause 4 uses the expression "dealing as consumer". Clause 6 uses the expressions, "dealing as consumer" and, "dealing otherwise than as consumer". Clause 7 uses the term "dealing as consumer". Clause 8 does not refer to this expression, and nor do Clauses 9 and 10.
It is, therefore, rather surprising to find, on reaching Clause 11, that it is entirely devoted to defining the expression "dealing as consumer" Clause 11 is not part of an interpretation clause; it is not even next to an interpretation clause. It seems to have been cunningly placed where it is in order that the hurried reader shall have the least possible chance of finding it.
My Lords, would it not be more reasonable and sensible to print the words of Clause 11 as the final subsections of Clause 3, which is the clause in which the expression, "deals as consumer" is first used? In that way it will avoid the reader speculating on what these words mean and having to search to a rather strange place in the Bill in order to find the definition of the expression. I floated this idea at the Committee stage, and I was much encouraged by the support for it which I received from the noble Lord, Lord Drumalbyn. I hope that it commends itself to your Lordships this afternoon, and I beg to move this Amendment.
Lord DRUMALBYN: My Lords, I have not changed my view on this. The noble and learned Lord the Lord Chancellor very kindly said that he would look at this kind of suggestion. I think that the form which the noble Lord, Lord Airedale, has devised to remedy what I thought was a defect is a good one, and I hope it commends itself to the Government.
Lord JACQUES: My Lords, since the Committee stage both the sponsors and
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the Government have had a look at this to see whether they could meet the point of view which was put forward by the two noble Lords. We have come to the conclusion that the Bill should stay as it is, for this reason. People who look at a Bill such as this usually look first of all at the page which shows the arrangement of the clauses. People do not get hold of a Bill with a view to reading it right through from beginning to end; it is used as a reference. They refer to the arrangement of the clauses, and, as the Bill is at present, they see in the arrangement of the clauses quite clearly where "Explanatory provisions" are. They see that in fact under "Explanatory provisions" there is, in Clause 11, a definition of "Dealing as consumer". It is clear right from the beginning.
If we transposed Clause 11 to Clause 3, as is now suggested, it would not be clear; it would not be on the front page; it would not be seen. We also feel that, if it were included in Clause 3, as suggested, we should then have to cross-reference to Clause 3 every other place in the Bill where the term "Dealing as consumer" is used; and that, we think, ought to be avoided if possible. We therefore feel that, on balance, the present arrangement is the better of the two possibilities.
Lord AIREDALE: My Lords, I wonder whether the noble Lord, Lord Jacques, is right about this. Is it true that, if you open a bound volume of the Statutes, you find at the beginning of each Statute the arrangement of clauses such as you have in a Public Bill? The noble Lord may be right about this, but my instinct is to believe that you go straight into Section 1 of the Act when you open the bound volume of the Statutes; and, really, if my instinct about this is right, I believe that that demolishes the argument that the noble Lord, Lord Jacques, has just put forward. I do not know whether the noble Lord wishes to interrupt me in order to say anything? He does not, apparently. My Lords, I have a private arrangement with myself that I will not divide the House on any matter which is a matter of drafting, but I think we really might look at this point again before the next stage of the Bill. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
clause 12 [varieties of exemption clause]:
5.5 p.m.
Lord JACQUES Lord JACQUES moved Amendment No. 14:
Page 6, line 38, at end insert—
("(3) A person is not bound by any contract term prejudicing or taking away rights of his which arise under, or in connection with the performance of, another contract, so far as those rights extend to the enforcement of another's liability which this Part of this Act prevents that other from excluding or restricting.").
The noble Lord said: My Lords, the purpose of this Amendment is to prevent evasion of the controls in Part I of the Bill. It does so by ensuring that where one party to a contract, party A, is prevented by Part I of the Bill from excluding or restricting his liability to the other party, party B, then B, as the party whose rights under the contract are protected by Part I of the Bill, is not bound by a term of another contract made with a third party that B will not enforce his rights against A. This is not an easy point to explain, and I think I might do it by way of example. Suppose a shopkeeper wishes to have installed a system of central heating. For that purpose he enters into a contract with a company which installs central heating. Let us suppose that in the contract there is either no exemption clause or, if there was one, it would not stand up to the test of reasonableness.
The heating system is installed, but it has to be serviced, so company A, which did the installation, say, "We would recommend you, Mr. Shopkeeper, to go along to company B", which is one of their subsidiaries and which specialises in servicing. So we now have the second company, the servicing company. The servicing company say, "We will not merely service your central heating but we will look after any defects which might arise from the installation. But you will have to give us an undertaking in the contract that you will not take action against the installing company; the liability will rest solely with us". Let us suppose that the shopkeeper enters into that maintenance contract and that there is an explosion of the boiler due to negligence on the part of the installers. Now action against the service company alone would not satisfy the shopkeeper,
58
because not merely are questions of defects in the central heating to be put right, but his shop has been shattered by the explosion. Consequently, he sues the installing company and says, "You have been negligent". He proves negligence, and he claims not merely to have the central heating system put right but to be compensated for the damage to his shop.
The installing company then sues the servicing company for indemnity because it has had had to pay where it did not expect to have to pay, to the shopkeeper. The servicing company can then take action against the shopkeeper for breach of contract because he has taken action against the installing company when, under the contract, he said that he was not going to take such action. This Amendment seeks to deal with that situation. By itself, Clause 2 of the Bill could not apply to such a case. It assumes that a contract term excluding or restricting a supplier's liability to a customer will be contained in a contract between the supplier and the customer; that is, between the installer of the system and the shopkeeper. For the same reasons, Clause 3 would also be evaded. This Amendment seeks to prevent these evasions. In conclusion, I should mention that the Sale of Goods Act, as amended, and the Supply of Goods (Implied Terms) Act 1973 make provision for preventing evasion of the controls under those Acts by the methods I have just described, and it is clearly important that we should also have such a provision in this Bill. I beg to move.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I wonder whether this is a necessary improvement, or an improvement at all. I do not think there is any difference in principle between the noble Lord, Lord Jacques, and myself but I would ask him to reflect upon the following considerations. This Bill has been produced after prolonged scrutiny by the two Law Commissions, both in Scotland and in England. It has had careful consideration before a Commons Committee and a Commons Report. It has been examined by this House in Committee. Now, on Report, we are told that this Amendment is important and necessary. I wonder whether it really is so at this stage. I am always a

59
little suspicious of provisions in Bills which are not desired for their own sake but seek to forestall evasion, which is a dirty word among anybody in modern Parliaments. But there will be attempts to evade any kind of Bill. I have never known Parliament successfully prevent them in advance. Ex post facto if they become a nuisance they can be dealt with fairly easily. I am a little suspicious of clauses which have it as their sole purpose to prevent evasion. I doubt whether it is necessary to prevent evasion.
I am not sure whether, in the suppositious case that the noble Lord has given, the contract would effectively be valid. To begin with, supposing the suppositious maintenance engineer brought an action on the clause of his contract seeking to protect the original installation engineer, one wonders what damage the service engineer could say that he had suffered. If you paid a couple of pounds into court, I think that would put an end to the whole proceedings. I cannot see a court giving an injunction in such a case. It would be a very perverse court if it did so. So I doubt that it is necessary.
Let us look at the drafting. It is put as a new subsection in Clause 12. Clause 12, which comes between two interpretation clauses, is designed to say that if, for instance, a clause already makes liability or enforcement subject to restrictive or onerous conditions, it is already excluded by the Bill; you are to take it into account as amounting to the same thing.
There is a very clear interpretation grafted on to an existing prohibition. But this clause inserts, to my mind, a totally new prohibition and tucks it away in the middle of a lot of interpretation matter and leaves somebody almost bewildered as to what it is about. With his customary lucidity, the noble Lord, Lord Jacques, has told us what it is about, but I do not think anyone reading the clause would know what it is about. Look at what it says! I am going to read it out slowly and ask noble Lords, and in particular the noble Lord, Lord Jacques, who is a very sensible noble Lord, if I may say so, this question: If somebody else produced a clause saying this, would one have the slightest idea of what on earth it meant:
"a person is not bound by any contract term prejudicing"—
60
whatever that may mean—
"or taking away rights of his which arise under, or in connection with the performance of, another contract, so far as those rights extend to the enforcement of another's liability which this Part of this Act prevents that other from excluding or restricting".
I can see the noble and learned Lord, Lord Morris of Borth-y-Gest, smilling, but I wonder whether this is a wise thing to introduce at this stage of the Bill. The noble Lord, Lord Jacques, can introduce an Amendment on Third Reading. I wonder whether he would not be rather better advised to take this wretched little misery away and see if somebody cannot make sense of it for him.
Lord JACQUES: My Lords, I am impressed by the argument as to the lack of clarity, but I am not impressed by the argument that the Amendment is not necessary. In fact, this Amendment carries out a Law Commission recommendation that evasion should not be possible, subject to the reasonableness test, by means of that or any other contract as in the Supply of Goods (Implied Terms) Act. I believe that the noble and learned Lord took an active part in the Supply of Goods (Implied Terms) Act. The Bill was considered during the period when he was Lord Chancellor. I am suggesting that there should be an Amendment to this Bill making a provision which is identical to that in that particular Bill. Therefore, I would not accept that the Amendment is not necessary, but I am a little concerned at the lack of clarity. For that reason I will withdraw the Amendment, but with the promise that it is almost certain to come back at Third Reading.
Amendment, by leave, withdrawn.
Clause 13 [Interpretation of Part I]:
5.17 p.m.
Lord AIREDALE Lord AIREDALE moved Amendment No. 15:
Page 6, line 40, after ("and") insert ("all").
The noble Lord said: My Lords, Amendment No. 36 is an identical Amendment to Part II of the Bill; so perhaps we could discuss these two Amendments together. This is another Amendment to try to overcome lack of clarity in the

61
definition of the term "business" which reads:
"'business' includes a profession and the activities of any government department or local or public authority".
I should have thought there was an ambiguity as to whether that meant that "business" includes the business activities of any Government Department, et cetera, or whether it means that "business" includes all the activities of any Government Department, et cetera.
I should have thought that the reader would have been excused for thinking to himself that the non-business activities of Government Departments surely cannot be intended to be included in the definition of the word "business" because, for one thing, is it not straining language to say that "business" shall include non-business activities? Further, the reader would say to himself: "Surely, if that was what Parliament intended, Parliament could so easily have made its intention clear. Therefore I, the reader, am driven to the conclusion that these words are put into the Act because local authorities do not normally, for the most part, engage in business activities and are not therefore regarded as businesses; and, therefore, it is made clear in this definition that in so far as local authorities do conduct some business operations, to that extent they shall be included in the Bill".
My Lords, we know that the intention of the sponsors of the Bill is that all the non-business activities of the public authorities are to be covered by the Bill. Surely we need to make this clear in the interpretation clause so that the reader is not left wondering exactly what it means. My method of doing so is simply to insert the word "all" so that the definition reads:
"'business' includes all the activities of any Government Department …".
Reading that, the reader will be left in no doubt. Without the word "all", I feel sure that some readers will be left in serious doubt as to whether the non-business activities of the public authorities can possibly be intended to be included in the definition of the word "business". I beg to move.
Lord JACQUES: My Lords, I assure the noble Lord that the present wording covers all and not just some of the activities of Government Departments and
62
local and public authorities. In those circumstances, we feel that the addition of the word "all" is unnecessary.
Viscount BARRINGTON: My Lords, does it do any harm? Would it alter the intention of the Government if it were included?
Lord JACQUES: My Lords, no. We intend the wording to cover all activities, and we believe the present wording does so.
Lord AIREDALE: My Lords, I cannot go on encouraging the noble Lord to make speeches, but although nobody is going to be left in any doubt, they would be left very much happier if the word "all" were included so that they could see that Parliament obviously did intend all the activities of public authorities to be covered.
Lord JACQUES: My Lords, we believe that the present wording is clear. It covers all the activities and it is not necessary to add the word "all".
Lord AIREDALE: My Lords, I am not overcome by the volume of support that I am receiving from other parts of the House, and I think I had better beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord LYELL Lord LYELL moved Amendment No. 16:
Page 6, line 41, at end insert ("or statutory undertaker").
The noble Lord said: My Lords, for the convenience of the House I will speak to Amendments Nos. 16, 37, 51 and 52. All of these stand in my name and they are, in broad terms, the same Amendment which I moved at an earlier stage. In case the House thinks that it is sheer impudence on my part in again raising these minor, semantic points, the reply which the noble Lord, Lord Jacques, gave us was brief, swift and to the point. It achieved its purpose. I wonder whether the noble Lord might be able to give a slightly more detailed explanation of why the term "statutory undertaker" is not in the Bill? I understand that its omission from the Bill will have results in other legislation and enactments. I do not think that there

63
is anything sinister in wishing to insert "statutory undertaker". It is not an office under the Crown or anything else. It is a plain definition. I beg to move.
The Lord CHANCELLOR: My Lords, the definition of "business", which is fundamental to the Bill because of its operation only in relation to "business liability", makes it clear that the activities of various kinds of public body (Government Departments and local and public authorities) are included. In the draft Bills prepared by the Law Commissions, the definition of "business" made a specific reference to the activities of statutory undertakers but, as has been rightly pointed out earlier, not in terms to those of public authorities.
The expression "statutory undertaker" does not however have a specialised meaning, though in the context of the Bill it may be taken as covering any body, such as the nationalised industries, which undertakes to provide goods or services in the exercise of statutory functions. However, it is doubtful whether certain statutory bodies being bodies which are of a public nature but whose functions do not involve, or do not primarily involve, the provision of goods or services, would be included in that expression. For example, the National Consumer Council, the British Airports Authority or the Police authorities. Yet bodies of that kind have occasion to make contracts (either with members of the public or with people or firms carrying on business in the conventional sense) which might contain terms which ought to be subject to control under the Bill.
These bodies are more aptly described in modern legislation as "public authorities", an expression which equally covers those, like the nationalised industries, which are aptly described as "statutory undertakers". Hence the former expression has been substituted for the latter to which on that basis, it becomes unnecessary to refer. It is not thought that any body exists which could aptly be described as a "statutory undertaker" but not as a "public authority" but which was not carrying on a business in the conventional sense and whose activities are therefore within the general meaning of that expression, apart from the special cases covered by the definition. I hope
64
that that explanation will satisfy the noble Lord.
Lord LYELL: My Lords, I was in error earlier in looking towards the noble Lord, Lord Jacques, for an explanation. I wondered what was awaiting me when the noble Lord, Lord Jacques, showed no emotion. I am immensely grateful to the noble and learned Lord for his very full explanation. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 14 [Scope of Part II]:
5.25 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 17:
Page 7, line 15, leave out ("17") and insert ("(Arbitration of differences in consumer contracts)").
The noble and learned Lord said: My Lords, it will be for the convenience of the House if, with this Amendment, I also speak to Amendments Nos. 19 and 24. Amendment No. 24 is the Scottish equivalent of the matter which was discussed in reference to Amendment No. 9, the clause in relation to arbitration. There is a difference in relation to the drafting and that derives from the fact that the Scottish Part of the Bill, which is Part II, is structured differently from the English Part. The shape is different and the terminology is to some extent different. I should say—because this applies to a number of other Amendments—that the basic difference, as one can see from Clause 14, is that the Scottish Part of the Bill applies to contracts which are in effect listed or specified, whereas, as one sees from Clause 1(2), the Bill is intended to apply to all contracts unless they are excepted. That gives rise to certain differences in terminology.
Just to exemplify it briefly here, there is no equivalent in the new clause which is mentioned in Amendment No. 24 to the provision in the new clause mentioned in Amendment No. 9, Clause 9A(2)(b). Its scope does not apply to disputes arising under any of the contracts listed in Schedule I. This is because the same effect is achieved in the context of Part II by bringing the new proposed clause 17A within the ambit of those contracts to which clauses Nos. 15 to 17 apply. This is achieved by amending Clause 14(2)

65
and (3) by Amendments Nos. 17 and 19 to extend the references therein to Clauses 15 to 17 to include the new clause. It is therefore unnecessary to have any equivalent in the proposed new clause to the provision made by new Clause 9A(2)(b).
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 18:
Page 7, leave out line 25 and insert—
("(d) relates to the liability of an occupier of land to persons entering upon or using that land;
(e) relates to a grant of any right or permission to enter upon or use land not amounting to an estate or interest in the land.")
The noble and learned Lord said: My Lords, this Amendment should be considered along with Amendment No. 20. The general purpose of these Amendments is to replace the existing provisions of Clause 14(2)(d) and Clause 14(3)(a)(i) by a more precise description of the types of contractual provisions relating to land to which Clauses Nos. 15 to 17 are to apply and by doing so to make those provisions more easily understood. It is intended that those clauses should apply, first of all, to provisions relating to services in any contract including a lease. This is already achieved by Clause 14(2)(c) and the Amendments do not affect this position.
Secondly, it is intended that those clauses should apply to provisions relating to an occupier's liability to persons entering upon or using his land, such as provisions excluding or restricting such liability. That is achieved by the proposed replacement of Clause 14(2)(d). And, thirdly, the provisions relating to a licence to enter upon or use land—this is achieved by the new paragraph (Clause 14(2)(e)). Your Lordships should be aware that, as the expression "licence" is not a term of art in Scots law, it has been found necessary to define what is meant by it in such a way as to distinguish it from a lease or other contract relating to land. The way which has been adopted is precedented in Section 32(1)(d) of the Caravan Sites and Control of Development Act 1960.
As a result of specifying precisely the types of contractual provisions relating to land to which Clauses 15 to 17 are to
66
apply, it is unnecessary and indeed inappropriate to retain any general exception relating to land contracts, as was contained in Clause 14(3). Accordingly, that part of Clause 14(3)—in other words, 14(3)(a)(i)—is to be deleted. I beg to move Amendment No. 18.
The Earl of SELKIRK: My Lords, I take it from what the noble and learned Lord has said that there is no intention of any change in meaning whatever in the references to land occupation. The noble and learned Lord made a change recently —and I am afraid I did not read it at the Committee stage—so that the word "refers" has become "relates". May I ask whether there is any difference between those two words? "Refers" strikes me as slightly narrower in meaning than the word "relates", particularly in time. "Refers" would tend more to relate to a situation at a given time but "relates" might be extended over a considerable period. I wonder whether any real alteration in meaning has been made, particularly relating to events occurring before or after certain things have happened. If there is no change in meaning I am quite content: if there is a change, f should like to know what it is.
Lord McCLUSKEY: My Lords, I think I explained at the time why we were changing "relates" to "refers". and that was accepted then. There was no intention to change the matter. This is merely a matter of consistency in that regard with the rest of the Bill. No other change is intended in relation to occupiers' liability. What I think would be achieved if Amendments Nos. 18 and 20 are accepted would be a clarification of what it is intended to cover. I think it emerges much more precisely, and I hope we shall see that when the Bill is ultimately reprinted. It is perhaps rather difficult to see it at this stage when we are working with bits of paper and going from one to the other.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 19:
Page 7, line 27, leave out ("17") and insert ("(Arbitration of differences in consumer contracts)").
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 20:
Page 7, leave out lines 30 and 31.
On Question, Amendment agreed to.
Clause 15 [Liability for breach of duty]:
5.34 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 21:
Page 8, line 24, leave out ("or") and insert ("and").
The noble and learned Lord said: My Lords, with your permission, in moving this Amendment I should like to refer to a great many other Amendments which are of exactly the same kind. They are Amendments Nos. 22, 23, 25, 26, 27, 28, 29, 31, 34 and 40. At one stage it was suggested by the noble and learned Lord, Lord Hailsham, that perhaps the noble and learned Lord the Lord Chancellor might consider conferring an honorary Q.C. upon the noble Lord, Lord Lyell. When his petition to be made a Q.C. goes forward, I should like to add my name to those supporting it, because this is another example of the noble Lord's having brought good sense to a Bill.
Several noble Lords: Hear, hear!
Lord McCLUSKEY: The Government accept what the noble Lord has proposed. The Amendment being made here to delete the word "or" and insert the word "and" are merely to do what the noble Lord, Lord Lyell, asked us to do at Committee stage. We are very grateful to him. We accept it, although I would defend the draftsmen and indeed the Law Commission, who used the term "fair or reasonable" rather than the one to which we move, by saying that I think ultimately it makes no difference but it certainly makes good sense. I commend these Amendments to your Lordships. I beg to move.
Lord LYELL: My Lords, I am very grateful for your Lordships' acceptance of these Amendments. Indeed, they follow from points that I raised which I regarded as semantics and mere questioning at an earlier stage. I am very flattered by the kind remarks that have come my way at this stage and at an earlier stage
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of the Bill from both sides of the Border, so far as law is concerned. I must say I was a little apprehensive when the noble and learned Lord, Lord McCluskey, accepted all these Amendments. He says that "fair or reasonable" or "fair and reasonable" makes no appreciable difference. I am glad that he says so, because I have learned to my cost, I hasten to add, that in a theoretical examination room all is not what it appears to be in the legal paper. Certainly, if the noble and learned Lord, Lord McCluskey, believes that I have added clarity to the Bill, I feel that his remarks will not reflect solely upon me but also upon an institute not a hundred miles from the Law Society of Scotland: indeed, their address is in Queen Street, Edinburgh. I am sure that they, too, will be pleased that my legal training has shown an independent and inquiring mind into these small differences. But if the noble and learned Lord, Lord McCluskey, says that the removal of "or" and the insertion of "and" makes no difference to the Scottish law, then I, and I am sure the whole House, will be delighted.
On Question, Amendment agreed to.
Clause 16 [Control of unreasonable exemptions in consumer or standard form contracts]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendments Nos. 22 and 23:
Page 9, line 3, leave out ("or") and insert ("and");
Clause 17, page 9, line 14, leave out ("or") and insert ("and").
On Question, Amendments agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 24:
After Clause 17, insert the following new clause:
Arbitration of differences in consumer contracts.
—(1) In the case of a consumer contract, an agreement to refer future differences to arbitration cannot be enforced against the consumer except—

(a) with his written consent given after differences have arisen;

(b) where he has himself had recourse to arbitration in pursuance of the agreement.

(2) Subsection (1) above does not affect the enforcement of arbitration agreements to which section 1 of the Arbitration Act 1975 applies (that is, arbitration agreements other than "domestic" within the meaning of that section).
The noble and learned Lord said: My Lords, I spoke to this Amendment in connection with earlier Amendments, and I now beg formally to move Amendment No. 24.
On Question, Amendment agreed to.
Clause 19 [Obligations implied by law in sale and hire-purchase contracts]:
Lord McCLUSKEY Lord McCLUSKEY moved Amendments Nos. 25 to 29:
Page 10, line 21, leave out ("or") and insert ("and");
Clause 20, page 10, line 30, leave out ("or") and insert ("and");
Page 10, line 33, leave out ("or") and insert ("and");
Clause 21, page 11, line 15, leave out ("or") and insert ("and");
Clause 22, page 11, line 23, leave out ("or") and insert ("and").
On Question, Amendments agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 31:
Page 11, line 29, leave out ("or") and insert ("and").
On Question, Amendment agreed to.
Lord HAILSHAM of SAINT MARYLEBONE Lord HAILSHAM of SAINT MARYLEBONE moved Amendment No. 32:
Page 11, line 35, at end insert—
("() Where a term in a contract purports to restrict liability to a specified sum of money, and the question arises for the purposes of this Part of this Act whether it was fair and reasonable to incorporate the term in the contract, then, without prejudice to subsection (2) above, regard shall be had in particular to—

(a) the resources which the party seeking to rely on that term could expect to be available to him for the purpose of meeting the liability should it arise;

(b) how far it was open to that party to cover himself by insurance.")

The noble and learned Lord said: My Lords, this is the Scottish equivalent of Amendment No. 11 which was accepted. I therefore beg to move it formally.
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 34:
Page 11, line 36, leave out ("or") and insert ("and").
On Question, Amendment agreed to.
Lord McCLUSKEY Lord McCLUSKEY had given Notice of his intention to move Amendment No. 35:
After Clause 22, insert the following new clause:
Interference with provisions of Part II.
(".Any term of any contract shall be void which, either expressly or by implication, disapplies or restricts the application of the provisions of this Part of this Act in respect of that or any other contract.")
The noble and learned Lord said: My Lords, this is the Scottish equivalent of Amendment No. 14 and, having regard to the fate of that Amendment, I shall not move this one.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I was going to commend this one to the noble Lord, Lord Jacques, as being a better version, but perhaps it is right not to pass it now. I was really going to say that if the noble Lord, Lord Jacques, had taken a leaf out of the Scottish draftsman's book he would have had a less violent reaction from me.
Lord McCLUSKEY: I almost said that myself, my Lords, but I am happy that it should come from the noble and learned Lord, Lord Hailsham of Saint Marylebone, rather than from me.
Clause 23 [Interpretation of Part II]:
5.40 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 38:
Page 12, line 30, at end insert ("act or omission giving rise to that").
The noble Lord said: My Lords, Amendment No. 38 is purely a drafting Amendment. When I spoke to Amendments Nos. 66 and 69 in Committee I indicated that I was not entirely happy with the wording. I think that the reason was that although the wording was perhaps readily comprehensible it was not entirely logical as it stood in the Bill, because it is not the breach which is not intentional or deliberate but rather the act or omission which causes the breach. This Amendment is intended to remedy that logical defect by altering Clause 23(2) so that it reads:
"… whether the act or omission giving rise to that breach was inadvertent or intentional".

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That is the only purpose of the Amendment. I beg leave to move Amendment No. 38.
On Question, Amendment agreed to.
Clause 24 [International supply contracts]:
Lord LYELL Lord LYELL moved Amendment No. 39:
Page 13, line 18, leave out ("subsection (3) below") and insert ("this section").
The noble Lord said: My Lords, it might be for the convenience of the House that I should speak not only to Amendment No. 39 but to other minor Amendments that appear in my name—namely, Amendments Nos. 41, 42, 43 and 44. I hope that such a course will be convenient. It would certainly add to the speed of our proceedings. Clause 24 as it stands at present excludes from the scope of the Bill any international contracts for the sale and supply of goods. However, the Bill does not exclude international contracts for the supply of services. Let us take an example of the kind of services that I have in mind. There are professional engineers, management consultants, chartered accountants and many others who render service overseas.
The reason for distinguishing in this particular way between the two different types of contract—international contracts for the supply of goods and the supply of services—is not immediately clear. Indeed, the position is that much more difficult to understand when we consider that international agreements often combine the sale of goods with the provision of services. The noble Lord, Lord Jacques, had a florid example, of the heating that blew up and I presume that he was referring to a United Kingdom boiler. We can foresee many refrigeration services that might be going to lands in the Middle East and, clearly, combined with contracts for the sale of these refrigeration plants or whatever is being sent to Saudi Arabia and other places in the Gulf, one finds a contract for the provision of services for maintenance of this complicated and complex equipment.
Of course, these services are of considerable importance to all professional groups. It is not clear from the Law
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Commissioners' Second Report that they specifically directed their minds to this particular class of international contract. There were no precise reasons that we could find for not treating contracts for the supply of services in the same way as contracts for the supply of goods. Finally, we could not really believe that the acceptance of the Amendments would have any serious effect on the protection which the Bill is intended to give and, we believe, does give to consumers. We hope that that is not a reason for not giving further and more detailed consideration to these Amendments. I should therefore now like to move Amendment No. 39.
The LORD CHANCELLOR: My Lords, the noble Lord, Lord Lyell, has returned with his Amendments to the discussion which we had on the same matter during the Committee stage. In Committee the noble and learned Lord, Lord Hailsham, asked whether I would consider between then and the Report stage the position of a supplier of services who wishes to supply them abroad under a contract concluded here. I have given this consideration and am grateful to the noble Lord, Lord Lyell, for putting down these Amendments so that we can consider the matter.
The Amendments raise the question whether the Bill should deal with international contracts for the supply of services on the same, or roughly the same, basis as the provision which it makes for international contracts for the supply of goods. Clause 24 in part restates the law as laid down in the Supply of Goods (Implied Terms) Act 1973. So far as Clause 24 relates to the sale of goods, it is a pure restatement. Clause 24 extends this régime to international contracts for the supply of goods otherwise than by sale.
The 1973 Supply of Goods (Implied Terms) Act gave exemption to international contracts for the sale of goods which satisfied the characteristics which are given in subsections (3) and (4) of the clause, and the reasons for this were the following. First, where goods are exported from one country to another protection for consumers and purchasers is really a matter for the importing State. Secondly, international contracts

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are usually transactions of some considerable size between commercial men who wish to be free to negotiate their own terms without the controls imposed by the Bill. Thirdly, it was suggested to the Law Commission before 1969 that control over international sales of goods could damage our export drive. These reasons appeared in their First Report.
With these Amendments the noble and learned Lord now asks why that reason is not equally applicable to international contracts for the supply of services. It is a very reasonable question to ask. The answer, in the first place, is, I think, that the Law Commissioners themselves considered that there was a distinction between contracts for the supply of goods and contracts for the supply of services. The main reasons given were that in the context of personal injury and death there was no need to provide an exemption from the categories of exemptions to be rendered void, and this reason is, if anything, stronger as a result of the general acceptance that has been given in both Houses to Clause 2(1) of the Bill. Furthermore, the reasonableness test was, they thought, likely to prove flexible enough in operation to be able to take account of the international character of the contracts in question.
The noble and learned Lord, Lord Hailsham, put to the Committee the case of the consulting engineer who contracts for the supply of services in New Zealand. The reasonableness test would, I think, enable the courts to take account of the fact that there was international corn-petition for the order in question, and would give full weight to this when deciding whether or not the exception clause was reasonable. If the competition for the services of an architect was keen so that the foreign customer was in a strong bargaining position, then the fact that he had none the less accepted a contract which contained an exemption clause, could operate as an indication that it was fair and reasonable for it to have been included. At any rate, it is the kind of factor which the court could, and would no doubt, consider.
In dealing with this Amendment in Committee my noble friend Lord Jacques mentioned that the Amendments might impose a serious limitation on the protection which the Bill gives to consumers. He and I have since discussed this and are
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agreed that this criticism would apply to the Amendments in question only in so far as the consumer was contracting with someone across an international frontier from him. None the less, I think there is still something in the point.
A further reason for not extending Clause 24 for contracts for services is that this would indeed pose serious problems of drafting. The Amendments of the noble Lord, Lord Lyell, go as far as possible towards a satisfactory draft, but they raise a difficulty about where a contract for the supply of services is to be performed. This has caused difficulty in the context of value added tax and would, I think, prove substantially more difficult here. The difficulty is that there is not always something tangible which can be seen, as in the case of goods as they move from one country to another. So that, ill general, I believe there is a good deal of practical sense in the Law Commissions' joint recommendation, which, in a sense, suggests that these difficulties can be left to the operation of "reasonableness" in the courts and the way in which it is interpreted. It may not be a completely satisfactory answer, but I hope that it is, at any rate, thought to be a practical one.
Lord LYELL: My Lords. I should like to thank the noble and learned Lord for his very lengthy, detailed and concise reply to my Amendment. I was pleased that he said that it might not have been a full argument, and I hope that at some stage we may be able to obtain the full argument. But I take his point that it was a practical answer, and it provided much more information than I had received before. I am grateful to the noble and learned Lord, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 40:
Page 13, line 22, leave out ("or") and insert ("and").
On Question, Amendment agreed to.
Clause 25 [Choice of law clauses]:
5.52 p.m.
Lord JACQUES Lord JACQUES moved Amendment No. 45:
Page 14, line 8, leave out ("that") and insert—
("(either or both)—
(a) the")
The noble Lord said: My Lords, I think it will be for the convenience of the House if, in moving this Amendment, I speak to Amendment No. 46. These Amendments are designed to give consumers additional protection against terms in contracts which, by providing that the law governing the contract is to be the law of a country outside the United Kingdom, would prevent the Bill from applying to the contract. Under Clause 25(2) as it is now, the Bill will have effect despite the fact that the parties have chosen to apply a foreign law to the contract, but only where it can be proved that the choice of the foreign law was made in order to evade the operation of the Bill. It is now recognised that, in practice, this may well throw a heavy burden on the very person whom Clause 25(2) is seeking to protect, because he will have to prove that the sole or main purpose of the other party in applying the foreign law was to evade the operation of the Bill.
We consider, therefore, that additional protection is needed for consumers as regards contract terms which apply a foreign law, and this Amendment will give it. It does so by providing that, where the consumer is habitually resident in the United Kingdom and takes all the steps necessary on his part for the conclusion of the contract in the United Kingdom, the Bill will apply despite the term which applies the foreign law. In other words, where a foreign law is chosen and consumers are involved, the rules in the Bill will prevail. But in dealings between businessmen, their express choice of that law will normally prevail. My Lords I beg to move.
On Question, Amendment agreed to.
Lord JACQUES Lord JACQUES moved Amendment No. 46:
Page 14, line 11, at end insert—
("or
(b) in the making of the contract one of the parties dealt as consumer, and he was then habitually resident in the United Kingdom, and the essential steps necessary for the making of the contract were taken there, whether by him or by others on his behalf.
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(3) In the application of subsection (2) above to Scotland, for paragraph (b) there shall be substituted—
"(b) the contract is a consumer contract as defined in Part II of this Act, and the consumer at the date when the contract was made was habitually resident in the United Kingdom, and the essential steps necessary for the making of the contract were taken there, whether by him or by others on his behalf.".")
On Question, Amendment agreed to.
Clause 27 [Saving for other relevant legislation]:
Lord AIREDALE Lord AIREDALE moved Amendment No. 47:
Page 15, line 26, after ("function") insert ("and is not a term in a contract to which the competent authority is itself a party.")
The noble Lord said: My Lords, this is an Amendment to a new subsection which was introduced into the Bill at the Committee stage by the noble Lord, Lord Jacques. That new subsection propounds the proposition that a contract term is to be taken as satisfying the requirement of reasonableness if it is approved by a competent authority—and that includes a statutory undertaker—acting in the exercise of any statutory jurisdiction. Perhaps I may pause there and say that I have no quarrel at all with this subsection so far. It is the last two words "or function", that I suggest to your Lordships need qualification, because it seems to me that if those words are not qualified they will establish a charter for statutory undertakers, merely by giving their blessing to the terms of their own contracts with their customers, to oust the jurisdiction of the court and to prevent the customer, if he is aggrieved, from taking the case to the court and getting an impartial decision from the court as to the reasonableness of the terms of the contract of the statutory undertaker about which he is complaining.
I therefore seek to insert the words in this Amendment, which make it quite clear that the subsection is not intended to apply in a case in which a statutory undertaker is itself a contracting party, and that the clause is therefore referring solely to cases in which the competent authorities are exercising a quasi-judicial authority in relation to contracts entered into between other people, and not contracts to which

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they are themselves a party. My Lords, I beg to move.
Lord JACQUES: My Lords, it has never been intended that a public authority could take advantage of this clause in relation to contracts to which it is a party. I have had consultations, and I am happy to say that the draft is acceptable to both the sponsor and the Government. Therefore, I accept the Amendment and commend it to the House.
On Question, Amendment agreed to.
Clause 29 [Commencement; amendments; repeals]:
5.57 p.m.
Lord JACQUES Lord JACQUES moved Amendment No. 48:
Page 16, line 4, leave out from ("force") to end of line 5 and insert ("on 1st February 1978").
The noble Lord, said: My Lords, this Amendment arises out of a minor debate that we had in Committee as to the commencement date. The effect of it is to delay the commencement from three months after the Bill is passed to six months after it is passed. We are very reluctant to extend the date, but we recognise that it will be necessary for business and professional men to have a look at their insurances, in order to make sure that they get adequate cover. I am happy to commend this Amendment to the House. My Lords, I beg to move.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I am very grateful to the noble Lord, Lord Jacques, for paying attention to what we said in Committee. I expect that this will be just long enough, but not much more.
On Question, Amendment agreed to.
Clause 30 [Citation and extent]:
Lord HAILSHAM of SAINT MARYLEBONE Lord HAILSHAM of SAINT MARYLEBONE moved Amendment No. 49.
Page 16, line 14, leave out from ("the") to end of line and insert ("Exemption Clauses").
The noble and learned Lord said: My Lords, here again we come to the famous question of the Short Title of the Bill. I really take exception to Unfair Contract Terms Bill. It is a completely misleading, name, it is ungrammatical English and
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I think that if we were labelling goods in this way we should render ourselves liable to prosecution under the Trade Descriptions Act. I venture to take a leaf out of the book of the noble Lord, Lord Airedale—or perhaps it was another noble Lord on the Liberal Benches—who gave me qualified support for an earlier and limping suggestion which I made and I think that, on the whole, the term which I have inserted into the Amendment is not misleading, is fairly honest and is not unduly long and cumbersome, as my previous suggestion was. I know it may be said that it does not cover the entire area covered by the Long Title, but what Short Title does? The Long Title covers, by Clause 4, the indemnity clauses and will also cover the arbitration clause if the final Amendment is accepted. However, I think that I have done better than the sponsors. Therefore I commend the Amendment to the House and beg to move.
Lord AIREDALE: My Lords, I am very happy to give my support, for what it is worth, to this Amendment—as I did, indeed, at the Committee stage. Very briefly, I should like to mention one point which has not been made. My problem is that the existing Title of the Bill begins with an adjective which is in common use; one visualises the harassed, busy practitioner racking his brain to try to remember what common adjective it is that the has to look up in order to find the Title. Is it "unfair", is it "unreasonable", is it "inequitable", is it "objectionable"? Which of these common terms is it that he has to try to search for and find in the index to the Statutes? I should have thought that that was a solid ground for objecting to any Title which begins with a common adjective having many synonyms. I hope the House will consider that the noble and learned Lord's alternative Short Title is very much to be preferred.
The LORD CHANCELLOR: My Lords, what is important in the Bill is not its Short Title but its content, and I hope that we shall not have too prolonged an argument about the mere Title. The difficulty is that, so far, no wholly satisfactory Title has been discovered. At least the present Title is meaningful. I do not believe that it is emotive. It will be easily understood by

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the man in the street and the small shopkeeper. The name "Exemption Clauses Bill" does itself have a number of drawbacks. For instance, a number of the provisions in the Bill are not exemption clauses but conditions under which licences are granted or benefits voluntarily conferred. In addition, in Clause 4 We have indemnity clauses which, in general, are not exemption clauses, either. Certainly there is no perfection, nor, indeed, is perfection claimed for the proposed substitution.
My view of the matter is that the Bill is directed towards controlling the major kinds of unfair contract terms. I am informed by the sponsors of the Bill that not only do they desire to adhere to the present description but that they believe it highly likely that, if your Lordships reject the present Title, it will be reinstated in another place. However, that is a factor which certainly ought not to dominate decisions in this House, though it is perhaps worth bearing in mind at this stage. Although I agree that "Unfair Contract Terms Bill" is not perfect, it has the merit, at any rate, of being short and easily understood. I hope, accordingly, that your Lordships will leave it unchanged.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I find that a very unsatisfactory reply. Our Title is as short and it happens to be accurate and honest. The existing Title is, I think, misleading and therefore dishonest. If the Commons have nothing better to do than to change the names of Bills without altering their content, I am rather unimpressed by their threats. However, as it is going to waste a great deal of your Lordships' time to have this Amendment back again, perhaps I had better withdraw it with as ungracious an attitude as I can possibly adopt.
Amendment, by leave, withdrawn.
Schedule 2 ["Guidelines" for application of reasonableness test]:
Lord JACQUES Lord JACQUES moved Amendment No. 50:
Page 18, line 4, after ("7(3)") insert ("and (4)").
The noble Lord said: My Lords, this Amendment is consequential upon Amendment No. 7. I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 53:
In the Title, line 7, at end insert ("and (for the whole of the United Kingdom) to render arbitration agreements unenforceable in certain cases").
The noble and learned Lord said: My Lords, this Amendment extends the Long Title of the Bill to cover the addition of the new clause on consumer arbitration. I beg to move.
On Question, Amendment agreed to.

INSURANCE BROKERS (REGISTRATION) BILL
6.7 p.m.
Report received.
Clause 10 [Code of conduct]:
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 1:
Page 7, line 44, after ("and") insert ("may").
The noble Lord said: My Lords, the Amendment which I am now moving is very simple. It is designed to amend an Amendment which was made during the Committee stage. The words:
"The Council shall draw up … a statement of the acts and omissions which, if done or made by registered insurance brokers or enrolled bodies corporate, or by registered insurance brokers or enrolled bodies corporate in particular circumstances, constitute in the opinion of the Council unprofessional conduct"
were amended to read:
"The Council shall draw up and from time to time revise a statement of the acts and omissions …".
It seems very curious to oblige the Council from time to time to revise the statement, whether or not it requires revision. Therefore, what was probably intended was that the Amendment made during the Committee stage should make subsection (1) read:
"The Council shall draw up and may from time to time revise a statement …"
rather than that it should state that the Council must revise it. I beg to move.
Lord ORAM: My Lords, on behalf of the Government, may I indicate briefly that the Government are happy to accept this Amendment. It is useful for it to be made perfectly clear that the Council is not compelled to revise the code of conduct at frequent intervals and regardless of whether it requires revision. I think that the noble Lord, Lord Drumalbyn, has made a perfectly fair point and hope that the House will agree with him.
On Question, Amendment agreed to.
Clause 27 [Rules etc. made by Council]:
6.9 p.m.
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 2:
Page 19, line 35, leave out from ("Act") to end of line 36.
The noble Lord said: My Lords, I beg to move Amendment No. 2. This is a much more substantial Amendment, and I am afraid that I shall have to take up a little of your Lordships' time in order to explain its background. We are dealing here still with the question of the statement which is to form the basis, at any rate, of the code of professional conduct. This subsection of Clause 27 empowers the Secretary of State not only to vary or revoke any rules made under Clauses 8, 11 or 12 of the Bill, but also to revise the statement in Clause 10. This is the statement dealing with the code, and I will refer to it as "the code" for the sake of simplicity. The earlier part of Clause 27, with which I shall be mainly dealing, provides that the code can come into operation only if it is approved by the Secretary of State by order—and in passing may I say that is an order which the Secretary of State may revoke under Clause 28, as he can revoke any order that he makes.
I should also like to ask this question in passing: As one reads the clause literally all he has to do is to make an order indicating his approval, but am I right in assuming that the approval will cover the actual code and that the code itself will also be presented to Parliament? The Bill does not say that, but I imagine that is the intention. I have not sought to make any amendment to that because I think it is perfectly proper. What will happen is that the Council will draw up
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this code, will submit it to the Secretary of State for approval and, when it is approved, it will come into operation.
It is also provided that the Secretary of State may make any modifications in the code as submitted to him. No doubt this is not unreasonable, especially as he has first at least to notify the Council, and secondly he has to consider any observations that the Council may make. Then we have the code. What I am seeking to leave out by this Amendment is the power of the Secretary of State on his own initiative to revise the code which is made under Clause 10 of the Bill. Again he has to consult the Council, and again, if he exercises that power the order falls to be approved under the Affirmative Resolution procedure, whereas an order approving the code in the first instance, or approving amendments subsequently made to the code at the instance of the Council, would be subject to the Negative Resolution procedure.
I raise this in order to raise the whole question whether it is really appropriate for the Secretary of State on his own initiative to alter the code of a professional body as to what conduct is to he adjudged unprofessional. I noted that my noble friend Lord Mansfield congratulated both the insurance brokers and my noble friend Lord Orr-Ewing on introducing the Bill into this House and on the degree of self-regulation, and approved of self-regulation in principle. However I am doubting whether it is really appropriate for the Secretary of State on his own initiative to alter that code of professional conduct.
I agree that, since the interests of the clients and the brokers are involved, the approval of the Secretary of State to the code should be obtained and that the Secretary of State should signify his approval by order in the first place. But as noble Lords will have noted in Clause 10, the code itself is to include provisions which constitute "in the opinion of the Council" unprofessional conduct. Admittedly, the Secretary of State could revise and amend that and, if necessary—and certainly in practice—would consult with the Council before making any amendment. But it seems to me there is a difference. The words "amend" and "revise" have a rather different connotation. If we give the Secretary of State power to revise the code he can look

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through it, make one amendment in it or he may strike out some of those acts or omissions which are proposed to be regarded as unprofessional; he may add other acts or omissions which are proposed to be regarded as unprofessional. He may amend the terms of any such item, and the power to revise may enable him on his own initiative to change the whole character of the professional code. I am not saying that will necessarily be done, but that is the power which is given to him.
It is evident that some approval of the code is needed, as I have said, but it is difficult to see why, in a self-regulating profession, the Secretary of State should be able to dictate what should or should not be unprofessional conduct. Let us consider how this might arise. No doubt the Secretary of State's Department will be in close touch with the Council; it would be very unfortunate if they were not. And the Department, as also their predecessors, have had close relationships with various bodies of this description and have managed to retain the confidence of those various bodies. I myself have the greatest respect for the way in which this is done.
Let me say in passing that one of the things they are very good at is resisting pressures for changes which superficially seem sensible and indeed from time to time obtain considerable popular support, but which are not adjudged, after consideration, to be in the real interests of the public or of the profession itself. What would happen? Supposing there is some abuse, or something which some complainant thinks is an abuse, which is brought to the attention of the Secretary of State. Unless it is trivial, he will bring it to the attention of the Council. He may even suggest that the code of conduct should be amended, and there would be a discussion about that. In many cases no doubt, as has happened in my experience, the Council will be able to convince the Secretary of State that such an amendment would not be an improvement. But there may remain a difference of opinion; there may be considerable pressure and then the Secretary of State can overrule the Council, can produce his own order on his own initiative, and has to go through what would then really be a farce of again consulting the Council
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whose views he already knew, and then would present the order to Parliament.
I really do not think that this is the best way of running a self-regulating system of this kind because the Secretary of State will always be talking and negotiating with the self-regulatory bodies, but having behind him the power to override them at any time. That is not the best way to get sensible discussion on important matters affecting a profession and the profession's clients. I should much prefer to see these words omitted altogether.
What I am saying is that if the words I desire to leave out remained in the Bill they would in effect be a bludgeon in the hands of the Secretary of State, so that his will would without question prevail. It seems to me that that is the antithesis of self-regulation. It would make discussion very difficult and it would make impossible any normal relationship between the Secretary of State and the Council. It is for that reason that I raised the matter at what I quite admit is a late stage. I am afraid I myself came into the discussion of the Bill at a fairly late stage. My claim to detain the House on this is that I have had some experience in this field. I beg to move.
6.21 p.m.
Lord ORR-EWING: My Lords, I have been looking at this Amendment very carefully since my noble friend tabled it. I think if we were starting this Bill afresh there might be some merit in having a longer discussion on it. I am sure my noble friend does well to put it down so that we can probe it, and I very much hope that we can have some assurances on the issue. On balance, I have come to feel that there are sufficient reasons not to divide the House and amend the Bill at this stage. After all, the Secretary of State—any Secretary of State—would feel obligated to consult the Council most carefully before he did anything against their wishes. After all, 12 members of the insurance profession will be members of that Council, and another five will be appointed by the Secretary of State himself. So he would not wish to override the professional considerations and the knowledge and experience of such a Council without their agreement.

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Moreover, if he did wish to do it he would have to get an Affirmative Resolution through both Houses in accordance with that wish. That gives people every opportunity to lobby, people who are earning their daily bread in this profession and who have great knowledge and experience; they will have an opportunity of seeing their Members of Parliament and seeing others who know about these technicalities and putting their views forward. So I cannot feel that the knowledge will go unheard and the experience will go unsung. There is a Parliamentary opportunity, in both Houses, to hear the case put by the Secretary of State, and most people would probably side with the Council because they have first-hand knowledge and professional experience.
I also rather hope that my noble friend will not feel it necessary to divide the House because one of the merits of this Bill is that we have had in this House, where I had the honour to introduce the Bill, Labour, Liberal and Tory support for this measure. I do not think one should lightly cast this aside, because I can imagine giving all sorts of good reasons, when these Amendments go back to another place, for prolonging the discussion to those who wish to slow it down and filibuster. So I hope the Minister will be able to find some form of words and some assurances which will allay my noble friend's very real anxieties on this point.
Lord ORAM: My Lords, I shall try to respond to the suggestion contained in the last few sentences of the speech of the noble Lord, Lord Orr-Ewing, in meeting the real point that the noble Lord, Lord Drumalbyn, has raised. As he quite rightly said, this is a matter of more substance than the one to which I was glad to agree on behalf of the Government earlier. I am afraid this is an Amendment which is not acceptable, because it would remove from the Bill an important safeguard of the public interest.
Before I go on to explain why we take that attitude, the noble Lord, Lord Drumalbyn, asked me a question and perhaps I can seek to deal with that first. As I understand it, he was asking whether the code itself would be subject to Parliamentary approval. The Secretary of
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State must lay before Parliament his Instrument giving approval to the code, and presumably the code itself would be annexed as a Schedule. This Instrument would be subject to Negative Resolution procedure.
If I may now return to the main argument about the noble Lord's Amendment, let me first reassure the House over the extent of the Secretary of State's power under Clause 27(3), because it is subject to important limitations. He may revise the code of conduct only after consulting the Council, as the noble Lord, Lord Orr-Ewing, pointed out. I would remind noble Lords also that any order revising the code in this way would be subject to Affirmative Resolution in each House. There would, therefore, be no question of the Secretary of State using this power in any ill-considered or irresponsible manner. He could not make any changes in the code of conduct until they had been considered and approved by both Houses. The power in Clause 27(3) is not something that the Government inserted in the Bill against the wishes of its sponsors; it was in the Bill from its introduction in another place. None the less the Government were very glad that the safeguard was included. It was a material factor in the Government's decision to support the Bill.
Lord DRUMALBYN: My Lords, I wonder whether I may interrupt for one moment because the noble Lord is making a rather important point. Of course, I am well aware that what he has said is true; I am sure everyone would accept it. But that surely does not mean that the Department did not see the Bill until it was brought before Parliament. It seems to me highly improbable that the insurance brokers themselves would have suggested this power. Surely it must have come from the Department in the first place?
Lord ORAM: My Lords, during the Second Reading we spelt out the degree of collaboration between the sponsors and the Department. It is a Bill which we welcome, and clearly what the noble Lord says is right—the Government did see it. We were glad to see this particular point included, and it had the approval both of the Government and of the sponsors.

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I would suggest that it is important to remember that the Bill confers considerable privileges on insurance brokers. It provides them with machinery for effective self-regulation under Statute, including the right to give or withhold use of the reserve title "insurance broker", a sanction that I am sure will become still more important as time goes on. We have every confidence in the present leadership of the broking community. Otherwise, we would not have supported their proposals for self-regulation.
However—and I would urge the noble Lord to consider this—when enacting measures that are intended to last for many years, perhaps many decades, it would be irresponsible not to include some safeguards against (shall we say?) lethargy or poor judgment on the part of future generations. It is true that when it is first drawn up the code of conduct is subject to the approval of the Secretary of State, but I suggest that that is not enough. Circumstances change; new abuses can creep into insurance selling, as they can into other areas. If insurance brokers are to enjoy continuing statutory privileges, it is important for the Government to be able to make sure that the brokers continue to be responsive to the public's needs for protection against new abuses and, therefore, that they keep their code of conduct up to date.
If all goes well—and we fully hope and expect that it will—this is a power that will be seldom, if ever, used. But I suggest that it is an essential long-stop in case things do not go well. I hope that the noble Lord will accept the points I have raised. We fully understand why he raised the question but I believe that when he gives further consideration to what I have said and to what the noble Lord, Lord Orr-Ewing, has said he will appreciate that there is sufficient reason to keep the present wording in the Bill. If he reaches that conclusion, I hope that he will agree to withdraw the Amendment.
Lord DRUMALBYN: My Lords, I am grateful for the way in which the noble Lord, Lord Oram, has responded to my Amendment. Perhaps he has not given the House quite as clear a picture of the way in which the relationship between the brokers and the public will be controlled and is likely to operate. In addition to the
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code there are, of course, the rules that must be made by the brokers—rules as to eligibility for admission to make certain that the brokers really are brokers; rules to indemnify those members of the public who may be defrauded or suffer from dishonesty in some way; rules for the setting up of a compensation fund to meet such payments and also compensation for the civil liabilities of brokers themselves; and rules as to disciplinary procedures.
Of course, any person who goes before the disciplinary committee that is to be set up and is found guilty—if that is the right expression—would have the right of appeal to the courts. It is for that reason —and I would think for that reason alone —that the approval of the Secretary of State is required for the strictly professional part of the code. This is quite different from the rules. Otherwise, there would be no means of appeal to the courts —there would be nothing for the courts to go on. So that, essentially, is why the code would need the approval of the Secretary of State and would need to be sanctioned by Parliament. That is fine, but I still think that the relationship between the public, the Council and the brokers themselves would be sufficiently controlled by the rules. Of course, the public would always have access to the courts direct where fraud or dishonesty of any kind was involved.
However, though I should be really reluctant to see an extension of this principle of control over professional codes by the Secretary of State on his own initiative, it would not be right for me in any way to attempt to make an Amendment at this stage. However, I would ask the Minister what precedents there are for Secretaries of State—that is, for the Government—to approve codes of conduct of this kind. This is entirely different from the Highway Code and from the code under which employers give information to trade unionists, and that sort of thing. Therefore, this may well set a pattern and create a precedent. In earlier days, professional bodies tended to be chartered and then it was the Privy Council that controlled them, not a Minister. Therefore, I have misgivings about this. I recognise that it is too late to do anything about it now.
I welcome the assurance of the noble Lord, Lord Oram, that if all goes well the

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power will seldom, if ever, be used. That is probably true but, in fact, it slants a self-regulatory system in a way which I believe detracts very much from self-regulation. If the noble Lord is unable to tell me now what precedents there are, I should be grateful if he could write and tell me. Having said that and made the position clear, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Schedule [Constitution, etc. of Insurance Brokers' Registration Council]:
6.37 p.m.
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 3:
Page 22, line 12, at end insert—
("(2) Before nominating the persons mentioned in sub-paragraph (b) of paragraph 1 above the Secretary of State shall consult in the first instance the British Insurance Brokers' Association and thereafter the Council".)
The noble Lord said: My Lords, this is a point with which I can deal very quickly. The Schedule provides for the composition of the Council and states how it is to be set up. In addition to the 12 persons chosen to represent registered insurance brokers, one of whom is to be chairman, there are to be five persons nominated by the Secretary of State. I tried to table a briefer Amendment—one similar to my first Amendment—but it was not possible because there have to be two stages. To begin with, the first Council has to be set up and thereafter the independent members will be replaced and the professional members will be elected.
It seems obvious to me that the Secretary of State will, in fact, consult the Council once it has been set up. I think it desirable that, in the early stages, the British Insurance Brokers' Association should also be consulted on the type of independence that the Association would be likely to find appropriate and easy to work with, because it is very important in setting up a Council to have a team working together. I should be grateful for an assurance that such consultation will take place. If the noble Lord is prepared to give such an assurance, I need say no more about this Amendment, which would merely spell out that assurance in the Bill.
Lord ORAM: My Lords, I can straight away give the noble Lord, Lord Drumalbyn, the assurance that informal liaison with the British Insurance Brokers' Association would certainly take place about the Secretary of State's first round of nominations. That is bound to be so in view of the history of the preparation of the Bill so far and of what we have said in this House. Indeed, whenever the Secretary of State makes nominations he will, where possible, obviously wish to avoid nominating people who would be unacceptable to the broker members of the Council. However, I am afraid that I see no need for such consultations to be enshrined in the Bill. An undertaking to consult the British Insurance Brokers' Association could only lead to other interests, such as, for example, the Law Society, accountancy bodies, or bodies claiming to represent consumers, asking why they were not given a statutory right to be consulted.
I here again urge the noble Lord to think again as to whether this Amendment is necessary. I feel that it is not. I can assure him that the Government fully accept the need to work in close liaison with the British Insurance Brokers' Association and with the Council, when it comes to be established, in this matter. With that assurance, which I hope he will feel is adequate, I hope he will withdraw this Amendment.
Lord DRUMALBYN: My Lords, I am grateful for the assurance the noble Lord has given. Without further delay, I gladly ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.

WATER CHARGES EQUALISATION BILL
6.41 p.m.
Report received.
Clause 1 [Equalisation levies payable by certain water authorities]:
Lord SANDFORD Lord SANDFORD moved Amendment No. 1:
Page 2, line 7, at beginning insert ("Subject to subsection (4A) below").
The noble Lord said: My Lords, the House will remember that at the previous stage of this Bill there was what I might describe as a slip in the drill at the point where I moved Amendment No. 6. The Chairman of Committees explained later on the same day what had occurred, and generously attributed it to the fact that it was his birthday. This means that the Amendments that I moved, and which the Committee accepted after a Division, could not be printed in the Bill that is before us now, and have to be moved again. I understand through the usual channels that it is not the wish of anybody that all the substantial arguments should be redeployed. Therefore, I think I can describe the Amendments that we have down as being drafting Amendments to the original Amendments to make sure that they fit into the Bill as we now have it. In that sense I beg to move Amendment No. 1, and to indicate that Amendment No. 3 goes with it. I beg to move.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk): My Lords, the noble Lord, Lord Sandford, is of course absolutely right that this was lost on a technicality, so I do not propose to repeat my arguments why the Government still find these Amendments unacceptable. All I will say is that, even at this late stage, if the noble Lord, Lord Sandford, has a change of heart we will not hold it against him. I would not think it in the slightest inconsistent. I would think that in the period between Committee stage and Report he has had second thoughts which were much better than the first thoughts, and I would strongly urge him to withdraw his Amendments. If he insists on pressing them against the extraordinarily good advice that I am giving him, I do not propose to divide the House.
Lord SANDFORD: My Lords, I am grateful to the noble Baroness for those gracious words, but I shall not succumb to that siren voice. I should like to press Amendment No. 1, but I should like to correct what I said before and say that it is Amendment No. 4 that is linked to this one.
On Question, Amendment agreed to.
Lord SANDFORD Lord SANDFORD moved Amendment No. 2:
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Page 2, line 11, after ("of") insert ("the aggregate of").
The noble Lord said: My Lords, I beg to move Amendment No. 2. The same point that I was making about having been lost on a technicality applies here. The point is a different one. Amendments Nos. 2 and 3 are linked together. I beg to move.
Baroness BIRK: My Lords, the same applies to this. It really suffered what I could call a posthumous technical knockout. In any case, the same arguments I used before still apply. I do not know whether the noble Lord will change his mind, but I have nothing more to say on this.
On Question, Amendment agreed to.
Lord SANDFORD Lord SANDFORD moved Amendment No. 3:
Page 2, line 26, at end insert ("multiplied by the appropriate factor.
In this subsection the "appropriate factor" means the proportion which the average bill for general rates and water services in respect of premises to which a supply of water is provided by the undertaker on an unmeasured basis bears to the average bill for general rates and water services to such premises throughout England and Wales").
On Question, Amendment agreed to.
Lord SANDFORD Lord SANDFORD moved Amendment No. 4:
Page 2, line 26, at end insert—
("(4A) The amount ascertained under subsection (4) above shall be reduced by any relief received in the corresponding accounting period through the rate support grant by premises to which a supply of water is provided by the undertaker on an unmeasured basis to the extent that such grant takes account of water supply charges.")
On Question, Amendment agreed to.
6.46 p.m.
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 5:
Page 3, line 5, at end insert ("but shall not in any case exceed the amount of any such levy which the undertaker was directed by him to pay under that subsection in the preceding financial year allowing for any appropriate adjustment in respect of that year made under the said section 3(3).")
The noble Lord said: My Lords, this is a new Amendment. The point we are seeking to raise is a new one. I am sorry that we were not able to raise it at an earlier stage. As the noble Baroness

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is aware, a number of new features were brought into the Bill at a later stage in the Bill's progress and it has only just now been possible for us to form a view on this matter. Clause 1 empowers the Secretary of State to direct equalisation levies to be paid to the National Water Council by those water authorities, and now water companies, with a unit cost below the national average. The Amendments we have just been considering somewhat amended this arrangement, but the amount of any equalisation levy which a water authority, or water company, may be directed to pay is to be calculated in accordance with the formula set out in Clause 1, from which it is apparent that the amount of a levy may, and probably will, vary front year to year.
The object of this Amendment is to seek to place a limit on the amount of the levy which an authority may be directed to pay so as to secure, so far as possible, that householders in the area of an authority or company which is so directed to pay a levy are not subject to an ever-increasing demand to contribute towards the water rates payable by householders in a recipient area.
During the third sitting of the Standing Committee in another place on 8th February the right honourable gentleman the Under-Secretary of State for Wales, Mr. Jones, at columns 125 and 131 of the Official Report, drew the Committee's attention to paragraph 73 of the consultative document, Review of the Water Industry in England and Wales, which states:
"The interim equalisation scheme will have a progressively limited effect over a period of years".
I repeat, those were the words of the Under-Secretary of State. During the debate, the right honourable gentleman reaffirmed that equalisation levies would be of a progressively diminishing amount, and that within about five years they may be phased out altogether. In the circumstances, the Government may seek to argue that the Amendment is not necessary, but I would put to the noble Baroness that if the assurances that the Government have given on this point are worth anything then there will be no objection to writing this Amendment into the Bill.
Baroness BIRK: My Lords, the noble Lord, Lord Trefgarne, is not right because the two things he is trying to do, do not add up. They are two entirely different things which, with great respect, have become confused here. There is in this Amendment a technical defect in that it refers to the preceding financial year, but that is neither here nor there. It is in substance that the Amendment is quite unacceptable.
We have always said that the equalisation scheme is a self-wasting one and that its effect will diminish over a period of years. That is certainly the case. But the main reason for that effect is not that the equalisation transfers will get smaller year by year, but that they will constitute a smaller proportion of each authority's revenue requirement each year as the cost of financing new capital expenditure, and operating costs increasing in line with inflation, outstrip them. There should certainly be a steady decline in equalisation transfers as the historic debt is paid off, and so the "qualifying asset value" as defined in subsection (3) of Clause 1 gets steadily smaller.
But this does not mean that the relevant financing costs will necessarily fall year by year. The most important element in those costs is interest charges, which of course depend on the current level of interest rates. If there is a marked increase in interest rates from one year to another, then even with the smaller volume of debt, the total financing costs may well be higher. This applies of course to the total equalisation pool—that is, the total financing costs of all authorities which go into the equalisation pool—but it need not affect all authorities or companies equally; interest rates do not always move precisely in line.
Moreover, even if interest rates remain stable and the total equalisation pool diminishes, the position of different undertakers may change. This can arise not only from varying movements in interest rates, but from differences in the rate at which they are paying off their qualifying historic debt. This means that an undertaker's average unit cost may fall significantly faster than the national average unit cost, in which case his equalisation levy might well increase though the total volume of transfers was falling. This is an inevitable consequence of a scheme which

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equalises a moving figure of costs, and that is what this scheme does.
Unfortunately, it is not possible to provide detailed estimates of levies and payments in future years because they will depend on these individual movements in interest rates. What we can say with some certainty is that if, as we all must hope and indeed can expect, interest rates fall below the very high levels prevailing when the notional figures for the current year were prepared, then the total size of transfers should fall and no authority or company should be faced with any dramatic change from year to year.
There is one further objection to the Amendment. The limitation would apply only to equalisation levies; there is no such limitation on equalisation payments. But if the amount of money raised in levies was reduced below the figure necessary to meet the equalising criteria prescribed in Clause 1(7), there would not be enough money in the pool to make the equalisation payments prescribed in Clause 2(2). As we have said before, equalisation is a self-contained game; you cannot reduce one side of the equation without reducing the other by precisely the same amount. I hope that that clear exposition has convinced the noble Lord that his Amendment is really off-side.
Lord TREFGARNE: My Lords, I am not convinced that it is off-side. The noble Baroness, Lady Birk, says that no provision is made in the Amendment for equalisation of the payments; we were well aware of that when we tabled it, and indeed, had we been able to persuade the Government to accept the Amendment, that matter could have been put right on Third Reading. However, I do not think it will come to that. The noble Baroness has totally resisted the very notion of what we are proposing and it is certainly not my intention to pursue the matter to a Division now. I would have wished that she had been able to repeat the assurance given by her right honourable friend the Secretary of State for Wales, when the Bill was in Standing Committee in another place, indeed, I am sorry she has not felt able to repeat that assurance in even firmer tones than did her right honourable friend.
Baroness BIRK: My Lords, while I do not have a note with me, though I have read it, of what my right honourable friend said in another place, if the noble Lord reads that again together with what I have said today, I think he will find that my right honourable friend was saying the same thing. I suggest that the noble Lord has mixed up—I will not use the word "confused"—the point about interest rates and the point about equalisation. I listened carefully when he repeated what my right honourable friend said, and it seemed to me that it was exactly what I was saying. I was pointing out the difference between the running down which he was describing and how it would work if the Amendment became part of the Bill. There really is no difference between us, as I think the noble Lord will find when he reads the two speeches side by side. I appreciate that this is a very complicated subject.
Lord TREFGARNE: The noble Baroness, Lady Birk, is very likely right, my Lords. I prefer to reserve my position on the matter and study carefully what she said, and if I am so moved and if my noble friends agree, I may consider returning to the matter on Third Reading, having regard to the restraints on our procedures as they apply to Amendments that may be moved at that stage. I do not think there is much profit to be derived from taking the matter further at this point and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.56 p.m.
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 6:
Page 3, line 13, at end insert—
("(10) In the first financial year in respect of which an order is made under subsection (1) above, the amount of the levy calculated under subsection (7) above shall be reduced by two-thirds and in the second financial year in respect of which such an order is made the said levy shall be reduced by one-third.").
The noble Lord said: I will, with the permission of the House, speak at the same time to Amendments Nos. 7 and 8. Your Lordships know that this Bill provides for money to be levied on water companies and certain water authorities and then paid over to others less fortunately placed than the companies on which the levy falls. When we moved a similar

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Amendment in Committee we rather underestimated the position and, as I explained at that time, we had not received all the information that we now have as to how these levies and the resulting payments will fall on the newly included water companies.
In Committee I suggested that the water charges falling on consumers living, for example, in the area served by the Thames Water Authority might increase by 10 per cent. or so, and I advanced such figures as being typical; but I underestimated the figures considerably. New figures have come into my hands which I will put to your Lordships and apply them in the hope of persuading the House to accept the Amendment. I am advised, for example, that under the Bill the Bournemouth and District Water Company—I take this and other examples quite at random—will have to increase its charges by 22 per cent. to provide the necessary monies for the levy to be paid. Another company, in Hartlepool, will have to increase its charges by 24 per cent; I noticed that another company, West Hampshire, will have to increase its charges by 27 per cent; and those served by the Portsmouth Water Company will suffer an increase of 23 per cent. in the charges they will have to pay, all these charges applying starting this year.
It is not beyond the bounds of possibility that inflation generally next year will be 10 per cent. or 15 per cent. That inflation will of course apply not only to the costs of water companies but to all other costs incurred by local authorities, and that will increase the general rates which those authorities have to levy. It appears to us therefore that the increase in the burden on householders, taking together the water rates and the local rates, will be very substantial indeed. It seems to us that this very substantial increase ought to be phased and brought in gradually.
Therefore it is our proposal—and in substance it is the same as the one which we put before your Lordships at the Committee stage—that the increase ought to be phased over a period of three years. Amendment No. 6, which is the one that I am formally moving at the moment, provides that the levy should be reduced by two-thirds in the first year and by one-third in the second year, so that on the third year it comes into full force. Amend
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ments Nos. 7 and 8, which relate to Clause 2, have the same effect with regard to the payments to be made from the levies collected under Clause 1. I hope that your Lordships will agree that this phasing arrangement (as we have called it) will be beneficial to the water consumers and, indeed, to all the householders in the areas served by the authorities affected by the Bill. I beg to move.
Lord PEDDLE: My Lords, I am sure that there is some virtue in the suggestions behind this Amendment—and I should like to speak with particular emphasis to Amendment No. 8. I think that the Amendment provides the means to staunch the wounds that the Bill, when it later becomes an Act, is likely to inflict upon some water companies and water authorities. In view of the fact that the Bill is theoretically concerned with equity, it seems difficult to argue against the basic principle involved in the Amendment. On Second Reading and at the Committee stage, I stated my views on the basic principles upon which the Bill is based. I think that it is ill-timed, and it certainly does not achieve the objectives that the draftsmen intended to secure. But I was pleased that the Government listened to our plea that the water companies should be included, and I thank my noble friend for her contribution to that end.
Therefore, I do not quite share the point of view in the remark, "Oh yes, we wanted to be in, and we are in, and now we squeal like stuck pigs because it is likely to hurt". I welcome the inclusion of the water companies. I recognise that some will gain and some lose, and that the water companies will lose collectively, or will pay out rather more than £3¼ million more than they receive. What we are concerned with is the effect on the ordinary householder user. He is the person with whom we are concerned, not the company that will be paying out. I have had support for the figures that have already been mentioned, and there will, for instance, be more than nine companies which will have increases in charges of over 12 per cent. One instance of an increase as high as 27 per cent. has already been quoted. I am concerned with the effect upon the user.
The original theoretical concept behind the Bill was equity in the burden of charges. If there are transfers that

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heighten the inequity and at the same time introduce a measure of distortion, then it is perfectly obvious that we should try to adopt some measures in order to reduce the rather savage impact in certain areas. It is interesting—at least to me—that, tomorrow and the following day, I shall be chairing a seminar at Keble College, promoted by the Water Research Council, which will be concerned with the economics of charging structures in the water services. A high-powered team of people drawn from all over the world will be lecturing there, and the point that is to be emphasised is that charging within the water industry today has a dynamic function. That is something of tremendous significance and, to an increasing degree, the whole modern philosophy with regard to charging within the water industry emphasises that the charges should be a reflection of costs. Yet the Bill is doing precisely the opposite. For a variety of reasons acceptable to them the Government are going to obscure that objective.
I should like also to refer to a booklet which I wrote two years ago at the behest of the Chartered Institute of Public Finance and Accountancy. I had the opportunity of recording the first report of the Secretary of State for the Environment in 1973, in which the statement is made that charging policies should be influenced not only by the need to cover revenue expenditure, but also by the aim to make consumers aware, as far as possible, of the real cost of those services. That was the very kernel of the Government's attitude towards pricing policy at the time. I wrote that booklet only two years ago, and I am very anxious to know whether or not there has been a fundamental change in the policy of the Government, because if there has been a fundamental change, it must, as I said previously, apply to other industries.
We must recognise that, today, charging has a dynamic function, particularly in the nationalised industries. I believe that the Bill will, when it becomes an Act, obscure the relationship between charges and cost. I hope that this Amendment will be accepted, because, if we are to proceed with the proposal inherent in the Bill, I believe that the application of the Amendment will at least soften the blow
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in some areas. Let us look at the situation. We are introducing a Bill to soften the blow of high charges in certain areas of the country. To do this, we are "clobbering"—and unrealistically so—another area of the country. It is not right. There is something fundamentally wrong with proposals of that kind.
We have gone along with the Government's point of view, and I appreciate the fact that water companies have been included. However, I ask that serious consideration be given to this proposal because, as is shown in the evidence that has been produced, the effect, at least upon the water companies and some water authorities, could be considerable, if not catastrophic, in the initial stages. In turn, there will be the effect on the ordinary user. In the interests of the ordinary user, I ask the Government to adopt this phasing principle, because such a method would at least soften the blow.
Baroness BIRK: My Lords, I am sorry that I cannot agree, either with the noble Lord, Lord Trefgarne, who moved this Amendment, or with my noble friend who has just supported it. Let me start off by pointing out once again that neither the Amendments nor the Bill itself have anything to do with inflation, because the Bill has no effect whatever on public expenditure. What it does is to provide for a self-balancing scheme: one where total payments into the equalisation pool will be exactly matched by total payments from the pool. In that way it is a purely redistributive measure, and it is designed in such a way that it will by easy and cheap for the National Water Council to administer. It is true that the increases in some of the company areas are bigger (although I think I would say that the figures quoted by the noble Lord, Lord Trefgarne, are a bit on the high side), but the Government argument is still valid. These companies will pay more because their charges are so very low. They will all, nevertheless, remain a long way below the national average.
Then, we have not heard anything about the companies which are well above the average. Our scheme will still leave consumers in some companies well above the average—mid-Sussex, for instance, 43 per cent.; East Surrey, 22 per cent.; and mid-Kent, 20 per cent. Phasing over three years means that it will be three years

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before they get even to that level. Mid-Sussex is still nearly 60 per cent. above the average next year. Doing it in this way—and this, my Lords, is really a very modest Bill—will be long-drawn-out agony. It means that taking the Thames area, for instance, the per capita contribution required of Thames consumers will be low—as little as 2p a week for the average household—while the benefit to Welsh households will be considerably greater—7p a week. There are, it is true, more people in the Thames area than in Wales.
What the Bill does is a great deal to help people now facing very high average water bills, at minimum expense to consumers in areas where average water bills are relatively low. I should have thought that it was helping the fight against inflation to bring down these extraordinarily high charges in Wales, in the South-West, for instance, and in East Anglia. People in these areas—and we are talking about the individuals—feel the high charges, and are suffering from them at the present moment. The Government's proposals are, as I have said, a modest measure, and they fall well short of full equalisation of bills. To reduce the transfers, which is what these Amendments seek to do, by two-thirds in the first year of the scheme and one-third in the second year, would make the transfers really derisory and reduce the whole scheme to a nonsense. The life expectancy of the scheme is about five years. In successive years its significance will diminish as transfers become a smaller and smaller proportion of the undertakers' revenue requirements. For these reasons, I cannot advise the House to accept Amendments which would dilute what is a very modest equalisation proposal.
Lord TREFGARNE: My Lords, how disappointing. The truth of the matter is that, if you live in London, your water rates are going to go up, and the household rates which you pay are already astronomic. So for the noble Baroness to throw away so lightly the effect upon inflation is, I believe, unfortunate, unsatisfactory and misleading. There are many poor people in London, and at the moment they enjoy quite modest water rates. It is the proposal of the Government that these water rates should be substantially increased next year. They are not to be
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phased over one, two or three years but, next year, are to be increased by 20 per cent. or so. At the same time, the domestic rates which those unfortunate people pay, calculated on the rateable value of their property, as are water rates, will also go up, very likely. Heaven knows! they are high enough already, but that the noble Baroness just dismisses.
As for the unfortunate people of Wales, who the noble Baroness says suffer such astronomic water charges at the moment, it is indeed the case that the people of Wales, although served by the Welsh Water Authority, pay somewhat higher water rates at the moment than those paid elsewhere. But, of course, the truth of the matter also is that the domestic rates paid by those people are substantially lower, and thus the total burden falling upon householders in Wales is significantly less than the burden falling upon householders where, under the proposals of the present Government, the water charges are to be increased.
My Lords, I am not the least bit persuaded by the noble Baroness. She talks of figures somewhat as if it did not matter about the individuals involved. But the individuals do matter, and I believe they are the people we ought to seek to protect. The water companies are not complaining, as I understand it, of their inclusion in the Bill. Indeed, they were anxious to be included, and now, thank goodness! they are included; but it is right and proper that their inclusion should be equitable and that the burden falling, not only upon them but upon the water authorities which are already covered in the Bill, should be phased in gradually, so that the increases which fall upon householders are not lumped on them suddently next year, or even this year, as is the proposal of the Government. I am very disappointed that the Government have found it impossible to yield in any way on the proposal that we have put to your Lordships.
Baroness BIRK: My Lords, I wonder if at this moment, without interrupting the noble Lord's flow, I may put a point to him. I do not accept that I have dismissed lightly the plight of people in different areas. What I should like to put to him is whether he thinks that

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everyone in, for example, Wales, the South-West, East Anglia or Northumbria is well off, while all the poor of the country are concentrated in the Thames area and in the other areas which will be contributors under the Bill? Because it is just not so: the population there is a mixture, as it is anywhere else. Furthermore, I wonder whether the noble Lord could clarify his view on this figure with regard to the Thames area. The actual figure, as I understand it, is a 5 per cent. increase. In Committee the noble Lord said it was 10 per cent.; now he is claiming 20 per cent. We seem to be having a great numbers game going on here, and I think we ought to get it clear.
Lord TREFGARNE: My Lords, as to the number of poor in Wales or the West Country compared with the number of poor in London, I do not have at my fingertips—nor, I suspect, does the noble Baroness—the total number of those below the average national wage, or whatever line she likes to draw, living in the West Country or living in London. But one thing I do know is that there are a great many people living in the Greater London Area who are very hard-up. They are hard-up for all sorts of reasons, no doubt, but one reason in particular is that the general rates they have to pay are very high. The cost of all the social services and other things provided by the Greater London Council is no doubt very high. All the householders living
in the Greater London Area have to contribute to those costs, and thus the rates they pay reflect that situation.
As for the percentage increases, I do not think it is profitable to bandy detailed percentages around if the noble Baroness does not want to, but the truth of the matter is that the people in London, for example, will pay substantial increases. All the figures that I produce and all the figures which the noble Baroness produces are forward projections, and may in the upshot prove optimistic or pessimistic. If the noble Baroness thinks that my figures are unduly pessimistic and hers are unduly optimistic, or the other way about, so be it. The noble Baroness says that she thinks her figures are right. I wish all her noble and right honourable friends were as confident and accurate in their predictions of, for example, the rate of inflation. I remember, in August 1974, her right honourable friend the Chancellor of the Exchequer announcing to the world that inflation was down to 8 per cent. My inflation was not down to that level then, nor has it been since. I am firmly convinced that this Amendment is a significant improvement to this Bill and I hope your Lordships will agree with me.
7.20 p.m.
On Question, Whether the said Amendment (No. 6) shall be agreed to?
Their Lordships divided: Contents, 44; Not-Contents, 30.

CONTENTS

Alexander of Tunis, E.

Hereford, V.

Reading, M.

Amherst of Hackney, L.

Hornsby-Smith, B.

Romney, E.

Amory, V.

Long, V.

Sandford, L.

Avon, E.

Lyell, L.

Sandys, L.

Brooke of Ystradfellte, B.

Merrivale, L.

Southwell, Bp.

Brougham and Vaux, L.

Monck, V.

Strathclyde, L.

Camoys, L.

Monson, L.

Strathcona and Mount Royal, L.

Cathcart, E.

Morris, L.

Sudeley, L.

Cullen of Ashbourne, L.

Mowbray and Stourton, L. [Teller]

Swinfen, L.

de Clifford, L.

Trefgarne, L.

De La Warr, E.

Newall, L.

Vivian, L.

Denham, L. [Teller]

Northchurch, B.

Wakefield of Kendal, L.

Drumalbyn, L.

O'Hagan, L.

Ward of North Tyneside, B.

Elton, L.

O'Neill of the Maine, L,

Westbury, L.

Hatherton, L.

Rankeillour, L.

Young, B.

NOT-CONTENTS

Allen of Abbeydale, L.

Goronwy-Roberts, L.

Peart, L. (L. Privy Seal)

Avebury, L.

Hale, L.

Phillips, B.

Banks, L.

Harris of Greenwich, L.

Pitt of Hampstead, L.

Birk, B.

Houghton of Sowerby, L.

Ponsonby of Shulbrede, L.

Blyton, L.

Hylton-Foster, B.

Popplewell, L.

Champion, L.

Jacques, L.

Stone, L.

Collison, L.

Lleweiyn-Davies of Hastoe, B.

Strabolgi, L.

Davies of Penrhys, L.

McCluskey, L.

Taylor of Mansfield, L.

George-Brown, L.

Milner of Leeds, L.

Wallace of Coslany, L. [Teller]

Gore-Booth, L.

Oram, L. [Teller]

Wynne-Jones, L.

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
Clause 2 [Equalisation payments to be made to certain water authorities]:
7.27 p.m.
Lord TREFGARNE Lord TREFGARNE moved Amendments Nos. 7 and 8:
Page 3, line 21, after ("to") insert ("subsection (3A) of this section and")
line 38, at end insert—
("(3A) En the first financial year in respect of which an order is made under section 1(1) above, the amount of the payment calculated under subsection (2) of this section shall be reduced by two-thirds and in the second financial year in respect of which such an order is made the payment shall be reduced by one-third.")
The noble Lord said: My Lords, Amendments Nos. 7 and 8 are consequential upon Amendment No. 6. I am not, therefore, proposing to make a further long speech but would merely say that Amendments Nos. 7 and 8 apply to Clause 2 and their effect is to phase the payments while the Amendment to which your Lordships have just agreed was to phase the levy. I hope you will agree that these two Amendments are consequential. I beg to move.
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 9:
After Clause 2, insert the following new clause:
Grant in lieu
.—(1) The Secretary of State may, with the approval of the Treasury out of money provided by Parliament, make to any water authority a grant in lieu of the whole or part of an equalisation payment.
(2) Where such a grant is made the amount of the grant shall be deducted from the amount of the equalisation payment to that water authority and shall also be deducted proportionately from the equalisation levies to be paid by statutory water undertakers under section 1 above.
The noble Lord said: My Lords, this Amendment is similar but not identical to the one moved by my noble friend Lord Sandford during the Committee stage of the Bill. As your Lordships have heard, the Bill provides for a system of levies and payments to equalise the charges of water companies across the land. However, in my view and in that of my noble friends, and, indeed, of my honourable and right honourable friends in another place, this is not a satisfactory method of equalising the charges, if equalisation itself be desirable; and there is certainly room for more than one view as to that. We believe it would be appropriate to give to the Secretary of State the power, but not the obligation, to make certain payments by way of grant where, for one reason or another, the system of levies and payments does not appear appropriate.
During the Committee stage in this House the Amendment that was moved by my noble friend was resisted by the noble Baroness. As I recall, she had three principal objections. The first was that this was an increase in public expenditure; and she "twitted" my noble friend and myself, and others on this side of the House, with our apparent desire to increase public expenditure in this specific area while we have constantly resisted any increase in public expenditure across the whole range of Government activities. We accept that as a reasonable objection to what we were then proposing; that is why this Amendment is not mandatory upon the Secretary of State. It is enabling only, and enables him to take what we believe to be the desirable course when Government finances allow it.
The second objection which the noble Baroness raised was that the Amendment was limited in its scope in that it provided only for a grant to the Welsh Authority.

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In deference to the wishes of the noble Baroness, we have amended the Amendment—if that is the right expression—so that now the Secretary of State can use the power that we seek to give him to make a grant to any authority covered by the Bill.
The third objection was that the Amendment was out of order because we were encroaching upon the prerogative of the other place. I am sorry to tell the noble Baroness that there was no need for us to alter our Amendment in that respect because the noble Baroness was plumb wrong on that matter. I have taken the best advice, and I am informed that there have been many cases in which the Government have proposed Amendments in this House which are either not covered by the money resolution or which are to a Bill in respect of which no money resolution has been applied. In all such cases, a money resolution has been passed in the Commons when the Lords' Amendments are considered. I am further informed that this is also the view of the authorities in the other place.
I hope that your Lordships will agree therefore that the shortcomings, if there were any, in regard to our Amendment at the Committee stage have now been substantially overcome and that your Lordships will therefore agree that this Amendment ought to be included in the Bill. I beg to move.
7.34 p.m.
Baroness BIRK: My Lords, the noble Lord, Lord Trefgarne, is quite right when he says that there are several reasons why the Government cannot accept the Amendment. In the first place it would be redundant. He reminded me that I "twitted" him last time about the increase in public expenditure. It does not alter the substantial point because the Secretary of State is not making the power mandatory, but, nevertheless, there are some extremely unpalatable implications for public expenditure, even if the Amendment is now on the basis of the Secretary of State being able to choose whether or not he will do this. What would still be very dangerous would be to inaugurate Government subsidies to an industry whose annual revenue requirement is about £1,200 million, and for this reason
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the Government opted for a self-balancing scheme avoiding central subsidies.
I do not know whether the noble Lord has in mind the possibility of a future Conservative Government having to operate the Bill, because his noble friend all the way through the Committee stage talked as though he was ready to throw the whole Bill out of the window. If one noble Lord wants to keep it with extra public expenditure and the other wants to get rid of it, are they seeking to ensure merely that they will have adequate powers to distribute Exchequer subsidies without having to obtain their own approval? Maybe this is part of the Tory Party's bold new programme of reducing the burden on the taxpayer.
Lord TREFGARNE: My Lords, if the noble Baroness will allow me, I am not forecasting an Election this week, next week or next year, but I have been listening to her right honourable friend the Prime Minister who assures us that all is going to be all right next year. If we are to be guided by what he told his audience at the weekend, then by next year the Government should have plenty of money for subsidising everything, including the unfortunate water consumers in Wales.
Baroness BIRK: My Lords, with great respect, if in the future a Conservative Government are elected—and I hope that does not happen—for the sake of the country I hope that the noble Lord, Lord Trefgarne, does not become the next Chancellor of the Exchequer, because the idea of a Government subsidising an industry with the annual revenue requirement of the water industry, and which has been able to be self-balancing, seems absolutely wrong. I do not think we are going to have that much oil pouring in from anywhere.
However, apart from the public expenditure point, the Amendment now, as the noble Lord quite rightly said, is not restricted just to Wales. Nevertheless, my basic objection is the same. We are keeping to a self-balancing scheme. That means that equalisation involves some going up and some coming down. The argument is the same, except on the last round Wales was just picked out for special preference. It does not alter the basic point that underlying the whole

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scheme is the question of redistribution and self-balancing. This Amendment removes that and brings it into the taxation and taxpayers' area.
Regarding privilege, I take the point that that is something for another place. I am not convinced that it will not raise a point of privilege. That is no reason to deny it in this House. That is a matter for another place and I certainly would not rest my case solely on that argument. The case is on the main point of a self-balancing scheme. That is the underlying motive of the whole Bill. Therefore I ask the House to reject the Amendment.
Lord TREFGARNE: My Lords, I am sorry that the noble Baroness is not able to offer us a more helpful approach to this Amendment. I am convinced that she and her advisers have not really appreciated the merit of it. It was certainly not our intention that the grant should totally replace the unhappy and, we would say, unsatisfactory equalisation arrangements, but that it should be complementary to them. Our Amendment is drafted in such a way that the grant could be of a sum much less than the total revenue requirements that the noble Baroness has bandied around, which are irrelevant figures in the context in which we are considering them.
We had in mind, as the noble Baroness knows, because this was implicit in the Amendment we moved on Committee stage, that the Secretary of State should have the power to make a grant on a selective basis to certain water companies or water authorities who were particularly hard hit in any one year. However, we find, to our regret, that the Amendment is not acceptable to the noble Baroness and therefore will not pursue the matter further. We are disappointed that the noble Baroness does not agree with our desire to give the Minister this more flexible power. In the circumstances, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 3 [Supplementary provisions as to directions and orders]:
7.41 p.m.
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 10:
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Page 4, line 19, leave out ("he considers") and insert ("is").
The noble Lord said: Clause 3(1) of the Bill refers to the determination of levies and payments on the basis of estimates. Clause 3(3) prescribes the procedure for subsequent adjustment of these estimates to bring them into line with actual figures when the accounts are available; but it leaves it open to the Secretary of State to make such adjustments to the levies or payments as "he considers necessary".
It is not clear why the clause cannot simply prescribe that when the actual figures are known the levies and payments will be adjusted accordingly, unless it be the fact that the Secretary of State wishes to retain the power to change the figures if they do not happen to be to his liking. I am informed that it is quite possible that there will be substantial changes in the amounts when they are recalculated on the basis of the true figures as these become available. We therefore think it is very important that the Secretary of State is not, as is provided in the Bill, empowered to make adjustments to the levies which he alone considers necessary, but clearly as they are necessary. That is the purpose of our Amendment, and I beg to move.
Baroness BIRK: My Lords, as the noble Lord, Lord Trefgarne, has said, the calculations for equalisation levies and payments under Clauses 1 and 2 have of necessity to be based on estimates, since the orders have to be made before the start of the year to which they relate. Clause 3 requires the Secretary of State to recalculate the levies and transfers in the light of the actual figures as soon as they are available and to take any discrepancy between the two sets of calculations into account in subsequent years.
The purpose of this Amendment is presumably simply to remove what might appear to be an unacceptable degree of discretion to the Secretary of State in deciding what adjustment he will make. I have explained why it is essential for the Secretary of State to retain considerable discretion in making the basic calculations —because of the unavoidable need for working to broad assumptions—but I do accept that there is no need for similar discretion at this point. The Secretary of State will indeed do what "is" necessary.

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In those circumstances, I accept the Amendment.
Lord TREFGARNE: My Lords, words fail me! I am grateful to the noble Baroness. It was a point that we considered to be very important. The noble Baroness has saved the House and my tonsils quite a bit of effort, and I am happy to acknowledge her acceptance of our Amendment.
Clause 6 [Citation, interpretation and extent]:
7.46 p.m.
Lord SANDFORD Lord SANDFORD moved Amendment No. 11:
Page 5, line 29, at end insert—
("() This Act shall come into force at the expiration of the period of three months beginning with the day on which it is passed.")
The noble Lord said, My Lords, I beg to move Amendment No. 11. I have to go back to a point I made at Committee stage, the main substance of which was that I felt it was not appropriate for this Bill to be enacted before we saw the results of the Government's consideration of the issues raised in their Consultative Document, with which they initiated the review of the water industry.
The noble Baroness was able to tell us at Committee stage that a White Paper will be with us quite soon. It was promised for the spring, and she told us it would be here this month, in July. It seems to me important that there should be a period during which the implications of that can be read, marked, learned and inwardly digested by the regional water authorities and the water companies, and indeed all concerned, before starting work on this Bill, if, unfortunately, it is enacted. The noble Baroness resisted the Amendment I moved then on the grounds that its effect would be to delay the issuing of the orders called for in the Bill which, because of the Amendments she was tabling that day, would begin not when I thought they would begin and when they would have begun if the Bill had just included the regional water authorities. The noble Baroness told us that it is necessary that they should first be issued in November because of the different
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financial years followed and adopted by the water companies.
I withdrew the Amendment in order to take both those points into account, and the new Amendment, I think, does so. It will still ensure that there is a delay after the passing of this Act so that the implications of the Government's White Paper on the water industry can be absorbed; but the delay has been reduced to one of three months, which will not cause any delay in the issuing of the first orders under the Bill. I hope that, with those adjustments, this Amendment will be acceptable to the Government. I beg to move.
Baroness BIRK: My Lords, I appreciate that the Amendment which the noble Lord, Lord Sandford, has now moved will avoid the effect of his earlier Amendment, which would have delayed equalisation for another year; but, frankly, I do not see what possible practical effect his new Amendment would have. He told us on Committee stage, and has repeated it now, that his purpose was that implementation of the Bill should take place only after Parliament has seen and debated the impending White Paper concerning the review of the water industry. I explained to him the Government's intentions on publication of the White Paper, to make equalisation orders under this Bill.
The White Paper will be published later this month and, subject to the Bill gaining Royal Assent, we shall make equalisation orders governing next year in November or December. I very much hope there will be time for a debate on the White Paper before November but, as the noble Lord must be aware, one cannot make promises in such matters. But, whether or not time can be found for such a debate, the arrangements proposed in the Bill would still go ahead. They must go ahead, because those water companies whose financial year starts on 1st January must be given time to take their levy or payment into account when fixing their charges, and the water authorities will have to take equalisation of payments into account in the lengthy process of preparing and submitting their budgets to the Price Commission, which also has to begin in November.
The Amendment, it is true, still allows us to make the orders as planned in

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November, but I really do not think it would serve any useful purpose. What it may do is to hinder us in one way: it would prevent our making orders any earlier than November if we found ourselves in a position to do so. In that sense, it could be counter to everybody's interests. We should get the orders made as early as possible in order to give people as much notice as possible. I say, frankly, that if the noble Lord wants to press his Amendment I shall not force a Division, but I hope, in view of the time sequence I have pointed out, that he will withdraw the Amendment. I think he will get the opportunities he wants, and his Amendment would merely result in delaying the possibility of getting on with some of the orders before November.
Lord SANDFORD: My Lords, I am grateful to the noble Baroness, Lady Birk, for the way in which she has received this modified Amendment. This, of course, is not the end of the day. The Bill will not be enacted in precisely the form in which it leaves this House. The Amendments that we have been proposing, though primarily designed to improve the Bill, are also to give another place an opportunity to reconsider a number of matters.
I think that the question is whether they want the Bill to come into force the moment they have enacted, which I imagine will be later this month, and before—if it is before—they have seen enough of the White Paper. I am inclined to accept the point that the noble Baroness has made and move this Amendment, knowing that if the Government present our Amendments to another place with reasonable despatch and the White Paper has, in fact, by then been issued and they have seen it—and they can see for themselves whether it has implications for the operation of the Bill—then the Amendment can come out. If, on the other hand, another place take the view that it is inappropriate to have the administrative actions that flow from the Bill operating before they have seen the White Paper, then they can leave it in and it will have that effect. I do not think that the effect it will have will be all that disastrous.
I believe that it is necessary to give another place an opportunity to consider the matter which this Amendment raises; namely, the appropriateness of having a
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Bill on this minor matter coming into force, before the White Paper reviewing the whole industry is before Parliament. For that reason and bearing in mind that it is quite open to another place to take it out if, in the circumstances, they think that it should come out, I commend Amendment No. 11.
7.53 p.m.
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 12:
Page 5, line 30, leave out subsection (3).
The noble Lord said: My Lords, this Amendment is in the nature, I believe, of a probing Amendment. Clause 6(3) defines an unmeasured water supply as a
"supply to consumers whose charges for the supply are not payable by reference to the volume of water supplied".
I believe that this observation will require some clarification.
Many measured consumers—consumers who have meters installed—do not in practice pay by reference to the volume of water supplied because of the effect of the minimum charges based upon the rateable value of the premises supplied. If these consumers had to be included in unmeasured supplies a very considerable administrative problem would be created. Furthermore, there are some other added complications of which I believe the Government have not seized themselves. I am told, for example, that in one particular city certain premises are supplied wholly by meter while some similar premises are supplied partly by meter and partly by reference to a fixed charge, while some other equally similar premises are charged on a wholly fixed basis.
I suspect that this inconsistency and, indeed, this haze of mystery, which perchance the noble Baroness, Lady Birk, will be able to clarify, results from the haste with which the Government introduced the Bill in another place, hoping then that the Bill would come into law in time to be brought into force this year. It was, I suspect, for that reason, that those consumers who have metered supplies were totally, or so the Government hoped, excluded from the Bill. Unhappily, as I have related, there are a number of consumers who either wholly or in part are

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supplied through a meter but who none the less may in fact be charged on a basis related to the rateable value of the property because they consume below the minimum quantity specified for meter charges. I hope that the noble Baroness will be able to help me on this matter. I beg to move.
Baroness BIRK: My Lords, I am glad that the noble Lord, Lord Trefgarne, made it clear that this was a probing Amendment, because this is a difficult matter. The Government have always made it clear that our objective in introducing the Bill is to bring some relief to those people who most need it; namely, the domestic consumers in those areas where charges are above average. We should have liked to limit it entirely to domestic consumers but that simply was not practical: there is no easy way in which either the water authorities or the water companies can distinguish the householder from the other consumers who get their water on an unmeasured basis, and in practical terms we have had no alternative but to include all unmeasured consumers. There are, of course, relatively few non-domestic consumers who get an unmeasured supply; nearly all industry and most commercial premises pay by meter.
It is, however, the normal practice for consumers who pay by meter to be liable to a minimum charge based on rateable value which applies if their consumption falls, so that the metered charge would be lower than the water rate. In this way all consumers are liable to pay no less than the water rate, but those with heavy demands pay more.
The effect of equalisation transfers under this Bill will be to increase the water rate of those undertakers who have to pay levies and to reduce that of those who receive payments. Clause 4 ensures that this is the effect. It is our intention that these changes in the water rate should apply also to minimum charges for metered consumers. That seems to us right and equitable. As I have said, the principle of the minimum charge is that all consumers should be liable to pay at least the basic water rate, and we clearly cannot have two levels of water rate in the-same area. So I can confirm that the definiton in the subsection which this Amendment
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seeks to remove will allow the water undertakers to increase or reduce minimum charges to metered consumers on the occasions when those minimum charges apply.
I think, in addition, that I should also make clear that for simple practical reasons we do not propose to include such properties in the total numbers used to make the calculations under Clause 1 and Clause 2. There we shall stick to the number of properties without a meter. The reason, of course, is that the basic calculations have to be made before the start of the year and there is no way of knowing which, if any, metered properties will end up paying a minimum charge. At the end of the year it would be a lengthy process to identify those properties which had done so and we believe that bringing them in would make no significant difference to the calculations. It also is our understanding that all the water authorities and the companies are content with this approach. I hope that this rather lengthy explanation makes the position clear. I concede that we are prepared to look at the matter at the end of every year and see whether an adjustment is necessary.
Lord TREFGARNE: My Lords, I believe that in this matter the noble Baroness, Lady Birk, has helped me considerably. I cannot pretend that I am precisely clear about the effect of what she has said, but she sounded very convincing. I shall study very carefully what the noble Baroness has said and see whether the matter needs to be raised again. She certainly grasped the point which I was seeking somewhat inadequately to put before your Lordships; namely, the effect upon those consumers who have a meter installed but who consume less than the minimum requirement. I think that the noble Baroness has made the situation clear. I am sorry that they are not to be included in the calculation, but if, as the noble Baroness has said, the effect of their exclusion is really not to make any significant difference then I suspect that on consideration I shall be satisfied with what the noble Baroness has said. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.

CHARITY LAW AND VOLUNTARY ORGANISATIONS
8 p.m.
Lord ALLEN of ABBEYDALE Lord ALLEN of ABBEYDALE rose to ask Her Majesty's Government whether they have come to any conclusions on the recommendations made in the report of the Goodman Committee on Charity Law and Voluntary Organisations. The noble Lord said: My Lords, the report of the Committee on Charity Law and Voluntary Organisations, which was so skilfully chaired by the noble Lord, Lord Goodman, is an important document on an important topic, and I am grateful for the opportunity of initiating a short discussion about it. It is particularly pleasing that the noble Lord, Lord Goodman, himself, and the noble Lord, Lord Nathan, who was the vice-chairman of the Committee, are to speak this evening.
From about the time that I became chairman of the National Council of Social Service in 1973—although I hope and believe that this was pure coincidence —we became increasingly aware of concern about the law and the administration relating to charities. We learned of this concern through books and articles, as well as through representations made direct. I suppose the issue which most caught the eye was that relating to the extent to which charities can engage in political activity. But there were other points, too, which is hardly surprising as there was by then a good deal of experience, and circumstances had changed since the Charities Act 1960 had been passed. After a good deal of discussion and consultation, the National Council concluded that the time was ripe for launching a committee of inquiry. I am very grateful that the noble Lord, Lord Goodman, agreed to chair this inquiry and that we were able to support him with a strong membership. The inquiry elicited a great deal of evidence, and I am particularly glad to place on record that the Government Departments concerned co-operated and gave a great deal of help.
It so happens that after the Committee had got under way, the Expenditure Committee in another place reported on the Charity Commissioners and their accountability, and we have the added
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bonus that the Goodman Committee were able to include their comments on the Expenditure Committee's recommendations. I do not suppose that many people will agree with every single thing in the report—I do not myself. Indeed, the report itself contains a minority recommendation. But there will be general agreement that this is a most valuable report, raising all the relevant issues. It is not only the National Council who have great cause to be grateful to the noble Lord and his colleagues. I noted that the Charity Commissioners themselves, in their recent report for 1976, said how much they welcomed the Committee's report, and in view of the high regard I have for the chairman of the Charity Commission I feel that this comment is particularly valuable.
I am not sure that it is universally recognised how important charities are in this country, and how fortunate we are to have such a wealth of activities carried out by charitable bodies for the benefit of the community. A good deal of money is involved, too. Charities hold substantial assets, they have incomes which must total at least £400 million a year—although I am bound to say that some of this income is looking a little precarious, in present circumstances —and they enjoy tax exemptions totting up to well over £100 million a year. All this means that a balance has to be kept between, on the one hand, encouraging voluntary effort without stifling initiative, and, on the other hand, seeing that the money which the public contribute as donors and as taxpayers is not wasted through diversion to non-charitable purposes through incompetence or, indeed, through fraud.
The Committee's report deals with all these issues, but I should like this evening just to pick out four points. The first arises out of the basic recommendation that a definition of "charity" is not practicable, but that the categories of permissible activities should be restated in modern simple language, if those two adjectives are consistent. This proposal rests on the assumption that, very broadly, the present basis of deciding what is a charity should be continued. But Mr. Whitaker's minority report reflects the view held by some, that private charity should now be drastically limited

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just to the prevention and relief of deprivation, and that the rest of the money should go to the public social services which are democratically determined.
I myself believe that the nation's investment in charity is amply justified, even if, in practice, the interpretation of what constitutes "charity" goes wider than perhaps the man in the street would ordinarily understand by charitable purposes. It is an investment which taps resources of effort on a scale which the statutory services simply could not match. I do not know what will be the reaction of the Government to the recommendation about defining "charity", but I hope that they accept the underlying assumption on which it is based. I am encouraged in this by the decision which the Government recently took to exempt all charities from the two points surcharge on the employer's National Insurance contribution, and I am glad to have this first opportunity of expressing appreciation of this important concession.
I can deal very briefly with my remaining three points on the report. I should like to call attention to what the Committee say about the test for securing registration as a charity. This involves not only the question of political activity, but also whether there should be a right of appeal to a tribunal against administrative decisions of the Charity Commissioners, and whether there should be legal aid for appeals to the courts on points of law.
Then there is the suggestion that the Charity Commissioners should have a power to register a charity provisionally for a period, to give them time to resolve doubts whether the organisation is serving the community in a reasonably effective way. Lastly, there is the suggestion that the cy près doctrine should be relaxed, so that when a charity is obsolete some new purpose can be substituted to serve a real current need of society. There are a great many other recommendations, but the only other one I want to refer to is the proposal for a new charity board. On this, I just want to say that this is a recommendation which, in the course of consultations after the report was published, has not found very much favour. Many of those consulted say that they would prefer to see some lay element introduced into the Charity Commission itself.
I am certainly not expecting the Minister to come out tonight with a list of Government decisions, and an announcement of an early Bill. The National Council themselves are still brooding over the Committee's recommendations on fiscal issues and the reviews of local charities, and I know that the meeting, at which they hope to give to the Home Secretary the views that they have formed so far, has had to be postponed until after this debate, because of a little local difficulty. I also recognise that the forthcoming report of the Committee chaired by the noble Lord, Lord Wolfenden, on the future of voluntary organisations, is likely to have some bearing on some of the issues involved. Nevertheless, there are propositions in the report which involve changes of administration and not necessarily changes in the law. We shall listen with close attention to anything that the Minister can tell us at this stage about the Government's reactions to the report and also to anything he may be able to say about the possible programme of consultations; whether, for example, in these days of open government, he is thinking of the possibility of a Green Paper at some stage. I have already spoken for rather longer than I had intended, and I should now like to give way to those who are rather more knowledgeable than I.
8.10 p.m.
Lord GOODMAN: My Lords, those of us who were on the Committee are most indebted to the noble Lord, Lord Allen of Abbeydale, for securing this opportunity to discuss the two years' work that was involved in preparing this report. May I say at the outset that, as the chairman of the Committee, I do not regard it as appropriate that I should press on anybody the virtues or advantages of our recommendations. I do not believe that that is the function of the chairman of a committee. The recommendations are there on paper for everybody to see. Whether or not they are agreed with is obviously a matter for Governmental consideration, for democratic consideration and, at the end of the day, for decisions to be made by other people. We have made our recommendations and suggested what we think ought to be done, and we must leave it to others to judge their merits or demerits. However, there

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are a few observations which can usefully be made by the chairman of such a committee. They can also relate to some of the criticisms which have already been uttered.
There was a basic criticism—not very widely uttered—about the selection of the Committee. I should like to say in quite unequivocal terms that the committee was admirable. The people on it were experts. We did not know, except in one rather spectacularly obvious instance, the political colour of anybody who was on the Committee, nor did it have any bearing on the recommendations which were made. It was a wholly nonpolitical committee until it emerged that what we were saying was the subject of very political comment. The most violent criticism directed against us came from groups who do not, in a simple word, believe that government ought to exist. The most bizarre suggestion we received was that any organisation of a voluntary nature that was non-profitmaking should receive the fiscal benefits and advantages that are now available to charities. I asked one of the proponents of this proposal whether he included, for instance, a body such as the Stock Exchange. I believe that there was a slight pause before no answer was furnished to the question.
All I can say is that I encountered this form of philosophy as Chairman of the Arts Council. A great number of people —great in relation to the numbers interested in the arts but a tiny minority of the population—proposed that the Arts Council should be taken over by another body which would not seek to impose the intervention of any discretion or choice in matters of art. It would be a case of first come, first served, which they saw as the best way of dealing with any administrative problem that arose. I remember that, on one occasion, a particular body was formed which had what seemed to me the wholly virtuous object of showing pictures in tents in the park. This object had our strong support until it emerged that the method of selecting the pictures was simply the order in which they arrived for selection. The first dozen to arrive were exhibited; the others, even if painted by Rembrandt, or Van Gogh, or whoever it was, would still not be exhibited. The notion that any human mind should
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intrude into the question of selection was wholly unacceptable, authoritarian and, to these people, thoroughly repellent.
To my astonishment, the same idea emerged in relation to charities. It is felt in some quarters—and this view is slightly reflected in the minority report—that no organisation should exist to make any decision about other human beings. This would make our lives here much easier, because we could all go home and leave matters to be dealt with simply on the basis that whoever came first received what there was and those who came later received nothing. No doubt the revolutions and riots which ensued would not be dealt with because there would he no police force to deal with them.
This is perhaps a slightly lighter and more frivolous note in relation to our report, but it is important that we should know that these opinions exist. I did not even know of their existence except for my encounter with them at the Arts Council, and the vehemence with which those opinions were expressed to us in evidence and in after-comment came to me as a mild surprise. It seemed to me, at my age and very embedded in Establishment notions, inconceivable that one could bestow upon any organisation that happened to form itself the fiscal benefits which today are available to a very carefully monitored charity. It still seems to me inconceivable. But that there are many other people who do not consider it inconceivable is a matter for reflection —and, I think, for rather chastened reflection. There are people who think differently from ourselves, and it is probable that one of them is in this Chamber at the moment. Nevertheless, those views have to be taken into consideration. That they should arise in the case of a highly technical subject like charities was certainly an agreeable surprise, because it lent a little colour to the discussions which might not otherwise have taken place.
I do not intend, in our nocturnal "romp" discussing charities in this House, to occupy much of your Lordships' time. I have said that I think the composition of the Committee excellent. The philosophy of everybody on the Committee was a profound belief in the need to maintain charitable organisations, which was perhaps based on the rather wide

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concept of the need to retain the volunteer in English national life. I do not think that anybody features more importantly than the voluntary worker. It is in connection with charities that one sees him at his best and that one sees him making his most valuable contribution to social life. I encountered it in my work at the Arts Council, as chairman of the Housing Corporation and throughout those small aspects of public life with which I have been concerned. It is impossible to exaggerate the importance of the voluntary worker and what he does to maintain institutions which would not otherwise be there.
Hence, the Committee has reported that we are not in favour of discouraging small charities simply because they are small or even because they may, on the face of it, seem to involve a degree of effort and exertion that is not related to the results achieved. Of all the activities in this country which are the least mischievous and do the least harm, the people engaged in pursuing charities to relieve poverty, or to provide gowns for virgins, or whatever other activities saw them established in the 15th or 16th centuries, seem to me to be the least harmful of all. I should not like to see small charities swept away into a common pool under some kind of authoritarian direction because it would be profoundly discouraging to an immense number of people who are engaged in this wholly innocent and, I think, benevolent and godly activity, and I do not believe that they ought to be discouraged. That was certainly the philosophy upon which we, as a Committee, worked.
What else needs to be said? Perhaps that there are something like 30,000 small charities in this country. There are a great number—much less than 30,000 —of large charities. There are immensely important activities which are maintained by charities and charitable workers. It is obvious from the strength of interest in these matters, from centuries ago, that this is something which will endure in English life. I do not believe that any statutory discouragement would at the end of the day destroy the charitable impulse, the impulse to bring voluntary aid to human beings, which exists so deeply in the structure of our society. I believe, therefore, that it calls for careful governmental consideration. It is a very
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long time since 1601. It is a very long time since Pemsel's case. It calls for all the recommendations in this very detailed and careful report to be taken carefully into account, together with the recommendations of the Expenditure Committee and those of Lord Wolfenden's Committee when they emerge.
As the noble Lord, Lord Allen of Abbeydale, has said, we had very great assistance from the Government Departments that are involved in these matters. I should like to mention in particular that we had very considerate, careful, detailed and time-consuming help from the Inland Revenue, who gave us evidence on more than one occasion and sent very superior people, if I may use that word. Those of us who are merely concerned with dealings with H.M. Collector of Taxes may not realise that such superior people are available within the organisation. We had assistance from people of high intellectual quality who came and, in fact, rather changed our view. At the outset, many of us were of the view that the job should be done entirely by the Charity Commissioners and that the function of the Inland Revenue was redundant and superflous but, having heard the Inland Revenue on the subject, we revised our view on that aspect of the matter. We are extremely grateful to all the people who so willingly gave us assistance.
I will conclude simply by reading a word or two from the minority report because it demonstrates the profound difference in approach between the majority and the minority in this matter. The minority report says somewhere that, in its view, some matters are too important to be left to private charities and should he referred to the State. Frankly, the view we took was that some matters are too important to be left to the State and should remain in private hands. We held this view very strongly. It is not in the least a political manifestation; it is a belief that the qualities of mercy and compassion and attention to the needs of the elderly, the poor and the afflicted cannot be adequately dealt with by any State or governmental organisation. It is only through the intervention of a person who is privately concerned and who is deeply concerned not because he is employed to do the job but because of an urge from within that the job gets properly

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done. In that spirit, it was with pleasure that we presented this report, for what it is worth and for good or ill. We shall be interested to hear the Government's view on the matter.
8.21 p.m.
Lord PONSONBY of SHULBREDE: My Lords, I am sure we are all very grateful for the opportunity this evening to debate the report of the Goodman Committee on Charity Law and Voluntary Organisations and to hear the chairman of that Committee himself speaking about the work of the Committee. It is almost three years since the Committee was established, but it is almost five years since a Committee of which l have the honour to be the chairman—the Charity Law Reform Committee—started its campaign to press for reform in the existing charity law. I should like to say straight away that we in the Charity Law Reform Committee have been disappointed that the report has not produced radical suggestions for the reappraisal of our attitudes to charity law.
We are grateful that a number of detailed proposals about the administration of charities which have been put forward to the Goodman Committee and, previously, to the Expenditure Committee in the House of Commons, have been accepted, but the central problem of charity law has been tackled in such a way that, if the proposals are enacted, vagueness and uncertainty of law will be increased. The problem is the reliance on a definition of "charity" and this has led to arbitrary distinctions between the bodies which can and those which cannot gain the financial advantage of charitable status.
The report adds endless elaboration to the existing definition in the Act of 1601 to cover every conceivable charitable object. Time and again, the report places great emphasis on the ability of the Charity Commissioners to decide what is appropriate, suitable and deserving, but it fails to appreciate that the real need is to rid the system of value judgment and compounds this with statements of doubtful political philosophy such as, however liberal or tolerant a society may be, it has a duty to determine what is and what is not beneficial to it. Accordingly, between good and evil it cannot be neutral; it must exclude from
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charitable status what it regards as evil, just as it can and does outlaw what it regards as detrimental to its moral welfare.
The Committee has spent too much of its energy on the wrong question. For example, it discusses whether or not contemplative religious orders and ethical and philosophical systems bring benefit to the community, yet it does not address itself to the one important question: Why is it necessary, as the Committee asserts without argument, to have a system of fiscal advantages based on value judgments rather than on objective evidence?
We live in a plural society with many different sets of values. It is invidious for small groups of people to apply any specific set of values to the exclusion of others. No new definition of charity can possibly meet the evident need for fairness, clarity and certainty. For example, ethical societies not founded on a belief in a deity have not been accepted as charities. In principle, the Committee supports the advancement of such movements and considers that, if not detrimental to the community's moral welfare, they should be encouraged and should, in fact, be granted charitable status. However, they should be required to satisfy the Charity Commissioners or the court that their advancement is for the benefit of the community.
But what if the Charity Commissioners think that agnosticism is an evil? What then will become of their particular beliefs? According to the report, the fiscal reliefs granted to charities cost the taxpayer at least £75 million a year. But probably they cost about £100 million when one takes into account the reliefs granted by local authorities. The Committee suggest ways in which further reliefs can be given. For example, they suggest that covenanted donations should be allowed as deductions for higher rate tax purposes and also that company donations should not be taxed as distributions to shareholders. Both these items would be of financial advantage to individual charities.
How the Government will look upon these proposals at the present time I know not, hut I should have thought that in a time of economic stringency the Government would be unlikely to look favourably

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upon any proposals which involve an expansion in the amount of monies given to charities as a whole by the national Exchequer. I should have thought that a better starting point for the deliberations of the Committee, given a limit on the amount of relief to good causes, would have been to consider whether the right organisations were receiving that relief. That is the crucial point with regard to charity law. Because of the unfairness which inevitably occurs at the edges in the definition of charity law one has various arbitrary decisions made, which means that there can be an element of unfairness.
I think that the Committee should have concerned themselves with doing away with this element of unfairness and making proposals to that end. Indeed they did try to ameliorate the position to some extent by pushing further back the boundaries of charity definition, what is and what is not acceptable as a charity. But inevitably this will create a mass of new case law; not case law created in the courts but case law made by the decisions of the Charity Commissioners at individual points of time, as to what is and what is not a charity. Because of the high cost of legal expenses, the impossibility of any small oganisation challenging the decisions of the Charity Commissioners in the courts is well known. It was for this reason that my Committee advocated the granting of fiscal benefits accorded to charities to all non-profit distributing organisations. In paragraph 23 of the report the noble Lord, Lord Goodman, argues:
"We can see no justification for saying that the difficulties should be side-tracked by giving the same status to all NPDOs as is now given to charities. This is really to abolish altogether the concept of charity as it has developed over the centuries and to alter radically the commonly accepted meaning of charities in the minds of most people".
My Lords, this is really nonsense. The ordinary concept of charity is already miles away from its legal definition. By all means let us keep the word "charity". Let charities be sub-categories of NPDOs worthy of the name of charity. The Inland Revenue also suggested to the Committee that the extension of fiscal advantages to all NPDOs would give rise to considerable opportunities for abuse. Yet when members of my Committee met them, the Inland Revenue were not able to
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point to any way in which this scope for abuse came about.
My Lords, I hope this House will not regard this report as the last word about charity law. As I have said, the report contains some very useful proposals about the administration of charities. But it is a report prepared largely by those with a vested interest in the status quo for charities. Both the noble Lord, Lord Allen of Abbeydale, and the noble Lord, Lord Goodman, were on the defensive about attacks which they said had been made about the membership of their Committee. Lord Allen of Abbeydale called it a strong membership; Lord Goodman defended the membership. But the point is that the membership did not reflect the concern of those organisations, like the Disablement Income Group, Amnesty, the National Council for Civil Liberties, the Campaign Against Racial Discrimination, who are outside the traditional ambit of charities. It was their concern and the concern of other organisations which was one of the motivating forces which led the Charity Law Reform Committee to press for an inquiry into the existing law regarding charities. I hope, therefore, that the Government will feel that this is a matter which needs to be looked into further, because I think that a lot more could be said on this matter.
8.34 p.m.
The Lord Bishop of SOUTHWELL: My Lords, I am grateful to the noble Lord, Lord Allen of Abbeydale, for giving us the opportunity of this debate, and I am glad of the chance to express from these Benches what I think is the view of the mainstream Churches in the country. We welcome this report, and not least for the fact that it does not attempt at this time of great change to be drastic in the remedies it suggests for any excesses or deficiencies in the law concerning charities at the present time. The Committee chaired by the noble Lord, Lord Goodman, was generous enough to say that after very careful inquiry no large problems existed, and in consequence only a few matters of obvious demerit needed rectification.
My view, which clearly differs from the view of the noble Lord who preceded me, is that this is a proper kind of report,

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one which proposes changes where change is necessary and declines to meddle where there is little advantage to be gained from meddling. In this field evolution is a far more fruitful process than drastic changes in the law. The long history of case law in charity matters provides us with an invaluable corpus of sound judgment on real situations from which sensible deductions can be made as new situations emerge. Perhaps being born and bred in the Church of England I may have the via media too deeply ingrained in me, and for that reason I may see merit in this report which others may not. But your Lordships may note that my few utterances in this House have not always supported the status quo.
There is no doubt that this matter before us today is a very important matter. There is sometimes expressed the view that if something is worth doing it should be done officially by the decisions and actions of central or local government. But, as this report reminds us, this is a simplistic view.
"Charity will never be altogether superseded by State activity, even in the field of poverty and social welfare. There will always be gaps in the services run by the State. Further, the voluntary services may not only be quick to identify new needs and cater for them before the necessary statutory powers can be given to the State welfare services, but also may give a more individual service less trammelled by the limitations of the rule books under which the State welfare services operate".
Those words are quoted from paragraph 19 of the report.
I would go a stage further by saying that the official agencies cannot avoid being classed as "them", as those who are paid to do good, and so there builds up a natural barrier in the heart of the recipient, who, like any of us, does not like to be done good to. But more than this, voluntary action may not only be swifter, it may also be more daring. Local authorities cannot vote money for what are untried ventures, but voluntary enthusiasts will do just that, risking a lot in order to get a sad gap plugged or a new need met. Perhaps your Lordships will allow me to say one more thing on this point, and it is this. It would be a sad day if the society in which we live was robbed of the challenge to do something positively good out of sheer good will. At a time when we are all naturally
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cautious and anxious not to worsen our lot, we need the challenge that voluntary service can offer to lift us out of our selfishness.
I would agree with the report that motivation to engage in charitable works is not confined to those practising the Christian religion, or indeed any religion. There are many who love and serve their neighbours from what the report calls genuine altruism. But religious belief is a strong motivation, and for this reason, if for no other, it is important that religious bodies should continue to be classed as charities. In many local situations I find that much of the voluntary and statutory social work is being done by people with religious motivation.
I am glad that the report recognises the importance of the nation's spiritual welfare as well as its physical and social welfare. No man can be regarded as whole while his mental and spiritual needs are unsatisfied. We witness today, in my view, a spiritual deprivation on a large scale. The provision of religious amenities and the staffing of religious institutions is not properly done by the State, as in most European countries, but by voluntary contributions, and this charitable work must surely continue to be given the financial privileges which charity status affords. At present ordinary God-fearing people in town and country are giving sacrificially for the maintenance of their religious institutions. This task should be encouraged along the lines of this report.
May I at this point make a tiny plea that the contemplative orders of the Churches and their work should not be overlooked. It may seem to the uninitiated that such prayerful activity is wholly subjective and therefore inappropriately classed as charitable work. I find it hard to distinguish between this prayerful activity and the aim and purpose of the Church's work as a whole. For those of us who have to be inordinately activist, almost to the neglect of our own spirituality, it is comforting to know that we are supported by the prayers of those who have devoted their lives to this one thing; and let no man think it an easy option—it is in fact the hardest of work.
I hope that when reconsideration is given to the question of contemplative

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orders being charitable bodies they will be given generous recognition. I know that there is a need to discriminate between the beneficial and harmful activities undertaken by religious bodies. I have no doubt that there will always be conscientious people aggrieved at any discrimination against them in regard to their religious affiliations. But my view is that up till now the matter has been dealt with, on the whole, very realistically and beneficially, and under the terms of this report there is every chance that this situation will not change.
There will always be religious cranks and people who will capitalise out of other people's susceptibilities, but the English people are not easily "conned" and such aberrations quickly fade away. In passing, I am sure that Mr. Ben Whitaker's remarks in the minority report, that religious bodies should be granted charitable status only in so far as they carry out charitable activities—for example, for their work in relieving poverty—but not for providing vestments, were a convenient shorthand but an unfortunate phrase. The embellishment of Churches or their ministers is a very costly business nowadays and the laiety who pay for it well know their priorities. It would be impossible and wrong for religion to be divested of its symbolism, for it is through symbolism that some truths alone can be communicated.
In conclusion, I should like to say a few words about religion and politics. I trust that your Lordships do not regard the presence of the bishops in this House as a sort of chaplaincy, but rather as a recognition that religion cannot escape involvement in politics if it is to impinge on life. We realise that there is no single area of life that can avoid political involvement. We may regret that so often politics prevents the staging of certain sporting contests, whether it be rugby football, cricket or chess. International sport is bound to arouse political feelings. So also the activities of the Church in this country, and in countries overseas, will require a political stance on the part of the Churches. It is hard for Christians not to express common cause with their fellow human beings in matters of simple justice when they are living under other skies and sometimes alien ideologies. Still less can they stand aside
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when their fellow Christians are concerned, to whom they are bound in ties of affection and international organisation. Here, clearly, we are at the heart of a very difficult problem—the relation of politics and charity law.
Once more may I support the view that the Committee of the noble Lord, Lord Goodman, has taken in this matter. There are political activities which are inappropriate activities for a charity organisation, and the guidelines suggested in paragraph 104 of the report seem to meet this point. In this way charitable bodies will be free to face the inevitable political challenges of the work they seek to do and will also be able to engage in proper political action.
My Lords, I do not intend to comment on the financial section of this report. The Churches are very glad that Her Majesty's Government were ready to concede that charities were suffering grave discrimination by the proposal to levy on them the National Insurance surcharge. I should like to take this opportunity on behalf of the Churches to express their thanks to the Government that that particular financial proposal was withdrawn. It is a great relief to Churches and charities alike, and we are indeed grateful. I am sure that the people of this country will not want charities, and among them Churches, to suffer financial hardship by the withdrawal from them of the financial privileges that they enjoy under charity law. We are glad that this report comes out firmly in our favour on this point.
In general, the Churches support the recommendations of the report and hope that such legislation as is necessary can be introduced at the appropriate time and in the not too distant future for our consideration in this House, when any minor blemishes in these proposals can quite effectively be corrected.
8.45 p.m.
Lord GORE-BOOTH: My Lords, we are very much indebted this evening to my noble friend Lord Allen of Abbeydale for giving us this opportunity to talk about the report which my noble friend Lord Goodman has produced. At once I should like to say that I agree with my noble friend Lord Goodman very much in his commendation of his Committee. I should

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also like to add my commendation of what he himself has written in the preface.
Perhaps I may begin with a quotation from the report which says:
"The mainstay of charity is a general altruism."
I make that my first comment because it is important in this debate to recognise what those who enter into charitable work are like and what they do. Here I believe that the report is very strong—even if it does not use precisely this language—when it says that people who engage in this work are people who quite simply want to do some good to those who fare less well than they do.
Charity is not really about a fundamental theoretical problem. Charity is about the fact that someone gets to know that several hundred thousand babies in Bangladesh do not have enough to eat or enough milk; it is about someone who gets to know that there are a number of children on the streets of Belfast who have nowhere to go to get out of the range of casual gunfire and who would be much better off if a few people subscribed so that they could play together not on the streets but in a hut or in someone's house. That is what the whole motivation of the charity movement is about.
The great strength of this report is that it has regard to this all the time. In other words the report always says, if not in so many ways, do not try to tidy up charity too much. That is the soundest possible advice. I really must take this opportunity of replying to the remarks made by the noble Lord, Lord Ponsonby of Shulbrede, who told us that the motivation of people engaged in charity—such as my noble friend Lord Goodman and the rest of us—is the maintenance of the status quo. If that is said to a playgroup in the East End, they would make a very odd face if not a very odd noise. People are interested in behaving to others as they would like others to behave to them, and the report is quite right in the instinctive understanding that one does good works of this kind when one can, where one can, and with the means that one is fortunate enough to have.
It is also very wrong to talk about a charity "benefiting" from some concession by the Government or some extra money. It is not the charity which benefits; in my case it is the children, but
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it may be the disadvantaged, the aged or whomever one likes. It is they who benefit, not the charity. I am sure that the Committee was right and that we shall be right if we constantly keep this principle in view.
That brings me, with perhaps a bit of a drop from the principle of what we are doing, to the finance of what we are doing. If we try to get away from fashionable motivations, surely we must all be a little horrified at the figures that are given in paragraph 116. These are the figures which indicate that if you have a certain income level (certainly it is a high one) and if you wish to give a charity £1,000, you have to earn £3,280. This is, with great respect, crazy. The charity needs the money for the people whom it benefits. The way in which this scale is arranged is precisely to offer people who are in high income brackets a "disinducement", going up and up, to contribute to charity at all, and this cannot be sensible.
The noble Lord, Lord Ponsonby, said that it might be difficult for the Government to do this, but good heavens! in the sort of world about which we are talking this evening if nobody ever did anything that was not convenient, or might be a little difficult, nothing would get done at all. So I feel bound to protest that the Committee are right in their strictures on this financial situation. I hope that it will be possible that the Government may consider this with some speed because a decision like that takes a good deal less time than decisions of organisation, administration, and the setting up of bodies and so on.
While I am on the matter of finance, perhaps I could also express agreement with the Committee that there would not be great sense in overturning our taxation system in this particular context, but I am sure that the Committee are right to suggest that the period of the covenant has become too long. It has become too long because the people you meet about the place who are able to sign covenants, and want to pledge themselves to the future, cannot in all good conscience to their own families pledge themselves in these uneasy days to periods as long as seven years. I should like to commend the Committee's suggestion that for the time being the covenant period should be reduced to four years. That at least

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would give the charities some assurance of getting a regular sum, but it would not place too unknown and rather frightening a burden on the person contemplating making some kind of a pledge.
May I conclude by once again thanking the Committee very much for what they have done; for their intelligent and sensitive humanity, which I hope, in nearly all the respects which they have considered, will be a guide to a future which will be sufficiently orderly not to raise suspicions of charities but sufficiently relaxed to let people who want to benefit the less fortunate to go ahead and do it.
8.53 p.m.
Lord NATHAN: My Lords, I had the privilege of serving under the noble Lord, Lord Goodman, as vice-chairman of the Committee. To my mind the most remarkable fact is that people give to charitable causes—and, in aggregate, in huge amounts—every year, and they give in voluntary service as well as money. There is ample evidence that the young give no less generously than the young of previous generations, and perhaps more so. This intense desire to give has not been stultified by the Welfare State, as some thought it might be, but rather has, since its inception, gone from strength to strength. It has found new outlets not dreamed of half a century ago. This tenacity of the desire to give has been demonstrated with special significance in these past difficult years of economic stringency. So the first question with which we might have been confronted, whether the changes in social and economic circumstances have rendered charity redundant, answered itself; charity is a central institution in our society.
In view of the remarks of the noble Lord, Lord Ponsonby, I should like to spend a moment or two on the question of the definition of "charity" and the other points to which he referred. First, perhaps, in view of his observations concerning the names of those who were members of the Committee, I might indicate to the House who these were. Apart from the noble Lord, Lord Goodman, as chairman, there were Mr. Montgomerie and myself as vice-chairmen. There was Mr. Ames Lewis, a recently retired Charity Commissioner; Mr. John
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Balcombe, Q.C., since elevated to the Bench; there was Stewart Bates, Q.C.; Professor Sewell Bray, who practises as a chartered accountant; Mr. Cracknell, general secretary of the National Children's Home; Martin Grundy, general secretary, Exeter Council for Voluntary Service; Mr. Nicholas Hinton, director of the National Association for the Care and Resettlement of Offenders; David Hob-man, Director of Age Concern; T. McMillan, director and general manager of Related Banking Services Division of the National Westminster Bank; Mrs. Charles Morrison, then vice-chairman, now chairman, of the National Council of Social Service; Air Commodore Milligan, secretary of the Rayne Foundation; J. K. Owens, director of the National Council of Social Service; Colonel Satterthwaite, director and general secretary of the National Playing Fields Association; Ben Whitaker, of whom mention has been made; and Peter Williams, director of the Wellcome Trust. It is not a bad list, with a variety of interests, experience, and contributions to make to such discussions.
Returning, if I may, to the difficult question of the definition of "charity", we received evidence such as the noble Lord, Lord Ponsonby, has described, from those who would like to see the privileges afforded to charities extended to all organisations constituted so as to eliminate distribution of profits whatever their objects or activities. We rejected this proposition for a number of reasons given in our report, but most importantly because it would eliminate the concept of charity as an institution in our society.
"Charity" has a moral connotation and it is this, in part, which attracts such widespread support. There has been much emphasis on the tax and other privileges which charities enjoy but enormous sums, let alone voluntary service, are received by charities which attract no tax benefit at all. It is this moral connotation which, in large part, attracts this widespread support.
There were those who believed that one should first determine what purposes or activities should attract the tax benefits presently accorded to charities, and confine the legal status of charity to those organisations which conform to those requirements. But to define charities

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according to such a formula turns the argument upside down. What is required is an assessment of the criteria required for qualification of a charity—or a definition—and the tax and other privileges would flow only to those so qualifying.
It is worth mentioning perhaps that the position is that since the beginning charities have, in principle, not paid tax on the ground that they do not make profits. To my mind it is a misconception to say that they are subsidised in the way that word is so often used. We were not surprised, and your Lordships will not be surprised either, that a definition of "charity" eluded us as it has the greatest minds in all generations—with which we do not seek to compare ourselves in any way.
One reason for the difficulty is that from age to age the concept of charity has been moulded by changing social conditions. It is therefore in a constant state of flux. If the concept had remained unchanged it might have died or become of minor importance, yet it is perhaps more vigorous than ever. It was tentatively suggested to us that the Home Secretary should have powers to make changes by Statutory Instrument in what is, or what is not, considered to be a charity. We rejected that proposal for many reasons. Above all, we felt that charity provides an opportunity for individuals to stake out priorities for themselves. By giving for spastic children, or cancer relief, or overseas relief, whatever it may be, the giver is identifying himself with that cause and establishing for himself, and perhaps by his example for others, a priority for it. Governments have constantly to establish their priorities but their choices are much constrained by political and financial factors. Government do not and cannot therefore reflect the aspirations of all, all of whom are individuals with personal predilections and all of whom are in one way or another within minority groups within the whole. The old, the sick, the sportsman, the musician—each in some aspect of his life is within a special group with interests in common. Government intervention in establishing what is and what is not a charity contradicts the basic concept of charity itself.
It is in this context that I turn to some of our main recommendations. The noble
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Lord, Lord Allen of Abbeydale, in opening referred to our view that the preamble to the 1601 Act had served us well. But we thought the language was so out of tune with current usage that it would be well, first, to update it and, secondly, to set out the categories of activity, or rather purpose, now regarded as charitable. Therefore we set that out in an appendix to the report which we hope might be of use in case this were acquired for incorporation in a statutory provision.
I wish, first, to refer to the environment, a comparatively new field of charitable activity. The widespread and increasing support for and interest in such charities derives from a new philosophy. It is increasingly coming to be thought that the heritage of the land, the trees, the beauty of landscape, the antiquities and curiosities which previous generations have created, are not dispensable as rights of property by private or public interests based on personal preferences or economic pressures, but that the public have an interest of their own, separate and distinct from rights of property for their enjoyment and as trustees for future generations. Further, this philosophy extends to the development of new landscape, both rural and urban. We believe that every encouragement should be given to charities with such purposes and that they should not be constrained by any narrow interpretation of law or practice.
The question arose in regard to the overseas activities of English charities, and our own recommendations on this have received some comment in the Press, so perhaps I might comment on the subject. We start from the proposition that the purposes and activities which are charitable if carried out in England should likewise be charitable under English law if carried out overseas. Poverty, ignorance or the desecration of ancient monuments are as much an affront to civilisation if carried out overseas as they are here. Such activity abroad by an English charity could, we appreciate, be contrary to the public interest of the United Kingdom.
In principle, we believe that Governmental intervention or direction in relation to charities should be avoided wherever possible; any such intervention should be public and open to debate. In these circumstances, we recommend that the Foreign Office should be empowered to

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make an order requiring a charity to cease an activity overseas, but subject to safeguards. These safeguards would be that the order should be made only after giving an opportunity for representations to be made, including the possibility of debate in Parliament, and the order should be published.
We were also concerned about what might be called international charities. Generally, the need and demand for action by charities across national boundaries have greatly increased in recent years, and this is likely to continue with increasing pressure. We believe this should be encouraged. However, the need for effective supervision and control over charities by the Charity Commission, the courts and the Inland Revenue to avoid abuses is of overriding importance to maintain public confidence, which now justifiably stands high.
However apparently insular and nationalistic such a policy may appear, we believe the current position, under which only charities constituted in England can enjoy privilges accorded to charities, should be maintained. I would hope, however, that by international agreements, possibly instituted under the aegis of the Council of Europe, some means may be found to meet the requirements of supervision and thus enable trans-national charities to be constituted.
Possibly a step by step approach relating to particular charitable projects, such as the conservation of Venice, the development of specific youth programmes or particular projects for education, might be more fruitful than an attempt to formulate some all-embracing convention covering all forms of charitable endeavour. As the noble Lord, Lord Allen, pointed out, the problems in regard to the political activity of charities proved, as we expected, to be the most difficult which we had to consider and I will not detain your Lordships by referring to our proposals in that regard; it takes a complete chapter of the report and at least I hope the points in favour of different courses are clearly set out.
Our brief was to consider charity law and voluntary organisations. Law does not create charity; it provides a framework within which it may be exercised. In delimits the scope of charity for legal
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purposes, so that it shall not be so narrow as to stultify endeavour nor be so wide as to dilute its meaning. The law may be changed marginally or radically without destroying the concept. Once the concept is undermined by the general body of opinion, it will die; directly or indirectly, a few have started on this road.
A declaration now of the importance of charity as a central institution in our society maybe reeks of platitude. If left until an attack is mounted, it comes too late. If our report is criticised for platitudes, I would rather that than have to plead for a lost cause. I therefore hope that the Government and your Lordships will affirm the central importance of charity today, and that the Minister in his reply may be able to indicate some steps which he has in mind to make in regard to the changes in law and practice which we have recommended.
9.7 p.m.
Lord PLATT: My Lords, you will be pleased to know that I rise only to ask a question which, after all, is what we are here for. I may possibly ask another related question, and I shall, I am afraid, have to take a little of your Lordships' time in explaining how this question arises. My impression from the debate is that charity is entirely run by very high principled saints. Perhaps all saints are high-principled—but, at any rate, those are the people involved. Your Lordships may find some of my questions rather unwelcome in that context. I will have to be quite specific. But I do so only to give your Lordships an example of the way that some charities are managing their affairs. I shall have to be specific, but I shall not name the charity, because I think that that would be unfair as I have no evidence that they are in any way breaking the law.
Let us call it the National X Research Fund, X being a group of illnesses in which I have myself been interested. A strong committee of very distinguished men of complete integrity was called. It was a scientific committee, which was to decide on how the money should be spent, and what projects should be supported. But like most scientific and medical men in general, they were far more interested in what they would like

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to do with the money than in how it was to be obtained.
I was asked to act as sponsor, which I gladly did, and as your Lordships know, a sponsor does not usually expect to have to do anything, except perhaps turn up at one or two Press conferences. But surely the one thing he must do is ensure that all the methods used by the fund which he is supporting are those of which he can approve, and he must, in other words, be able to guarantee the integrity of the charity.
After a few years I found that all kinds of peculiar fund-raising activities were in use, including bingo, which is probably perfectly legal, and so on, and there were collectors going around, visiting public houses, especially on Saturday nights. They were able to bring in large sums of money for this fund. I then found that the collectors were entitled to take 30 per cent. of the money collected, the supervisors of each district were taking another 10 per cent., and there seemed to be certain people in the background who were perhaps getting some other, unspecified, rake-off.
The facts were made known in articles in the Guardian and in the News of the World. Needless to say, I inquired into all of this because it seemed to me that they were evading at any rate the spirit of the Charity Commissioners, if not the actual rules. After some evasions, I was told that the activities which seemed to me to be rather questionable, with these enormous sums going into the pockets of the collectors, were all put into action by something called the Appeals Society of the Research Fund. This was not registered as a charity, and so it has no reason to respect any of the kind of rules which normally govern charitable institutions.
But I checked up on the collecting boxes, and I found that they were clearly labelled as collecting for the research fund, and not for the Appeals Society. Whether they still are, after some comments that I have made, I do not know because I resigned my position as a sponsor. The registered number of the charity was in fact given, although this money was going into the Appeals Society. As I said, it may be that nobody was breaking the law, but the innocent public who put their
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50p pieces or pound notes into the boxes, little knew that about half of the contributions would never reach the fund at all.
This makes it very easy for the central fund. All it has to do is register that so many thousands or hundreds of thousands pounds were paid into its fund by the Appeals Society. Of course, there are no central expenses on that, and so they can show a nice pretty picture of having got all this money without having to put up their central office expenses. But of course they can do it only because all the expenses have been paid out to the collectors before the fund ever sees the money at all.
Now we come to the question. Nothing I have read in the Goodman Report—and I admit that I have looked only at parts of it which I think might be relevant to my question—gives me to understand that they knew that this kind of thing was going on. Nothing that I have heard tonight would make me think that any noble Lord who has spoken thought that this kind of thing was going on. I should like the Minister to try to give me some guidance as to whether all this is accepted and acceptable practice, or whether it really does need looking into a little more closely.
Lord GORE-BOOTH: My Lords, may I ask the noble Lord a question? Is he somewhat tending to take a single case of abuse to prove a general point, or is he drawing our attention to a single case where abuse has been possible?
Lord PLATT: My Lords, I cannot answer that question absolutely because I happened to he involved in this and, therefore, went into it very carefully; but I was told that there was nothing unusual in this procedure. I think that is the best answer I can give the noble Lord, because I have not studied charitable institutions in general. I was taking a specific example in order to demonstrate what could be done.
9.14 p.m.
Lord STRATHCONA and MOUNT ROYAL: My Lords, clearly one of the more valuable functions of charities is indeed to produce a report about charities, which has given rise to this debate this evening. I have served, and still do serve, on several registered charities, and I have had experience (shared by most of

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your Lordships, I expect) in trying to extract support from other charitiable organisations. I dare say the noble Lord, Lord Ponsonby, would therefore say that I had a vested interest in what we are talking about this evening. Equally, I suspect I am probably not alone in not having devoted a great deal of thought to some of the fundamental issues until I looked at this report, which made me aware how incredibly ignorant I was about some of the underlying problems. I suspect this is a condition shared by a number of others, and I am afraid it may continue to be so because I had quite a lot of difficulty in getting hold of a copy of the report. That is a great shame because it should be widely read. It does, at least, offer a primer which sets out many of the questions that we need to answer, even if we do not necessarily agree on some of the answers which are put forward in the report.
I was very glad to find that, right at the outset, the report laid the ghost of some of the unthinking and iconoclastic, rather cynical critics who dismiss all charities as a racket. On page 4 one finds the interesting comment:
"At the beginning of the Committee's deliberations, there was an indication that there were a number of problems which might have suggested that radical reform was necessary. However, after considering the evidence and making an analysis of the problems which were discussed with a number of witnesses on several occasions, it was evident that no large problems existed "—
although they then go on to say there were certain areas which called for further thought. I find this very reassuring, and I hope I shall not sound presumptuous if I say that the whole report seemed to me to be shot through with ordinary, sound, common sense. I think it would be recommended reading to anybody who is going to indulge in philosophical thinking about the place of charities in our national life.
We on this side of the House are, I think, bound to welcome the conclusion at the end of Chapter I, where the third recommendation in the Summary says:
"We do not agree with those who say that the concept of charity is outmoded and that all its activities should be functions of the state".
This, of course, was against some of the comments made in the minority report, which seemed to me to devote a great deal of time beating the air and making a
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mountain out of a molehill on the issue of rationalisation. The minority report says:
"The fact that, 16 years after the Act, over half the charities registered with the Charity Commission have an annual income of less than £50 and nearly 25 per cent. have an income of less than £5, speaks for itself".
Indeed it does speak for itself, and one of the things it says to me is that it is not a terribly big problem because the sums of money involved are so extraordinarily small.
Going back to the more general question, it was also interesting to find that in this House in 1959 a noble Lord called Lord Nathan made a great speech on this subject in which he quoted from a debate 10 years before. He said:
"It was my noble friend Lord Pakenham who, in the debate 10 years ago, speaking then for the Government of the day, said that:
'Without voluntary service the State would lose its soul';"
and went on to say:
"I adopt that phrase". —[Official Report, 13/5/59; col. 366.]
It is interesting to find the same general comment cropping up again in this report. I must say that I, too, was slightly worried by the question of the moral value judgments which have to be made on this issue of charities and it troubled me that the report appeared to feel that it was possible for the Charity Commissioners to make these judgments. But I am bound to say I did not find it very logical of the noble Lord, Lord Ponsonby, to suggest that what we apparently have to call the NPDOs should all be allowed to enjoy the fiscal benefits which relate to charities and at the same time that the Government would control the amount of money allocated to charities. I cannot see how you can have it both ways, but perhaps I misunderstood the noble Lord. If so, I apologise and no doubt we shall be able to work it out later.
I believe that the question of the State's participation is an important one. It seems to me that, almost by definition, the State cannot deal with many of the issues which the charities have set up to handle. Added to that, we have the possibility of political interference in charitable organisations, the sheer inhumanity of size and what I might call the irresistible "Parkinsonian" tendency of the self-perpetuating bureaucracy which all these

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organisations tend to create around themselves, where what we ought to see is a reduction in bureaucracy. One of the ways in which we can achieve this is to recognise the great value—as the report did and as the noble Lord, Lord Goodman, emphasised again this evening—of the enormous voluntary efforts which are put in, particularly by after-hours activity at local level and by people slaving away for salaries which would not be regarded as competitive at the central administrative level of charitable organisations. I hope that we shall take to heart the resistance in the report to the imposition of coordination and uniformity in the name of administrative tidiness. This is another point which struck me as being very much a part of the minority report with which I could not agree. Instead, we should be doing all we can to encourage local variations which are appropriate to the disparate needs of all areas of this country. It was clearly no accident that, in the days of the Arts Council under the noble Lord, Lord Goodman, of which I had some experience, one of the criteria for giving grants was the amount in local contributions which had been forthcoming.
The other point that I think we have not made at all is that we need to encourage sources of volunteers outside the State and quasi-State organisations by the obvious means of increasing profits and reducing taxes. Here, I hope the noble Lord when he comes to reply will be able to tell us what is the Government's attitude to the rather anomalous notion that supertax is not allowable whereas the basic rate of tax is allowable. There is no defence for this. This is a point which has already been made at least once this evening and I shall not reiterate it.
My Lords, I was attracted to the idea of a charity board to advise on policy because it seems to me that this is a good way to make sure that policy issues are kept under review. This is a function which has recently been handled in other areas by organisations like the Public Accounts Committee. We do not want the Charity Commissioners to become set in their ways. I hope that the next time we come to have a report on this subject we shall not find in it the splendid phrase—whose author I think I can guess—
"A fine selection of vituperative epithets has been levelled at the Charity Commissioners in the evidence".
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I hope that the existence of a charity board might help to avoid that happening and might also help to prod the Government into a constant examination of whether the policies in the Charity Commissioners are being adapted to the continually changing circumstances in which they are being operated.
Then also there is the concept of an appellate tribunal which is sensible if one is going to ask the Charity Commissioners to operate their administrative functions rather more intensively. The caveat one would utter here is to ask whether this might add a further cost. In my ignorance, I do not know who pays for the Charity Commission at the present time. One would be worried as to whether some of the suggestions would be liable to increase the cost of the charitable administration.
The Report makes it clear that the law may need some revision and updating—which is reasonable enough when, as several noble Lords have mentioned, the basic law was made in 1601—but there is no need for major surgery. It also mentions that the law is not clear. My worry here is that it is seldom clear to the layman, anyway, and nothing that I have seen in recent years has led me to believe that Parliamentary draftsmen are likely to add a great deal to the clarity of the law. I am sorry to say this, but it has to be said.
My Lords, I do not think that I can do better than end by quoting the last paragraph (paragraph 251) of the report which sums up exactly what we ought to he thinking about at the present time. It is headed "A More Imaginative Approach".
"The main considerations which we have had in mind in drafting this latter part of the Report are firstly the hope that it will be possible, as a result of the recommendations, to bring a more imaginative and positive attitude to bear on the subject of charities, and secondly, by making a clear distinction between the small local charities and the large national charities, and by decentralising the surveillance of the former to ensure that more time is spent in the years to come on the study of the problems and needs of the larger national charities".
Lord PONSONBY of SI-TULBREDE: My Lords, before the noble Lord sits down, may I say that he heard me correctly. The question is whether the

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jam is spread thickly over a smaller area or more thinly over a much larger area.
9.29 p.m.
The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich): My Lords, all will agree that the House is indebted to the noble Lord, Lord Allen of Abbeydale, for having given us the opportunity this evening of discussing the report of the Committee on Charity Law and Voluntary Organiations, of which the noble Lord, Lord Goodman, was chairman. We also agree that the subject is one of considerable social importance. That has been testified to by virtually all who have participated in the debate. It should be of interest to the very substantial proportion of the public who contribute to or benefit from charitable and voluntary work.
On subjects of this kind, this House is often able to bring to bear a degree of expertise which could not readily be found elsewhere. It has been so this evening because the noble Lord, Lord Allen of Abbeydale, who initiated the debate, only recently relinquished the chairmanship of the National Council of Social Service which of course set up the Goodman Committee.
I am always in a slight difficulty when referring to the noble Lord, Lord Allen of Abbeydale, whom, according to the rules of the House, I cannot appropriately describe as "my noble friend". I have to refer to him as "the noble Lord, Lord Allen", although he and I served together in the Home Office for quite a substantial time. However, I was reassured, as I am sure the rest of your Lordships' House were also, to hear the former Permanent Under-Secretary of the Foreign Office refer to the former Permanent Under-Secretary of the Home Office as "his noble friend". So, I am quite sure, were the rest of the Civil Service.
Among those also who have contributed to the debate today have been the noble Lord, Lord Goodman, who presided over the Committee, and the noble Lord, Lord Nathan, whose interest in this subject continues a family tradition. His father was chairman of the Committee appointed in 1950 to review the law relating to charitable trusts in England and Wales and on whose report the Charities Act
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1960 was based. The noble Lord has continued his father's interest in the law on charities; he is one of the leading authorities on the subject and was also a vice-chairman of the Goodman Committee. We are also glad that the debate has enabled my noble friend Lord Ponsonby of Shulbrede to speak to us and give us his views. He provided the House with a critical analysis of the report of the Goodman Committee and I think the debate was very substantially improved as a result of that.
It is difficult, inevitably, to deal with some of the more detailed points that have arisen, but perhaps I could start by dealing with a point made only a few moments ago by the noble Lord, Lord Platt, who referred to a particular charity. I do not know the name of the organisation to which he was alluding, but all I would say about his speech is this. The law, as I understand it, is that house-to-house collections and street collections for charities are subject to the control of the local authority. In the case of London, in the Metropolitan Police District it is the responsibility of the police. Collections in public houses are not subject to control, but the Committee of the noble Lord, Lord Goodman, in paragraph 213(c) of its report recommended that they should be brought under control. We shall, of course, be looking at that recommendation—
Lord PLATT: My Lords—
Lord HARRIS of GREENWICH: It is the practice, if I might just continue to deal with the point, to permit charities to retain a commission, provided that the commission does not appear to be excessive; but I should like to look more carefully at what the noble Lord said. If he would care to provide me with further information on the matter I should be glad to receive it and then I, or perhaps my honourable friend the Parliamentary Under-Secretary, who deals with these matters, will write to him.
The Committee whose report we are discussing was set up in 1974 with a very wide remit, as I am sure the noble Lord, Lord Goodman, would agree: to examine the effect of existing legislation about charitable organisations in England and Wales, and to suggest improvements to

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benefit the work of voluntary organisations. The report, of course, was neither produced nor directly sponsored by the Government, but it was, and in my view will be, of great value to us. We had been awaiting it not only because of its intrinsic significance but also because in the autumn of 1975—and this point has been mentioned by a number of speakers this evening—the Expenditure Committee in another place produced a report dealing with the accountability of the Charity Commissioners. During the 1974–75 Parliamentary Session, the Expenditure Committee in another place and the Committee of the noble Lord, Lord Goodman, were both at work simultaneously. The Expenditure Committee, as is customary, completed its work within the compass of a single Session. It produced a report which was necessarily a great deal shorter than that of Lord Goodman's Committee and, of course, it covered a far narrower field.
When the Expenditure Committee's report appeared, it seemed sensible to the Government that our consideration of its recommendations should be deferred until we received the report of the Committee of the noble Lord, Lord Goodman. Now, of course, we have both reports before us. With the aid of the helpful comparative summary in Appendix III of the report of the noble Lord's Committee it can not only be seen that the two reports cover some common ground but also that, on a number of issues, they disagree.
I should like to begin by dealing with some of the recommendations of the report of the noble Lord, Lord Goodman, and his Committee. The Committee began, naturally enough, by considering the definition of "charity". The Nathan Committee recommended in 1952 that the definition then in force, which operated by reference to the examples of charities given in the preamble to the Statute of Charitable Uses passed in the reign of Queen Elizabeth I, should be replaced by a shorter and simpler definition in modern terms, but without abolishing the existing case-law. However, the then Government rejected this recommendation in 1955, on the ground that it was impracticable to devise any "new" definition which would not be new in substance as well as in form.
The Committee of the noble Lord, Lord Goodman, has now recommended a restatement of the categories of charities in
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simple and modern language, on the lines suggested in Appendix I to the Committee's report. The Committee has given up the Nathan Committee's hope for a short definition; but in other respects, particularly as regards preservation of the existing case-law, the recommendations of the two committees have a great deal in common.
Reference has been made to the minority report of Mr. Whitaker. It was referred to by the right reverend Prelate the Bishop of Southwell and others. It relates to issues of broad social policy rather than questions of legal definition. Mr. Whitaker urged that the scope of charity should be restricted to the relief of poverty and deprivation, and to social welfare in general. As is clear, this restriction advocated by Mr. Whitaker was not supported by the other members of the Committee who considered that other causes to which people were willing to devote money and voluntary effort without material reward also deserved the protection which the legal status of charity affords. All I can say is that this is a matter of considerable importance. There is here a substantial philosophical divide and it is clearly an issue upon which the Government must form a view and so must Parliament.
The Committee of the noble Lord then went on to express general satisfaction with the present arrangements for the control of charities by the Charity Commissioners. I am grateful for the generous words bestowed on the civil servants in various Departments by the noble Lord, Lord Goodman, because, as he rightly observed, the Committee obviously derived a great deal of benefit from the very substantial assistance it rightly received from officials of various Departments. I am sure that all those who assisted the Committee will be grateful for what the noble Lord said.
Having indicated their general satisfaction with the control of charities by the Commissioners, the Committee went on to recommend certain extensions of the Commissioners' functions. In considering these recommendations we shall need to take into account the demands that their implementation would make on public service manpower, and the consequent effect on the level of public expenditure. We shall also have to consider the objections that the Goodman Committee

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expressed to financing the work of the Charity Commission by levying a registration fee on charities. This is an issue—and there are others—where there is a difference of opinion between the report of the noble Lord and his Committee, and the recommendations of the Expenditure Committee in another place.
There are also divergent recommendations from the two Committees on the arrangements for the review of local charities—whether responsibility for these reviews should rest with local authorities, as is the situation at the moment, or with the Charity Commission, and whether there should be powers of compulsory amalgamation. There are also differences of view about the structure and accountability of the Charity Commission—whether the Commissioners should, as they are now, be civil servants, or be drawn from a wider field; and whether they should be made answerable to Parliament, through my right honourable friend the Home Secretary, for their day-to-day work.
Of course, the Committee of the noble Lord, Lord Goodman, submitted its report not to my right honourable friend the Home Secretary nor to any other Minister, but to the National Council of Social Service. The House will understand, therefore, that the Government cannot take their consideration of the Goodman Committee's Report very far until we know how far the recommendations are endorsed by the National Council of Social service itself. The NCSS, for its part, has decided to consult widely before formulating its own views. The noble Lord, Lord Allen of Abbeydale, presided at a conference on the Goodman report in April, which I know was also addressed by the noble Lord, Lord Nathan, and some other members of the Committee. No doubt, other representations have been made to the National Council by its constituent bodies. I understand that the Council is now drawing up a memorandum for consideration by the Government, and we look forward to receiving it.
The present Chairman of the National Council of Social Service recently asked for a meeting with my right honourable friend the Home Secretary to discuss the report of the noble Lord, Lord Goodman, and his Committee, and this meeting—
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having been deferred on one occasion, as the noble Lord, Lord Allen, has rightly observed—will be taking place later this week. In these circumstances, I know that the noble Lord, Lord Allen of Abbeydale, will not be surprised to hear that the Government have not as yet reached any conclusions on the recommendations made by the Goodman Committee. Not only would it have been somewhat discourteous to the National Council of Social Service if we had attempted to do so without knowing what their views might be, but the very breadth and scope of the Committee's report would have rendered it an exceptionally difficult task. Nevertheless, as I indicated at the beginning of my speech, this is clearly a most important matter and so we regard it.
The work of charities affects the lives of many millions of our fellow citizens. The noble Lord, Lord Goodman, referred in his speech to the role of the volunteer in our society, and certainly I would agree with him. For the first two years when I was at the Home Office, I had responsibility for the voluntary service unit of the Home Office which, as the noble Lord will know, has an important role in relation to the voluntary organisations and their total relationship with Government—not only my own Department, but all others. Therefore, I had a great deal to do for those two years with representatives of the voluntary organisations and, certainly—and I am sure that my experience will be very similar to that of the noble Lord—one could not but be impressed, and sometimes moved, by the tremendous amount of dedicated and disinterested work that takes place among people of this kind. Certainly, I agree with the noble Lord, that, at a time of great national economic difficulty, there is no doubt that, whatever philosophical differences may exist, in many cases if the voluntary movement—if I may so describe it—does not take on certain functions, no one else will do so.
The blunt reality is that we as a country are in a position where we can define without any difficulty urgent social problems, but we shall be unable to devote enough in the way of resources to dealing with those social problems. As a result, we shall be heavily dependent on the work of people in voluntary organisations. To take only one obvious example, this

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is particularly true in the area with which I am involved; namely, the general question of penal institutions, probation and after-care, and so on.
In many of these areas we are increasingly dependent upon the disinterested work of a large number of people who are prepared to give of their time. Therefore, I very much agree with the general approach of the noble Lord, Lord Goodman. Certainly it gives us an indication of the importance of the subject which we have been debating this evening. In the situation which we have been discussing and which I have just identified, it is clearly desirable that the Government should determine their policy without unreasonable delay. Of course the examination of the two reports will take some time because, as the noble Lord, Lord Goodman, pointed out, many Government Departments are inevitably involved with both. Given its responsibilities, my Department will be particularly closely involved.
The noble Lord, Lord Allen of Abbeydale, asked whether the Government are thinking of producing a Green Paper. As the noble Lord will be well aware, the Government are under an obligation to reply in due course to the report of the Expenditure Committee. Such a reply is normally conveyed in a White Paper. Whether or not at a later stage it will be appropriate to publish a Green Paper I do not know, but certainly I shall take into account the suggestion of the noble Lord and make quite sure that it is considered by those concerned.
To sum up, as I indicated at the beginning of my reply, I take the view—and I think it is the view of all noble Lords who have participated—that this has been a valuable debate. Certainly it will be of value to both the National Council for Social Service and the Government. I should like to assure the House that my right honourable friend the Home Secretary, knowing of your Lordships' interest in the subject and that there is this report from the Expenditure Committee in another place to which the Government
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have yet to reply, is determined to ensure that we should now proceed to formulate our views on these important issues as speedily as possible.

  NORTHERN IRELAND: HUMAN RIGHTS COMMISSION REPORT
  NORTHERN IRELAND: HUMAN RIGHTS COMMISSION REPORT
  SHIPBUILDING SUBSIDIES
  SHIPBUILDING SUBSIDIES