Sitting of 21 July 1977

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

  NORTH WEST WATER AUTHORITY BILL
  [Lords]
  (By Order.)
  Order for Third reading read.
  To be read the Third time upon Tuesday next.

  MERSEYSIDE PASSENGER TRANSPORT BILL
  (By Order)
  Order read for resuming adjourned debate on Question [11th July], That the Bill, as amended, he now considered.
  Debate to be resumed upon Tuesday next.

  UNIVERSITY OF LONDON BILL [Lords]
  (By Order)
  Order for Second reading read.
  To be read a Second time upon Thursday next.?

  GREATER LONDON COUNCIL (GENERAL POWERS) BILL
  Ordered,
  That the Promoters of the Greater London Council (General Powers) Bill shall have leave to suspend any further proceedings thereon in order to proceed with that Bill, if they think fit, in the next Session of Parliament, provided that the Agents for the Bill give notice to the Clerks in the Private Bill Office of their intention to suspend further proceedings not later than Five o'clock on the day before the close of the present Session and that all Fees due on the Bill up to that date be paid.
  Ordered,
  That if the Bill is presented in the next Session, the Agents for the Bill shall deposit in the Private Bill Office a declaration, signed by them, stating that the Bill is the same, in
  1822
  every respect, as the Bill which was presented in the present Session.
  Ordered,
  That as soon as a certificate by one of the Clerks in the Private Bill Office that such a declaration has been so deposited has been laid upon the Table of the House, the Bill shall be deemed to have been read the first and second time and committed.
  Ordered,
  That all Petitions against the Bill presented in the present Session which stand referred to the Committee on the Bill shall stand referred to the Committee on the Bill in the next Session.
  Ordered,
  That no Petitioners shall be heard before the Committee on the Bill unless their Petition has been presented within the time limited within the present Session.
  Ordered,
  That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the present Session.
  Ordered,
  That these Orders be Standing Orders of the House.—[The Second Deputy Chairman of Ways and Means.]

ORAL ANSWERS TO QUESTIONS
  NORTHERN IRELAND

    Young Persons (Employment)
    Mr. John Ellisasked the Secretary of State for Northern Ireland what progress has been made with regard to the youth opportunities programme; and if he will make a statement.
    Mr. Canavanasked the Secretary of State for Northern Ireland what further steps he has taken to improve the employment prospects of young school leavers in Northern Ireland.
    The Minister of State, Northern Ireland Office (Mr. J. D. Concannon): I announced on 17th May a £13 million package of measures aimed at alleviating unemployment in Northern Ireland. This extra finance has enabled a number of measures specifically related to young people to be taken.
    On 30th June my right hon. Friend the Secretary of State announced in the House that a youth opportunities programme

    1823
    would be established in Northern Ireland. The Department of Manpower Services will be responsible for co-ordinating the programme. Officials have had discussions with the Northern Ireland Region of the CBI and the Northern Ireland Committee of the Irish Congress of Trade Unions. Arrangements are in hand for a further meeting with interested bodies, including some who should be able to run schemes under the programme.
    The Department will itself operate a number of schemes and action is being taken to ensure that the necessary training and careers staff will be available as the programme gains momentum. The programme's primary aim will be to provide effective training and experience to help young people into permanent employment, and it is expected to add some 2,000 places to those already provided in training and employment schemes.
    Mr. Ellis: I thank my hon. Friend for that reply. Can he say how much this programme has cost and how it compares with schemes in this country?
    Mr. Concannon: The Northern Ireland programme will provide about 6,000 places compared with 130,000 in Great Britain. If we use the multiplier of 40, the ratio in Northern Ireland is much higher than in the rest of the United Kingdom. It is too early to give any firm estimate of the cost of the programme but indications are that when it is fully operative it could be as much as £40 million.
    Mr. Canavan: Will my hon. Friend urge the Northern Ireland Development Agency to help create better employment opportunities for young school leavers by assisting in manufacturing and industrial projects such as the crystal factory in Andersonstown, which some of us in the Parliamentary Labour Party visited earlier this year, which is making a meaningful contribution to creating jobs for young school leavers in Northern Ireland.
    Mr. Concannon: I shall use every arm that I can in Northern Ireland. There are several opportunities that I can use. We do, of course, look hard at the employment of young school leavers and teenagers. The NIDA is one of the arms that help me very well indeed.
    Mr. Powell: Is it not the case that another factor which has to be taken into account when judging the ratio of expenditure on youth opportunities is that the level of unemployment is higher in the Province than it is in any other part of the United Kingdom?
    Mr. Concannon: Yes. I was only drawing comparisons to show how much we were doing in Northern Ireland compared with the rest of the United Kingdom. With the unemployment rate in Northern Ireland, that is just how it should be.

    Security
    Mr. Molyneauxasked the Secretary of State for Northern Ireland whether he will make a statement on the security situation in Northern Ireland.
    Mr. Farrasked the Secretary of State for Northern Ireland if he will make a further statement on the security situation in Northern Ireland.
    The Secretary of State for Northern Ireland (Mr. Roy Mason): Both Republican and Loyalist terrorist groups are being brought under growing pressure by the effectiveness and vigilance of the security forces. Terrorist attacks are still being made from time to time, especially on the security forces and against property, but these must not be allowed to mask the very real improvements of recent months. So far this year nearly 750 people have been charged with terrorist crimes, including over 140 with murder and attempted murder and over 260 for firearms and explosives offences.
    Mr. Molyneaux: Bearing in mind the IRA habit of switching to new tactics, will the Secretary of State assure the House that during the period when Parliament is in recess there will be flexibility in response to such changes in tactics?
    Mr. Mason: I can assure the hon. Gentleman on that score. We are, of course, aware of the methods that the Provisional IRA particularly has used in the past and we know how it tends to switch targets. At the moment it appears to be concentrating particularly on pinpointing members of the security forces. I am under no illusions. I do not allow myself to be complacent at all. During the course of this year we are

    1825
    determined to make substantial inroads into terrorist activity in Northern Ireland.
    Mr. Farr: While recognising what the Secretary of State has said, may I ask him to make a statement about the non-payments of rates in certain areas? Is that improving, and are we nearing a situation in which rate demands can be universally enforced?
    Mr. Mason: I do not know that the non-payment of rates arises on the security question, but I should have to have more knowledge of the question before I could give a more detailed reply.
    Mr. Goodhart: The security forces are to be congratulated on their recent successes, but is the right hon. Gentleman aware that a substantial propaganda campaign is now being mounted against the RUC Reserve? Does he think that one of the reasons for this campaign is the recognition that the RUC Reserve could become an important channel for recruiting members of the minority community into the security forces?
    Mr. Mason: I would very much appreciate leaders of the minority community now encouraging their people to join the RUC Reserve, and the RUC in particular. I agree with the hon. Gentleman that there has recently been a campaign by the Provisional IRA against the RUC because of the tremendous successes achieved by the RUC during this year. In the first six months of 1976, there were 634 bomb incidents. So far this year there have been 335. Compared with the first six months of 1976, civilian deaths are down from 146 to 49 and civilian injuries have been reduced from 1,253 to 657. Alongside that, the RUC has been increasing not only its charging rate but its conviction rate against terrorists during the course of this year.

    Housing
    Mr. Watkinsonasked the Secretary of State for Northern Ireland if he will make a statement on the housing situation in Northern Ireland.
    The Under-Secretary of State for Northern Ireland (Mr. Ray Carter): My officials and the Housing Executive have been carrying out an intensive and
    1826
    detailed analysis of the Northern Ireland housing problem, which is, as the House knows, extremely complex and serious. Their work is now bearing fruit, and we are taking action in a number of fields. I give a particularly high priority to the improvement of the situation in Belfast.
    Mr. Watkinson: Is my hon. Friend aware that those of us who serve on the Public Accounts Committee are well aware of the enormous problems confronting the Housing Executive in Northern Ireland? Can he say whether he is satisfied that sufficiently speedy progress is being made in this area? Can he also say whether he has any indication yet that any of the schemes that he is introducing will encourage the purchase of private sector housing, given the fact that house prices in Belfast are especially high?
    Mr. Carter: I am not satisfied that we are doing enough. We are dealing with an enormous housing problem in Northern Ireland, especially in Belfast. That is why I became the chairman of the steering group to oversee the redevelopment of Belfast. I hope that in the next 12 months or so we shall see some real evidence on the ground. We are seeking, through equity sharing and mortgage option schemes, to increase purchases of private houses in Northern Ireland.
    Mr. Wm. Ross: Have any investigations been carried out into the effects of wall insulation, to get rid of the problem of condensation that we have in Northern Ireland, and has any investigation been carried out to improve the design of houses to try to avoid this problem in future building programmes?
    Mr. Carter: The problem of condensation in houses is not peculiar to Northern Ireland. I doubt whether there is any constituency in the United Kingdom with public or private housing which does not need something done about the problem of condensation. We are alive to it in Northern Ireland and we are seeking to do whatever we can to eradicate the problem, which in many cases is not the fault of design but, rather, the heating practices of those occupying the houses.
    Mr. Kilfedder: In view of the generally lower incomes in Northern Ireland, which

    1827
    I reckon at about £4 a week less than in Great Britain, and in view of the higher costs of food, heating, clothing and transport, will the hon. Gentleman freeze Housing Executive rents for a period as a contribution towards avoiding hardship and as a social measure which will be greatly appreciated in the Province?
    Mr. Carter: As is so very often the case, the hon. Gentleman has his facts wrong. It is not true that incomes in Northern Ireland are substantially below those in the rest of the United Kingdom. I must tell the hon. Gentleman bluntly that there is no prospect of a freezing of housing rents in the public sector in Northern Ireland.

    Young Offenders
    Mr. Townsendasked the Secretary of State for Northern Ireland if he will bring forward proposals for improving the system for handling and treating young offenders in juvenile courts in Northern Ireland.
    Mr. Carter: An inter-departmental review group under the chairmanship of Sir Harold Black is carrying out a comprehensive review of legislation and services for children and young persons, including the rôle of juvenile courts.
    The group issued a consultative document last month. Meanwhile, we are not aware of major inadequacies in the present arrangements for dealing with young offenders in juvenile courts in Northern Ireland which require short-term and piecemeal changes.
    Mr. Townsend: Does not the Minister appreciate that the whole structure for handling young offenders in Northern Ireland by the courts, training establishments and the probation service has fallen about 10 years behind current practice in the United Kingdom and that young offenders are more frequently given custodial sentences in Northern Ireland? Will the Government take vigorous steps to put this right?
    Mr. Carter: That is precisely why we have a review of the present procedures. I can only agree with the hon. Gentleman. If he has specific observations to make, I am sure that the review body will be pleased to receive them.
    Mr. Hardy: Without anticipating that review, can my hon. Friend tell us whether there are a sufficient number of probation officers and social workers, especially in the areas of difficulty?
    Mr. Carter: In the peculiar circumstances in which we live in Northern Ireland, the probation service and the social services as a whole are fully equipped to deal with the current situation. Once again, the review body will look at all aspects of juvenile crime.

    Political Parties (Talks)
    Mr. van Straubenzeeasked the Secretary of State for Northern Ireland whether he will make a statement on the progress of his talks with the political parties in Northern Ireland to achieve a political settlement.
    Mr. Mason: I reported to the House on 30th June about discussions with the political parties. These are still at an exploratory stage, and there is nothing that I can add to what I said on that occasion.
    Mr. Straubenzee: I appreciate that the Secretary of State is not responsible for what appears in the public Press, but will he take us into his confidence to the extent of indicating whether some kind of structure on the lines of an advisory assembly, with a committee set-up, is what he is talking about? Since we shall not be able to question him again for some weeks owing to the imminence of the Summer Recess, will he accept good wishes for whatever efforts he is making to achieve political advances in Northern Ireland?
    Mr. Mason: I indicated earlier that apart from my official talks with all the major four parties concerned, other exploratory talks were taking place. I have indicated that I should be prepared to consider interim arrangements that devolved real power and responsibility and commanded widespread support throughout both parts of the community. I am not committed to any specific proposals, and I personally have not been negotiating. These are exploratory talks to discover the extent to which we can find common ground between the parties. I recognise that the House will be going into recess for quite some time. I hope that these talks will continue. But the House has also to recognise that we are

    1829
    moving into the marching season and the holiday period in Northern Ireland as well. I hope that we can proceed.
    Mr. Molyneux: Is not the time opportune when the Secretary of State might give some thought to the possibility of putting forward suggestions on behalf of Her Majesty's Government?
    Mr. Mason: I bear in mind what the hon. Gentleman says. He has been playing a leading part from Westminster in suggesting the way in which these talks might be fashioned. I bear in mind what he says, but I think that it is too early to take any initiative. As he will recognise, the imposition of an initiative on the parties in Northern Ireland could be very dangerous, especially if it led people to believe that there was hope and then we plunged them back into the depths of despair.
    Mr. McNamara: Will my right hon. Friend confirm that the three principles which have underlined the bipartisan policy, such as it has been over the past years, are still the principles which govern Her Majesty's Government's policy in trying to find a solution in the Six Counties?
    Mr. Mason: Yes. I have explained many times my policy goal. It is the goal of Her Majesty's Government. I am sure that all parties will agree that we want devolved executive government with a legislative assembly in Northern Ireland, based on partnership between the two communities.
    Mr. Biggs-Davison: Noting the suggestion of my hon. Friend the Member for Wokingham (Mr. van Straubenzee), may I ask whether the Secretary of State recalls that since the end of the constitutional convention my hon. Friend the Member for Abingdon (Mr. Neave) has pressed on behalf of the Opposition for a political forum to fill the political vacuum? Since the Government have belatedly acknowledged that Northern Ireland is under-represented at Westminster, does the right hon. Gentleman agree that local politicians should have the means of democratic expression, without which there is danger that politics in the Province will be taken over by paramilitary bullies? Should there not be more urgency in his approach? The right hon. Gentleman said that he has
    1830
    not negotiated, but is he doing his utmost to reach agreement among Northern Ireland parties on the future of the Province?
    Mr. Mason: The hon. Gentleman must be aware that talks on an advisory council would not satisfy the major parties in Northern Ireland. If we went forward on that basis, they would assume that we were being diverted from their ultimate goal and they would lose faith in Her Majesty's Government's intention of going for a fully devolved executive Government. I hope that the hon. Gentleman will also recognise that the paramilitary bully has not taken over, but is being forced to recede.
    In regard to political aims, hon. Members should know that the Provisional IRA and the Provisional Sinn Fein have no democratic case left, have no electoral support in Northern Ireland, and are gradually being isolated.
    Mr. John Ellis: Will the Secretary of State make haste slowly? Is he aware that there is considerable uncertainty about the line being followed in local representations across the political divide among responsible parties? Might there not be more merit in his arranging for a number of large halls to be made available in the recess to be put at the disposal of responsible political organisations at which they might join together and decide their policy—which might edify some of us more than is the case at present?
    Mr. Mason: We have gone over these courses many times before. In regard to the role of Northern Ireland politicians, when the hon. Members for Antrim, North (Rev. Ian Paisley) and Belfast, West (Mr. Fitt) get together, I do not think the party political squabble that would ensue would result in any progress.

    Terrorist Activities (Inquests on Victims)
    Mr. Dunlopasked the Secretary of State for Northern Ireland what is the reason for the delay in holding inquests into the death of victims of terrorist action.
    Mr. Carter: Every effort is made to ensure that such inquests are held as quickly as possible and there is no undue delay. In many cases, however, police investigations are complex and lengthy

    1831
    and it is inevitable that some delay occurs.
    Mr. Dunlop: Is the Minister aware that long delay in these matters occasions great distress to members of the families of the victims of terrorism? Is he also aware that when there is no inquest there is no issue of a death certificate? This inhibits the settlement of the affairs of those who have been victims of terrorism. One of my constituents was murdered 15 months ago. As yet there has been no inquest. Will the hon. Gentleman undertake to expedite the carrying out of inquests?
    Mr. Carter: I am aware of the problem to which the hon. Gentleman draws attention, but in the peculiar circumstances of Northern Ireland, where police investigations take a long time, I must tell him that there is little prospect of a major change in the situation. However, if the hon. Gentleman will let me have the details of the case to which he refers, I shall examine the situation and find out the reasons for the delay.

    Prisoners and Prison Building
    Mr. Hardyasked the Secretary of State for Northern Ireland if he will make a statement about the prison population and building programme in Northern Ireland.
    Mr. Concannon: The prison population is continuing to increase, but the rate of increase is less marked than during the early years of the civil disturbances. On 17th July 1977 the total number of prisoners, tried and untried, was 2,867. This compares with 2,483 at the same date in 1976 and 763 on 1st January 1970.
    To meet the increase in population and to provide more satisfactory accommodation, a comprehensive building programme is under way. Six cell blocks, with 100 cells each, have been completed at Maze prison and two more will be ready later in the year. A new closed borstal is expected to be ready in October, a young offenders' centre with 300 places should be completed by mid-1978, and a start has been made on a new prison at Maghaberry, which I hope will be ready for occupation early in 1982.
    Mr. Hardy: I am very grateful for that full information, but will my hon. Friend
    1832
    give the cost of the current prison building programme?
    Mr. Concannon: The cost of the current building programme—I stress "current" programme—is nearly £38 million. The Maze cell blocks and ancillary accommodation amount to £11.8 million; the closed borstal, £13 million; the young offenders' centre, £5.6 million; and Maghaberry, £19 million. Those figures do not take account of the contents and furniture of cells.
    Mr. Neave: Surely the completion of the new prison is urgent, since 1982 seems a long way away. Will the Minister also say something about remission policy? Is he aware that some of us have had reports from the security forces that they are concerned about the level of remission given to those convicted of terrorist offences? Does he recollect an answer given earlier this year, stating that between March 1976 and February 1977, 358 special category prisoners were released with remission? We supported the treatment of offenders legislation in 1976, but does the Minister think it wise to grant remission to those who consistently refuse to obey ordinary prison rules?
    Mr. Concannon: Those who disobey prison rules do not get remission. Indeed, they lose remission for every day that they do not observe those rules. I must remind the hon. Gentleman that the legislation in relation to this system was passed by the House. I assure the House that every "streaker" in Northern Ireland loses a day's remission for every day of disobedience. Indeed, some have lost nearly all their remission.
    On the other point that was put to me, I would inform the hon. Gentleman that there is no parole system in Northern Ireland. We have a system in which half remission is allowed to those who obey prison rules and behave themselves. If they are caught misbehaving afterwards, and continue to do so after they have been let out, the courts can bring them back to justice and reimpose that amount of prison sentence. I understand, from the last batch of figures that we received, that only one of the people convicted of terrorist offences was brought back to be dealt with by the courts.
    Mr. Freud: In view of the general determination not to create martyrs in Northern Ireland and in the light of the

    1833
    article in The Guardian on 8th June, will the Minister have another look at the case of William Gallagher, who spent a year in prison in the period between arrest and conviction and who was convicted on disputed identification and an alleged verbal admission?
    Mr. Concannon: The hon. Gentleman rightly draws that case to my attention, but it is only one of the many cases that arrive on my desk almost every week. I sometimes wonder whom I have got locked up in prison.
    Miss Maynard: In view of the reply to the original Question and the information given about the new prison, detention centre and borstal, does my hon. Friend agree that the building of prisons is the only growth industry in Northern Ireland?
    Mr. Concannon: Certainly not. I have the problem of keeping up with the successes of the security forces. Once they catch these criminals, I have to find places to put them in. So long as the police and the Army in Northern Ireland are so successful in their activities against this criminal element, I shall have to keep on building prison cells.
    Mr. Farr: Can the Minister say whether the security of the prison officers has improved, and to what extent there is interchangeability between prison officers serving in Northern Ireland and those serving in Great Britain?
    Mr. Concannon: The figure of prison officers on loan from Great Britain serving in Northern Ireland has dropped from 400 to less than 100. The morale of the prison officers is very high, despite the cowardly attacks made upon them. I do not think the hon. Gentleman would like me to spell out the security measures taken by the security authorities. I wish to pay tribute to the sterling work that they have done in the face of great intimidation.

    Recreation Facilities
    Mr. Bradfordasked the Secretary of State for Northern Ireland whether his future social amenity strategy includes the construction of a comprehensive leisure centre on the Bog Meadows to cater for South and West Belfast; and
    1834
    what assessment he has made of the value of such large multi-district centres, compared with smaller leisure centres which can be identified with a definable community.
    Mr. Carter: Responsibility for the provision of recreational facilities in Belfast rests with the city council. The facility planned for Bog Meadows is not a leisure centre but a recreational area, which will include an all-weather floodlit games pitch, a children's play area, and a recreation-cum-community hall. This provision is one of 10 new neighbourhood recreation facilities that will be provided by the Belfast City Council as part of the Government programme of action in the Belfast area of need.
    Mr. Bradford: I am very grateful to the Minister for that informative reply. Does he accept that there has been a piece of injudicious siting of a large leisure centre on the Albert Bridge Road, which was designed to provide facilities for East and West Belfast but is used only by a small section of the community, due to IRA dominance of the surrounding area?
    Mr. Carter: No, I do not accept that at all.

    Gas and Electricity Supplies
    Mr. Powellasked the Secretary of State for Northern Ireland whether he will urgently institute an economic study of the respective roles of gas and electricity in supplying the energy needs of Northern Ireland.
    Mr. Concannon: Northern Ireland's energy needs are the subject of continuing study by the Department of Commerce, in the light of the published Shepherd and British Gas Corporation Reports on, respectively, the electricity and gas industries.
    I do not think that it will be helpful to commission a separate economic study at this stage, bearing in mind the urgency of the electricity and gas problem; which face us. Decision on these problems will be taken by the Government on the basis of the fullest possible information.
    Mr. Powell: Does the Minister of State realise—I am sure that he does—that my Northern Ireland colleagues are not prepared to allow the future of one

    1835
    of these industries to be sacrificed for the future of the other industry? Admitting the urgency to which he refers, does he accept that it is necessary, before a substantive decision is taken, that there should be more technical and economic studies of the possibility of embodying both industries more closely in the corresponding industries of Great Britain?
    Mr. Concannon: We have had two discussions in Committee on the gas industry and the electricity industry, and right hon. and hon. Members have let me know their feelings. I shall have to think very seriously about it. However, I must point out that we have all the economic advice that is available in Northern Ireland. The Department also has its own economic unit, headed by a professional economist. I do not know whether that is a good thing. To help us we also have an economic adviser, who is Professor of Economics at Belfast University.
    Mr. McCusker: Will the Minister confirm that he agrees with his right hon. Friend the Secretary of State for Energy that North Sea gas is a national asset and not simply for the benefit of Great Britain? Does he accept that Northern Ireland is therefore entitled to benefit from it?
    Mr. Concannon: I am sure that the hon. Gentleman does not think that he will trap me as easily as that. In the discussions that we have had we have talked about this. The decision is basically for the British Gas Corporation and how it sees its liabilities in terms of North Sea gas.
    Mr. Biggs-Davison: Is it the Government's policy that the energy resources and requirements of the whole United Kingdom should be treated as a single long-term problem? The Minister mentioned the economic advice available to him. Has the Northern Ireland Economic Council been set up, and would this be a subject suitable for the council to consider?
    Mr. Concannon: The Northern Ireland Economic Council, after a few hiccups, will be set up very soon indeed. On the other point, we get all the specialist advice available in Northern Ireland. Until a short time ago most of the Northern Ireland electricity and gas services were still
    1836
    in the hands of the local authorities, and the gas industry still is. It is not a matter of saying that it belongs to one large unit. It has never been one unit, and many negotiations will have to take place.
    Mr. Skinner: Are all these decisions taken in accordance with the views of the right hon. Member for Down, South (Mr. Powell) about the necessity for market forces and free enterprise to prevail at all times?
    Mr. Concannon: If market forces and free enterprise prevailed in the economy of Northern Ireland and it had to deal with its own fuel policy, costs would be much higher. The cost of electricity in Northern Ireland is already 50 per cent. dearer to industry and gas prices are three times as high as in Great Britain. That shows how cheaply the rest of the United Kingdom gets its energy from the gas and oil fields in the North Sea.
    Mr. Kilfedder: Have the Government sought the advice and assistance of the Common Market, since the cost of gas and electricity is clearly a severe burden to people in the Province and to industrialists who wish to provide more employment?
    Mr. Concannon: Yes. I saw Senor Giolitti when he was in Northern Ireland a short time ago on his first visit in his new capacity. That point was put to him very well indeed. I shall be seeing him again in a series of meetings tomorrow.

    Harland and Wolff Ltd. (Orders)
    Mr. Michael McNair-Wilsonasked the Secretary of State for Northern Ireland how many of the seven ships currently on order from Harland and Wolff Ltd. are likely to produce a profit for the company.
    Mr. Concannon: As regards five of the seven ships currently on order from Harland and Wolff Limited, I have nothing to add to the reply that I gave the hon. Member on 11th October 1976. Since then the company has received an order for the construction of two liquefied petroleum gas carriers for long-term charter to Shell. The financial basis of this order—including the injection of preference capital by the company—was outlined by my right hon. Friend the Secretary of State in a written reply on 27th April this year.

    1837
    The company's latest forecast indicates that the price paid for these two ships should at least cover their construction cost.
    Mr. McNair-Wilson: In the absence of profitable returns from most of the ships that it makes, how long does the Minister expect that the £60 million given to the company in 1975 will last? Will he say what further proposals for financial assistance the Government have to tide the company over the present lack of demand for new ships?
    Mr. Concannon: It was originally expected that the £60 million would last until the end of 1978, but I can inform the hon. Gentleman that it seems possible that it will last beyond that date. The assistance that we are giving is to pursue orders for the shipyard so that it can become viable.
    Mr. Neave: Does the Minister of State recall that I have been pressing him for some time for a diversification programme for Harland and Wolff? In many people's opinion the company's resourceful and experienced staff would allow it to diversify its product considerably. What is the Government's long-term policy for Harland and Wolff in this respect?
    Mr. Concannon: There are inquiries into the diversification of as much of Harland and Wolff as possible, but the re-equipment of the main yard was to enable it to build huge tankers, and it is not easy to diversify some of the equipment used in Harland and Wolff to build other things. We are studying the shipyard. We shall diversify in any place that we can.

    Department of Manpower Services (Conciliation and Arbitration)
    Mr. Ernest G. Perryasked the Secretary of State for Northern Ireland whether arrangements have yet been made for the transfer to the Labour Relations Agency of the conciliation and arbitration function now performed by the Department of Manpower Services.
    Mr. Concannon: Following my announcement to the House on 21st January that these functions would be transferred to the Agency subject to the making of satisfactory arrangments for their continued performance, consultations have taken place between the Department
    1838
    of Manpower Services, the Agency and the staff interests. As a result an order made under Article 16 of the Industrial Relations (Northern Ireland) Order 1976 transferring the functions to the Agency was laid before Parliament on 7th July. The order, which is subject to negative resolution, is due to come into force on 1st August.
    Mr. Perry: I thank my hon. Friend for that reply and the rather belated decision, in view of the consternation felt about this matter in Northern Ireland, but can he give us the reasons for the transfer of these functions?
    Mr. Concannon: These functions are being transferred following the representation of employers and trade unions to establish in Northern Ireland a conciliation and arbitration service which is completely independent of the Government. The development is similar to that which took place in Great Britain with the establishment of the Advisory, Conciliation and Arbitration Service. The reason why it has taken so long is that we have had to have detailed negotiations with all the men who will be involved in the transfer.
    Mr. McCusker: Does the Minister remember the report on industrial relations in Northern Ireland during the disastrous period of the Industrial Relations Act in Great Britain—the report that commended the work of the conciliation and arbitration function of his Department? Is it not a pity that he will lose that intimate contact with industry, which at that time was found so beneficial?
    Mr. Concannon: The intimate contact with industry will still be there. It will not be under my immediate control in the Department, but most if not all of the people who will be running the service will be the same people as are running it today.
    Mr. Loyden: Is my hon. Friend satisfied with the consultations that took place with the trade unions on this and other problems? Will he say how frequently he meets the trade union on such matters?
    Mr. Concannon: We have close liaison with the trade union movement in Northern Ireland. I should imagine that I meet representatives almost daily on

    1839
    many different subjects. 1 stress that our links with the trade union movement are very close.

    Geriatric Beds
    Mr. Kilfedderasked the Secretary of State for Northern Ireland what is the amount of financial resources which has been devoted for the provision of geriatric beds in the present and the next following financial years.
    Mr. Carter: It is planned to spent £1,416,000 this financial year and £1,104,000 next year on new geriatric beds and the upgrading of existing ones. Large sums are, of course, spent annually on the maintenance of existing facilities, but the accounts are not kept in a way that enables geriatric costs to be separately identified.
    Mr. Kilfedder: Although this question of geriatric beds was ridiculed by United Ulster Unionist Council Members behind me, who wish to keep this Government in office, none the less that answer proves that I am right in seeking to get this Government out of office. It is a disgraceful situation in Northern Ireland—
    Mr. Speaker: Order. The hon. Gentleman may be quite correct, but he must ask a question.
    Mr. Kilfedder: Will the Minister now take action to remedy the situation? Only last week four elderly persons, whose doctors said that they should be admitted to hospital as a matter of priority, could not get beds. It is quite disgraceful.
    Mr. Carter: The hon. Member for Down, North (Mr. Kilfedder) sounds more and more like a candidate for one of the beds.
    In Northern Ireland we achieve 14.9 beds per 1,000, whereas the national average is 15. I should have thought that direct rule was doing quite well in terms of geriatric beds.
    Mr. Mellish: Will my hon. Friend arrange for one of those beds to be given to the hon. Member for Down, North (Mr. Kilfedder), who can stay there, for what good he is here?
    Mr. Bradford: Will the Minister address his mind to another group of people who require round-the-clock attention—mentally handicapped children?
    1840
    Currently 360 are awaiting vacancies in Muckamore Abbey Hospital, where beds become vacant but infrequently.
    Mr. Carter: That is not entirely related to the question of geriatric beds. If the hon. Gentleman will let me have details of the matter that he has raised, I shall have it looked into and will send him a reply.

    Road Casualties
    Mr. McCuskerasked the Secretary of State for Northern Ireland if he is satisfied that all possible steps are being taken to reduce the high level of road casualties in Northern Ireland.
    Mr. Carter: While measures being adopted in Northern Ireland to combat road accidents are in broad parity with those in Great Britain, the level of casualties remains unacceptably high. For this reason, last November I formed a study group drawn from interested organisations to make recommendations designed to reduce road casualties. I have now received its report and am considering its 10 major recommendations. Copies of the report have been placed in the Library of this House.
    I have under consideration how many recommendations can be adopted for a draft order.
    Mr. McCusker: Does the Minister recall that that report suggested that he could immediately introduce compulsory seat belt legislation in Northern Ireland? Why cannot he do that immediately? Also, what does he hope to do to combat drunken driving and accidents caused by speeding?
    Mr. Carter: I cannot do anything immediately, because I received the report only on Monday. There are 10 fairly major recommendations in the report, which we shall have to consider. They have quite serious implications legislatively and in many other respects for Northern Ireland. I attach great importance to the report. As soon as we can get down to discussing how to implement its proposals we shall do so. I shall keep the hon. Gentleman informed of the progress that is made.
    Mr. Craig: Can the Minister do anything to step up the inspection of the roadworthiness of vehicles? From casual

    1841
    observation, there would seem to be many unfit vehicles on the road.
    Mr. Carter: If a comparative judgment were made of the level of inspection in Northern Ireland and that in the rest of the United Kingdom, I think that the right hon. Gentleman would find that the level in Northern Ireland is significantly better than in the rest of the United Kingdom. I do not think that we can be criticised on any front in that respect.
    Mr. Flannery: Does my hon. Friend agree that road casualties in Northern Ireland are almost twice as high as in the rest of the United Kingdom? Can he give us some idea why that is so? I had a conversation the other day with my right hon. Friend, who was most interested to know.
    Mr. Carter: I have a report that goes into this matter in detail, which I will let my hon. Friend have afterwards. There are certain peculiarities in the situation in Northern Ireland that are not dissimilar to those in similar rural communities in Western Europe. The fact is that Northern Ireland has the worst road casualty figures in the whole of Western Europe, and we must do something about the matter.
    Mr. Goodhart: As the number of casualties from traffic accidents in Northern Ireland has always exceeded the number of casualties from terrorism, even in the worst years, will the Minister pay particular attention to the recommendation about compulsory seat belts, which could do an enormous amount of good?
    Mr. Carter: I am well aware of that factor, but I am equally concerned with the effects of drinking on driving standards in Northern Ireland. That probably has a more significant impact on casualty figures than does any other factor.

  QUESTIONS TO THE PRIME MINISTER
  Mr. Speaker: Order. I want to state that in order to meet what I believe is the overwhelming wish of the House, on the open Questions which give rise to supplementary questions, of which no notice has been given, I shall call only the hon. Members who ask the Questions, so that the House can get on more quickly to substantive Questions.

  PRIME MINISTER (ENGAGEMENTS)
  Mr. McCrindleasked the Prime Minister what are his public engagements for 21st July.
  The Prime Minister (Mr. James Callaghan): This morning I presided at a meeting of the Cabinet. In addition to my duties in this House, I shall be holding further meetings with ministerial colleagues and others including one with the President of the European Commission and one with a delegation from the Young Socialists of the Social Democratic Party of the Federal German Republic.
  Mr. McCrindle: With the CBI today accusing the Government of opting out and a leading Liberal describing the new wages policy as a massive retreat, will the Prime Minister remind the House and the country what remains of that special relationship between the trade unions and the Labour Party that we were told in 1974 was indispensable to the prosperity of the country?
  The Prime Minister: The return to free collective bargaining is a decision of the trade union movement. In a democracy such as ours it is not a matter the Government can control. But a very close relationship will continue to exist. I refer the hon. Gentleman to what I said on this matter yesterday.
  Mr. Canavanasked the Prime Minister what are his official engagements for 21st July.
  The Prime Minister: I refer my hon. Friend to the reply that I gave earlier today to the hon. Member for Brentwood and Ongar (Mr. McCrindle).
  Mr. Canavan: In view of today'sDaily Telegraph description of the Leader of the Opposition as a mixture between Oscar Wilde and the Red Army Choir, would my right hon. Friend care to comment on her statement yesterday that wage differentials for the higher-paid within the public sector should be met within strict cash limits? As this appears to mean that within the Health Service, for example, the Tory Party would like to meet the wage demands of the overpaid consultants out of the

  1843
  pockets of the nurses and other Health Service workers, and possibly also at the expense of the health and even the lives of patients, would it not be more appropriate for the Daily Telegraph to describe the right hon. Lady tomorrow as surpassing even Lady Macbeth for sheer bloody ruthlessness?
  The Prime Minister: I am not surprised that my hon. Friend has to put his own construction and interpretation on the speech to which we listened yesterday. I congratulate the right hon. Lady on her style. If only the content had matched it, we should know a lot more about Tory policy.
  Mr. Luceasked the Prime Minister if he will list his engagements for Thursday 21st July.
  The Prime Minister: I refer the hon. Gentleman to the reply that I gave earlier today to the hon. Member for Brentwood and Ongar (Mr. McCrindle).
  Mr. Luce: As the unemployment figures are likely to reach 11 million very shortly, will the right hon. Gentleman say why the Government have continually refused to remove the legislative and taxation obstacles to the expansion of small busineses, which would have the result of creating more wealth and jobs and increasing productive employment? What are the Government waiting for?
  The Prime Minister: It would be helpful if these Questions were put down in detail, as I should then be able to provide hon. Members with answers. I have not been transferring substantive Questions. In so far as my recollection serves me, the hon. Gentleman is mistaken. Worthwhile reliefs were given to the small business man in the last Budget. I believe that the tax exemption limit was increased substantially. A number of measures have been introduced. If the hon. Gentleman puts down a detailed Question to the Department of Industry he will get a proper reply.
  Mr. Skinnerasked the Prime Minister if he will list his official engagements for 21st July.
  The Prime Minister: I must give my hon. Friend the reply that I have given so many times. I refer him to the reply
  1844
  that I gave earlier today to the hon. Member for Brentwood and Ongar (Mr. McCrindle).
  Mr. Skinner: Will my right hon. Friend take time out to consider Lord Denning's judgment of 24th May of this year, which will seriously affect the common law damages of those involved in trade unions and work generally who have been injured at work? Is he aware that since that date awards under the Administration of Justice Act, passed by the previous Labour Government in 1969, which allocated interest according to the damages that were paid to various persons both on personal injury and death, have been removed by Lord Denning's judgment? It will remove between 10 per cent. and 15 per cent. of the total amount of damages payable to workers. Will my right hon. Friend take time to consider the judgment and to ensure that it is reversed?
  The Prime Minister: My hon. Friend has raised an important matter. I shall look into it and communicate with him in due course.

  TUC
  Mr. Wyn Robertsasked the Prime Minister when he last met the TUC.
  The Prime Minister: I refer the hon. Member to the reply which I gave to my hon. Friend the Member for Thornaby (Mr. Wrigglesworth) on 14th July.
  Mr. Roberts: At that last meeting did the Prime Minister discuss with the TUC the need for possible guidelines and certainly strict monitoring of any productivity agreements outside the 12-months rule to ensure that they are genuinely self-financing, and not bogus agreements such as have blighted pay policies in the past? If he did not discuss that matter with the TUC, does he agree that it should be considered?
  The Prime Minister: Most of these matters have been discussed with the TUC.
  Mr. Skinner: When the Prime Minister meets the TUC on the many occasions on which he undoubtedly will in the near future, will he tell it that the members of the Cabinet are no longer going to

  1845
  orchestrate the view that Margaret Thatcher is almost—[Interruption.]
  Mr. Speaker: Order. I think that the hon. Gentleman forgot for a moment how we address each other in the House.
  Mr. Skinner: I was using the tactics that she used yesterday, Mr. Speaker.
  Will my right hon. Friend explain to the TUC that we no longer subscribe to the view that the Leader of the Opposition will be able to order the blue curtains for No. 10 Downing Street? Now that we have got rid of the incomes policy and almost restored free collective bargaining, will he move a step further and freeze prices, get us out of the Common Market, and restore the cuts in public expenditure, because that could be a winning ticket?
  The Prime Minister: The answer to the first part of the question is "Yes, Sir", and to the second part "No, Sir."
  Mr. Adley: As many aircraft workers are represented on the TUC, will the Prime Minister take time—perhaps this afternoon—to telephone his son-in-law and remind him that, as he is now a paid public servant, it is his job to uphold British interests, including the views of Her Majesty's Government on support for Concorde?
  The Prime Minister: The hon. Gentleman is a keen supporter of Concorde. However, I do not think that whether or not one personality flies in it should have any particular influence on the fact that that very fine aircraft should be permitted to land in New York.
  Mr. Tom King: Has the Prime Minister seen the statement by Sir Derek Ezra that falling coal productivity could threaten the supplies of house coal in this country this winter? In any discussions with the TUC will he be returning to the subject of the importance of a pit-by-pit productivity scheme for miners?
  The Prime Minister: I think that that question should be put to my right hon. Friend the Secretary of State for Energy. It is clearly a matter for discussion with the National Union of Mineworkers.

  NATIONALISED INDUSTRIES
  Mr. Mike Thomasasked the Prime Minister when he last met the chairmen of nationalised industries.
  The Prime Minister: I refer my hon. Friend to the reply that my right hon. Friend the Lord President of the Council gave on my behalf to the hon. Member for Newbury (Mr. McNair-Wilson) on 10th March.
  Mr. Thomas: When my right hon. Friend next meets the chairmen of the nationalised industries, what reassurance will he be able to give them that the Government will be keeping an eye on private sector wage settlements over the next 12 months? Is it not remarkable, that those who are constantly bleating about Government interference are terrified when it appears that the Government are no longer holding their hand in respect of wages?
  The Prime Minister: There is a responsibility upon employers as well as upon trade unions, as I emphasised in yesterday's debate. Employers may not like the sharp wind of not being able to shelter under a nationally agreed wages policy, but it is now for them to stand up and indicate to their workers what can be paid and what is proper to be paid. A great many company employers would get on a lot better if only they would adopt the system of planning agreements, under which the workers in their companies would know a lot more about the real prospects for their own industries.
  Mr. Hugh Fraser: Will the Prime Minister consider the attitude of the Chairman of the Central Electricity Generating Board after the right hon. Gentleman has made complete nonsense of the power industry? Will he consider dismissing him? At the same time will he consider making every Liberal Member a Privy Councillor, to balance severity with mercy and cement the support that they have given to a Socialist Government?
  The Prime Minister: I know that the Liberal Party often strikes sparks, but I am not sure what connection there is between it and the Central Electricity Generating Board. As for the Board, I hope that there will he a return to the proposal for a consistent and steady ordering programme. That would be invaluable to the future of the power plant industry, which this country needs. I think that it is short-sighted that it has not been able to agree on a restructuring so far. The Government must continue to press it. As for making Members of the

  1847
  Liberal Party Privy Councillors, I shall certainly be glad to consider that proposition. I notice that every time we have a vote of confidence the majority increases. I am delighted to see that.
  Mr. John Mendelson: In view of the developing anxiety in the House that the Government, and the Prime Minister in particular, should restrain the chairmen of nationalised industries from looking at demands for wage increases even before negotiations have started, would it not be much better if Liberal Members in particular urged my right hon. Friend to leave responsible trade unionists and their employers to get on with the negotiations in the traditional manner?
  The Prime Minister: I am much in favour of their getting on with the negotiations in a traditional manner. I must also ask them to accept and work within the general guidelines that the Chancellor laid down last Friday.
  Mrs. Winifred Ewing: When the Prime Minister next meets the Chairman of British Rail, will he again say how unsatisfactory was the answer given yesterday by the Secretary of State for Transport about the old rolling stock that is dumped in Scotland from south of the border, except, of course, when there are important oil exhibitions in the North-East of Scotland, when it is important to borrow expensive rolling stock from the English services to convince business men that that is what Scotland normally has? Is it not time that the Prime Minister took very seriously the run-down of British Rail in Scotland from the point of view of tourism and passengers, and much more seriously than his right hon. Friend did yesterday?
  The Prime Minister: I am not acquainted with this matter.

CABINET MINISTERS (COLLECTIVE RESPONSIBILTY)
Mr. Tim RentonQ6. Mr. Tim Renton asked the Prime Minister whether he has received any representations from Members of Parliament concerning a revision of the doctrine of collective Cabinet responsibility.
The Prime Minister: A number of hon. Members have tabled Questions to me
1848
on collective responsibility, but I have received no recent written representations on the subject.
Mr. Renton: Will the right hon. Gentleman use this opportunity to tell the House what importance he attaches to Ministers continuing to support measures that have been outlined in the Gracious Speech? Whether one likes its contents or not, if that speech is to be regarded as a legislative programme, surely it needs to have the continuing weight of the whole Government behind it?
The Prime Minister: Yes, I would generally accept that proposition.
Mr. Heller: Does my right hon. Friend recall that I have personally made representations on this matter in the Chamber on a number of occasions? Is it not time that we updated the whole process to recognise that the Cabinet is not entirely in agreement on every issue? [Interruption.] Should we not recognise that no Cabinet is entirely in agreement on every issue? Does my right hon. Friend agree that it is time we brought this into practice, instead of perpetuating a myth that started in the last century?
The Prime Minister: I thought the complaint was that I had updated the doctrine.
Mr. Ridley: Next time the right hon. Gentleman publishes a Queen's Speech, will he consider allowing a minority report to be published?
The Prime Minister: There always is. It takes the form of an amendment by the Opposition.

CONSOLIDATED FUND BILL (DEBATE)
Mr. Speaker: I have two short statements to make. The first is with regard to business for next week.
For the debate—if it is indicated by the Leader of the House—on Thursday 28th July on the Second Reading of the Consolidated Fund (Appropriation) Bill, hon. Members may hand in to my Office by 9 o'clock on the morning of Wednesday 27th July their names and the topics that they wish to raise. The Ballot will be carried out as on the last occasion. An hon. Member may hand in only his own name and one topic.

1849
The debate will cover all the main Estimates originally presented for the current financial year in the House of Commons Papers 174 and 231, and the revised Supplementary Estimates presented since then in House of Commons Papers 441 and 442. It will be in order on Second Reading to raise any topic falling within the compass of those Estimates.own name and one topic.
I shall put out the result of the Ballot on the morning of 27th July.

SUB JUDICE RULE (MR. MAURICE JONES)
Mr. Speaker: Secondly, yesterday the hon. Member for Sheffield, Heeley (Mr. Hooley) raised a point of order relating to one of his constituents who, though not directly identified by the hon. Member, must, I think, clearly be Mr. Maurice Jones, the Editor of the Yorkshire Miner. The hon. Member asked about the application of the sub judice rule. I informed the House that other hon. Members had made similar inquiries privately, and I promised to give a ruling today.
The facts are these. Mr. Jones was charged with an offence on 23rd June and released on bail to appear before a court on 8th July. He did not appear to answer to his bail on 8th July and is now abroad and outside the jurisdiction of the court. No day has been fixed for the resumption of the court hearing.
The Resolution of the House of 23rd July 1963 make the operation of the sub judice rule subject always to the discretion of the Speaker. To use this discretion so as to waive the sub judice rule is something which no Speaker would wish to do lightly and without long and careful consideration.
I do not think that it has ever before been done in such a way as to waive the rule completely. However, I am satisfied that in the special circumstances of this case it is proper to waive the rule. I have accordingly given instructions that all Questions and motions temporarily withheld from the Notice Paper should be released to the printers forthwith. The sub judice rule will not, for the immediate future, govern any other proceedings in the House connected with the charges against Mr. Jones.

BUSINESS OF THE HOUSE
Mrs. Thatcher: May I ask the Lord President to state the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): The business for next week will be as follows:
MONDAY 25TH JULY—Completion of the remaining stages of the Finance Bill.
TUESDAY 26TH JuLY—Debate on the Select Committee Report on the Conduct of Members.
Debate on the Joint Select Committee Report on sound broadcasting.
Motions on the African Development Fund Order and on the Assistance for House Purchase and Improvements Order.
Debate on the motions on Members' allowances, salaries and pensions.
WEDNESDAY 27TH JULY—Consideration of Lords amendments to the Control of Office Development Bill and of other Lords Messages which may be received.
Proceedings on the National Health Service Bill [Lords] and the remaining stages of the Employment Protection Bill [Lords], which are consolidation measures.
Motions on the orders on dividends. pay and prices.
THURSDAY 28TH JULY—Proceedings on the Consolidated Fund (Appropriation) Bill.
Consideration of any Lords Messages which may be received.
FRIDAY 29TH JULY—It Will be proposed that the House should rise for the Summer Adjournment until 26th October.
Mrs. Thatcher: May I ask the Leader of the House whether, on Wednesday, for the debate on dividends, pay and prices there will be three orders? Does the right hon. Gentleman intend to take them separately, or together, and when will the orders be available?
Secondly, the right hon. Gentleman said that the Summer Recess would cease on 26th October. As there does not seem to be much legislation left for the spillover, can he say when he plans the State Opening of the new Session?
Mr. Foot: On the first question, I think that the debate could take place on these matters together, but there will be three separate motions.
On the second question, we are hoping that it will hardly be necessary to have any spill-over at all. What we suggest is that the House should meet in the new Session on Thursday 3rd November.
Mr. Mellish: May I ask two questions on the debate on Tuesday concerning the behaviour of Members of the House? First, what form will it take? Do the Government intend to put down a motion? If so, may we have an indication of what motion it will be? Will it be a "take note" motion, or an "approval" motion?
Secondly, for how long will the debate continue? Is it intended to stop it at, say, 7 o'clock? Will the debate be stopped at 7 o'clock because of other important business? It is important that hon. Members should know what is to happen, because this will be a free vote of the entire House and it is important that we should have that fact in mind.
Mr. Foot: I am grateful to my right hon. Friend for raising this matter. It is important that the House should know what is proposed. This is not a Government matter. A motion will be put down in my name asking for approval of the report from the Select Committee and it will be open to hon. Members, if they wish, to put down amendments.
As for the timing of the debate, I do not think it would be envisaged that we should end the debate at 7 o'clock. How long the House will wish to discuss this subject will be a matter for the temper of the House at the time. I think that we should proceed on that basis. What we shall be doing is following the precedents in these matters.
Mr. Beith: As the proceedings on the Consolidated Fund (Appropriation) Bill often last all night, is there not a risk to any Lords Messages on the Housing (Homeless Persons) Bill, or Private Members' Adjournment motions, which will start at 11 a.m. on Friday?
Mr. Foot: It is the case, as the hon. Gentleman suggests, that the debate on the Consolidated Fund (Appropriation) Bill normally goes on all night. We have
1852
put down a reference to Lords Messages on that day as well as on the previous day because it is conceivable that we might not be able to deal with all the matters on Wednesday. We shall seek to do it then, but, if not, we shall seek to ensure that we can get the Housing (Homeless Persons) Bill through on Thursday. In any case, we wish to make provision to ensure that the Bill reaches the statute book.
I hope that it will not be necessary to use a day for that purpose in any spillover, if we have one. I hope very much that the House will co-operate in ensuring that the Bill, which has strong backing in the House, passes all its stages next week. I hope, too, that we shall get full co-operation from another place in helping that to happen.
Mr. Blaker: In view of the serious situation in Rhodesia and reports that the Cabinet has overridden the Foreign Secretary's suggestions about policy in that country, and the visit that the Foreign Secretary is to pay to Mr. Vance at the weekend, is it not important that the House should have a statement on this subject from the Foreign Secretary before we rise for the recess?
Mr. Foot: I suggest to the House that it should dismiss from its mind all kinds of reports in The Times on that subject —[Hon. Members: "And The Guardian."]—and The Guardian,if it has on this occasion to share guilt with The Times, but normally it is The Times alone that leads in these matters. On the major question, I agree that there should be a statement, and I think that one will probably be made by the Foreign Secretary on Monday.
Mr. Prescott: May I draw my right hon. Friend's attention to the publication of the Fowler Report on the Hull prison riot which concluded that liberal regimes led to riotous opportunities? Does my right hon. Friend agree that the House should be given an opportunity to debate this important matter particularly since the Home Secretary is considering the report and since I have received letters warning me about further riots this summer as I did before the Hull riots—a fact which was acknowledged in the Fowler Report?
Mr. Foot: I can assure my hon. Friend that he will have an opportunity to raise

1853
this matter next week during the Consolidated Fund Bill debate. That should not pre-empt further debate on the subject.
Mrs. Chalker: When will the Government introduce a revised social security uprating order, because the original order had to be withdrawn because it was ultra vires?
Mr. Foot: We are looking to see whether it is necessary to take further action.
Mr. Greville Janner: Is time to be given to the Unfair Contract Terms Bill, which is so important? When are we to have the motion for the Adjournment of the House for the Summer Recess?
Mr. Foot: I hope that the first matter will be dealt with by the House tomorrow. I agree with what my hon. and learned Friend said about that measure. If it is not dealt with tomorrow, it will be one day next week. We are hoping that the Adjournment motion will be taken on Thursday.
Mr. Wyn Roberts: Do the Government intend to make a statement on devolution before the recess and, if so, when? Can the Leader of the House confirm that we are to be faced with two Bills—one for Scotland and one for Wales—in the next Session?
Mr. Foot: It is the Government's intention to make a statement on devolution before the recess. I believe that it will be made on Tuesday. I ask the hon. Member to await that statement before he jumps to any conclusions about that or any other aspect of the matter.
Mr. John Mendelson: May we return to the tradition of having the debate for the Adjournment earlier than on the last day before the House rises? Experience has shown that there is a larger House earlier in the week. Does my right hon. Friend agree that we do not want this debate to become perfunctory, with less attention being paid to it?
Mr. Foot: I understand my hon. Friend seeking to have the debate earlier in the week, but I have not found that the debate has been perfunctory in any sense in recent times. We have always had a considerable amount of discussion. If it were to be moved to Wednesday it might
1854
be thought that the business that would have to be transferred from Wednesday to Thursday was perfunctory. That is not so. Wednesday's business is very important. We must ensure that it gets through. I am sure that we shall have a good debate.
Mr. Pym: Does the Leader of the House remember that in the 1970 Parliament he always complained that the Adjournment motion was taken on the last day? Is it not the case that he now invariably moves that motion on the last day? That is strange when one remembers what he used to say when he sat on these Benches.
Mr. Foot: The motion is not to be moved on the last day. Friday is the last day. In any case, I do not recall making many complaints on that score. I had more important complaints to make against the previous Administration. I am sure that the debate will work well.
Mr. Marten: Is the Leader of the House aware that there have been three Council of Ministers' meetings in Europe this week—on finance, agriculture and the budget? Is he aware that according to the Press those meetings resulted in the taking of important decisions, or non-decisions? May we have an assurance that we shall have statements on all three of those topics next week, otherwise, the House will be kept in the dark except for what it reads in the Press?
Mr. Foot: I know well the commitments which the Government have about making statements on these matters. We seek to follow the general rule which we laid down about statements being made as frequently as possible. We hope that there will be a statement on these matters next week. Since the hon. Member follows these matters closely, I am sure he will agree that, even though we are not yet perfect in this respect, there has been a considerable improvement in the last six to eight months in the way in which these matters are brought to the House.
Mr. Spriggs: Will my right hon. Friend reconsider his statement about the reassembly of the House on 26th October bearing in mind the length of time that hon. Members are expected to sit, both day and night, and the damage to the health of hon. Members and their families? In view of what has happened

1855
over the last few months, will my right hon. Friend reconsider the date and bring us back to the House earlier?
Mr. Foot: I do not think that that proposal would command the unanimous approval of the House. We shall be debating this question on Thursday. The question of the hours of sitting is being discussed by the Committee on Procedure. Every time committees look into that question they discover some of the problems of seeking to say that the House should limit its periods of recess. We have not solved these problems.
Mr. Michael Morris: May we have a statement before the recess on the footwear study group and on the Government's policy on new towns?
Mr. Foot: I hope that we shall have a statement on the footwear industry next week. I am not sure on which day, but I expect that it will be on Monday. My right hon. Friend the Minister of Agriculture, Fisheries and Food will be making a statement tomorrow on some of the subjects raised in the question put to me by the hon. Member for Banbury (Mr. Marten).
Mr. John Evans: In view of the Press reports this morning that the Council of Ministers has slashed the regional policy fund by about 50 per cent. and in view of the unsatisfactory debate that we had on Monday, is it not important to have a statement next week about the Council of Ministers' actions in this respect?
Mr. Foot: I shall bring that representation to the attention of my right hon. Friend. As the House will see, these matters are attended to instantly. The hon. Member for Banbury had only to ask a question and I came back in a minute to gratify him.
Mr. Gow: When will the Government lay the orders to give effect to the rise in school meals charges from 15p to 25p?
Mr. Foot: That is not a matter to be discussed next week, thank God. It will be discussed in detail later.
Dr. Hampson: Is the Leader of the House aware of the arrangements that were made for the distribution to hon.
1856
Members of the Green Paper on which we are about to have a statement? Is he aware that at 11.30 a.m. the Secretary of State's private office told me that a batch of copies of the Green Paper was coming immediately to the House, that they arrived at 12.30 p.m. but were embargoed until 3.30 p.m.? Is this an efficient way of dealing with the matter? There are 25,000 words and yet we received them only half an hour before the making of the statement. Does the Leader of the House consider that this is courteous? Is he aware that my hon. Friends the Members for Chelmsford (Mr. St. John-Stevas) and Brent, North (Dr. Boyson) received information from the Press, the members of which received their copies of the Green Paper early yesterday? I understand that a special messenger was sent over and arrived at noon with one copy. May we have an early debate in the House on this important matter?
Mr. Foot: I shall look into the matters mentioned by the hon. Gentleman. I would not accept what he has said without looking into the details. I do not think he knows all the background. No doubt my right hon. Friend the Secretary of State for Education and Science will be able to answer all the points made by the hon. Gentleman. There is no question of discourtesy to the House. If the hon. Gentleman has any representations to make, perhaps he should put them in a rather more inquiring manner rather than make dogmatic assertions.
Mr. Rhodes James: What is the Government's attitude towards the Guardianship (Amendment) Bill relating to the rights of grandparents to apply for access to their grandchildren? In view of the very strong support for the Bill among right hon. and hon. Members on both sides of the House, and in view of the considerable public interest in it, is the the right hon. Gentleman in a position to make a statement about the Government's attitude to it?
Mr. Foot: I understand that my right Friend the Home Secretary is looking into the matter with his customary sympathy. If that satisfies the hon. Gentleman, I am very glad to hear it.

EDUCATION (GREEN PAPER)
Mr. Speaker: Mrs. Williams—statement.
Mr. Pym: On a point of order, Mr. Speaker. May I draw to your attention and that of the House the length of the statement which the Secretary of State for Education and Science is about to make. Through the courtesies of the House, we have received a copy of what the right hon. Lady is about to say, and it is important, but it runs to five pages of foolscap. If there is a policy change in Government education strategy requiring a statement of this length, surely we should have a day's debate so that we may consider what the right hon. Lady has to say, in exactly the same way as the Government gave us a day yesterday to discuss their change in economic policy.
A Green Paper has been published relating to the statement. Surely it was not necessary for the statement to cover five foolscap pages. Would it not have been more appropriate if the statement were about one and half pages long and if we had had a debate on the subject later? It is an abuse of the practice of making statements in the House for, in effect, a speech to be made on a change of policy under the guise of a statement. It is an immensely unsatisfactory way of dealing with a matter as important as this.
Mr. Speaker: The Lord President.
Mr. Skinner: Further to the point of order—
Mr. Speaker: What the Lord President is about to say is further to the point of order. There are mysteries in this place. The Lord President.
The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): I am willing to give way to my hon. Friend.
Mr. Speaker: Very well, if the right hon. Gentleman gives way. He indicated that he wished to speak.
Mr. Skinner: Before my right hon. Friend answers the question of the right hon. Member for Cambridgeshire (Mr. Pym), I want him to take into account the fact that—
Mr. Speaker: Order. The point of order must be put through me to whomsoever the hon. Gentleman wants to hear it.
Mr. Skinner: Yes. We are being very finicky today.
Mr. Speaker: Order. I know that it is the month of July, but even the hon. Gentleman must observe normal courtesies.
Mr. Skinner: Yes.
I wonder whether my right hon. Friend, before he answers the question, if he catches Mr. Speaker's eye in relation to the point of order, will take into account the fact that the Opposition often raise questions about the failure to make documents available on time, their length, and so on. Although in general I sympathise with that view, will my right hon. Friend undertake to examine the fact that the two-faced people on the Opposition Benches never raise the question when Common Market documents are not available. That has to be left to my right hon. and hon. Friends on the Benches below the Gangway. Even when the documents arrive, some of them are out of date. The EEC is changing policy almost every day of the week—
Mr. Speaker: Order. I think that the hon. Gentleman's point has been made.
Mr. Foot: Further to the point of order, Mr. Speaker. I think that it would be unwise for the House to pass judgment on my right hon. Friend's statement before it has heard it. I am sure that right hon. and hon. Members will find that it is a very good statement. The right hon. Member for Cambridgeshire (Mr. Pym) is one of the few Members who have had the opportunity of seeing how long the statement is.
We try all the time, as I have no doubt the right hon. Gentleman did in similar circumstances, to ensure that statements made to the House are kept as brief as possible, because they eat into the time of debates. We try persistently to do that. Also, we always seek to ensure that the questions put from the Opposition Front. Bench may be abbreviated. I am sure that we shall have a fine example of that this afternoon from the hon. Member for Brent, North (Dr. Boyson).
The Secretary of State for Education and Science and Paymaster General (Mrs. Shirley Williams): With permission, I should like, Mr. Speaker, to make a statement about education in schools in England and Wales, on which my right hon. and learned Friend the Secretary of State for Wales and I are today presenting a Green Paper.
The Green Paper assesses the present stage of development of our schools and makes proposals and recommendations for their future development. Substantial progress has been made towards full comprehensive reorganisation of secondary education, and the Government are determined to press ahead to complete this process so that secondary education shall be equally available to all children over the full range of ability. Having secured that aim, the Government look to a period of stability in organisation and of improvement in educational standards.
The Green Paper points to the need for positive discrimination to help those most in need; those handicapped in different ways, including the disadvantages of a deprived environment; the ethnic minorities; travelling children and others. Special measures are needed, both to help the pupils themselves and to encourage the recruitment of teachers with those attributes that can be of special value to disadvantaged children.
It also underlines the importance of offering equal educational opportunities to girls as well as boys. The curriculum needs to reflect this, from the study of science to training in parenthood and domestic responsibilities.
The Green Paper recognises that schools benefit in many ways from building close links with the community and that the groups most deeply involved with a school must always be the teachers and the parents. The Taylor Report, to be published in September, will have more to say on this subject. Meanwhile, a circular on a matter of special importance —the information which is available to parents about their children's schools—is already out for consultation and comment and should be issued early in the new school year.
It must be our concern, together with our partners in the school education system in England and Wales—the local education authorities and the teachers—
1860
that the school curriculum should match the aptitudes and aspirations of boys and girls and of their parents for them as well as responding to national needs. The Government reject any idea of a central control of the curriculum but they believe that all those with responsibility for the schools should consider whether these needs are now properly met.
We therefore propose to ask each local education authority to consult the local representatives of the teachers and parents, employers and trades unions in carrying out a review of their curricular arrangements. This review and a joint study of what it reveals will precede the preparation of any curricular advice that we might then issue to local education authorities.
The Green Paper also deals with the accountability of schools and the need for a soundly based means of assessment for the educational system as a whole, for the schools, and for individual pupils. The assessment of the school system as a whole rests with Her Majesty's Inspectorate, which is moving towards quantitative analyses of what is done, for example, through the current surveys of primary and secondary schools, which complement the inspectors' traditional methods.
Secondly, local education authorities need to be able to identify schools' problems in performance and to take remedial action. But "league tables" based on standardised tests in isolation can be seriously misleading as they neglect many important factors, such as the school catchment area, the school's own objectives, and external factors.
Thirdly, the assessment of individual pupils is a continuous process in which the teachers' own competence and knowledge are of prime importance. The development of diagnostic tests and greater consistency of practice in their use will be encouraged by the education departments, but the Government reject the view that universal national testing of "basic literacy and numeracy" is desirable.
The Green Paper proposes further study of the concept of a leaving certificate for all pupils and it stresses the need for high standards of professional accuracy in record-keeping of pupils' progress. The keeping of records should be included in the review of curricular arrangements.

1861
Any plans for improving the curriculum and raising standards must depend in large part on the full understanding and support of the teaching profession and on the quality of its members. We are concerned to improve the quality and relevance of initial training in a number of ways. First, we shall set higher minimum standards for entry and we shall require a qualification in English and in mathematics. We also aim to continue the recruitment to teaching of mature people who can bring useful experience of the outside world into the profession, as well as more teachers from ethnic minorities. We are seeking ways of improving the college curriculum and the professional relevance of the training process.
As the number of newly qualified teachers entering the schools falls we intend to consult our partners regarding better arrangements for the induction period for newly qualified teachers entering the schools. They need support in a number of ways. The arrangements might involve some reduction in new teachers' work load, and experienced members of staff could be given special responsibility for overseeing their work and progress.
I intend to consult the local authority associations and the teachers about these proposals and about other possible developments, for example, whether new teachers might be given an interim status when they complete their training and receive fully qualified status upon the satisfactory completion of probation. The Green Paper also envisages a major initiative in in-service training. This would build upon the wide variety of provision already made and would aim to include the development of specialist centres on Mr. Stokes: On a point of order, Mr. Speaker. Would it be possible for the Secretary of State to read a little more slowly? It is very hard to follow her.a regional or national level.
I now turn to an aspect of our proposals with which I should like to deal in slightly more detail. [HON. MEMBERS: "Too long."] I am taking one minute for each 1 million children in our schools. I do not think that that is too much.
Mr. Stokes: On a point of order, Mr. Speaker. Would it be possible for the Secretary of State to read a little more slowly? It is very hard to follow her.
Mrs. Williams: I always try to please all members of the Opposition, but sometimes it is a little difficult.
The Green Paper points to the need for employing authorities to develop more systematic approaches to the recruitment, training and deployment of their teachers during the period of declining pupil numbers. This changed situation will give scope for authorities to give more positive attention to the career development of their teachers and to consider, for example, whether their present arrangements are such as to secure the best appointments to headships. I am confident that they will wish to proceed in the closest consultation with the teachers' representatives in all these matters. Various aspects of all these matters may need to be reviewed.
I, for my part, pledge my willingness to join sympathetically in any discussions, especially where action on my part might be required. The overwhelming majority of teachers give devoted and efficient service throughout their careers. A difficult problem is posed by the small minority whose performance falls below an acceptable level of efficiency, for a variety of reasons—for example, from the effects of stress. Any cases of this nature will raise sensitive personal issues and I expect authorities to offer the fullest consultation to the teachers' associations in working out procedures for dealing with them which clearly satisfy the requirements of fair practice.
The Green Paper proposes the further development of links both nationally and locally between schools and productive industry and of more direct contacts between those working in schools and in industry to increase understanding on both sides. In particular, the Green Paper emphasises the need for a much wider development of careers education to widen the scope and expectations of boys and girls in their career plans and to take fuller advantage of the contributions which employers and trade unionists can make.
The curriculum interpreted in its widest sense should be more outward looking. It should place more emphasis on preparation for adult life in an internationally

1863
oriented, democratic and industrial society. Parents, local industry and the community at large all have an essential part to play in helping schools to meet these needs.
There can be no end to debate on the education of our children, but there are times for self-examination and for the setting down of new objectives and new ways of reaching them. I believe that this is such a time and I look forward with confidence to the continued progress of our schools along the lines we have set out in the Green Paper.
Mr. St. John-Stevas: May I say to the right hon. Lady—I say it with regret—that, having had the opportunity briefly to look at her Green Paper and to hear her précis, I find it a rather disappointing document? Although we have no objection of course to her statement, our objection is to the lack of a debate on this document. I agree with her that one minute for 1 million children is not nearly enough.
We welcome the emphasis on higher standards and better qualified teachers, as these are themes that have been long stressed by the Opposition, but we are dismayed by the lack of positive proposals to improve the education service. If the Secretary of State is really serious about raising standards in schools, she has just told us that she intends to reject the most effective practical way of doing that—that is, to reintroduce the national standards of literacy and numeracy which were foolishly abolished by a previous Labour Government in 1966.
Why, since she has also just paid lip-service to parents, are there no proposals in this document to increase parental influence and freedom of choice? Why, since she has already received the Taylor Report, are there no proposals in this document for the appointment of parental governors? Although the right hon. Lady has been courageous in this document in admitting that comprehensive schools are not perfect, why are there no proposals for their improvement and why is there silence on their size, on the vital questions of setting and streaming and, above all, on mixed ability teaching? Surely her efforts would be much better concentrated on those questions than on pursuing this mindless vendetta against the
1864
grammar schools. Above all, why is there a deafening silence about that which concerns parents most of all, namely discipline in schools and moral and religious education in the schools?
So may I express to the right hon. Lady the Opposition's fear—it is a genuine fear —that, far from being a watershed in our educational history, this inadequate Green Paper will be another missed opportunity that the Government have failed to take?
Mrs. Williams: I know that the hon. Gentleman did not have long to read the Green Paper, but I am amazed that he missed so much of it. In respect of the improvement of the teaching profession, we are proposing a graduate profession; we are proposing special bridging courses for mature teachers and for those from ethnic minorities; we are proposing higher requirements in English and maths on entry to the profession; we are proposing a new induction year; we are proposing advanced in-service training. The Conservative Administration who were in power for four years, when the present Leader of the Opposition was the Secretary of State for Education and Science, did none of these things. I do not think that the Opposition are in much of a position to complain.
With regard to parents, we have issued for the first time from the DES a requirement for information about State schools. The great majority of our parents have their children at State schools. The Opposition concern themselves largely with those who do not attend the maintained sector.
For the first time we have involved parents in consultation about education policy and the curriculum and all the other aspects of it. This has not happened before. My predecessor asked for a report on the government and management of schools. The hon. Gentleman knows perfectly well that I am not at liberty to announce to the House the conclusions set out in a report that has not yet been published, and the House of Commons would profoundly resent it if I did anything of the sort.
Finally, with regard to what the hon. Gentleman said about comprehensive schools, we are proposing a review of the curricula. We are proposing new approaches on asessment. We are proposing new approaches to the transfer from

1865
primary to secondary education. We believe, as the Opposition do not, that we can make of our reorganised comprehensive schools an outstandingly successful and non-divisive educational system. That is what the Government are committed to.
Mr. Roderick: My right hon. Friend said that she would be setting higher requirements in English and mathematics for students wishing to enter teacher training colleges. As a mathematician, I beg her not to go ahead with such a scheme because so many students have poor facilities for mathematics at present and she would debar many good teachers from entering the profession merely because they have a blind spot in mathematics. It would be much better to impose on the teachers of mathematics the condition that mathematics teachers should have a qualification in mathematics.
Mrs. Williams: Obviously notice would have to be given of the requirement. The Government are embarking first upon courses to enable mathematics teachers to retrain—that is, those who are not specialised—so that for the first time we can begin to provide schools with those who are trained in mathematics. I agree that there are now many pupils without an understanding of or liking for mathematics, but one of the reasons for this is that many mathematics teachers are not qualified in maths. We are trying to remedy that situation as quickly as possible.
Mr. Freud: My right hon. and hon. Friends welcome the Secretary of State's eminently sensible statement. I echo the comment made by the hon. Member for Chelmsford (Mr. St. John-Stevas) and express our deep regret that we cannot have a fuller debate on it.
May I raise a few topics? I am sorry that the right hon. Lady made no mention of nursery education in rural areas. Will she look into and give support for play buses such as we have in Cambridgeshire, which are enormously successful? Will she also look into an extension of the system of works experience for those in the last two or three years of secondary education? Finally, in view of the greater co-operation that there is to be between her Department and the teachers, I wonder whether the Secretary of State
1866
would seek to reduce the number of teachers' unions.
Mrs. Williams: The hon. Gentleman will see that there is in the Green Paper a short section on nursery education—although the Green Paper is primarily about schools. However, we are hoping to issue a joint circular with the Department of Health and Social Security about the under-fives. As the hon. Gentleman will appreciate, one of the problems in the past has been the division of responsibility for the under-fives between day nurseries and nursery schools, which are the responsibility of the Department of Health and Social Security and of the Department of Education and Science respectively.
As regards pay buses, my hon. Friend the Member for Lincoln (Miss Jackson), who is responsible for nursery school education, has been looking into the whole question of school transport and will certainly pay close attention to this. I shall look at the matter of play buses, to which the hon. Member for Isle of Ely (Mr. Freud) referred.
We are looking for closer links between schools and further education colleges for pupils during their last three years at school. Pupils should be told about the courses available and encouraged to visit the colleges. Careffs education should start at the age of 13 and we have indicated that work experience and observations are an appropriate part of the latter years at school.
No doubt the hon. Member for Isle of Ely will offer his conciliatory services in the matter of teachers' unions, but I feel that the matter is rather beyond my capacity.
Mr. Flannery: I have not read the document so I shall confine my comments to what I have heard today. Did the Secretary of State refer to what amounts to the sacking of any incompetent teachers? There are many incompetent doctors, engineers and it has even been rumoured, hon. Members, but I shall not develop that theme. Does not my right hon. Friend agree that at this time, when there are 20,000 new, young, qualified teachers, some of whom have not yet received their certificates because they have not had a chance to work for a probationary year in some areas, a witch-hunt against teachers could be unleashed

1867
if we were not careful and if we did not deal with the matter in a sensitive way?
On the subject of curricula, did I hear aright when the right hon. Lady said that parents and industrialists would be invited to help form curricula, there having been a generalised discussion, and that the policy would be formulated by the local education authorities on the basis of such discussions?
Mrs. Williams: I draw the attention of my hon. Friend to paragraph 6.36 of the Green Paper, which mentions that a small minority of teachers should probably not be in the profession. It goes on:
"In none of these respects is the teaching profession unique; much the same could be said of other professions."
We are proposing that where a teacher finds it difficult to continue teaching—and examples of extreme stress among teachers have been brought to our attention by the teachers' associations—there should be reasonable regulations for early retirement. We are working on these regulations with the teachers' associations to enable such teachers to leave the profession if they wish. In the document my hon. Friend will find all the regulations that we have been discussing with the teachers' associations, and I do not think that these would release a witch hunt, because that is something that we have no desire to have.
In the course of discussions at regional conferences and since, in discussions with employers and trade unions, we have talked about links between schools, industry and the community, the transition to work, and work observation and experience. Our discussions about the curricula review will be held with local authorities and teachers. It is when the matter goes beyond the curricula that discussions with the wider community in the shape of parents and industry should be involved.
Sir T. Kitson: Is the Secretary of State considering in the Green Paper whether to set up again a working party on school transport? Now that school transport is being withdrawn in a number of areas, the roads and the conditions that we are asking pupils to face in walking to school are worse than when the working party last met. The right hon. Lady mentioned pay buses. What is the position there?
1868
Can something be done about getting children to school in difficult areas?
Mrs. Williams: Last year there were discussions on this matter following which my Department put to the local authorities certain proposals designed to bring about a more satisfactory system of school transport. Those proposals were not acceptable, primarily because some parents would have had to pay more to enable others to pay less. My Department is still exploring this with the local authorities to discover whether we can amend the proposals to achieve a more satisfactory result than the present one, which is, in fact, a gamble.
Mr. R. C. Mitchell: The Secretary of State quite rightly emphasised the importance of in-service training. What further powers does she propose to take to deal with those reactionary local authorities, like Hampshire, which are mostly Tory controlled and which have a bad record of in-service training?
Mrs. Williams: I have been advocating wherever I can the importance of in-service training. The change in the school population, with a fall in the number of pupils of primary age and a rise in the secondary age group, has made it not only desirable but essential that we should improve the quality of education. If the present unsatisfactory position continues, I shall have to explore other ways of ensuring that this vital training takes place.
Mr. Forman: Since at short notice one can ask only impressionistic questions, may I ask whether the Secretary of State is satisfied that the net result of the Green Paper will be to give more vocational emphasis to the school system and to put more emphasis at the younger end of the school system rather than the older end? Will it give parents more say and influence over a matter that is of deep concern to them?
Mrs. Williams: I hope so, because that was certainly intended to be the case. The hon. Gentleman spoke of a more vocational flavour and that is one of the main things that we want to obtain. We need to infuse into our children a greater sense of the society in which they are being brought up and in which they will participate. That should be so even

1869
for children who will not be taking vocational courses and who will be going on to higher education. They should be made much more aware of the importance of industry and its significance within the economy than they are now.
Miss Joan Lestor: Bearing in mind what my right hon. Friend has said about the issue of the joint curriculum and the references in the Green Paper to play groups, would she confirm whether she sees play groups as a permanent feature of the under-fives service in this country or as a pro tem one pending the expansion of nursery education? Has my right hon. Friend taken into account the fact that, since nursery education is not compulsory, her hopes for expansion, as outlined in the document, must rest on the attitude of local authorities? What is she doing to ensure that they will fulfil her hopes in this direction?
Mrs. Williams: An allocation for nursery building for 1978-79 will be announced next week. The amount is not as big as we should wish, but we shall be able to continue with the expansion of the nursery programme, particularly in the inner cities and conurbations. That will take the lion's share of the available cash and we shall not be able to expand nursery education as rapidly as we should like in the less stressful areas. I am trying to work with the Department of Health and Social Security to see that provision is made for the under-fives as a whole and particularly for hard-pressed families who resort to child minders because the times of nursery schools do not meet their needs.
I see the pre-school play group movement as a useful voluntary addition, but it cannot replace the necessity for a systematic programme of provision for the under-fives.
Dr. Hampson: Is the Secretary of State aware that the Prime Minister's speech, like the Green Paper, stressed the contribution that education can make to the productive capacity of the country? Yet there are only two pages on this subject within the 50 pages of the Green Paper. The right hon. Lady has talked about proposals. The Green Paper, in this area, proposes nothing and talks only about possibilities. It says that the Government are encouraged by-—not encouraging—the
1870
development of link schemes. Are not link schemes particularly vulnerable because of the cut-backs in local authority expenditure and are they not suffering acutely? The Green Paper calls for liaison between schools and universities as a possibility for further study, but the grants system is loaded in favour of advanced and degree courses against OND and technical courses. The Green Paper maintains an artificial division between the school and post-school sectors, and unless the right hon. Lady is prepared to grapple with this specific type of problem, I am afraid that the profession will regard this Green Paper as of limited value.
Mrs. Williams: Probably the hon. Gentleman has had time only to look at one part of the document. Perhaps I can refer him to one or two of the direct associations and to what we have said about industry. We have said that the curriculum should reflect the industrial needs of this country, that teachers should be given preference if they have had experience in the world outside of education. We have said that there should be a special programme for mature students entering education who have experience in industry and elsewhere. We have also said that there should be the fostering of closer links between schools and local firms—with trade union interests as well as with employers. We have said that there should be an encouragement of the link programmes which, for example, Essex, Leicestershire and other councils undertake. [Interruption.] The hon. Gentleman knows as well as I do that in our system of education the direct control of the schools is a matter for the local education authorities. Within the powers that exist in the Department of Education and Science we are undertaking in all possible directions the building of these much closer links, which we believe to be essential
Several Hon. Members Several Hon. Members rose——
Mr. Speaker: Order. I shall allow questions and answers to run for a few minutes more, but I must say that long questions and answers will limit the number of hon. Members who can be called.
Mr. Tom Ellis: Can my right hon. Friend say whether her Green Paper reflects, at least in part, advice given by the various main teacher unions and, if

1871
the advice was not the same in all cases —as might appear to be the case from public pronouncements since some unions appear to be more concerned with the quantitative aspects, such as pupil-teacher ratios, and other unions with qualitative aspects—can she confirm that the Green Paper comes down heavily on the side of those unions believing that the qualitative aspect is the more important, given the present position of our educational arrangements?
Mrs. Williams: We have had many consultations with the teachers' associations on this matter. There is no doubt about that. A good deal of the Green Paper reflects their thinking, although in parts it does not. We have to put the greater emphasis on the qualitative aspect now for the very good reason that the population in our schools is falling and in future years the number of dependants that each individual child will have to bear as he comes of age will be considerably greater than in the past. That means that each child must be educated to the limits of his willingness and capacity.
Mr. Alexander Fletcher: Is the right hon. Lady aware that the Secretary of State for Scotland has not seen fit to promote the "Great Debate" in Scotland, despite the equal amount of public concern about declining educational standards and deprivation of freedom of choice? Since we understand that the Green Paper must exclude Scotland, is this another example of a relaxation of collective Cabinet responsibility? Will the right hon. Lady lend a hand in shaking the Secretary of State for Scotland out of his complacency about Scottish education?
Mrs. Williams: There are many roads to truth. As I understand it, my right hon. Friend the Secretary of State for Scotland has chosen the path, which has also been adopted before in England, of various commissions being set up to look at particular aspects of the educational system. This is a rich tradition in England, too, with Crowther, Plowden and others. That has been my right hon. Friend's choice of the best way to look at the educational system in Scotland.
Mr. Bryan Davies: Will my right hon. Friend take this opportunity first to nail the obscurantist proposition of the Opposition Front Bench that concentration on the fact of selective schools with a narrowly-based academic criteria has nothing to do with the issue of improving the curriculum for the majority of schoolchildren in this country? With regard to producing a more constructive proposition to that end, will she define more clearly the nature of discussion with the local authorities? Will she accept that those groups which have the right to participate with local authorities and discuss the curriculum and make representations about it ought also to have the right to participate on the school governing bodies which control the schools.
Mrs. Williams: I can confirm that my hon. Friend is right about what he said in the first part of his question. As to the second part, I believe that the curriculum review is an essential part of the success of a comprehensive system. As individual areas go comprehensive, we sometimes find—not always—that there are grave curriculum weaknesses in the successor schools to the secondary modern schools. In some cases no teacher is able to teach science to 0-level or no teacher is adequately able to teach modern languages because the schools were deprived, in the curriculum sense, when they were secondary modern schools. It is part of the concept of comprehensive reorganisation that the content of the school curriculum should reflect equality of opportunity and choice as well as the name outside the school gates.
Mrs. Kellett-Bowman: If the right hon. Lady is concerned with the standard of teacher training may I ask her to be good enough to restore the cut of 50 places which she has suddenly and quite inexplicably imposed on St. Martin's Teacher Training College, Lancaster, which is one of the finest teacher training colleges in the country? Secondly, she will be aware that there have been difficulties with reorganisation in the Lancaster area. Does she appreciate that the local elections seem to show that most people would like to preserve the status quo but, being law-abiding, they are attempting to implement the law as it stands? Does she further appreciate

1873
that people in Lancaster have now come forward with a scheme for the possible amalgamation of the girls' and boys' grammar schools, making one 11-18 school? Since this will require further study, may I ask the Secretary of State whether she will allow extra time for this study?
Mrs. Williams: Dealing with the first point raised by the hon. Lady, I do not think that I can re-open the college of education settlement, which was reached with a great deal of difficulty and care. As to the second point, we shall certainly look at any proposal for genuine secondary reorganisation. However, I could not promise now to give the extra time. I would have to be persuaded that the authority needed it.
Dr. Bray: My right hon. Friend has undertaken a lot of important follow-up work from this report. In view of the great difficulty many young people are facing in making the transition from school to work, will she give priority to this problem? The Government have undertaken many detailed innovations, following the report "Young People at Work", to deal with problems where the interface with the schools has not been very well worked out. Can my right hon. Friend give priorty to this in the next few months?
Mrs. Williams: I assure my hon. Friend that this is one of the things about which we feel strongly. The Departments of Education and Science and Employment are working closely together on this question of transition. I regard this as one of the more unsatisfactory aspects of the educational system. We are attempting to improve it.
Mr. St. John-Stevas: On a point of order, Mr. Speaker. May I ask your indulgence, while in no way seeking to usurp your function? Because of the extraordinary situation concerning this Green Paper and the fact that we shall be dispersing for the recess without an opportunity to debate it, may I ask you to allow questions to run on for a little longer so that those hon. Members who wish to may have their say? Otherwise, we shall have a situation in which the only people who cannot take part in the
1874
"Great Debate" are those in the House of Commons.
Mr. Speaker: Order. The hon. Gentleman might belong to the A-stream, but that is a difficult one. He must leave this matter to my discretion.
Mr. Wyn Roberts: With regard to the section in the Green Paper entitled "Welsh in the curriculum of the Schools of Wales" and the call for clear language policies, formulated by authorities in consultation with parents and teachers, may I ask the right hon. Lady to assist in achieving such an objective by ensuring that her right hon. and learned Friend the Secretary of State for Wales issues clear guidelines to authorities about the form that consultations should take and the amount of regard that should be given to them by the authorities concerned? Is she aware that the general complaint on the part of parents and teachers alike is that the consultative machinery is inadequate and that insufficient attention is paid to their views?
Mrs. Williams: I understand that my right hon. and learned Friend the Secretary of State for Wales is embarking upon specific consultations about the Welsh language in Wales. In addition to that, he is prepared to consider making additional grants for bilingual education, if he has powers to do so. We shall be discussing with the local authorities in Wales the whole question of the role of the Welsh language in Welsh schools.
Mr. Gerry Fowler: Will my right hon. Friend accept that many of us accept her stress upon the importance of additional work experience and work observation in the curriculum and the suggestion that it should be internationally oriented, outward looking and should include some careers counselling? Will she also accept that this is bound to lead to further overcrowding of the curiculum, which will put more pressure of minority subjects which, alas, includes all modern languages, and will make it more difficult to get a common curriculum throughout the country? Does she accept that this will not be achieved until it is recognised that school education is for everyone the foundation of subsequent learning, how ever it be undertaken—perhaps at the workplace—and is not the end of learning leading

1875
on to work, after which learning is never undertaken again?
Mrs. Williams: My hon. Friend is an outstanding apostle of the concept of continuing education. I say to him at once that that must be the goal of any progressive system of education, although we are a long way from that. I recognise what he said about there being a certain conflict between the overcrowding of the curriculum and the need for the curriculum to reflect modern needs. I believe that he recognises that in some teaching of existing subject matter it would be possible to bring in more relevant, practical and more contemporary examples, for instance, in geography, history and maths. That is one of the way in which we might be able to square this circle.
Mr. Speaker: If hon. Members will cooperate with me and ask very brief questions, I may be able to call every hon. Member who was standing originally. However, if anyone asks a long question, someone else will be cut out.
Mr. Stokes: Will the Secretary of State assure us that the special treatment for immigrant children that is mentioned in the report will not be at the expense of British children, as there are considerable fears about this?
Mrs. Williams: There are, of course, some positive measures taken for immigrant children through section 11 of the urban programme. I believe that it is right and proper that additional sums should be made available to children, British or otherwise, who are handicapped in any way. It is a plank of our policy that there should be positive discrimination for disadvantaged children wherever they come from.
Mr. Newens: While concern about the standards of education is to be heartily welcomed and is, in some respects, long overdue, is my right hon. Friend aware that this objective cannot be attained while resources devoted to education are being reduced? Therefore, will she agree that it is necessary to reverse some of the cuts that are being demanded by the Opposition and made by Conservative-controlled councils throughout the country? This is the only way we can attain the objectives that we seek in this document.
Mrs. Williams: There are some changes that can be made without additional resources, but many cannot. The document recognises the importance of moving towards an improvement in teacher-pupil ratios as soon as we can. Many local authorities do a great deal for education, but there are others that do less than I would wish.
Mr. Durant: While welcoming the steps towards offering career guidance at the age of 13, may I ask the Secretary of State whether she is convinced that this is early enough? Will the Government make special provisions for more teachers of careers guidance, which has a very low priority in a lot of schools?
Mrs. Williams: In a sense it is never early enough to start careers guidance, but 13 is a practical limit at which to start. The Secretary of State for Employment has announced that there will be additional careers officers in the careers service and the Green Paper will endeavour to support an increase in the number of careers teachers in order to complement this.
Mr. Arnold Shaw: Will my right hon. Friend agree that teachers have played a leading part in any advances in the curriculum? Will she assure us that in any partnership with industry or any organisations along the lines suggested parents will play a larger part? Can we be assured that this will be a reality in future and not simply an election gimmick?
Mrs. Williams: It is a reality already. We have already tried to bring parents in, but one of the great problems is that there are no clear representative organisations of parents as there are of teachers, local authorities and other bodies. Therefore, consultation is not as satisfactory as it is with highly organised associations. We are doing everything we can to inform parents better, to give them access to the schools and to encourage them to engage in the management and organisation of the schools. We recognise that the modern generation of parents is better educated and therefore expects to be involved with the education of its children in the State sector.
Mr. Ian Lloyd: The Secretary of State will expect me to endorse warmly what she has said about the relationship between schools and industry, and I do

1877
so. But in one respect this Green Paper is absolutely astonishing. From cover to cover it contains not one mention of the word "computer". Have her advisers not told her what is happening in Japan and some other countries where there is education of the whole society in computer literacy? If we do not do this, much of the other education in relation to industry and industrial needs will be almost irrelevant.
Mrs. Williams: Although the Green Paper does not mention the word "computer", it often mentions the word "numeracy". While this is not a particularly attractive word, it means, in effect, having the same kind of under standing.
Mr. Alexander W. Lyon: The paucity of the section on special treatment of the ethnic minorities seems to be in marked contrast to the prolixity of the rest of the document. Why is there no indication in the review of section 11 of the special needs of Asian children as distinct from those of West Indians? Also, why is there no mention of teaching a language in the home to ensure that when a child enters a school he or she is on the same level as indigenous children?
Mrs. Williams: At no point does the document mention either West Indians or Asians. It says "ethnic minorities" and this includes Asians as well as West Indians. In addition, we have only recently sent out a draft circular for consultation on the whole subject of positive discrimination for ethnic minorities. This asks how many ethnic minority teachers there are and how many ethnic minority children are in institutions for the educationally subnormal. We have included the Asian community in this consultation document as well as the West Indian community. This is the first time this has been done and I would have thought that my hon. Friend with his interest in this matter would welcome it rather than criticise.
Mr. Peter Bottomley: It is unfortunate that the Secretary of State should suggest that hon. Members on this side of the House are interested only in children who attend private schools. We take that very bady coming from her. Will she explain why the Green Paper stresses the special needs of minority groups but does not
1878
mention one minority category—that of the academically able? Will she provide positive opportunities for these children to reach their full potential within or without the comprehensive system? Will the Department also give attention to the problems of mixed ability teaching, truancy and the question of homework, which seems to have different settings around the country?
Mrs. Williams: It is never easy to please Parliament. The hon. Member has called for a good deal more to be done and others have said that there is too much in the document. There will be a paper next week on the exceptionally gifted child, preceding the international conference in November which will cover the whole range of educational systems, from the United States to the Soviet Union, and in which we shall participate. There is to be a meeting about comprehensive schools to consider questions of size, the style of teaching and streaming and so on. In many ways this will be a more detailed study than the Green Paper could ever be and the hon. Member will have every opportunity to see the working papers of that meeting.
Mr. Andrew F. Bennett: Will my right hon. Friend consider increasing the educational maintenance allowance to ensure that children are not denied a sixth-form education because of their poverty?
Mrs. Williams: My hon. Friend has been a great champion of the educational maintenance allowance. We are looking at this very closely in conjunction with the Manpower Services Commission grants for the employment field. I should point out that the Green Paper is not meant to be about the post-16 period, which raises a different set of considerations. It is meant to be about the compulsory school period. Discussions about the 16-19 period will include other Departments as well as mine.
Dr. Boyson: Is the Secretary of State aware that many people will feel that there is very little positive in this document? Instead of being something which has ended a year of so-called discussions, it seems to be something which starts more discussion. It contains more suggestions than definitions. While welcoming the Government's belated and

1879
half-hearted conversion about the disaster of child-centred progressive education, which we have been advocating for some time, may I suggest that the Secretary of State allows some time for self-examination and stability in schools?
There is no self-examination and stability allowed by the Labour party's doctrine and dogma on comprehensive schools, regarding Birmingham, the Mary Datchelor School or St. Marylebone Grammar School for example. Some of us feel that within this document there are statements, alongside many others Blade on other occasions, which indicate the beginning of a vendetta, not just against grammar schools, but against the sixth-forms of comprehensive schools, which is shown in the traditional approach to the sixth-form.
Mrs. Williams: I must say that the hon. Gentleman's idea of a positive approach to education has always seemed to me to go negatively back a generation. I cannot see how advocating children leaving school at 14, rigid examinations and rigid selection could conceivably be described as a suitable education system for the kind of society this country now is. I have never understood that aspect of the hon. Gentleman's approach.
I must say, in addition, that the whole purpose and belief of the Government side of the House is that we can combine non-selective schooling with high standards, and that is what we are determined to do.
Finally, with regard to the hon. Gentleman's extraordinary remark about the sixth form, I should like him to give some evidence for that. What we have said is that sixth forms must be viable and must be able to offer a reasonable range of subject choices. We have never suggested that the sixth form is dead, but merely that it must be fair to the children in it.

ORDERS OF THE DAY
  FINANCE BILL
  As amended (in the Committee and in the Standing Committee), further considered.
Schedule 6

  VALUE ADDED TAX
  4.41 p.m.
  The Financial Secretary to the Treasury (Mr. Robert Sheldon): I beg to move, Amendment No. 77, in page 60, line 20, at end insert—
  '12A. For section 45 of the 1972 Act (meaning of "business" etc.) the following section shall be substituted—
  "Meaning of business etc.
  45.—(1) In this Part of this Act "business" includes any trade, profession or vocation.
  (2) The following (without prejudice to the generality of anything else in this Part) are deemed to be the carrying on of a business—

  (a)the provision by a club, association or organisation (for a subscription or other consideration) of the facilities or advantages available to its members; and

  (b)the admission, for a consideration, of persons to any premises.

  (3) Where a body has objects which are in the public domain and are of a political, religious, philanthropic, philosophical or patriotic nature, it is not to be treated as carrying on a business only because its members subscribe to it, if a subscription obtains no facility or advantage for the subscriber other than the right to participate in its management or receive reports on its activities.
  (4) Where a person, in the course or furtherance of a trade, profession or vocation, accepts any office, services supplied by him as the holder of that office are treated as supplied in the course of furtherance of the trade, profession or vocation.
  (5) Anything done in connection with the termination or intended termination of a business is treated as being done in the course or furtherance of that business.
  (6) The disposition of a business as a going concern, or of its assets or liabilities (whether or not in connection with its reorganisation or winding up), is a supply made in the course of furtherance of the business."•
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): With this we are to discuss the following:
  Amendment (a) to the proposed amendment, to leave out subsection (3) and insert—
  '(3) Where a non-profit-making body with aims of a political, trade union, religious,

  1881
  patriotic, philosophical, philanthropic or civic nature provides services or goods closely linked thereto for the benefit of its members in return for a subscription fixed in accordance with its rules such supply shall be an exempt supply.'.
  Amendment (b) to the proposed amendment, to leave out from "only" in subsection (3) to the end of the subsection and to insert,
  'by virtue of the supply of services and goods closely linked thereto for the benefit of its members in return for a subscription fixed in accordance with its rules; provided that this exemption is not likely to cause distortion of competition'.
  Mr. Sheldon: This amendment reintroduces provisions that were removed from the Bill in Standing Committee. What we have done in the amendment is to bring back a revised Section 45, to be incorporated in the Bill—an amendment to the Finance Act 1972—which includes different provisions concerning clubs and associations.
  In Standing Committee a number of hon. Members felt that although the criteria to meet the Sixth Directive obviously had to be rather different from the criteria that existed beforehand, nevertheless, the effects of these new criteria were uncertain in their impact on certain clubs, societies and institutions. That complaint is clearly justified. Whenever one changes the basis of legislation, in the form in which it is presented, there will obviously be a change in definitions. Every club, institution or association, over a period of time, is able to devise the kind of system that suits it best within the definition set by legislation; and even if it is not so able to select, at any rate it comes to live with that legislation. When that legislation changes, it has to start the process afresh I hope that what I say this afternoon will help to clarify certain matters.
  The hon. Member for Guildford (Mr. Howell) will know that we have had a number of consultations, which I have tried to carry out in the spirit in which he put the point in Standing Committee. Perhaps I may refer to what he said then. Referring to the actions of the Opposition, he said,
  "What we are doing—I hope that that was made clear then but if not I shall make it clear now—is proposing that Ministers should bring forward on Report a new and more full explanation of the criterion on which they intend to proceed. We shall look for that information on Report in one form or another,
  1882
  so that some of the worries that were eloquently expressed on both sides of the Committee can be stilled. I hope that that makes clear our general approach to what is obviously a difficult and complicated area of law making."— [Official Report, Standing Committee D, 26th May 1977; c. 366.]
  It is in that spirit that I carried out a number of consultations, and a Press notice was made available and a draft order was prepared for the consultations with the various associations, societies and institutions.
  This change is a consequence of the Sixth Directive. Where large matters were discussed and where compromises were reached, we feel that we did particularly well in those exchanges and compromises. We obtained what was the most important matter open to the British people—the maintenance of our zero rating, covering, as it does, a wide range of activities. A number of other concessions were made by other countries—I assume and believe —in areas of major importance as far as their individual problems were concerned and the new taxes that they had to accept.
  What we have here is an attempt to ensure that within the spirit of the Sixth Directive we are able to make as large a concession to practice as is possible. What happened under the legislation that came before the House for approval in 1972, and was approved, was that those conducting a trade, profession or vocation had in practice the option to decide whether they should be taxable or not taxable. The Sixth Directive does not permit the continuation of the option for taxation which was provided under Section 45 of the Finance Act 1972. Under the directive, all are to be within the scope of the tax.
  Perhaps I can show the way in which this affects the two main areas of interest, as expressed in Standing Committee.
  The majority of trade associations are not disadvantaged. More than 750 have chosen to be taxable. The disadvantage to traders whose outputs are not exempt or partly exempt of the tax on the subscription, can easily be exaggerated, bearing in mind that we are talking about 8 per cent., and that it is only 8 per cent., in many cases, on the benefit which are receivable.
  There is a particular dilemma that the learned societies have tried to resolve in the best way available. That is that existing legislation allows the exemption

  1883
  option only for an organisation for a trade, profession or vocation, whereas membership of learned bodies is open to those interested in the work of the society, so that they did not meet the criteria of the legislation that was enacted. But there was a discretion given, and this seems to have gone through over the years without being questioned. Therefore, they are not strictly exempt within the terms of the existing legislation..
  The problem that we had in the implementation of the Sixth Directive, where we tried to keep the existing system open so that the option could still be retained, is that we were unable to get the other member countries to accept the stand that we wished to make. The problem is that a number of these societies have certain club facilities. They vary. Some provide benefits to their members and some do not.
  The test that we might usefully make is that where the membership is customary —that it is not necessarily compulsory for the profession or employment of the person concerned—no VAT would be required. Also, there would be another test that where the facilities that are available are not those for which VAT would otherwise be chargeable. In other words, if there is a particular benefit to the individual concerned, they would be chargeable, but if the benefit that they seek to assert is one to society as a whole, which covers most of the learned societies, the VAT would not be charged. Of course, there is provision for further examination of these matters through the tribunals, in a way that hon. Members will understand.
  However, the present position of the vast majority of clubs and associations will remain unchanged. I think that what we have seen here is that there has been an understanding of the particularly important role of these societies, which I believe has always been one of our great strengths.
  We have not yet finally decided the shape of the order. That is still open to consultation in the way that I indicated earlier. Any further points which arise, either in debate or as a result of representations made, can be considered in time for further inclusion or further
  1884
  changes in the order that will be produced in due course.
  It is right to protect and to preserve these institutions. They have formed a valuable part of our heritage. I intend within the terms of the Sixth Directive to do everything possible to assist these clubs, societies and institutions.
  Mr. Peter Rees: I beg to move, as an amendment to the proposed amendment, Amendment (a), to leave our subsection (3) and insert:
  '(3) Where a non-profit-making body with aims of a political, trade union, religious, patriotic, philosophical, philanthropic or civic nature provides services or goods closely linked thereto for the benefit of its members in return for a subscription fixed in accordance with its rules such supply shall be an exempt supply.'.
  In moving the amendment I declare a whole range of interests, since I belong to a number of bodies which may come within the scope of the amendment moved by the Financial Secretary—bodies which may be affected, I hope favourably, by Amendments (a) and (b).
  I recall in the debate in Committee that the justification for the amendment which was then voted down was purely that it was attempting to embody in domestic legislation the provisions of Article 13 of the Sixth Directive. The debate ranged hardly wider than that. The general principles which might be adduced to support the imposition or non-imposition of VAT over the various activities was hardly canvassed. The Committee voted down the amendment which the Financial Secretary, with his accustomed grace and facility, was pressing on us, on the ground that the amendment was too vague and indeterminate in its terms and would inevitably have to be enforced in individual cases by a battery of orders which were not then before the Committee.
  Doing its proper duty and taking a nonpartisan view of the matter, the Committee—the Conservative Benches being supported by Labour Members—decided that it was its duty to impress upon the Government the need to be a little more precise with their measures.
  The Financial Secretary now commends to the House Amendment No. 77. Its only justification must surely be that it is an accurate, faithful translation into domestic United Kingdom law of the

  1885
  provisions of Article 13 of the Sixth Directive.
  Since the Financial Secretary has been a little coy in referring the House to the provisions of Article 13, particularly paragraph (1), I hope that I shall be forgiven if I refer the House to them. That article exempts from VAT the
  "supply of services and goods closely linked thereto for the benefit of their members in return for a subscription fixed in accordance with their rules by non-profit-making organisations with aims of a political, trade union, religious, patriotic, philosophical, philanthropic or civic nature, provided that this exemption is not likely to cause distortion of competition."
  We could have an interesting, if perhaps slightly profitless debate on the precise meaning in this context of
  "political, trade union, religious, patriotic, philosophical, philanthropic or civic nature."
  The right hon. Member for Down, South (Mr. Powell), with his vast erudition, particularly his knowledge of the Greek language, will no doubt be able to enlarge our horizons on that matter. I do not, however, wish to detain the House over long with these fine questions of construction. I point out only that under Article 13 it is merely necessary for a body or organisation to demonstrate that it is of such a character. If it is, the mere fact that it provides services and goods closely linked with its predominant object for the benefit of its members in return for a subscription, will not expose that subscription to an imposition of VAT. The only limitation on that exemption—I emphasise that this is an exempting provision—is that the exemption should not be likely to cause distortion of competition.
  One would have thought that the Financial Secretary would concentrate on that aspect of Article 13, to demonstrate that the amendment that he moved is designed to ensure that though the general exemption will be effective, it is drawn up in such a way that there would be no distortion of competition.
  I hope that the Financial Secretary will forgive me for saying that his argument is singularly opaque. He congratulated himself on the fact that a whole range of organisations would not be affected one way or another. He adduced two entirely new criteria which I shall have to examine more closely in Hansard tomorrow. It will be difficult to know how
  1886
  to apply them in a given situation. Since I am professionally concerned with such matters I must say that I would find it difficult to advise clients on the basis of the test which the Financial Secretary has adduced so far. As always, the Financial Secretary is prone to rely on the extra-statutory concession. So I hope, Mr. Deputy Speaker, that if he is fortunate enough to catch your eye at the conclusion of the debate, he will enlarge on the criteria which are to be applied extra-statutorily by the Commissioners of Customs and Excise.
  Amendment (a) seeks to reproduce with much greater exactitude and fidelity the provisions of Article 13 of the Sixth Directive. The amendment says:
  "Where a non-profit-making body with aims of a political, trade union, religious, patriotic, philosophical, philanthropic or civic nature"
  —the House will discern at once that 1 follow with complete precision the words of Article 13—
  "provides services or goods closely linked thereto for the benefit of its members "
  —again following exactly the provisions of Article 13—
  "in return for a subscription fixed in accordance with its rules such supply shall be an exempt supply."
  It is only in the last seven words that I diverge from Article 13. But I reproduce precisely the sense and intention of Article 13.
  Mr. J. Enoch Powell: How does the hon. and learned Member construe the word "thereto"? Is it to be construed as referring to services or to aims? It appears to me to be ambiguous. It could mean services or goods closely linked to the services provided, or it could mean services linked to their aims, or goods closely linked to their aims.
  Mr. Rees: This is a very valid point which I take. I could plead in extenuation that I am only following the wording of Article 13.
  Mr. Powell: That is typical of EEC law.
  Mr. Rees: The right hon. Gentleman is entitled to make that point. He rubs his hands and says "Once again I have caught out the draftsmen at Brussels at their singularly inept job of framing legislation for the Community." I do not make such a cheap point myself,

  1887
  although I am not conversant with the intricacies of Continental draftsmanship. Being a little circumscribed in my outlook, I prefer the quality of English draftsmanship and construction, although at times I have said hard things of the draftsmen and drafting in this House. None the less, on this occasion I shall not enlarge on that theme. I offer the House my construction, for what it is worth, which is that the services or goods are to be closely linked with aims of a political, trade union, religious, patriotic, philosophical, philanthropic or civic nature, of the non-profit making body concerned. This provision may be productive of litigation in future, but that is often a consequence of many of the provisions we enact.
  5.0 p.m.
  Were it not for these ambiguities, my hon. Friend the Member for Eastbourne (Mr. Gow) and I might be deprived of much remunerative professional work. Perhaps that is one reason for my declaring an interest, although it was not of that kind that I thought originally. But I hope for the moment to have satisfied the right hon. Member for Down, South.
  The only point at which I substantially depart from Article 13 is that I have not included the words
  "provided that this exemption is not likely to cause distortion of competition".
  My hon. Friend the Member for Guildford (Mr. Howell) has included those words in Amendment (b). Although my name is attached to both, I confess a partiality to Amendment (a) because it might be difficult for the courts to apply those words.
  The only respectable argument that the Financial Secretary can advance in this case for asking the House to reject Amendment (a) is that it might in a given circumstance lead to distortion of competition, but so far I have heard no argument from him which would lead me to prefer Amendment No. 77 to the same amendment as amended by Amendment (a).
  I cannot conceive, for instance, that there will be distortion of competition because various bodies concerned with the ownership of land, such as the CLA or the NFU, might be able to claim
  1888
  exemption in respect of their subscriptions. If the Anglers Association were to achieve exemption from VAT as a result of Amendment (a), I cannot conceive that that would lead to any distortion of competition.
  If, for example, the National Union of Students were to be exempted from VAT by Amendment (a) but not by Amendment No. 77, I cannot conceive that that would lead to distortion of competition. I pick out the NUS at random. I have not been approached by any of its representatives, and perhaps it has not applied its collective mind to the problem. Does the Financial Secretary feel that its subscriptions will be caught for VAT by Amendment No. 77? Are the various old-age pensioners' associations likely to be caught?
  I cannot conceive that if any of those worthy organisations is let out by Amendment (a), that will cause distortion of competition. The amendment reproduces with fidelity the provisions of Article 13 and will not lead to distortion of competition and on that basis I commend it to the House.
  Mr. Deputy Speaker: I should point out that hon. Members will be free to discuss both Amendment No. 77 and the two amendments to it, one of which, Amendment (a), has now been moved. I should add that this will in no way prevent another hon. Member, should he wish to do so, from moving Amendment (b).
  Mr. David Howell: I am not clear, Mr. Deputy Speaker whether you wish me to move Amendment (b) now or later, but I should prefer to speak following my hon. and learned Friend the Member for Dover and Deal (Mr. Rees) to the sense of Amendment (b). It may be that with your help that amendment can be formally moved later, should that be necessary.
  Amendment (b) has some similarities to Amendment (a). As the Financial Secretary reminded us, we recognised in Committee that we were dealing with a matter of considerable complexity—some would say even of deterrent complexity—in that an attempt was being made to weave into the language of our statute book the words and intentions of Article 13 of the Sixth Directive.

  1889
  What is at issue in this debate is the question whether the Financial Secretary and his advisers are following this matter through in a way calculated to minimise the difficulties and to be most effective in achieving the ends, or whether they could do better. We felt in Committee that they could do better—that issues were left unresolved—and we looked for a replacement, on Report, of what was in the earlier draft of the Bill. That replacement has now appeared and the fact that there are amendments to it shows straight away that we are still far from happy about what the Government propose.
  I want to confine myself to three sets of questions so as to indicate our continuing concern about the problems that seem to be raised for many organisations by Amendment No. 77.
  The first question is the basic one. Have the Government interpreted the directive in the right way? Have they, in the words used by the Financial Secretary in correspondence, "used to the full" the wording of the directive'? We still believe that they have not. That is one reason why we have sought in Amendment (b)—and no doubt why my hon. and learned Friend has sought in Amendment (a)—to stick more closely to the wording of the directive, even though, as we have learned from the debate so far, the meaning of that amendment itself is not immune to query.
  We still feel that in Amendment No. 77 the Government and their advisers are taking too rigid and narrow a view of what the directive intends. I do not know why they should be doing that, although I shall describe some possible reasons in a moment. They seem to be tying the situation down in a way that the directive does not strictly require.
  Secondly, are the Government interpreting the directive in line with its interpretation, and the application of that interpretation, in other member countries of the EEC? Again, making what comparisons we can between bodies in this country and apparently similar bodies elsewhere—one example is the National Farmers' Union—we believe that what is proposed for this nation is uniquely tight and circumscribed.
  Are the Government really sensitive to the way in which this directive is interpreted elsewhere, or are we being over-
  1890
  zealous in rushing in to bat first and insisting on interpreting it to the letter, not only in the EEC sense but in the sense of the most rigid and narrow interpretation within our own law?
  We seek assurances and explanations from the Financial Secretary why bodies in this country will be caught by the requirement to charge VAT on their subscriptions when similar bodies in other EEC countries do not appear to be caught by the directive.
  The fundamental question is whether Amendment No. 77 and the draft order make the position clearer than we felt it to be in Committee. The Financial Secretary has elaborated on the draft order and spoken of certain tests that he believes should apply over and above what is intended in the directive. The directive includes the words that are repeated in Amendment (b):
  "provided that this exemption is not likely to cause distortion of competition".
  That seems a fairly clear and basic statement of the criterion.
  However, in correspondence with my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), the Financial Secretary produced another way of saying what I think is the same thing. He said:
  "the new subsection (3) to section 45 which we are proposing on Report would put outside the scope of tax organisations of a kind illustrated in the Directive Article 13A.1(1)—if the subscription is in fact a donation not used for the benefit of members exclusively".
  Is that the same as what is suggested in Amendment No. 77, where the words are a little different? Subsection (3) reads:
  "if a subscription obtains no facility or advantage for the subscriber other than the right to participate in its management or receive reports on its activities".
  In his letter the Financial Secretary offered two tests of whether bodies would be exempt. They were whether membership was customary and whether facilities for services were for the benefit of society as a whole, implying, I imagine, that if they were for the benefit of members only they would be regarded as donations that were purchasing facilities for the benefit of members and did not apply necessarily to a vocation or trade, were not covered by the next subsection and would therefore make the body liable to charge VAT on subscriptions.

  1891
  This is a matter of fiendish complexity, and it may not be clear to the Financial Secretary or to the rest of the House where we are left. There have been various descriptions. The Financial Secretary said that a donation not used for the benefit of members exclusively would allow a club or body to be free of VAT. There is another description in Amendment No. 77, and yet another that appears in the article and is reproduced in our amendments. In addition, we have the tests that have been offered by the Financial Secretary.
  I am left with the feeling that our criticisms in Committee remain valid and that we are being offered an attempt that still defines the matter too narrowly and in a way that leaves the position of a great many bodies, perhaps inevitably but quite definitely, extremely uncertain. We are being asked to accept an amendment in that form, and it is not satisfactory. Having examined the matter very carefully and listened to the Financial Secretary, I still feel that he and his advisers have not got it right. Until they do get it right, we shall create even more uncertainty and difficulty than is necessary in applying the directive.
  5.15 p.m.
  Mr. William Molloy: I agree with what the hon. Member for Guildford (Mr. Howell) said about the fiendish difficulty of trying to interpret these matters. It seems that it is almost impossible to get an accurate interpretation.
  I wish to put a point on behalf of one of Britain's learned societies—the Royal Geographical Society. I have to declare an interest, as a member of the council of the society. The difficulty in which the society finds itself is probably shared by many other learned societies. Its terms of election are too broad for it to qualify as a trade union or a professional association.
  The society regards it as a duty to interpret geography for the interest of members of the general public, so the subscriptions of its 6,000 fellows support the research activities of more learned members that could ultimately be passed on to associate members and, for example, to many thousands of schoolchildren whose schools are associate members.
  1892
  About half the fellows and members are professionally engaged in geography or related subjects, but this qualification is not included in the definition of eligibility in the society's articles of association.
  The imposition of VAT on RGS subscriptions would be a serious financial blow. I hope that in trying to interpret all the documents relating to this subject, my right hon. Friend the Financial Secretary will bear in mind that the Society's terms of reference and election are too broad for it to qualify as a trade union or a professional association, but that there are certain aspects that seem to indicate that it should be exempted from VAT, and I believe that we should adopt this approach.
  The immense difficulties of trying to interpret what is meant by the provisions that we are discussing makes it difficult to explain my case in a short debate. I hope, therefore, that if I send my right hon. Friend all the necessary data on behalf of the RGS, he will examine it and will agree with me that it qualifies for exemption.
  Mr. Powell: We are having an excellent, if unenjoyable, example of the consequences of an external foreign body seeking to lay down the lines of legislation and limits of legislation for this subordinate House. The whole form and nature of the legislation on the Continent is different in its habits and purposes from that which constitutes our statute law.
  There are two specific illustrations of this in Article 13(1) of the Sixth Directive that have caused the trouble in Committee and today. First, there is the ambiguity that was a matter of discussion between the hon. and learned Member for Dover and Deal (Mr. Rees) and myself. I do not think that the draftsman would allow that to arise in English statutes, but we cannot ask the draftsman. It must be a matter of immense difficulty to get an authoritative interpretation of what "linked thereto" means, because these are not our words; they are not the words of the Government; they are not the words of the Government's servants; they are the words of an external body, and we have to sit here musing what that body could possibly mean by those words.

  1893
  Then there are the words:
  "provided that this exemption is not likely to to cause distortion of competition."
  It is not uncommon for Continental law that is to be the basis of bureaucratic and official administration to include such philosophical and economic propositions of great generality. It would be interesting to debate how distortion of competition arises, to what extent it arises, and how it could arise in the context of the matter to which the amendment is directed. But that is not the sort of law that we pass. We endeavour in this House not to hand to the judges, whatever view we may take of them, the decision on what are the circumstances in which competition is distorted, and we do not ask them to apply their minds to large philosophical and economic investigations. But, unfortunately, in the directive in question we have to try to translate all that into the interpretable language of a United Kingdom financial statute.
  It is, I am afraid, vain for the hon. Member for Guildford (Mr. Howell) to inquire rather plaintively how they do it in other Community countries. What a position we have got ourselves into when, in deciding what we can put, what we are required to put, what we are under duress to put, into a United Kingdom Finance Bill, we have to run round and try to find out what they have done or intend to do in Luxembourg so that we can keep in line with the interpretation of the article which is being employed in all the other eight countries.
  But in a sense the hon. Gentleman is right. It would be unreasonable for us to be out of step, to the disadvantage of our own citizens, with what interpretation is applied in the other parts of the Community. What an impracticable situation we have placed ourselves in, unless all these matters are to be justiciable by the European Court, and unless the taxability of the Royal Geographical Society is to become a matter on which case law will be built up in the European Court. That is the implication of the inquiry proffered by the hon. Gentleman.
  Speaking for myself and my right hon. and hon. Friends—and we have tried to direct our minds to the problem as best we can—I think that Amendment (a) and Amendment (b) go unconscionably wide
  1894
  and that the formula in Amendment No. 77, moved by the Financial Secretary, at any rate has the advantage of a reasonable degree of certainty and precision. I think that there is a principle here which ought to be recognised and could be agreed, and that is that where the payment of a subscription secures services which, if they were not procured from a society or body, would be subject to value added tax if they were procured by the beneficiary from some other source, prima facie that subscription ought to carry VAT.
  I say that without any criticism of the complaints put forward by the CLA, the NFU and other bodies, but it seems to be a requirement of fairness and justice that we ought to adopt, since we have to make the attempt, the wording of the amendment. What one is doing is attempting to give precision and legal statutory meaning to the underlying notion
  "provided that the exemption is not likely to cause distortion of competition",
  that is to say, we want all services of the same nature, whether they are from a club or society or professional adviser, for example, to attract VAT in as near as may be the same way.
  Mr. Peter Rees: Since the right hon. Gentleman has commended the Government amendment and criticised amendments (a) and (b) on the basis that the Government amendment enjoys an enviable precision while (a) and (b) lack that quality, may I ask him to apply himself a little more closely than perhaps he has done to subsection (3) of Amendment No. 77, because at least half of it follows precisely article 13, just as Amendments (a) and (b) do? If, therefore, the Government amendment enjoys precision, so surely should (a) and (b). Perhaps he will consider and apply his mind to that.
  Mr. Powell: No; it happens that the difficulty does not lie in the words common to the article and to the amendments; it lies in the words that are not identical in the various amendments. I have done my best with 12A(3) of the Government amendment, and it seems to me that the expression
  "no facility or advantage for the subscriber other than the right to participate in its management or receive reports of its activities"

  1895
  effectively excludes all those other goods or services which could be procured from other sources and would be subject to VAT if they were procured from and provided by those other sources. My belief, therefore, is that the Government amendment is far nearer to expressing in statutory terms the principle of equity which underlies the words
  "provided that the exemption is not likely to cause distortion of competition"
  than Amendments (a) and (b).
  Mr. Nigel Lawson: Will not the right hon. Gentleman agree, however, that the Government's wording, although very precise, is quite clearly more exclusive, and much narrower, than the terms of the Sixth Directive?
  Mr. Powell: It may be more exclusive than the implication of Article 13F—it may be. But it is up to those who claim that is so to specify the services and goods which they think ought to be exempt and which would not be subject to VAT if they were procured from some other source. I find it difficult to distinguish such a category. I feel, therefore, as advised at this stage, that in a choice of difficulties the advantage both of precision and of interpretability lies with the form of words adopted by the Financial Secretary.
  Mr. Nicholas Ridley: I was fascinated by the preferences of the right hon. Member for Down, South (Mr. Powell) in English and Continental draftsmanship, but I am afraid that I was unable entirely to agree with the conclusion he reached. I thought that his view of which club and association subscriptions should attract value added tax was more coloured by his dislike of the EEC than by his understand of the problems and the nature of the organisations concerned. I think that the Government amendment, which he finds so superior in draftsmanship, is almost unintelligible, whereas one can at least understand what Amendment (b) means.
  First, Amendment No. 77 carries the extraordinary phrase, in subsection (3)
  " in the public domain and are of a political, religious, philanthropic, philosophical or patriotic nature ".
  What is the public domain is not at all clear to me, and it seems to be a very untypical piece of draftsmanship that the
  1896
  right hon. Gentleman would do well to ponder on. The wording "political, religious," and so on, seems to be as wide as life itself. I can think of few activities by any organisation that could not somehow be squeezed under one of those hats. Obviously, commerce is excluded, but that we know. It seems to me to add very little to the understanding of which organisations are excluded and which are not.
  The draft order goes through a totally different definition. It refers to
  "a trade union or other organisation of persons having as its main object the negotiation on behalf of its members of the terms and conditions of their employment."
  It also refers to professional associations, and the third category is
  "an association, the primary purpose of which is the advancement of a particular branch of knowledge …".
  Why that order is not incorporated in the Government amendment I do not know, because we have two completely different sets of definitions. One is contained in Amendment No. 77 and one is contained in the draft order. I am not clear under what powers the Treasury hopes to make the order law, because the powers for order-making seem to have been cut out by the amendment carried in Committee and not reinstated in Amendment No. 77. There is no order-making power in Amendment No. 77 to extend the definition, as far as I can see, but that is a secondary point and it may well be a false one.
  5.30 p.m.
  The test, surely, is whether any reasonable person reading Amendment No. 77 can tell who is and who is not included. I should have thought that the CLA and the NFU would be excluded, because they are both of a political nature. They could hardly be called philanthropic. Certainly they are political in at least part of their intent.
  What happens if an organisation is partly political and partly commercial in its objects? The Royal Automobile Club and the Automobile Association are certainly commercial in part of their activities, because they provide services of a commercial nature to motorists. On the other hand, I suggest that part of their activities is political. They come to this House to lobby Members as to how they should legislate about road traffic

  1897
  and petrol matters. We all receive circulars from them. Are they to be exempt or are they not?
  It is very far from clear to me whether this sub-paragraph of Amendment No. 77 would exempt them. It is quite clear that Amendments (a) and (b) would exempt them, because in no sense could they be said to be causing distortion of competition.
  Whatever the merits of the draftsmanship may be, at least there is some understanding of what Amendment (b) means, whereas there is very little to commend Amendment No. 77 on the ground of understanding who will be within and who will be without.
  At least the Financial Secretary has made an attempt at a definition, and I pay tribute to him for that. He did not simply leave it to some order, although there still appears to be one coming later. I hope that he will clear up the question whether it is still to come or is superseded by Amendment No. 77. But inasmuch as he has tried to define something at this stage of the Bill, it is an improvement to that extent.
  Mr. Marcus Kimball: Following on from what my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) said about voluntary organisations, I feel that nothing could have been more charming than the tribute paid by the Financial Secretary to voluntary organisations when he moved the amendment; but however sympathetic and charming the Financial Secretary may be it is always a little more difficult when we come to deal with the tax-gathering authorities.
  However, having said that, I pay tribute to the way in which the Customs and Excise headquarters at Kings Beam House helped in the original stages of VAT in 1972. No one could have been more helpful in advising the voluntary bodies on their approach to this problem and in looking very carefully at the aims and published objectives of voluntary bodies to see whether they were to be VAT-able.
  The Financial Secretary said today that the shape of the order is yet to be made. The criterion for deciding whether many of these voluntary bodies have to pay VAT is their published aims and objectives. These aims and objectives are revisable
  1898
  by any voluntary body at its annual general meeting. I am thinking in particular of the Women's Institutes. One's subscription to the Women's Institute—a very powerful body of opinion throughout the country—is VAT-able at the moment, because it publishes a monthly magazine.
  Surely there is an opportunity now to say to these bodies "We will reassess your VAT-able position, but there is just a chance, with the order about to be made, that if you change your aims and objectives and bring them into line so that you are not VAT-able, it may be possible to put them right."
  As I understand it, the Financial Secretary, in introducing subsection (3) has granted a measure of relief to some of the voluntary bodies for which representation was made in Committee. I do not think there is any doubt now that, tor example, Dr. Barnardo's—a charity about which no one would have any doubt—is now safely excluded from VAT.
  I do not think that there is any doubt that the political lobby of which I have the privilege of being chairman will remain un-VAT-able. After the past battles that we have had in another capacity with the Financial Secretary we are very grateful to receive this concession from him now. But, like my hon. and learned Friend the Member for Dover and Deal (Mr. Rees), I doubt whether the Government have drawn their subsection (3) widely enough to exclude bodies such as the CLA and the NFU. It is for that reason that I shall certainly be supporting him in the Lobby tonight.
  Will the Financial Secretary say what is meant by the words "public domain"? It is an extraordinary term to have from a Socialist Government. I thought that private domains went out with the French Revolution. It is extraordinary that it takes a Socialist Government to bring forward the public domain to the Statute Book.
  Mr. Ian Stewart: When, in Committee, I moved Amendment No. 130, it was accepted by a vote of no less than 15 to 12, representing not only my hon. Friends but some hon. Members on the Government side and also the Liberal representative on the Committee. I moved that amendment because at that stage it

  1899
  was clear that the Committee was not in a position to judge what were the Government's VAT proposals on subscriptions. As a result of the success of that amendment in Committee, the offending paragraph was removed, and since that date we have had the benefit of a great deal more information about the Government's intention. I think, therefore, that it showed that we were right to carry the amendment in Committee.
  We now have a Press notice—No. 459, dated 10th June 1977. There is an explanatory note headed "Trade Unions and Professional Bodies Etc.". There is also a draft of the Treasury Order for Schedule 5, Group 9, which covers these headings. Finally, there are some notes on the order. Whereas we had a shortage of information in Committee, we now have perhaps an embarrassment of information, and it is difficult to reconcile these different documents.
  The point I wish to take up—it has been made by a number of my hon. Friends and also by the hon. Member for Ealing, North (Mr. Molloy)concerns the way in which these proposals will affect learned societies. We must always be suspicious when, in formulating our legistion following a directive from the EEC, the Government choose to introduce a measure that is less generous than it might be and that puts associations, clubs and societies in this country on a less advantageous and a less generous footing than that on which they would be under the directive, or, for all we know, in other countries.
  The restriction to which I particularly object is that which says that learned societies shall have the right to be exempt from VAT on their subscriptions only if they consist principally of employees. This is no accident, because it is referred to in no less than four different places in four completely different ways in the documents to which I have referred.
  First, in the Press notice it says that
  "the Directive contains provisions which will continue the exemption for trade unions and other associations whose membership largely consists of employees or individuals pursuing a trade, profession or vocation."
  I do not find those words, or anything very close to them, in the directive. But it is not an accident, for if we turn to
  1900
  the explanatory note we read that it shall apply
  "to learned (e.g. scientific or philosophical) societies directly connected with the profession or employment of members."
  When we read the draft order itself we find that item 1(c) refers to
  "an association, the primary purpose of which is the advancement of a particular branch of knowledge, or the fostering of professional expertise, connected with the past or present professions or employments of its members."
  But note (3) states that
  "Paragraph (c) does not apply unless the association restricts its membership wholly or mainly—
  whatever that may mean—
  "to individuals whose present or previous professions or employments are directly connected with the purposes of the association."
  I declare an interest, as a Fellow of the Society of Antiquaries. Other bodies might be affected by these provisions. What I simply cannot understand is how this definition will operate. For example, the Society of Antiquaries includes a number of professionals—professors of history and archaeology, musuem curators, and others—but also a great number of amateurs. The proportion between the two varies from one year to another. If a number of elderly professionals were to die off one year, the balance could be tipped.
  Mr. Molloy: Does the hon. Gentleman agree that there is also the possibility of a real danger, since many of our learned societies, like the Royal Geographical Society and the others that he has mentioned encourage the amateur, and those interested in various subjects, to join? If they really want to avoid the imposition of this tax all they have to do is to exclude the interested amateur and allow only professionals to be members. In my judgment—I hope that the hon. Gentleman will agree that would constitute an almost heinous crime.
  Mr. Stewart: I did not want to prolong my speech, but I must take time to agree with what the hon. Gentleman has just said. There is great merit in learned societies that combine professional and amateur contributions to knowledge. If they were to suffer from the directive that is now proposed it would be a grave mistake. So far as I can see, that is not imposed upon us by the terms of the draft directive.

  1901
  Therefore, I hope that the amendments that we have proposed will be acceptable. More than that, I hope that before this draft order becomes a real one the Financial Secretary and his advisers will have taken time to think further about this and to remedy a situation that could be more serious than they realise.
  Mr. Robert Sheldon: I start off with Amendment (a), moved by the hon. and learned Member for Dover and Deal (Mr. Rees). He claimed that the amendment would give what he called greater exactitude and fidelity to the Sixth Directive. I think that the notable part of the amendment is that it avoids the problem of the distortion of competition, which is an inescapable part of the directive itself. Far from providing the greater exactitude and fidelity, it leaves out that which underlines most of the reasons for the inclusion of these arrangements in our legislation.
  We are aware that Amendment (b) tries to make good that deficiency. It tries to insert this as the test for VAT to be exempt from clubs, societies and institutions. It seeks to provide real certainty by copying what it assumes to be the precision of the directive itself and incorporating that into our legislation.
  As the right hon. Member for Down, South (Mr. Powell) observed, this attempt is an impossible one, because what we are seeing here is the end result that it hopes to achieve rather than the precision of the means by which we guarantee our legislation. What we have done here is to try to produce in legislative form the way in which the directive itself can proceed to implementation. The easy assumption that all we have to do is copy the directive in order to get the certainty that the directive has is a mistaken one.
  5.45 p.m.
  What we are seeing is an attempt that has been made by the Government to produce the attitude of the Sixth Directive itself. If we were to accept Amendment (b) we would give to the Customs and Excise the task of defining the distortion of competition. If it did not define that adequately it would be open to the aggrieved party to take the matter to a tribunal. It would then be for the VAT tribunal to decide whether a distortion of competition was occurring. That would no doubt result in bevies of economists
  1902
  launching into this complex and impossible-to-ascertain area where no conclusion can ever result.
  Mr. Powell: Would it not be possible thereafter for the matter to be referred to the European Court on the ground that the proceedings of the Customs and Excise were in accordance with the directive?
  Mr. Sheldon: That could well be a further consequence of the nonsense of this kind of approach, as shown by the arguments advanced by the right hon. Gentleman and the points that I have tried to add to those arguments.
  Mr. Peter Rees: The Financial Secretary may have been led to accept too readily the point put to him by the right hon. Gentleman, however authoritative the source may be. Surely it is not yet the position that the European Court has the power to review domestic fiscal legislation or the decisions of domestic courts in order to construe domestic fiscal legislation? If that is so, can the Financial Secretary cite a single case where it has been so?
  Mr. Sheldon: I do not think that the avenue down which the hon. and learned Gentleman is trying to lead me is a matter that lies before us. What we are concerned about is the interpretation of a general directive into specific legislation, with the authority of this House, and which could lead to consequences which flow from that.
  The hon. Member for Guildford (Mr. Howell) asked about the interpretation of the directive, and whether that interpretation was to the best conceivable advantage of societies, clubs and institutions. I think that I gave the answer in my opening remarks, when I said that I was trying to interpret the Sixth Directive as widely as possible within the terms of the directive as we saw it.
  The hon. Gentleman asked about comparisons with other countries. The problem is that by a coincidence of time we happen to be the first to legislate in this area, and therefore it is not possible to make that comparative test. I would give the assurance that if we are seen to be more restrictive and to interpret the directive too strictly, via the order that

  1903
  has yet to come, and on which consultations are proceeding, the draft order as published can be amended in the light of discussions and consultations that are taking place, and can take into account some of these possible changes. This is the answer to the hon. Member for Cirencester and Tewkesbury (Mr. Ridley).
  Mr. Ridley: The Financial Secretary should not use the word "amended". He knows that an order cannot be amended. That is our objection. He ought to have said"changed by ministerial fiat".
  Mr. Sheldon: I accept the point, but this is only a draft order, and a draft order can be changed before it comes to this House for final approval.
  The hon. Member for Guildford asked me about the tests. Perhaps I may summarise them without too much loss of accuracy. I know that this is an area where accuracy is important, but although it may not have the precision that legislation has it will at any rate give the House the opportunity to question more fully the kind of tests that I announced earlier.
  The first test for exemption is whether membership is customary—that is, for people in a certain occupation or profession. It need not be essential. The membership of certain professional bodies is regarded as essential for many people in the professions. We do not go as far as that. We say that provided its membership is customary, the organisation will be exempt. The second test is that provided that the facilities that are given are facilities for which VAT is not normally chargeable, the organisation will be exempt. This meets the test that the right hon. Member for Down, South mentioned. It is one that I myself mentioned earlier. This is an important element of it. The third test is that the benefit is to the community generally and not to the individual concerned. The final test is that the subscription has the nature of a donation.
  I think that those tests go very far in meeting the problems of the various organisations concerned, and they show the importance that the Government attach to the flourishing of the societies. We look forward to receiving further representations that may be made, and we hope to be able at any rate to take
  1904
  into account the general views expressed to us before the order is finally brought to the House.
  Mr. David Howell: With the leave of the House, I should like to say that the debate has turned on the alleged vagueness or precision of the rival amendments, and various arguments have been put forward to support the qualities of each amendment.
  What is certain is that vagueness or uncertainty is endemic in the situation with which we are grappling. It is endemic because the procedure which is to be followed is that a Treasury order will be drawn up, of which we have a draft, and will come into effect on 1st January 1978, and then certain criteria, some of which are mentioned in the draft order and others of which the Financial Secretary has elaborated, will be applied. So uncertainty and vagueness are there, anyway.
  The right hon. Member for Down. South (Mr. Powell) pointed to what he asserted to be the potential vagueness of Amendment (b). Then he went on to talk of the precision of the Government's Amendment No. 77, and the Financial Secretary echoed this claim. The Government's amendment is alleged to meet more clearly the problem of the supply of goods that may be supplied by other bodies in competition. presumably, with the society or learned body.
  I have to ask those who use the word "precision" in connection with Amendment No. 77 whether that can be applied when we look at the list of bodies that are to be exempt. It includes political, religious, philanthropic, patriotic or philosophical bodies. How can they be precise? I hesitate to raise any of the definitions of philosophical ", but I am sure that the right hon. Member for Down, South will accept that that is an attitude to life. It is not a precise word or definition. We know from Socrates onwards that the unexamined life is not worth living.
  So the amendment is about the whole of life. How can it be precise? However, perhaps I should not pursue that. I merely make the point to bring home the fact that uncertainty is endemic in the whole range of these amendments. There is bound to be uncertainty if we do not know how the order is applied, and the

  1905
  Financial Secretary's more elaborate tests.
  That being the case, we are offered a choice between the uncertainties and vaguenesses of the Government's amendment, which is excessively narrow, and excludes a number of bodies, and our own amendment, which at least provides an opportunity for an interpretation that would exempt those bodies and would leave them in the same position as we suspect similar bodies in other member countries of the Community are to be left.
  For those reasons, I urge my right hon. and hon. Friends to press Amendment (b), in that it makes a less bad job—
  Mr. Lawson: Does my hon. Friend agree that the Government's complacency is unwarranted? The Bill originally contained a formula that was manifestly unacceptable and manifestly stricter, more rigorous and more exclusive than the Sixth Directive. It is only as a result of our pressure that the Government have been able to move in this modest way and to improve the formula to the extent that they have.
  Mr. Howell: I nearly always agree with my hon. Friend the Member for Blaby (Mr. Lawson). In this case, I agree with him totally. He has put with great precision the point that is in all our minds. There is no credit to the Government in the way that they have acted in this matter. By good fortune, we were able to raise it in Committee and avoid being saddled with even more uncertain legislation. If we can now press Amendment (b), we shall make the best of that bad job.
  Mr. Peter Rees: The only point of substance made against Amendment (a) came from the Financial Secretary, who said that it did not contain the proviso that is to be found in Article 13 and is reproduced in Amendment (b).
  I found a certain difficulty in that proviso—a difficulty that the courts might have shared. On reflection, however, I appreciated that the difficulties would probably evaporate, since they were difficulties that must have been encountered by the courts in the application
  1906
  of the Restrictive Trade Practices Act. In the application of that Act the courts have done justice evenhandedly, though that may not be entirely acceptable to Government supporters. I see no reason why the courts should not do equal justice in the application of Amendment (b).
  The case made out by the Financial Secretary also rested on the precision, accuracy or lucidity of Amendment No. 77, He received surprising but perhaps not unaccustomed support from the right hon. Member for Down, South (Mr. Powell).
  If and when I am called on to construe Amendment No. 77, should it find favour with the House, I shall recall this debate a little wryly. The phrases that are to be found in it are not those that any English lawyer has had to encounter. The phrase "public domain" has not so far been the subject of construction by the courts.
  Mr. Powell: In that case, is not it regrettable that Amendment (b) proposes to leave in those terms?
  Mr. Rees: The right hon. Gentleman makes an interesting point. In any event, the difficulties of construction with which the courts are to be faced will be considerably increased by Amendment No. 77, whereas they would be diminished by Amendment (a) and, it must be said, also by Amendment (b).
  So as to disarm criticism, and in deference to my hon. Friend the Member for Guildford (Mr. Howell), I beg to ask leave to withdraw Amendment (a). I hope that Amendment (b) will find favour with my right hon. and hon. Friends.
  Amendment (a) to the proposed amendment, by leave, withdrawn.
  Amendment proposed to the proposed Amendment(b), in line 13, leave out from 'only' to end of line 15 and insert
  'by virtue of the supply of services and goods closely linked thereto for the benefit of its members in return for a subscription fixed in accordance with its rules; provided that this exemption is not likely to cause distortion of competition'.—[Mr.David Howell.]
  Question put, That the amendment to the proposed amendment be made:—

  Division No. 204]

  AYES

  [6.00 p.m.

  Adley, Robert

  Goodhart, Philip

  Monro, Hector

  Aitken, Jonathan

  Goodhew, Victor

  Montgomery, Fergus

  Alison, Michael

  Goodlad, Alastalr

  Moore, John (Croydon C)

  Amery, Rt Hon Julian

  Gorst, John

  Morgan, Geraint

  Arnold, Tom

  Gow, Ian (Eastbourne)

  Morgan-Giles, Rear-Admiral

  Atkins, Rt Hon H. (Spelthorne)

  Gower, Sir Raymond (Barry)

  Morris, Michael (Northampton S)

  Awdry, Daniel

  Grant, Anthony (Harrow C)

  Morrison, Charles (Devizes)

  Baker, Kenneth

  Gray, Hamish

  Morrison, Hon Peter (Chester)

  Bell, Ronald

  Grieve, Percy

  Mudd, David

  Bennett, Sir Frederic (Torbay)

  Griffiths, Eldon

  Neave, Airey

  Bennett, Dr Reginald (Fareham)

  Grist, Ian

  Nelson, Anthony

  Benyon,W.

  Hamilton, Michael (Salisbury)

  Neubert, Michael

  Berry, Hon Anthony

  Hampson, Dr Keith

  Normanton, Tom

  Biffen, John

  Hannam, John

  Nott, John

  Biggs-Davison, John

  Harrison, Col Sir Harwood (Eye)

  Oppenheim, Mrs Sally

  Blaker, Peter

  Harvie Anderson, Rt Hon Miss

  Osborn, John

  Body, Richard

  Haselhurst, Alan

  Page, John (Harrow West)

  Boscawen, Hon Robert

  Hastings, Stephen

  Page, Rt Hon R. Graham (Crosby)

  Bottomley, Peter

  Havers, Rt Hon Sir Michael

  Page, Richard (Workington)

  Bowden, A. (Brighton, Kemptown)

  Hawkins, Paul

  Parkinson, Cecil

  Boyson, Dr Rhodes (Brent)

  Hayhoe, Barney

  Pattie, Geoffrey

  Braine, Sir Bernard

  Henderson, Douglas

  Peyton, Rt Hon John

  Brittan, Leon

  Heseltine, Michael

  Price, David (Eastleigh)

  Brooke. Peter

  Hicks, Robert

  Pym, Rt Hon Francis

  Brotherton, Michael

  Higgins, Terence L.

  Rathbone, Tim

  Brown, Sir Edward (Bath)

  Hodgson, Robin

  Rawlinson, Rt Hon Sir Peter

  Bryan, Sir Paul

  Holland, Philip

  Rees, Peter (Dover &Deal)

  Buck, Antony

  Hordern, Peter

  Rees-Davies,W.R.

  Budgen, Nick

  Howe, Rt Hon Sir Geoffrey

  Renton, Rt Hon Sir D. (Hunts)

  Bulmer, Esmond

  Howell, David (Guildford)

  Renton, Tim (Mid-Sussex)

  Burden,F.A.

  Howell, Ralph (North Norfolk)

  Rhodes James,R.

  Butler, Adam (Bosworth)

  Hunt, David (Wirral)

  Rhys Williams, Sir Brandon

  Carlisle, Mark

  Hunt, John (Bromley)

  Ridley, Hon Nicholas

  Chalker, Mrs Lynda

  Hurd, Douglas

  Ridsdale, Julian

  Channon, Paul

  Hutchison, Michael Clark

  flifkind, Malcolm

  Churchill, W.S.

  Irving, Charles (Cheltenham)

  Roberts, Michael (Cardiff NW)

  Clark, Alan (Plymouth, Sutton)

  James, David

  Roberts, Wyn (Conway)

  Clark, William (Croydon S)

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

  Rodgers, Sir John (Sevenoaks)

  Clarke, Kenneth (Rusticliffe)

  Jessel, Toby

  Rossi, Hugh (Hornsey)

  Clegg, Walter

  Johnson Smith, G. (E Grinstead)

  Rest, Peter (SE Derbyshire)

  Cockcroft, John

  Jones, Arthur (Daventry)

  Royle, Sir Anthony

  Cooke, Robert (Bristol W)

  Jopling Michael

  Sainsbury, Tim

  Cope, John

  Joseph, Rt Hon Sir Keith

  St. John-Stevas, Norman

  Cormack, Patrick

  Kaberry, Sir Donald

  Scott, Nicholas

  Corrie, John

  Kellett-Bowman, Mrs Elaine

  Scott-Hopkins, James

  Costain,A.P.

  Kershaw, Anthony

  Shaw, Giles (Pudsey)

  Critchley, Julian

  Kimball, Marcus

  Shelton, William (Streatham)

  Crouch, David

  King, Evelyn (South Dorset)

  Shepherd, Colin

  Crowder,F.P.

  King, Tom (Bridgwater)

  Shersby, Michael

  Dean, Paul (N Somerset)

  Kitson, Sir Timothy

  Silvester, Fred

  Dodsworth, Geoffrey

  Knox, David

  Sims, Roger

  Douglas-Hamilton, Lord James

  Lamont, Norman

  Sinclair, Sir George

  Drayson, Burnaby

  Latham, Michael (Melton)

  Skeet, T. H. H.

  du Cann, Rt Hon Edward

  Lawson, Nigel

  Smith, Timothy John (Ashfleld)

  Duranl, Tony

  Le Merchant, Spencer

  Speed, Keith

  Dykes, Hugh

  Lewis, Kenneth (Rutland)

  Spence, John

  Eden, Rt Hon Sir John

  Lloyd, lan

  Spicer, Jim (W Dorset)

  Edwards, Nicholas (Pembroke)

  Loveridge, John

  Spicer, Michael (S Worcester)

  Elliott, Sir William

  Luce, Richard

  Sproat, lain

  Emery, Peter

  McAdden, Sir Stephen

  Stainton, Keith

  Ewing, Mrs Winifred (Moray)

  McCrindle, Robert

  Stanbrook, Ivor

  Eyre, Reginald

  Macfarlane, Neil

  Stanley, John

  Fairbairn, Nicholas

  MacGregor, John

  Stewart, Rt Hon Donald

  Farr, John

  MacKay, Andrew James

  Stewart, lan (Hitchin)

  Fell, Anthony

  Macmillan, Rt Hon M. (Farnham)

  Stokes, John

  Finsberg, Geoffrey

  McNair-Wilson, M. (Newbury)

  Stradling Thomas, J.

  Fisher, Sir Nigel

  McNair-Wilson, P. (New Forest)

  Tapsell, Peter

  Fletcher, Alex (Edinburgh N)

  Madel, David

  Taylor, R. (Croydon NW)

  Fookes, Miss Janet

  Marshall, Michael (Arundel)

  Taylor, Teddy Cathcart)

  Forman, Nigel

  Marten, Neil

  Tebbit, Norman

  Fowler, Norman (Sutton Cf'd)

  Mates, Michael

  Temple-Morris, Peter

  Fox, Marcus

  Maude, Angus

  Thatcher, Rt Hon Margaret

  Fraser, Rt Hon H. (Stafford & SI)

  Maudling, Rt Hon Reginald

  Thomas, Rt Hon P. (Hendon S)

  Fry, Peter

  Mayhew, Patrick

  Thompson, George

  Galbraith, Hon T. G. D.

  Meyer, Sir Anthony

  Townsend, Cyril D.

  Gardiner, George (Reigate)

  Miller, Hal (Bromsgrove)

  Vaughan, Dr Gerard

  Gardner, Edward (S Fylde)

  Mills, Peter

  Viggers, Peter

  Gilmour, Rt Hon Sir Ian (Chesham)

  Miscampbell, Norman

  Wakeham, John

  Gilmour, Sir John (East Fife)

  Mitchell, David (Baslngstoke)

  Walder, David (Clitheroe)

  Glyn, Dr Alan

  Moate, Roger

  Walker-Smith. Rt Hon Sir Derek

  The House divided:Ayes 250 Noes.282

  Wall, Patrick

  Wiggin, Jerry

  Walters, Dennis

  Wilson, Gordon (Dundee E)

  TELLERS FOR THE AYES

  Warren, Kenneth

  Wood, Rt Hon Richard

  Mr. Carol Mather and

  Weatherill, Bernard

  Young, Sir G. (Ealing, Acton)

  Mr. Jim Lestor.

  Welsh, Andrew

  Younger, Hon George

  NOES

  Abse, Leo

  Ennals, David

  Mabon, Rt Hon Dr J. Dickson

  Allaun, Frank

  Evans, Fred (Caerphilly)

  McCartney, Hugh

  Archer, Rt Hon Peter

  Evans, loan (Aberdare)

  McDonald, Dr Oonagh

  Armstrong, Ernest

  Evans, John (Newton)

  McElhone, Frank

  Ashley, Jack

  Ewing, Harry (Stirling)

  MacFarquhar, Roderick

  Ashton, Joe

  Faulds, Andrew

  MacKenzie, Rt Hon Gregor

  Atkins, Ronald (Preston N)

  Fernyhough, Rt Hon E.

  Maclennan, Robert

  Atkinson, Norman

  Fitch, Alan (Wigan)

  McMillan, Tom (Glasgow C)

  Bagier, Gordon A. T.

  Flannery, Martin

  McNamara, Kevin

  Barnett, Guy (Greenwich)

  Fletcher, Ted (Darlington)

  Madden, Max

  Barnett, Rt Hon Joel (Heywood)

  Foot, Rt Hon Michael

  Magee, Bryan

  Bates, Alf

  Forrester, John

  Mahon, Simon

  Bean,R. E.

  Fowler, Gerald (The Wrekin)

  Mallalieu, J. P. W.

  Benn, Rt Hon Anthony Wedgwood

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

  Marks, Kenneth

  Bennett, Andrew (Stockport N)

  Freeson, Reginald

  Marshall, Jim (Leicester S)

  Bidwell, Sydney

  Freud, Clement

  Maynard, Miss Joan

  Bishop, Rt Hon Edward

  Garrett, John (Norwich S)

  Mellish, Rt Hon Robert

  Blenkinsop, Arthur

  George, Bruce

  Mendelson, John

  Boardman, H.

  Gilbert, Dr John

  Mikardo, lan

  Booth, Rt Hon Albert

  Ginsburg, David

  Millan, Rt Hon Bruce

  Boothroyd, Miss Betty

  Gourlay, Harry

  Miller, Dr M. S. (E Kilbride)

  Bottomley, Rt Hon Arthur

  Grant, George (Morpeth)

  Mitchell, R. C. (Soton, ltchen)

  Boyden, James (Bish Auck)

  Grant, John (Islington C)

  Molloy, William

  Bradley, Tom

  Grimond, Rt Hon J.

  Moonman, Eric

  Bray, Dr Jeremy

  Grocott, Bruce

  Morris, Alfred (Wythenshawe)

  Brown, Hugh D. (Provan)

  Hamilton, James (Bothwell)

  Morris, Charles R. (Openshaw)

  Brown, Robert C. (Newcastle W)

  Hamilton, W. W. (Central Fife)

  Morris, Rt Hon J. (Aberavon)

  Brown, Ronald (Hackney S)

  Hardy, Peter

  Moyle, Roland

  Buchan, Norman

  Harper, Joseph

  Mulley, Rt Hon Frederick

  Buchanan, Richard

  Harrison, Rt Hon Walter

  Murray, Rt Hon Ronald King

  Callaghan, Jim (Mlddleton & P)

  Hart, Rt Hon Judith

  Newens, Stanley

  Campbell, Ian

  Hatton, Frank

  Noble, Mike

  Canavan, Dennis

  Hayman, Mrs Helene

  Oakes, Gordon

  Cant,R. B.

  Healey, Rt Hon Denis

  Ogden, Eric

  Carmichael, Neil

  Heffer, Eric S.

  O'Halloran, Michael

  Carter, Ray

  Hooley, Frank

  Orbach, Maurice

  Carter-Jones, Lewis

  Hooson, Emlyn

  Orme, Rt Hon Stanley

  Cartwright, John

  Horam, John

  Ovenden, John

  Castle, Rt Hon Barbara

  Hoyle, Doug (Nelson)

  Owen, Rt Hon Dr David

  Clemilson, Ivor

  Huckfleld, Les

  Padley, Walter

  Cocks, Rt Hon Michael

  Hughes, Rt Hon C. (Anglesey)

  Palmer, Arthur

  Cohen, Stanley

  Hughes, Robert (Aberdeen N)

  Pardoe, John

  Coleman, Donid

  Hughes, Roy (Newport)

  Park, George

  Concannon,J. D.

  Hunter, Adam

  Parry, Robert

  Conlan, Bernard

  Irving, Rt Hon S. (Dartford)

  Pavitt, Laurie

  Cook, Robin F. (Edin C)

  Jackson, Colin (Brighouse)

  Pendry, Tom

  Corbett. Robin

  Jackson, Miss Margaret (Lincoln)

  Perry, Ernest

  Cowans, Harry

  Janner, Greville

  Phipps, Dr Colin

  Cox, Thomas (Tooting)

  Jay, Rt Hon Douglas

  Prescott, John

  Craigen Jim Maryhill

  Jeger, Mrs Lena

  Radice, Giles

  Crawshaw, Richard

  Jenkins, Hugh (Putney)

  Rees, Rt Hon Merlyn (Leeds S)

  Cronin John

  John, Brynmor

  Richardson, Miss Joe

  Crowther, Stan (Rotherham)

  Johnson, James (Hull West)

  Roberts, Albert (Normanton)

  Cryer, Bob

  Johnson,Walter(Derby S)

  Roberts, Gwilym (Cannock)

  Cunningham, G. (Islington S)

  Johnson, Russell(Inverness)

  Robinson, Geoffrey

  Cunningham Dr J (Whiteh)

  Jones, Alec (Rhondda)

  Roderick, Caerwyn

  Davidson,Arthur

  Jones, Barry (East Flint)

  Rodgers, George (Chorley)

  Davies, Bryan (Enfleld N)

  Jones, Dan (Burnley)

  Rodgers, Rt Hon William(Stockton)

  Davles, Denzll (Llaneill)

  Kaufman, Gerald

  Rooker,J.W.

  Davies,Ifor(Gower)

  Kelley, Richard

  Roper,John

  Davis, Clinton (Hackney C)

  Kilroy-Silk, Robert

  Ross, Stephen (Isle of Wight)

  Deakins, Eric

  Kinnock, Neil

  Ross, Rt Hon W. (Kilmarnock)

  Dean, Joseph (Leeds West)

  Lambie, David

  Rowlands, Ted

  de Freitas, Rt Hon Sir Geoffrey

  Lamborn, Harry

  Ryman.john

  Dempsey, James

  Lamond, James

  Sandelson, Neville

  Doig, Peter

  Latham, Arthur (Paddington)

  Sedgemore, Brian

  Dormand, J. D

  Leadbitter, Ted

  Selby, Harry

  Douglas-Mann, Bruce

  Lee, John

  Shaw, Arnold (liford South)

  Duffy, A. E. P.

  Lestor, Miss Joan (Eton & Slough)

  Sheldon, Rt Hon Robert

  Dunnett, jack

  Lever, Rt Hon Harold

  Shore, Rt Hon Peter

  Dunwoody, Mrs Gwyneth

  Lewis, Arthur (Newham N)

  Silkln, Rt Hon John (Deptford)

  Eadle, Alex

  Lewis, Ron (Carlisle)

  Silkin, Rt Hon S. C. (Dulwich)

  Edge, Geoff

  Litterick, Tom

  Silverman, Julius

  Edwards, Robert (Wolv SE)

  Loyden, Eddie

  Skinner, Dennis

  Ellis, John (Brigg & Scun)

  Luard, Evan

  Small, William

  Ellis, Tom (Wrexham)

  Lyon, Alexander (York)

  Smith, Cyril (Rochdale)

  English, Michael

  Lyons, Edward (Bradford W)

  Smith, John (N Lanarkshire)

  1910

  1911

  Snape, Peter

  Thorpe, Rt Hon Jeremy (N Devon)

  Whitlock, William

  Spearing, Nigel

  Tierney, Sydney

  Wigley, Dafydd

  Spriggs, Leslie

  Tomlinson, John

  Willey, Rt Hon Frederick

  Stallard, A. W.

  Tomney, Frank

  Williams, Rt Hon Alan (Swansea W)

  Steel, Rt Mon David

  Torney, Tom

  Williams, Alan Lee (Hornch'ch)

  Stewart, Rt Hon M. (Fulham)

  Tuck, Raphael

  Williams, Sir Thomas (Warrington)

  Stoddart, David

  Urwin, T. W.

  Wilson, Alexander (Hamilton)

  Stott, Roger

  Wainwright, Edwin (Dearne V)

  Wilson, William (Coventry SE)

  Strang, Gavin

  Wainwright, Richard (Colne V)

  Wise, Mrs Audrey

  Strauss, Rt Hon G. R.

  Walker, Harold (Doncaster)

  Woodall, Alec

  Summerskill, Hon Dr Shirley

  Walker, Terry (Kingswood)

  Woof, Robert

  Swain, Thomas

  Ward, Michael

  Wrigglesworth, lan

  Taylor, Mrs Ann (Bolton W)

  Watkins, David

  Young, David (Bolton E)

  Thomas, Dafydd (Merioneth)

  Watkinson. John

  Thomas, Jeffrey (Abertillery)

  Weetch, Ken

  Thomas, Mike (Newcastle E)

  Weitzman, David

  TELLERS FOR THE NOSE:

  Thomas, Ron (Bristol NW)

  White, Frank R. (Bury)

  Mr. Ted Graham and

  Thorne, Stan (Preston South)

  White, James (Pollok)

  Mr. James Tinn.

  Question accordingly negatived.
  Amendment No. 77 agreed to.
  Amendment made: No. 78, in page 61, line 48, at end insert—
  '(c) the tax on the deemed supply would not be more than £50; or'.—[Mr. Robert Sheldon.]

Clause 15

  REGISTRATION LIMITS
  Amendment made: No. 8, in page 12. line 1, leave out subsection (4) and insert—
  '(4) In section 20(1) of that Act (registration of local authorities), for "£5,000" (in both places) there shall be substituted "£7,500".
  (5)In Schedule 2 to that Act, at the end of paragraph 3 (deemed supply of business assets, where business proprietor de-registered, except in certain cases), there shall be added—
  "or
  (c)the tax on the deemed supply would be not more than£50".
  (6)Subsection (5) above shall not come into force until 5th August 1977, and subsections (1) to (4) not until 1st October 1977.'.—[Mr. Robert Sheldon.]

Clause 17

  CHARGE OF INCOME TAX FOR 1977–78
  The Chief Secretary to the Treasury (Mr. Joel Barnett): I beg to move Amendment No. 95, in page 12, line 33, leave out 35 per cent.' and insert 34 per cent'.
  Mr. Deputy Speaker: With this we are to take the following:
  Amendment (a) to the proposed amendment, leave out 34 'and insert 33'.
  Amendment No. 10, in page 12, line 33, leave out '35' and insert 34'.
  1912
  New Clause 83—Capital gains:unit trusts, etc.
  '(1) In relation to gains accruing on disposals after 5th April 1977 section 112 of the Finance Act 1972 (reduction of tax liability on certain disposals of shares in unit trusts, investment trusts and funds in court) shall have effect as if for the references in paragraphs (b) and (c) of subsection (3) to 17½ per cent. there were substituted references to 17 per cent.
  (2) Section 113 of that Act (reduced rate of capital gains tax for certain unit trusts and funds in court) shall have effect for the year 1977–78 and subsequent years of assessment as if the rate specified in it were 17 per cent. instead of 17½per cent.'.
  Amendment (a) to the proposed new clause, in subsection (1), leave out 17 per cent.' and insert 16½ per cent.'.
  Amendment (b) to the proposed new clause, in subsection (2), leave out 17 per cent.' and insert 16½per cent '.
  New Clause 38—Decrease in deductions to be made from payments to subcontractors in the construction industry
  Subsection (4) of section 69 of the Finance (No. 2) Act 1975 (which requires deductions to be made from payments to certain sub-contractors in the construction industry) shall have effect in relation to payments made on or after 1st September 1977 with the substitution of "35 per cent." of '33 per cent."'.
  Government Amendments (a) and (b) to the proposed new clause.
  Government Amendment No. 96, in Clause 19, page 13, line 20, leave out thirty-five sixty-fifths 'and insert thirty-four sixty-sixths'.
  Amendment (a) to the proposed Amendment No. 96, leave out thirty-four sixty-sixths 'and insert thirty-three sixty-sevenths '.
  6.15 p.m.
  Mr. Barnett: Amendment No. 95, as will be clear to the House, seeks to reduce the basic rate of tax from 35p to

  1913
  34p. There are a number of consequential new clauses and amendments taken with it on which it might be helpful if I say a few words at the outset.
  New Clause 83 deals with the credit to capital gains tax in the case of unit trusts and investment trusts. It is exactly consequential on the reduction in the basic rate. New Clause 38 is again consequential on the reduction in the basic rate and relates to sub-contractors. On this I note that there is some concern, because the Opposition's amendment sought to have the date in September whereas we are suggesting that the date should be 6th November. I shall explain the reasoning behind this so that the House can understand why it was not possible to accept the date in September. The reason is that there are very serious operational problems, which I shall explain.
  A new ready reckoner and guidance notes will need to be prepared for the purposes of all those involved in the industry to save great difficulty in the half million businesses involved. If we tried to do it in September, before such guidance notes were distributed, it would be extremely difficult, not least for the smaller firms, although the larger firms might be able to cope with the reduction. It could not be prepared and distributed in time for September. Without that kind of certainty, I think it would be helpful to start at the earliest conceivable date when we can start sending notices to all concerned. That would be the beginning of the income tax pay-as-you-earn month, which would be 6th November.
  The House will appreciate that it does not affect the tax liability of the businesses concerned, which will be decided in the normal way when the accounts are submitted and assessed. I hope the House will recognise that, for these reasons, starting on 6th November is a sensible way of dealing with the matter.
  Those are the two main consequential amendments. Amendment No. 96 is also directly consequential and relates to advance corporation tax.
  We would, of course, have liked to reduce the basic rate of tax to 33 per cent. and we would have liked to do a great deal more about the threshold and also to introduce a reduced rate of tax.
  I have said on many occasions in the House and in Committee that the starting
  1914
  point for tax is far too high. We should have liked to make a start this year on a reduced rate band. We had a straight choice within the constraints of the borrowing requirement. Given the money available, we had to choose how much we could do on the threshold, how much we could do on the basic rate and how much, if anything we could do, on a reduced rate band. I make no bones about it. I preferred the original proposition to do something on the threshold plus 2p on the basic rate, which I believe would be a rather better balance than the additional amount on the threshold and only 1 p on the basic rate.
  As I explained in Committee, there has been a narrowing of differentials in terms of net take-home pay which we need to widen somewhat. Much as I want to raise the threshold as rapidly as possible, if we took all the sum available on the threshold and nothing, as some of my hon. Friends would have liked, on the basic rate of tax, that would give precisely the same sum in terms of net take-home pay and tax relief to the man or woman earning £30 a week as to the man or woman earning £100 a week. It would have narrowed differentials in terms of net take-home pay yet further to a small extent. That is why we chose as our preference to raise the threshold as much as we could and also to reduce the basic rate of tax by 2p.
  However, the Committee—and, it seems, the House—wants to raise the threshold rather more. Given the constraint on the borrowing requirement, it is not possible to do both. We have therefore decided to stay with the additional raising of the threshold plus 1 p, which is not as much as we would have liked but is still of some help to those in skilled employment and those with earnings at the top end of the basic rate band. I believe that it will be helpful in that respect, and I hope that the House agrees.
  I recognise that there are those, such as the right hon. Lady the Leader of the Opposition in her speech yesterday, who seem to be asking my right hon. Friend the Chancellor of the Exchequer to do much more out of the sums available for the higher paid, whereas some of my hon. Friends prefer to devote virtually all the sums available to the threshold. There is no simple answer to these questions. The threshold is too low, and we need

  1915
  to raise it as fast as we can. But, given all the constraints, I believe that the 1p, plus the additional raising of the threshold that we are now proposing, plus what was done in Committee, will be of considerable benefit.
  I know from speaking to people in my constituency and elsewhere that there is still misunderstanding about when the relief will take effect. Some people think that it takes effect only from the date when we pass the proposal in this House. I should make it clear, however, that both the new basic rate and the increase in personal allowances will be effective from 5th April last. That means that most taxpayers will get a refund of tax. Indeed, in August the taxpayer on average earnings and liable to the basic rate of tax will have a total refund in respect of personal allowances and the reduction in the basic rate of £17.50 for a single man and –19.50 for a married man.
  I hope that this proposal, together with the other measures announced by the Chancellor on Friday, will create the kind of climate that will enable us to obtain moderation in pay settlements during the next year. I should have preferred a more formal understanding on pay over the next 12 months, but I do not think we should under-estimate what the TUC has been able to do. The 12-months rule, as the TUC clearly spelt out in its document, should go a long way towards ensuring that there will not be a pay explosion in the next round. But that by itself will not be enough. Clearly we want settlements in the next round to ensure that the growth in earnings over the next 12 months will be within 10 per cent. overall. That does not mean that we can specify any particular figure in a period of free collective bargaining. But, as a Government, we shall be working to achieve that end.
  The TUC was particularly helpful in its statement last week, which is worth quoting:
  "In the context of the restoration of voluntary collective bargaining, the emphasis should be on looking forward to what can be genuinely gained in terms of real living standards, not on looking backward to a situation where it was the vain attempt to counter the effects of inflation by escalating wage claims that exacerbated the very ill this was hoped to cure."
  I am sure that the TUC meant what it said in that statement and that all members
  1916
  of the TUC and the constituent trade unions will note what it said. But one is bound to recognise that in a period of free collective bargaining the real test is yet to come. The real test will come during the next 12 months of the pay round. The Government for their part, both as employer and as being responsible for the management of the economy, intend to do all they can to ensure that kind of restraint in pay settlements.
  The raising of the tax threshold and the other measures that we have already announced, together with what we hope it will be possible to achieve in future, will show the trade union movement, and, indeed, all people who have to settle pay claims during the next 12 months, that we intend to try to create the kind of climate that will enable this country to move forward, with moderate pay claims and settlements in the next year, to the kind of economic situation that we can see within our grasp, with inflation of single figures and staying there and with living standards being maintained and thereafter moving on and up. I hope that the House will accept the amendment.
  Sir Geoffrey Howe: The Chief Secretary helpfully explained New Clause 38 and the amendments being proposed by the Government as being the changes necessary to accommodate those in the construction industry for the change in the tax rate now proposed. Lt is difficult to believe that it is necessary to defer the date from 1st September to 6th November. No doubt the ready reckoners are documents and objects of enormous complexity in this industry, but it is hard to believe that such a long delay is necessary.
  The right hon. Gentleman was right when he said that there would be no change in the tax liability of those concerned. There is a change of some significance in the cash flow position of those who benefit from the 714 certificates and who are entitled to benefit from the withholding of a lower amount of tax. I hope that the Chief Secretary will regard this as another example of uncertainty produced in the prospective rate of income tax as a result of the conditionality about the main tax change proposed in the Budget.
  There are two aspects to the debate. The first is conditionality—the concept of

  1917
  the House of Commons being invited to consider changes in the standard rate of income tax, but not to decide them for some months. The second concerns what is or should be the proper level of income tax as a standard rate.
  It is interesting to reflect, as the idea of conditionality sinks below the waves for the last time, how important it was to the Chancellor's Budget strategy, not only this year but last year. The House will recollect the way in which the reduction in income tax was made the centrepiece of the Chancellor's Budget Statement last year and was made explicitly dependent upon the achievement of a further formal agreement with the TUC. The House was presented with afait accompli.It was regarded as a new instrument of modern Socialist man, making our tax position subject to the determination of bodies outside the House.
  Therefore, this year the Chancellor, so proud was he of this device, not only presented it to his bank managers in the International Monetary Fund and said that he would again make his Budget conditional in this way, but made it clear in his Budget Statement. Conditionality was still at the heart of his Budget when we debated this matter in Committee as late as 9th May when the hapless Minister of State, in answer to a similar debate, said:
  "The Chancellor made the position quite clear in his Budget Statement, and it has been repeated here tonight. My hon. Friend feels that it would be quite imprudent to determine these matters until we have seen the course of the negotiations and the outlook for a pay agreement is more settled and clear. That is where the Government sstand."—[Official Report, 9th May 1977; Vol. 931, c. 1058.]
  That was a robust declaration by the Minister of State. We say that this approach to the settlement of tax rates for the country is wrong in principle and inconvenient in practice. It is inconvenient in the way in which we have been discussing 714 certificates for con- tractors, and it is wrong in principle, as we have said many times, to subject the decision of the proper standard rate of tax to a body outside the House.
  6.30 p.m.
  Incidentally, it has another unattractive aspect, although the Chancellor may find it attractive. The right hon. Gentleman appears to get an almost endless series of
  1918
  headlines telling the nation that he has made tax cuts that he has not made. When he makes his Budget Statement the headlines scream "Tuppence off" and everybody goes home euphoric and delighted. Then we are told that it is not really tuppence off and that the reduction is to be kept on ice till the TUC has considered it. The Chancellor told us last Friday that in fact it would be a penny off. Again the headlines screamed "Another penny tax cut". That may be the only justification left for the Chancellor to continue using the technique—namely, being praised in the headlines more than once for an ever-diminishing tax cut.
  When these matters were debated in Committee in May my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) and the hon. Member for Tottenhain (Mr. Atkinson) said that conditionality would not survive. They both said that whatever happened in respect of the pay deal the tax cut would be made in one form or another. And so it has proved. In fact, the pay deal has not been arrived at. The social contract has melted away. Conditionality is also melting away. It was the last residual feature of the social contract technique. It gives us the opportunity for taking another affectionate look at the posture of the Liberal Party in these affairs.
  Mr. John Pardoe: I wondered when the right hon. and learned Gentleman would turn to the Liberal Party. I was becoming rather lonely.
  Sir G. Howe: I did not want to disappoint the hon. Gentleman, who is sitting on the Liberal Bench in not so splendid isolation.
  The Government were standing firm on 9th May. The Chief Secretary had as his loyal henchman, his follower of fashion, the hon. Member for Cornwall, North (Mr. Pardoe). The hon. Gentleman said:
  "I accept the conditionality …What 1 do not believe is that, with the negotiations as they are now, the Government should simply hold up their hands and say to the trade unions 'We surrender. You can have anything you like. You can do any kind of deal you like, and it will not make any difference to taxation'."—[0fficial Report, 9th May 1977; Vol. 931, c. 1041.]

  1919
  It seems that the Liberal Party was standing firmly and squarely alongside the Chief Secretary on the principle of conditionality. It was one of the elements of the pact. It was one of the planks of the joint edifice that sustains the right hon. Gentleman and the hon. Gentleman alongside each other. However, like so much else it has disappeared, and the hon. Gentleman is left contemplating the wreckage. Conditionality is as dead as the social contract that gave it birth.
  Mr. Lawson: Perhaps my right hon. and learned Friend is being a little unfair. The hon. Member for Cornwall, North (Mr. Pardoe) and his fellow Liberals still have an opportunity to show their consistency and redeem their integrity by voting against the Government on the amendment.
  Sir G. Howe: Yes. I accept that position as being logically consistent with the solemn declarations made by the hon. Member for Cornwall, North. However, we do not know what further bargaining has been taking place between the Chief Secretary and the hon. Gentleman to maintain the improper embrace that they lock around each other to sustain this curious alliance. My hon. Friend the Member for Blaby (Mr. Lawson) is entirely right to draw attention to the opportunity that presents itself to the Liberal Party today. We shall see whether logic or some other relationship is dominant in the mind of the hon. Gentleman. I would seek to have no part in the sort of consultations that take place between the right hon. Gentleman and the hon. Gentleman. So much for conditionality.
  The other aspect that is even more important is what should be the standard rate of income tax for the present year. The Chief Secretary has moved an amendment to reduce it to 34p in the pound. The Opposition are proposing an amendment to reduce it to the level originally suggested of 33p in the pound.
  I remind the House of the way in which the Chancellor approached this issue when he gave the nation his compact and candid insight into the Budget in his Budget broadcast. There was no qualification in his description. He said:
  "It is this new confidence in Britain which has made it possible for me to make really big cuts in income tax so that it is more
  1920
  worth while for everybody to work that bit harder."
  He continued:
  "The cuts in income tax should make everyone feel that it is worth while putting more into their work and getting an agreement on another round of pay policy when this one runs out."
  At the end of the day the standard rate cut emerges as 1p. Of course, as the Chief Secretary has rightly said, the total package of tax cuts was originally meant to be conditional. However, an unconditional element has been brought into the mixture. There has also been a change in the level of allowances. That was imposed upon the Government in Committee. Although the threshold has been raised it still remains impossibly low.
  In our view, the Government continue to approach the reductions that should be made in income tax from entirely the wrong point of view. Night after night in theatre after theatre the Chief Secretary goes forward, wrings his hands and says" Of course, we should like to raise the thresholds. We should love to cut the standard rate. We should love to contemplate the introduction of a reduced rate band. However, we are unable to do as much as we should like." The right hon. Gentleman always operates as a man constrained by fixed frontiers.
  The right hon. Gentleman is rightly constrained by a responsible attitude to the public sector borrowing requirement. We wish to see that requirement being reduced steadily. However, he should not be constrained by feeling that all the expenditure to which he is committed is inevitable. He should not be constrained by a reluctance to contemplate what my hon. Friend the Member for Guildford (Mr. Howell) urged upon him in Committee and in the House previously—namely, a willingness to increase the yield of VAT by moving to a standard across-the-board simple rate of 10 per cent. with a yield of £600 million as a means of paying for a reduction in direct taxation. The right hon. Gentleman should not be constrained by a passionate determination to pour publicly raised money into oil exploitation and exploration in the North Sea through the British National Oil Corporation when oil companies around the world would love to relieve him and the public purse of that task.

  1921
  The right hon. Gentleman should be committing himself to further substantial reductions in public borrowing. He should accept the logic of the argument that he was advancing so benignly in the pages of the Financial Times last week—namely, that people wish to see a switch from tax on income to tax on expenditure.
  It is remarkable the way in which the right hon. Gentleman addresses conference after conference of tax experts and accountants and acquires a growing reputation for his wisdom and skill in these matters. No doubt, that will stand him in good stead in the world shortly to come. He commends the change of policy that we have been urging upon them, but he always fails to come to the point of doing anything about it.
  The right hon. Gentleman knows as well as we do that income tax was designed in the days of the Forsyte Saga. It has moved further and further down the income scale in the years that have passed since the war. In the early 1950s the threshold was above average earnings for a married man with two children but it is now well below half average earnings. The tax, which was designed for the Forsyte Saga, has now bitten deeply into Coronation Street. Families who should not be paying income tax are now paying it with a threshold that is too low and on a rate that is too high. It is the lowest threshold in the Western world and the highest starting rate.
  We should see a determination to make a major change in the shape and nature of the burden. That is why we are pressing for the implementation of the proposed reduction that was put forward in the Budget Statement of 33p. The Government should be prepared to finance that by raising additional money, if necessary from value added tax, but preferably by reducing some of the expenditure that we regard as unnecessary. Nobody else in the Western world has a starting rate as high as 33p, 34p or 35p. Nobody else has a starting rate of more than 22p in the pound. They all have higher thresholds except for one or two countries that have starting rates of only 7 per cent. or 15 per cent. It must be right to make substantial reductions in the shape and burden of direct taxation.
  1922
  The Chief Secretary, as did the Minister of State in our last debate on these issues, canvassed the possible alternative of a reduced rate band. I know that the hon. Member for Cornwall, North has spoken about this and that, like very other suggestion for lightening the burden of direct taxation, it deserves some consideration, but I do not find it an attractive direction in which to move, because the disincentive would remain high for those who began paying the standard rate above the reduced rate. In other words, the disincentive effect would be reduced only for those in the band covered by the reduced rate, and the standard rate would remain oppresively high for those above it. It could too easily be regarded as an excuse for maintaining too high a basic rate if one could point to a tranche of people who were exempted. From that point of view, reduction of the basic rate might be regarded as more preferable.
  There are bound to be administrative complications as a result of the reintroduction of a reduced rate band. There would be complications in relation to dividend payments, mortgage interest payments, and so on. There would be complications also if one were contemplating any further movement in the direction of the tax credit scheme alongside the child credit scheme. The Chief Secretary will remember that that was one reason why a single basic rate was adopted earlier.
  We prefer to see a switch from direct to indirect taxation given priority in itself, for its own sake, so that one can reduce the basic rate sufficiently to make the introduction of a reduced rate band unnecessary. The Chief Secretary will remember the answer given on 16th May about the proportion of direct to indirect taxation in this country. The Financial Secretary's answer, which is to be found in Hansard at Vol. 932, column 34, shows that in 1968–69 direct taxation as a percentage of indirect taxation was 81 per cent., whereas in 1975–76 the figure had risen to 123 per cent. The House is familiar with the huge switch of the burden in that direction. The tilt in the direction of direct taxation is so substantial that the main thrust of getting it back again should go in the reduction of the standard rate, and that should take precedence over the complications of introducing a reduced rate band.
  Mr. E. Fernyhough: I am interested in what the right hon. and learned Gentleman is saying. He will appreciate that the incomes of several million people are so low that they do not pay any tax. If indirect taxation is increased, the standard of living of those who do not now pay income tax is automatically reduced.
  Sir G. Howe: That argument has frequently been advanced over the years, but, as the Chancellor of the Exchequer said—for the first time from his point of view—in a debate last autumn—and it has been mentioned frequently in subsequent debates—because VAT, one of the main engines of indirect taxation, exempts food, fuel, transport and housing it leaves out a great chunk of essential purchases by the families to whom the right hon. Gentleman referred. It is inaccurate to speak of indirect taxation as regressive and working to the disadvantage of poorer families. For the reason that I have given VAT, with the spread that it now has, is an advantage. The Chancellor of the Exchequer has said, and the Chief Secretary will no doubt confirm this, that a switch from direct to indirect taxation would not work to the disadvantage of poorer families. The Chancellor has, I agree, gone on to say that a switch in that direction would produce an increase in the average level across the board of the retail price index that has to be taken into account, but the argument advanced by the right hon. Member for Jarrow (Mr. Fernyhough) is no longer valid.
  Mr. Julian Ridsdale: Does my right hon. and learned Friend agree that, to help the poorer families, we as a country have to create more wealth? How can we do that if we do not give people on the shop floor an incentive in the form of reduced taxation to produce that wealth?
  6.45 p.m.
  Sir G. Howe: My hon. Friend is right. That is the underlying thrust of my argument. It is the oppressive burden of direct taxation at every income level, and the imposition of tax at 39ip, including national insurance contributions, on every pound over £16 to £17 per week earned by a single man, that we must lift and lighten. It is a burden that we must
  1924
  be prepared to lighten at the expense of moving towards higher indirect taxes.
  In his Budget speech the Chancellor of the Exchequer introduced into these debates a new argument that is a little difficult to follow and accept entirely, but it might have some value. The right hon. Gentleman argued that a reduction in the burden of direct taxation would have, or could be said to have, the effect of reducing the retail price index.
  On 16th May my hon. Friend the Member for Horsham and Crawley asked the Chancellor of the Exchequer
  "what would be the effect on the retail price index if the basic rate of income tax were reduced (a) to 30 per cent. and (b) to 25 per cent., using the same calculations as he gave in his Budget statement".
  The Financial Secretary replied:
  "On the assumption that such reductions replaced increases in wages yielding the same net benefit, a reduction in the basic rate of income tax to 30 per cent. together with the other tax reliefs announced in the Budget would be worth 4¾ per cent. off the RPI by the end of 1978, and a reduction in the basic rate to 25 per cent. would be worth 8¼per cent. off the RPI. This is before any increases in indirect taxation which might be needed to offset such large direct tax reductions."—[Official Report,16th May 1977; Vol. 932, c. 33·4]
  The inflation concept that the Chancellor has introduced fortifies the argument that if one can make a substantial reduction in the standard or basic rate of direct taxation it can have a significant effect in persuading employees to accept more readily the case for restraint in pay bargaining. It can increase the incentive available to them by reductions in direct taxation, and it can, through the whole of that process, make more acceptable an increase in the burden of indirect taxation.
  I am certain that that is the direction in which we have to move in our tax system. We have to continue to raise the threshold to let out of the burden of income tax as many as we possibly can. We have to get away from nonsensically high rates of direct taxation at the top of the scale, and we have also to achieve substantial reductions in the basic rate of income tax.
  The Chancellor has raised the figure by 5p in the pound since he came to office. He held out the possibility of a reduction of 2p in the pound at the beginning of this year's Budget speech. He now leaves

  1925
  us with a reduction of 1p. We do not think that that goes anything like far enough. Even within the framework of this Budget, given proper resolution on their part, the Government could get at least the original 2p off the standard rate and I shall in due time invite my hon. Friends to vote for that course.
  Mr. Ridsdale: I am glad to follow my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) in the moderate way in which he has put forward our zeal to reduce direct taxation. The zeal that many of us have to reduce direct taxation stems from the fact that as a result of Socialist rule we see the economy of the country in a straitjacket.
  The failure to get any growth in the economy is alarming and startling, and anyone who is not tied up in the bureaucratic everyday running of our country and can look back and see with clear vision what is happening realises that a succession of Budgets introduced by Socialist Governments have led to direct taxes being increased because of the inflation they have caused.
  When I visit Japan, I am upset to see the difference between what is happening there and what is happening in this country. When I was there in April, I visited an exhibition at the British Export Trade Centre. 1 had crossed the Pole and I was tired. But next day I went to the exhibition. I thought that the furniture manufacturers would complain about import controls and the difficulty of getting into the market. Not a bit of it. They asked me to tell the Government when I returned home to get off their backs, because they could not compete with the present rates of direct taxation and wages.
  Our direct taxation is almost double that of Japan. Our wage rates are half those of Japan. It is no wonder that the Japanese have more incentive and freedom to produce. For every 60p that our Government spend, the Japanese Government spend 20p. That is how our incentives are reduced. That is why I appeal to the Government to get our economy out of the present straitjacket. We have too much Government expenditure, which must be reduced.
  Mr. Fernyhough: While the hon. Gentleman was in Japan, did he inquire
  1926
  about how much of their gross national product was spent on defence and how much of it has been spent on defence since the end of the war? If he compared it with ours, he would appreciate the burden that our people carry.
  Mr. Ridsdale: That is a real argument. Nevertheless, before the war when we were spending 20p in the pound we were able to spend a large amount of it on defence and compete in the world as well. Japan's defence burden is smaller than ours but it does not account for the comparative success of Japan. Their success is partly as a result of low Government expenditure.
  When I visit factories in my constituency, perhaps one that has been presented with the Queen's Award, I talk to the people on the shop floor. They tell me that it is nice to see the flag going up and for them to have a piece of the cake to share, but they do not know what is in it for them. They say that they have worked hard to increase exports but still have to pay a high proportion of tax.
  We must help the people on the shop floor with their tax burdens, otherwise we shall continue with the present zero growth rate. It is no wonder that there is a feeling in the unions in favour of increased wages. The Government have been spending too much. There has been a 50 per cent. increase in Government expenditure. That has to be paid for. What a pity it is that a constraint has not been placed upon the Government and that that money is not available to reduce taxation on the shop floor. That would increase our growth rate.
  In Japan a 15 per cent. settlement has been made in the public sector compared with 50 per cent. settlements in this country. The inflation rate will be 9 per cent. in Japan this year. The Government say that they want to bring down the rate of inflation to single figures. Even if we achieve that with a zero growth rate, we shall still be in difficulties.
  This is the challenge. This is why I say to the Government that a reduction of 2p in the pound in the standard rate of tax is not bold enough. We must switch from direct to indirect taxation, because the money that the Government need to meet their obligations cannot be cut overnight. We must ensure that those who produce the wealth of the country

  1927
  have a share in that wealth and thereby increase output.
  I am sorry to go on about Japan, but I have made a study of its industry. In Japan, wage negotiation is on a company basis. That means that both those on the shop floor and the management share in the creation of the wealth and in the wealth itself. Here, alas, because the wealth is shared across the board, the incentives are not there. That is why we want a reduction in direct taxation, not only for those on the shop floor but for management and for skilled people generally.
  It is alarming to find that when one visits a factory in this country the managers want one to stay a little longer before going to the shop floor. That is because management is taxed too heavily. The skilled and the hard-working are constrained in a straitjacket. Until we get out of that situation, we shall not give people the incentive to go ahead.
  High direct taxation causes many to leave the country to work abroad, where they find that they receive a better reward for their work. It is understandable that they should go abroad. The Government are in a straitjacket, not only because of their Socialism but because of their obligations to the IMF. I am glad that a new Conservative Government will not be long in taking over to give incentive to shop floor workers. We shall then see growth increasing and I am certain that we shall be out of many of the difficulties. Above all we must have a cut in direct taxation, but it must be a bold cut and not a petty cut.
  7.0 p.m.
  Mr. Pardoe: If the problems of the British economy were as easily solved as the hon. Member for Harwich (Mr. Ridsdale) indicated, there would be no difficulty in reversing the economic decline which began about 100 years ago in 1870. The fact is that in 1870 and in many of the years since then we had low taxation, and we did not solve our problems. By present standards, we had quite reasonably low taxation in the 1950s. In spite of the fact that the terms of trade then moved in our favour for a decade at least, we still did not solve our fundamental industrial problems. We were still not able to compete in the
  1928
  export markets of the world and in terms of productivity.
  I do not share the fondness for Japan expressed by the hon. Member for Harwich. The Japanese have done miraculous things economically, but it is an excruciatingly paternalistic society and I do not find that paternalism the least bit attractive. The hon. Member is not the only person who does business in Japan. At present, the Japanese economy is a pretty dead duck. The Japanese are therefore being forced to cut export prices to less than the bone in order to sell their products in the world markets, because they really cannot sell them at home as the domestic economy is in such poor shape.
  The right hon. and learned Member for Surrey, East (Sir G. Howe) tried hard to be beastly. For internal party purposes, he actually needs to be thought to be beastly. It is a well-known principle in the Conservative Party that the Chancellor has only one thing to commend him—namely, his beastliness. Anyone who is trying to compare himself with the Chancellor, or to be compared by Conservatives with the Chancellor, must therefore be beastly too. But, no matter how hard the right hon. and learned Gentleman tries, he remains resolutely and appallingly nice. That is his great difficulty.
  The right hon. and learned Gentleman and I—he may remember this it is a pity that he is not now in the Chamber—and the Secretary of State for Education and Science took part in a late-night discussion programme during the last General Election campaign. The programme was written up in one of the popular prints—the Daily Express or the Daily Telegraph,I remember not which. The television critic said "At last—three politicians who were able to discuss the problem reasonably and at least look as though they wanted to agree at the end and might, in fact, succeed."
  Let us see whether there is not some area of agreement about some of the subjects that we are discussing as a result of the amendment. The right hon. and learned Gentleman mentioned the conditionality. There are three ways at least of looking at conditionality. One is that the offer of 2p off the standard rate of income tax was a bribe to the trade unions in order to deliver a pay policy. If one looks at it like that—if it is not a

  1929
  pleasant prospect for any parliamentarian —I would not call it a bribe, but I am not sure what word I would euphemistically put in its place.
  Then one can say that it is a fiscal device to ensure that the balance of taxation takes account of what is happening in the rest of the economy. Here there is no doubt that pay is a very important part of what is happening in the rest of the economy. Pay is surely one of the most important factors in any Government's management of the economy. It is directly important because of the impact of pay increases on the Government's own labour costs and, therefore, on the Government's own total expenditure and on the borrowing requirement.
  It is also enormously important that the Government have some idea about what is going to happen to pay, even in the private sector, because, again, the level of pay can affect the whole question of the management of the economy. As most Governments—I think even the Government in which the right hon. and learned Gentleman took part—would believe that the tax system was one of the weapons that the Government have to use for the management of the economy, it seems obvious that there has to be a link at some point between the calculations they make about taxation level and what is happening to pay in the economy, because that is so important an element in the whole question of management.
  Then, perhaps, one can look at the question of conditionality as being a necessary delay, because it would be wrong to decide the final Budget judgment before knowing the level of pay. Of course, the trouble here is that, because our settlements are scattered out over the whole year, Governments never know what is likely to be the settlement on pay unless they have the kind of rigid pay policy that we have had in phase 1 and phase 2.
  I understand that the right hon. Member for Lowestoft (Mr. Prior) has been pondering on these problems and is very near the point, if not quite at the point, at which he can say that he favours something which is somewhat grotesquely called "synchro pay day". If that simply means that it would be better if all pay settlements, or major pay settlements anyway, were decided in
  1930
  the first three months of the calendar year, I think we would all agree that that would make many things easier. That is Utopia. I doubt whether we shall get near it, so there is not much point in talking about it. However, I understand that the right hon. Member for Lowestoft believes that to be an important factor for the future management of the economy under a Conservative Government. I look forward to seeing how the Conservatives will get from here to there. It would be interesting to see how it could be done. I accept that it would be desirable to do it if it coud be done. I am not sure whether the right hon. and learned Member for Surrey, East agrees with his right hon. Friend.
  Certainly, if we were in a position to know what the major pay settlements were for the year beginning, say, on 1st April, and if we knew that at some time in early March of each year the Budget judgment could obviously be taken with much greater confidence.
  Then we move to the question of the balance in our tax. Here again the right hon. and learned Gentleman made the point that our tax, certainly our income tax, is too high. His hon. Friend the Member for Harwich seemed to think that all our taxes were too high. I do not think that it is really sensible for us to keep repeating what is a myth. We still feature in the first 10 OECD countries in terms of wealth. We are about eighth in relation to the proportion of our gross national product which is drawn by the Government in taxation. Therefore, in total terms, we are not actually a high tax country. Unfortunately, it just feels that way because we take so much out through the most unpopular tax of all. That is my answer to the right hon. Member for Jarrow (Mr. Fernyhough).
  It is all very well to go on saying—as, indeed, I have said in the past; I accept that entirely—that income tax is somehow more fair and just in the teeth of what we all know—that is, that people would rather pay their tax on expenditure than on income. The problem with income tax is that it is so directly perceived a tax. If one is paid weekly, as the majority of the population are, there it appears, in black and white, on the pay slip. One seems what one could have got if only someone had not deducted

  1931
  that amount, and the gap between gross pay and net pay is so large that even people on a very modest level of income are now heartily sick and tired of income tax.
  That is not the same thing as saying that we are a high-tax nation. Therefore, it is much more important that we should discuss the question of the balance between taxes than simply continuing to mouth the old nonsense "We are overtaxed. Dear, oh dear, we must get total tax down." The fact is that Governments do not get total tax down, and—guess what?—Governments will not get total tax down.
  I do not believe any of the stuff about a Conservative Government being able to make the kind of cuts in public expenditures that will reduce the total burden of tax. When one considers all those other seven OECD industrial nations that are having to take a higher proportion of their GNP in taxation than we are—admittedly, they have higher GNPs, and it does not hurt so much when one takes it out of a higher total—I think it unlikely that we shall get ourselves into an economic situation in which we can become a low-tax country by their standards.
  I think that it is now common ground in the House, with one or two exceptions, that we need to reduce income tax. We need to reduce it, as the right hon. and learned Member for Surrey, East said, at every level. We needs to reduce it as a proportion of our total tax burden. It is ruinously high at low levels of income, at middle management levels and at the top rates, where it is simply confiscation, and one might as well be honest and call it by its proper name. But if one is to bring down income tax, where is the money to come from?
  The right hon. and learned Gentleman said that the Government might cut some expenditure. They might. To take another penny off income tax would cost about £450 million or 500 million, give or take a million—who cares? I do not expect the Chief Secretary to agree with my last comment. It is not his job to agree with such remarks. The necessary £450 million would have to be found from expenditure in this financial year because of all that we did in Committee.
  How is the money to be obtained? Is it likely that £450 million can be cut
  1932
  from current expenditure this year? If so, let us be specific and say where it is to come from, because 1 fear that otherwise it will come from capital expenditure. It is quicker and easier, as the right hon. Member for Down, South (Mr. Powell) has often pointed out, to take it out of capital expenditure. But that would be more disruptive. The money can come out of the capital programme provided that it has not been spent. At this stage in the year it can certainly be obtained from that source. Let us have from the hon. Member for Guildford (Mr. Howell) a specific answer to a specific question. If the £450 million is to come from reduced public expenditure, we all want to know exactly what public expenditure is to be cut.
  I remind the hon. Gentleman and his right hon. and learned Friend that it is not good enough for Conservatives to prate about how well they did the last time they were in power. I accept that income tax was lower when they left office than it is now, but that would not be very difficult. They did not do all that well, however. They only reduced the top rate of income tax to 75 per cent., and that is hardly Utopia. As the right hon. and learned Gentleman said this afternoon, the standard rate was only 5p less then at present. Is it the target of the next Conservative Government to knock 5p off the standard rate and knock the top rate of income tax down to 75 per cent.? I do not think that that can be so. If the Conservative Party goes on about cutting income tax, it must mean that it will do more than that. We should like to know exactly what it means. I ask how the hon. Member for Blaby (Mr. Lawson)—
  Mr. Lawson Mr. Lawson rose——
  Mr. Pardoe: I see that the hon. Member for Blaby, with the full authority of the Conservative Party, is to deliver the obiter dicta.
  Mr. Lawson: It is to offer no obiter dicta,to put the historical record straight. The hon. Member referred to the last Government only reducing the top level of tax to 75 per cent. That was not much, he said. Is he aware that when the last Conservative Government entered office the top rate of tax was 91¼per

  1933
  cent? A reduction from that to 75 per cent.—I agree that 75 per cent. is too high—is not a trifling reduction.
  Mr. Pardoe: We are talking about incredibly few people at that level.
  Mr. Joel Barnett: We must get the comparison right. The 91½ per cent. rate should be compared with 75 per cent. plus 15 per cent. investment income surcharge, which makes 90 per cent.
  Mr. Pardoe: I thought that the hon. Member for Blaby could not add up. That is because he is a monetarist.
  Mr. Lawson: We are talking about earned income. The top rate of tax on earned income when the last Conservative Government took office was 91½per cent., and they reduced it to 75 per cent. The Chief Secretary is talking about investment income, which is a different issue altogether and not what the hon. Member for Cornwall, North (Mr. Pardoe) and I are talking about.
  Mr. Pardoe: It is not a different issue. The hon. Gentleman is confusing the whole question. There was a complicated change of the tax system under Lord Barber, whereby the old standard rate on earned income and the earned income relief were dropped and an investment income surcharge was created. It is not fair to compare the two.
  That, however, is not the main point that I am trying to make, and the hon. Gentleman knows it. My main point is that the Conservative Government only reduced the top rate to 75 per cent. What it came down from is neither here nor there. People who are paying 75p in the pound are not thrilled by the idea that at some date in the past under some Government or other, their forebears paid 91p in the pound. They want to know what the Conservative Party, if it gets into Government, will do about the top rate of income tax. What is their target? The hon. Member for Guildford said that the target is 60 per cent. How many years will that take to achieve? How would the Conservatives replace that revenue?
  We then come to the standard rate of income tax. Is it 33 per cent., 34 per cent., or 35 per cent? One takes one's pick with this somewhat strange parliamentary arithmetic. Like my hon. Friends
  1934
  and the Chief Secretary, I would like to see it at 33 per cent., 32 per cent. or 31 per cent. Is there any advance on 31 per cent.? Does anybody want to go down the scale?
  7.15 p.m.
  We have to consider how the £450 million is to be replaced. I want a specific answer to the specific question. What do the next Conservative Government, if we ever get one, aim to do with the standard rate of income tax? Will it be 30p in the pound, or 28½? How long will it take a Conservative Government to reduce it? I would be much more impressed with Conservative policies it they were spelt out in this way.
  The right hon. and learned Member for Surrey, East spoke for a whole half hour last night and set a record which ought to go into the Guinness Book of Records. It would if the place was not already taken by his right hon. Friend the Leader of the Opposition. The record is for making a long speech which never at any point states what the Conservatives are going to do about anything. Not one single, specific, constructive thing did he say. We can redress the balance now. The hon. Member for Guildford can put it right. There is plenty of time. All his hon. Friends are upstairs at a meeting and they will not want to be here to vote for a time. He can spell out the next Conservative Government's targets on personal taxation. I hope that he will take this opportunity to do so.
  One of the difficulties to be faced by a Conservative Government is this extraordinary promise to scrap the domestic rate. How lovely, how popular. But what will replace it?
  Mr. Peter Rees: Before the hon. Gentleman goes on to deal with the question of rating—I know that he is anxious to avenge what he would regard as the slight which his right hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel) suffered yesterday—I would remind the House and the hon. Gentleman that his party are at the moment supporting in power a Government who are prepared to reduce the top rate of income tax on unearned income from 98 per cent. to 97 per cent. and on earned income from 83 per cent. to 82 per cent.—
  Mr. Ian Stewart: Not at all. That does not follow.
  Mr. Peter Rees: That reinforces the point. I would not be so vulgar as to refer to the Lib-Lab pact, but we are dealing with actualities and not what might happen after the next General Election. Will the hon. Gentleman confide to the House whether he and his right hon. Friend have made it an essential article of the pact this summer that the Chancellor of the Exchequer should reduce the rate of tax on higher incomes by more than apparently has been proposed by the Government Front Bench? I think that the bona fides of the hon. Gentleman and his right hon. and hon. Friends are at stake. The House will not listen with great relish or patience to a speech of this kind unless he can demonstrate that he has pressed policies of a different nature on the Chancellor and his right hon. and hon. Friends.
  Mr. Pardoe: I am sorry, but the hon. and learned Gentleman is not a fly on the wall. I will not take him wih me into meetings that the Chief Secretary and I have. He was almost asking for an invitation to those soirees, but he will not get one. They are very entertaining sessions, but he will not 'be around.
  In Committee on the Floor of the House, I moved an amendment which would have had a substantial effect on the top rates of income tax. It would have introduced into our tax system what the hon. and learned Member for Dover and Deal (Mr. Rees) knows is already a vital part of the American tax system—that, whatever the top rates of income tax may be, no one should pay more than 50 per cent. of his earned income in tax. That would have had a substantial effect on the top rates of income tax.
  The hon. and learned Gentleman, alas, did not join us in the Lobby. His right hon. and hon. Friends instructed him not to do so. I understand that: he has to obey when the whip is cracked. But it is a pity, because that amendment would have made a great deal of difference to the balance of our tax system.
  Mr. Peter Rees: Let me put the record straight. There was no question of instruction as far as I was concerned. Although, of course, I share the hon. Gentleman's apparent objective of bringing down the higher rates of tax, his
  1936
  amendment was not a well-thought-out way of doing so. It would, of course, have benefited those on incomes of £40,000 or £50,000 and above, but for those in the £19,000 to £20,000 range it would have had the curious effect that their marginal rates would have been very high and that only as their incomes rose to a certain level would the rates have dropped again. It would have had an uneven effect.
  Perhaps the hon. Gentleman did not study the debates on that amendment with care, or he would have realised that the practical reasons which led us to prefer a more sensible and logical approach, which will be adopted by a Conservative administration after the next General Election. No Whip, on whatever side, will deflect me from my intention to see the higher rates of tax fall, but I want them brought down in a more considered way than the hon. Gentleman's amendment would have achieved.
  Mr. Pardoe: I had hoped that I was being fair to the hon. and learned Gentleman. I was trying to give him a way out. I thought that he had espoused foolishness because he had been told to do so. Now I find that he always espouses foolishness of his own free will, which is far worse. The hon. and learned Gentleman knows—one does not need to be a clever lawyer to know this—that if one places a ceiling at any point in the income tax scale there will eventually come a point when someone's marginal rate of tax will actually start to fall. That did not stop the American Senate from introducing such a measure in 1975. I suggest that the hon. and learned Gentleman does what I have done and studies the debates in the Senate. They make far more sense than those conducted in the correspondence columns of The Times and the Financial Times—apart from the contributions I write myself.
  As the Chief Secretary knows, we have supported the Budget strategy, which is a question of how much tax there is to give away. The 1p reduction brings us up to and slightly over what the Chancellor set out to give away. At this stage, it would be ridiculously irresponsible to adopt the Conservative Amendment (a). I say that in some pain, because I recognise that 2p off the standard rate of tax would be a considerable

  1937
  help to middle management. It is what the CBI desperately wants this House to do. But it is what the House would have done if the Conservative Party had not tabled and voted for an amendment to change the threshold.
  Everybody wants to change the threshold. I want to bring in a reduced rate of tax: I find it strange that the Conservatives do not. We all want to reduce all taxes. But surely it would have been better this time round to keep the balance as it was in the Budget. It has somehow got around that what happened in Standing Committee was due to an amendment which is sometimes called the "Morecambe and Wise" amendment. I am sorry that the two Labour Members concerned are not here. I am not attacking them, because I supported the principles on which they were working.
  That amendment was not a Labour Left-wing amendment at all. It came out of the full irresponsibility of the Conservative Party in all its glory. Middle management and the CBI had better begin to understand that the reason why they will not get a 2p cut in the standard rate today is that the Conservatives ditched them in Committee. That is the fact, and that is what we shall continue to tell the nation.
  Mr. Tim Smith: It is a great pleasure to follow someone as modest as the hon. Member for Cornwall, North (Mr. Pardoe).
  Mr. Pardoe: They are not found very often.
  Mr. Smith: It is good to know that the sessions with the Chief Secretary are entertaining, but I wonder what influence, if any, the hon. Gentleman has had on Government policy. It is hard to see how Liberal policy has affected the Government at all over the past few weeks, although I know that the hon. Gentleman regards himself as the Vice-Chancellor. It is only a few weeks since he was saying that we should have a rigid incomes policy.
  I agree with the hon. Gentleman in one thing, that the majority of people would prefer to pay more of their tax indirectly rather than directly. I would also associate myself with the remarks of my hon. Friend the Member for Harwich (Mr. Ridsdale) who referred to
  1938
  the skill and hard work of people on the shop floor. It is working people and their taxes to which I want to address myself.
  Amendment (a) seeks, very modestly, to reduce the basic rate by a further 1 per cent. Since 1974 a combination of two factors, the increase in the standard rate from 30 per cent. to 35 per cent. and the failure of the tax thresholds to keep pace with inflation, has meant that ordinary working people have been squeezed hard. It is they who are now paying the bulk of income tax. The further adjustments that the Government have now accepted to the thresholds, and which were proposed in the Chancellor's statement last Friday and the White Paper, account for inflation only since the last Finance Act. There is still a lot of ground to be made up for that period from February 1974 to April 1976.
  The tax for everybody who has to work is ruinously high. Today, the Daily Express highlights what it calls "the real tax rip-off". It points out that, since 1970, tax has risen 40 per cent. more than prices, and that most of that has been plied on since 1974. A man on average earnings with a wife and two children now pays three and a half times as much tax in cash terms as he did in 1970, while prices have risen two and a half times. So in terms of actual tax paid, where he paid £215 a year in 1970, this year he will pay £750.
  This amendment deals with the standard rate. Between 1970 and 1974, and disregarding the reforms of the Finance Act 1971, the basic rate was reduced by 2½per cent. In the three years since 1974 it has been increased by 5 per cent. The current marginal deduction rate is 40¾per cent.—taking into account 35 per cent. tax and 5¾per cent. social security contributions—and the Chancellor now proposes to reduce that figure to 39¾per cent., but from 6th April next year social security contributions will go up again by¾per cent. to pay for the additional earnings-related pension scheme under the Social Security Pensions Act, 1975, so the marginal rate will be back to 40½per cent.
  That is an excessive marginal rate, which has a massive disincentive effect, especially on overtime working. For instance, a miner in my constituency working at the coalface has a basic pay at the

  1939
  moment of £70.35 a week. If he has a wife and two young children he will still be paying tax of £13 a week even after the Chancellor's revised proposals.
  7.30 p.m.
  We are talking about people who work hard, but where is the incentive to work hard? Where is the incentive for skilled people to make more effort when every pound that they earn in overtime will be reduced to 60p before it reaches the pay packet?
  Such is the strength of feeling on this issue that I have been given a number of NCB pay slips and told to keep complaining about the deductions till something is done. In many cases the tax deduction is equal to all the other deductions put together, including national insurance, NCB pension contributions, NUM pension contributions, union dues and NCB rent.
  The issue was highlighted by the Daily Mirror which, in May, investigated the reasons for the Government's resounding defeat in the Ashfield by-election. Joe Haines reported on why some miners had voted Tory. One said that he was bitter about the tax stopped from his wages and bitter because after a pit accident
  "I made more money stopping at home than I did when I was working".
  Another said that he had no confidence in the Government. Prices were going up all the time and the amount of tax that he paid on his overtime was ridiculous. A third said that he had voted Conservative for the first time. His pay slip showed a gross sum of £59.97 with a net payment of £38. He said:
  "If things don't alter, I'll vote Tory again. When you go to the pay office on a Friday at least a third of your wages has gone in tax."
  The annual report of the NCB has been published today and Sir Derek Ezra has warned that Britain faces the possibility of a shortage of house coal this winter unless the miners increase their output. He has called on union leaders for a new productivity drive. Why should miners work harder? They have no incentive to do so. They have no local productivity scheme and they pay a marginal deduction rate of tax of 40 per
  1940
  cent. on every pound they earn in overtime.
  No Labour hon. Member opposite who represents a mining district will say these things that so badly need to be said. Therefore it is left to me. The miners, like other hard-working, skilled people, pay far too much tax. Amendment (a) is extraordinarily modest, and should be supported.
  Mr. Ian Stewart: It must be rare for an Opposition Back Bencher to table an amendment to the Finance Bill on basic rates of tax and to have it not only accepted, but moved by a Minister. Amendment No. 10, which I tabled two or three weeks ago, has exactly the same effect as the Government's Amendment No. 95, which was tabled subsequently and which is longer and less elegant than mine, though, perhaps because it stands in the name of the Chancellor of the Exchequer, it appears higher on the Order Paper.
  I recognise that by the Report stage of the Finance Bill, the Government must make clear their intentions on those tax matters where they have not done so before, but the fact that a decision had not been made about the basic rate of tax until a few days before the Report stage started is a disgraceful reflection on the way in which the Government are pursuing their economic strategy and dealing with the fundamental tax problems of millions of citizens.
  I felt it right to table Amendment No. 10 in case the subject had slipped the Government's mind. I could not table an amendment to reduce the rate to 33 per cent., because that proposition had been defeated in Committee and, according to tradition, there would have been no opportunity to reintroduce it. Perhaps it was still the Government's intention to reduce the rate to 33 per cent., but they voted against that proposal and helped to defeat it in Committee.
  It is against that background that we have to consider the Committee's decision on the incidence of income tax. Weeks after the Budget Statement, the Government had still said nothing concrete about the basic rate of tax and the Committee was entitled to regard that part of the strategy relating to the reduction of the burden of income tax as open for debate and, if necessary, amendment. It was

  1941
  against that background that the Committee made its decision about the threshold.
  At that time we were also considering the basic rate of tax. There is no difference between my Front Bench and myself on this matter. Perhaps I was just a little more modest than Amendment (a) in proposing a reduction of 1 per cent. rather than 2 per cent. It is not irresponsible for the Opposition to make such a proposal. I cannot be drawn into giving official reasons for our belief that it is possible, desirable and capable of being financed. I leave that to my hon. Friend the Member for Guildford (Mr. Howell).
  Amendments to reduce the basic rate recognise, as do hon. Members on all sides of the House, that our rates of income tax are far too high at the top, in the middle and at the bottom, and that they start to bite at far too low a level of income. As my hon. Friend the Member for Ashfield (Mr. Smith) spelt out so cogently, the marginal rate of tax is far higher than 34 per cent. or 35 per cent., because we have to add national insurance payments. A marginal rate of about 40 per cent. on earned income is absurd. There is no other word for it. It is not surprising that it is having the social and economic consequences that we are now seeing.
  We are determined to reduce the basic rate of income tax and the incidence of other rates at higher levels. There is a fundamental difference between the two sides of the House on this subject. I believe that the Liberal Party is with us. The hon. Member for Cornwall, North (Mr. Pardoe) seemed to be agreeing with our view.
  We always get words of encouragement from the Treasury Bench, but we get very little action. The Government speak of the need to reduce the burden of personal taxes, but we must ask whether they mean what they say. It may be electorally embarrassing that so many of their erstwhile supporters are being taxed out of their loyalty to the Labour Party. That may suggest to the Government that something needs to be done, but the Government will do nothing on intellectual or social grounds or because of a sense of right, or because of their conscience. They will do it only if they are forced into doing it.
  1942
  The Chief Secretary and his right hon. Friends have said many times that they do not believe in the disincentive effect of high taxation. They suggest that if rates of direct tax are increased people will work harder in order to compensate for that and to maintain their standard of living. I do not understand how anyone can believe that that is an option, given our starting levels and rates of taxation. It is not on.
  This is nowhere better illustrated than in the sort of comments that many hon. Members must be getting when dealing with constituents' personal taxation problems in their weekly surgeries. When I was first elected to this House in 1974, I received a friendly letter from the inspector of taxes at Hitchin, offering to help with tax problems brought to me by constituents. For the first year or so they were mostly technical problems about whether assessments were correct, or whether there were arrears of this or credit for that, or perhaps some complicated arrangement over pension contribution deductions.
  That is not the way it has been in the past year. People have been asking me to take up their tax problems, because they believe that the level they are expected to pay is incredible. They do not believe it possible for the Government to have fixed rates of tax starting at such a level that they have to pay such a high proportion of their income in tax before they see anything in their pay packets.
  I dutifully go through the motions of checking whether there has been any mistake, and the inspector of taxes continues dutifully to reply with courtesy and promptness. But he confirms what we all know—that the impact of taxation, which is so worrying our constituents, is due not to calculations but to the rates of tax themselves It is widespread and it is fundamental, and it is urgent that the House should deal with the problem.
  I do not want to bother with statistics —they have been ably deployed by others and the case is well known—but I hope that eventually it will sink into the minds of Treasury Ministers that this is not just a marginal issue, or one of getting tax down a percentage point, or of raising thresholds by £50 here or there. It is a massive problem, which, because of inflation has distorted the whole impact

  1943
  of direct taxation to a level at which only fundamental action can set it right.
  The point at the heart of the proposals about the basic rate of tax and the fact that we are talking about it at this stage of the Bill lies in the Chancellor's Budget. When he made his Budget Statement he made the proposed reduction in the rate of income tax conditional on a successful negotiation of phase 3. In the last week or so, events have made that past history. The fact is that he regarded the inflationary position of pay settlements as fundamental to his decisions and judgment about the tax concessions which he could make in his Budget. No doubt his expectations today are different from those that he had in March. He would pretend that it was otherwise; that the course that he is following is the one that he intended to take all along. Many of us beg leave to doubt whether that is the case.
  The reason why the Chancellor found it so important to obtain a phase 3 settlement that would permit the reduction of income tax in the way he originally proposed—2p in the pound—was clearly his anxiety about the continuing impact of inflation. Although the overall reductions of tax now proposed are broadly similar, we are to get only 1 p off income tax if the Government proposals are carried. Therefore, I want to ask the Government a question. If inflation is as important as all that in determining the rates and levels of taxation, what are the Government doing with the exchange rate?
  7.45 p.m.
  The Chancellor claims that phases 1 and 2 were very successful in moderating the rate of price increases. They did moderate in 1976, but have gone op again in 1977. Was that the failure of phase 1 or of phase 2? No—it was the collapse of sterling in 1976 that brought about the increase in the retail price index in the first half of this year. The Government are sitting on the sterling exchange rate and holding it pegged at 1.72 dollars, and if the dollar is falling in value they are forcing the value of sterling down too. The pound is being forced down against natural market forces, and that is certain to make the inflation rate in the coming months higher than it otherwise need be.
  1944
  If the Government are serious about getting down the rate of inflation, why do they not address themselves to those parts of their policy that are in their power to do something about? Phase 3 does not appear to be very much in their control, but there are other methods. The Government are, however, taking measures with our currency that will force up inflation, and therefore the strategy originally proposed in the Budget is being contradicted by their own actions.
  At this stage, we should tell the Government that it has been demonstated that they have not only lost control of their Budget strategy, on the income tax side, but they have lost direction in the whole of their budgetary posture, and the House should be free to take whatever decisions it feels proper on this subject.
  Mr. Lawson: We are talking about a number of amendments and two new clauses, one of which is New Clause 83, which has various amendments to it. I want to say a brief word about one of them before coming to the major issues dealt with so ably by my hon. Friend the Member for Hitchen (Mr. Stewart) and, in a more wayward way, by the hon. Member for Cornwall, North (Mr. Pardoe).
  New Clause 83 is designed to make a consequential change in the concessionary rate of capital gains tax for unit trusts, consequential on the reduction in the basic rate. This concession implies that unit trusts ought to be treated specially. I therefore ask the Chief Secretary why it is that despite this the Treasury has continued to insist that unit trusts are taxed at the corporation tax rate on unfranked income and not at the basic rate of tax. Unfranked income in particular, comes from gilt-edged securities. It seems very strange that there should not be this modest encouragement for unit holders, through unit trusts, to invest in Government bonds, in gilt-edged securities.
  I ask the right hon. Gentleman to answer this point, because it seems strange that there should be this capital gains concession on the statute book—we are now amending it slightly through new Clause 83—when there is no concession on the unfranked income.
  My hon. Friend the Member for Hitchen said that the whole framework to

  1945
  our discussion of the question of a reduction in the basic rate is the pay policy of the Government and the Chancellor's approach to it. I shall return to that matter, but before doing so I should address myself to the rather strange remarks of the hon. Member for Cornwall, North, if only because he is obviously very eager that I should do just that.
  Towards the end of his speech, the hon. Gentleman launched into an attack on the Conservative Party. That I do not mind in the slightest. But his attack was a strange one. He said that he was going to go far and wide, broadcasting to everyone that the Conservative Party had not put as its first priority cutting the basic rate of income tax.
  I have taken the trouble to see what the hon. Member said on this subject in Committee of the whole House on 9th May. Then, when the Chancellor had proposed that there should be a 2p reduction in the basic rate of income tax, the hon. Member for Cornwall, North thought that that was wholly the wrong way to go about things. He said:
  "What I am trying to ask is whether we should not think in terms of a lower rate band as an alternative to a reduction in the standard rate of income tax whenever that takes place."
  He went on to ask
  "if we have just under £1,000 million at this stage of the game to play with—whether it would not be better to do it this way"
  —that is, by the reduced rate band—
  "rather than by reducing the standard rate of tax".
  The hon. Gentleman went on to explain that although he preferred a reduced rate band to a reduction in the basic rate of tax, there was another possibility. He said:
  "Of course, one answer would be to raise thresholds."
  He rejected that, reluctantly, on the ground that it might cost too much, saying that
  "it is a hideously expensive thing to do".
  Finally, he concluded:
  "Even at this stage I am, on balance, in favour of the reduced rate band rather than the 2p off the standard rate of income tax."—[Official Report. 9th May 1977; Vol. 931, c. 1037-8.]
  We are quite clear, then, as to the hon. Member's priorities on 9th May. His first priority was a reduced rate band of tax. If he could not have that, his
  1946
  alternative was an increase in the thresholds. The one thing that he thought least appropriate was a reduction in the basic rate of income tax. Yet here he is now, two months later, saying that he is the champion of the cut in the basic rate of income tax and that it is the Conservatives whom he will expose as having suggested that there may be a case for raising thresholds.
  Mr. Pardoe: The two quotations from my speech which the hon. Gentleman has read out were both put in the form of questions—whether it would not be better, and so on. They hardly sound like categorical statements of belief. Certainly I believe that it would be worth paying a very substantial price to reintroduce the principle of the reduced rate band. I am now confident that the tax system will eventually see the reintroduction of the reduced rate band, and I believe that that is an important matter. But certainly the speech from which the hon. Gentleman has quoted was in no sense a categorical statement about anything. I was talking about the three possibilities before the House. It is certainly true that I argued the case for the reduced rate band, but not necessarily to the exclusion of the others.
  Mr. Lawson: The hon. Gentleman is quite clearly wriggling. He is always confident about the future, as he showed a moment ago. If he had a better grasp of the past, we might have a little more reason to share some of his confidence about the future. What he said quite clearly was:
  "Even at this stage I am, on balance, in favour of the reduced rate band rather than the 2p off the standard rate of income tax."
  That was not in the form of a question. The hon. Gentleman was quite clearly comparing the two possibilities and saying that one was better than the other. That disposes of that matter.
  The hon. Gentleman then—[Interruption.] I know that the hon. Gentleman cannot take criticism, but he must learn to do so. He went on in that speech to talk about the top rates of tax. He said that he was very much in favour of a reduction in the top rates, but again it was the Conservatives who foiled him in his attempt to bring them down.
  Let us study the record again, if we may, Mr. Deputy Speaker. There is

  1947
  always plenty of record to study. One of the few advantages that the hon. Gentleman has, being the only economic spokesman of a very small party, is that every time any kind of economic debate takes place he is called—quite rightly, Mr. Deputy Speaker. I am not criticising that —whereas my hon. Friends have to wait almost a year before their turn comes to speak—
  Mr. Deputy Speaker (Sir Myer Galpern): Order. It is obvious, then, that the hon. Member for Cornwall, North (Mr. Pardoe) will have economic policies for each debate.
  Mr. Lawson: That is absolutely true. I absolutely agree with you, Mr. Deputy Speaker. The hon. Gentleman has a different economic policy for each debate, and it is somtimes a bewildering and baffling task to follow him through the maze. We in the Conservative Party put forward amendments to reduce the higher rates of tax, and this is what the hon. Gentleman had to say on that subject:
  "Whatever economic and utilitarian arguments we advance for a reduction in the top rates of tax. regrettably we are politicians. The amendment…"
  —that is, the Conservative amendment—
  "calls for substantial increases this year in net take-home pay for a small, though important section of the community … Frankly, I do not believe that we could get away with that. We must take account of the feelings of the British people, who are not in a mood at the moment to accept that such increases should be made."
  The hon. Gentleman went on to say that he hoped that it would eventually be
  "politically possible to reduce the upper rates of tax. However, as I shall argue later on investment tax, if I catch your eye, Sir Myer"
  —you were always the lucky man, Mr. Deputy Speaker, to hear the hon. Gentleman, and we all envy youߞ
  Mr. Deputy Speaker: Order. I assure the hon. Member for Blaby (Mr. Lawson) that I have benefited considerably from being in the Chair during the speeches of the hon. Member for Cornwall, North.
  Mr. Lawson: That was exactly the point I was making, Mr. Deputy Speaker. As usual, we are at one. The hon. Gentleman said that he hoped it would be
  "politically possible to reduce the upper rates of tax. However, as I shall argue later on investment tax, if I catch your eye, Sir Myer,
  1948
  I believe that the quid pro quo for that is a heavy wealth tax."—[Official Report, 10th May 1977; Vol. 931, c. 1178-9.]
  We then had a vote. The Conservative amendment was a relatively modest one, because we wanted to carry as many hon. Members as possible with us in reducing the top rate of income tax. We carried with us, indeed, the Members of the Scottish National Party and the Members of Plaid Cymru. But where were the Members of the Liberal Party? They were in the Government Lobby voting against a reduction in the higher rates of tax.
  Then, very much later, the hon. Member for Cornwall, North surprised us all —although we really should not be surprised at these somersaults from him—by moving, very much later at night, a curious amendment—the most up-market amendment of them all—to have a top take of 50 per cent. of anybody's total income, which would benefit only the very richest. He moved that amendment formally, without making a speech.
  We then had the task of trying to interpret what the hon. Gentleman meant by moving the amendment formally in that way. Clearly, he could not have meant that he was in favour of reducing the top rates of income tax, because we had had that debate and voted on it. We had voted for it, and he had voted with the Government against it. It could only have been a paving amendment for the heavy wealth tax of which he declared himself to be in favour and which he said was the necessary quid pro quo.
  When the hon. Gentleman goes to his friends in the City, trying to gather some funds for his impoverished party, and says "Do not believe the Conservatives, it is we, the Liberals, who are trying to help you, because we put forward this amendment", perhaps his friends in the City ought to look at the pages of Hansard in order to see what really happened on 10th May 1977.
  I think that that disposes of the charade of the hon. Member for Cornwall, North. Now I want to address myself, Mr. Deputy Speaker, to the proposal of the Chancellor of the Exchequer that is before us.
  The whole context of the debate is really very strange. It takes place in the context of the Budget Statement, and we

  1949
  have to go back to that. The Chancellor of the Exchequer said that he hoped to reduce taxation by £21 billion. He said that he was not committing himself straight away—I shall read his exact words in a moment—and that is why we are having to discuss the matter now.
  8.0 p.m.
  The Chancellor said:
  "I have explained why it would not be prudent to commit myself absolutely to this decision".
  —that is, the decision to cut tax by £21 billion—
  "until a satisfactory agreement on a new pay policy has been reached, as I expect to happen well before the Finance Bill leaves the House. To do otherwise would be to take risks with the growing confidence which is being shown in our economy both at home and abroad—".
  He continued:
  "In fact, it is difficult to exaggerate the advantages of a satisfactory pay agreement which makes it possible for me to proceed with the full income tax package of £2¼ billion."—[Official Report, 29th March 1977: Vol. 929, c. 283-4.]
  But what has happened? There is no satisfactory pay agreement. That is accepted by the Prime Minister, but not by the Chancellor, to whom I shall return in a moment, yet he still goes ahead in cutting taxes by £2¼ billion.
  That is no way for a Government to show authority. No one will believe anything that this Government says in future. The Chancellor said that if there were a satisfactory pay agreement, and only if there were a satisfactory pay agreement, he would cut taxation by £2¼ billion, but when there is not one, he still does. That makes nonsense of what the Government says. It lowers the status of the Treasury in the eyes of the nation. The Chancellor really should have resigned.
  In any case, it was complete nonsense to suggest that there was no link between taxation and public expenditure. The hon. Member for Cornwall, North was at least right to say that if we cut taxes by a further £450 million or £500 million we must balance it by other taxation or cuts in public expenditure. He rightly asked, Where will that money come from? It is absolute nonsense to suggest that the amount by which taxes can be put depends on whether there is a pay agreement.
  1950
  For too long the people of this country have been used to thinking that taxation and public expenditure are completely divorced from each other. The fact is that any change in one has an inexorable consequence on the other. People must learn the lesson that more public expenditure means higher taxes and lower taxation means lower public expenditure. Until that lesson is learned, we are lost.
  But the Chancellor says that the level of taxation has nothing to do with public expenditure; it depends on how good the pay agreement is. That is a lesson that no responsible Chancellor or Treasury should try to instil in the minds of the people.
  I said that I would refer to how we would get the money. We have made this absolutely clear. The Government could still do it by introducing a new Ways and Means Resolution, even at this late stage, and having a recommittal stage immediately after this Report stage, to move a new clause on VAT.
  We have said that we would recoup the money by having a 10 per cent. rate of VAT all round rather than two tiers of 8 per cent. and 12½ per cent. That is what we would do. That is why we shall be voting for the 33 per cent. tonight because we openly put forward the counterpart.
  It is not that public expenditure cannot be cut; it is rather that it takes a little time. Transfer payments such as food subsidies can be cut more quickly, but some things take longer. [Interruption.] The hon. Member for Cornwall, North tempts me to prolong my speech, but I do not think that that would necessarily commend itself to all hon. Members.
  The hon. Gentleman is wrong if he thinks that capital expenditure is something that we can switch off just like that. Capital expenditure is sometimes politically attractive to cut, because all the burden goes on the private sector and the construction industry, whereas public sector manpower is not touched. But if we cut capital expenditure just like that, there is tremendous waste. As a result too, the burden is concentrated on one industry—the construction industry—apart from the disastrous long-term consequences of a sharp fall in public sector investment. That has happened under

  1951
  this Government. It is public sector investment that has been cut rather than public sector consumption.
  Apart from all that, there is great waste. It is nonsense to stop a road in the middle when it has not been completed or to stop a building project halfway through. There are quicker ways of cutting public expenditure.
  Mr. Pardoe: I entirely agree. I agree that it is politically attractive to do this and that that is why politicians always do it. Will the hon. Gentleman say something about cuts in public expenditure? Does he think that it would be possible for a Conservative Government to cut £5,000 million off public expenditure in real terms? Has he seen the reports of the interview with his right hon. Friend the Member for Sidcup (Mr. Heath), the ex-Leader of the Conservative Party, whom the hon. Gentleman supported for so many years, in which the right hon. Gentleman said that it would be quite impossible for a Conservative Government to make these cuts in public expenditure? Does he disagree with his right hon. Friend or not?
  Mr. Lawson: One curious thing I have noticed about reaction to my right hon. Friend the Member for Sidcup (Mr. Heath) is that when he was Leader of the Conservative Party, Labour and Liberal Members did not have a good word to say for him, but now that he is no longer Leader of the Conservative Party they appear to consider him to be infallible. It would be interesting to see what they would say about my right hon. Friend if he were still Leader of the Conservative Party.
  I think that those hon. Members are making cheap political points and are not interested in seeking after the truth. I was saying that we are not committed to any specific sum. The hon. Member for Cornwall, North has plucked a figure of £5,000 million out of the air.
  Mr. Pardoe: The right hon. Member for Sidcup mentioned it.
  Mr. Lawson: Then it has been plucked out of the air by two hon. Members. That does not mean that it is Conservative policy. We shall certainly cut public expenditure. In another debate I may go
  1952
  into details about the public expenditure cuts that could be made, although I cannot speak for the Conservative Party. Indeed, in debates in the past I have gone into this question. No doubt the hon. Member for Cornwall, North will look them up.
  As my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) said, we have now abandoned the whole business of conditionality in pay policy. We have abandoned the incomes policy and the social contract. As the Prime Minister said, we are now in a period of free collective bargaining. Incidentally, I doubt whether the Chancellor could ever get himself to talk the truth. I wish he would. The Chancellor has not been telling us that we are in a period of free collective bargaining. The Prime Minister said that yesterday, and the Chief Secretary said it today, but the Chancellor says that we are in a period of a return to normal collective bargaining.
  The weasel words and uncouth manner of the Chancellor make him resemble nothing so much as a punk rock version of the right hon. Member for Huyton (Sir H. Wilson). It is something that this House could well do without.
  What we are concerned with is not just language for its own sake but, as the Prime Minister said yesterday, the fact that people have to be persuaded. The language has to be right. It is no use the Chancellor thinking that he can persuade people to follow what is necessary to maintain the monetary guidelines if he makes speeches to the CBI, as he did, saying that monetarism is practised only in countries where the police have been trained in torture. When he kept on saying —vainly—that we must have a year of phase 3 before we have free collective bargaining I wondered whether he wanted another year in order to train our police in torture.
  The Chancellor cannot preach against monetarism and then practice it and expect the people to be persuaded. He cannot follow an orthodox economic policy—as I am glad he is now, with free collective bargaining—and still speak the language of incomes policy. No one will believe him. No one will follow him.
  The Chancellor of the Exchequer is as unconvincing now as a believer in free

  1953
  collective bargaining and monetarism in the attack on inflation as Mr. Chamberlain was unconvincing as a war leader. Both were forced by events into policies with which they disagreed. The Chancellor of the Exchequer, for the first time, is approaching a correct policy, but it is not a policy that he will be able to sell. He has lost credibility, and the persuasion is not there. The language in which to sell the policy is not there.
  That is why, in voting for this amendment to bring the rate down to 33 per cent., I hope that we shall show once again our total lack of confidence in the Chancellor of the Exchequer.
  Mr. John Moore: It may be unwise for an innocent to intervene in this debate in the sense that I was not involved in the proceedings in Committee. However, I feel that something of an incestuous relationship may be developing between my hon. Friend the Member for Blaby (Mr. Lawson) and the hon. Member for Cornwall, North (Mr. Pardoe) and that there is now what might be described as a gap in the proceedings which may allow some of us to bring our attention back to the reality of simple tax matters.
  Some of us believe that our idiotic system of taxing earned income is at the root of many of the problems that our country faces. I want to develop the theme a little, since we have the opportunity of the amendment to look at the specific proposals of the Government to amend fractionally our earned income rate of tax from 35 per cent. down to 34 per cent. This is merely tinkering with a system which is so idiotic as not to make any kind of rational sense for the sort of society which both sides of the House would like to see.
  If I may say so to the hon. Member for Cornwall, North, there was not quite the degree of accuracy that there might have been in his references to the United States. In the United States, the federal system prevents an income tax level above 50 per cent. However, the combined impact of certain State taxes on income along with the Federal rate sometimes puts up the rate above 50 per cent. But hon. Members should not forget that the basic federal rate is 14 per cent. at the bottom, with a threshold which is somewhat more than twice our current
  1954
  threshold rates, even when we have adjusted them, up to a maximum of 50 per cent.
  Mr. Eric S. Heffer (Liverpool, Walton): The hon. Gentleman should take into consideration the lack of a national health service and matters of that kind which we have because we pay taxes of the kind that they do not pay in the United States. But if the hon. Gentleman believes in the so-called free enterprise system where the citizen pays for all his health, I can only say that, although the hon. Gentleman may be quite happy to have that sort of system, it is one which my hon. Friends and I would not accept.
  Mr. Moore: One of the difficulties about expressing ignorance of that kind is that the hon. Gentleman does not realise that not only do we have to live with the reality of an impoverished system which we on this side of the House would like to see improved but that we make comparisons on the basis of totally fallacious information.
  I happen to have spent many years in the United States. I have been a patient under both medical systems. The ignorant statements that we tend to get on the matter take away from a real understanding of the problems that we are now discussing.
  Mr. Heffer: Will the hon. Gentleman give way?
  Mr. Moore: No.
  Mr. Heffer: The hon. Gentleman said that I made an ignorant statement. Will he not give way?
  Mr. Moore: No, I shall not.
  Mr. Heffer Mr. Heffer rose——
  8.15 p.m.
  Mr. Deputy Speaker: The hon. Member for Liverpool, Walton (Mr. Helfer) knows that if an hon. Member says that he is not giving way, he is not giving way, and that is the end of it.
  Mr. Moore: I shall continue to develop my argument, which concerns the difficulty in which we are trapped so much in our choices as a society by the idiotic tax structure that we have.
  The hon. Member for Cornwall, North made some valid suggestions when he said he thought that it would be wiser if

  1955
  Opposition Members made rather more specific comments on their own views. I do not speak with the authority of my party, of course, but the hon. Gentleman may be interested to hear my personal view and the suggestions that I have to make about the basic income tax structure.
  I believe that 50 per cent. should be the maximum on earned income. I see no reason to play games with 55 per cent. or 60 per cent. In my view, 50 per cent. is simple, straightforward and easily understood. Whether we have 50 per cent. or 60 per cent. is a question of envy and not one of the revenue-raising. So 50 per cent. would be my maximum.
  Clearly, we have to do a much more important job than simply dropping to 50 per cent. to take into account the opportunities to earn at the top. The bottom is much more important. I said earlier that the United States had a bottom level of 14 per cent. I should like to see us approaching that kind of threshold level. Perhaps 15 per cent. would be a more straightforward figure.
  Obviously, it would be impossible to do that straight away. But if, tomorrow, we moved to a system on earned income where the base rate started at 25 per cent. and the maximum rates was 50 per cent., that would cost in lost revenue, assuming no revenue buoyancy, about £5.7 billion. That would have to be provided for. There is no way in which that kind of revenue can be disposed of overnight. But, clearly, there are dual ways of providing for it. One way is the need to identify public expenditure cuts. The other is the need to move into forms of indirect taxation.
  We should be more specific on this. I represent a constituency where the clear majority of my constituents are council tenants. The ratio of council tenants to those in private housing is far higher than in any other Conservative-held constituency. In my constituency, 44 per cent. are council tenants and only 29 per cent. are private tenants.
  With an average industrial wage of between £75 and £85 week, dropping the basic rate to 25 per cent. from the current 35 per cent. and the proposed 34 per cent. would result in the average married man with two children in my constituency
  1956
  saving about £5 a week. In those circumstances we could begin to make adjustments elsewhere. Certainly we could save money on direct council house subsidies.
  I say that because these things have to be said. Hon. Members on both sides of the House recognise the fallacious way that we discuss housing finance. I am concerned with helping my constituents and seeking to bring about a more wealth-creating society. In my view, that sort of suggestion is rather more sound than simply talking airly about what we might like to do.
  We must also concern ourselves with the real product of our levels of taxation. I dislike the way the hon. Member for Cornwall, North deprecated the so-called Rooker-Wise amendment in Committee which sought essentially to raise the threshold. For example, an elderly lady came to see me the other day. She was 70 and a pensioner. She had worked for most of her life as a nurse. She had accumulated very modest savings which had gone into buying a small apartment in a building which was then purchased compulsorily by the local authority. Needless to say, the building was knocked down to make way for a new development. But, of course, there is no development there. It is now an empty site.
  The lady is now in a home. The proceeds from the compulsory purchase order provide her with a small sum of money, and she is paid a small annuity. The total income does not exceed £25 a week, but the lady is now paying tax at a marginal rate of 25 per cent., which is a total absurdity. Surely hon. Members do not come to this House to create situations of that kind.
  I suggest that there is something very wrong with out system of earned income. It produces a society in which we are very much concerned with redistribution. One has to examine the degree to which we are all trapped into a sense of guilt about riches. Fortunately, since I come from a poor background, I have no such guilt, and I believe that people should be allowed to break out of their poor-income background. My party in the past has been suffering from these guilt feelings and we have sought to tinker with the rates of tax, but I believe that the top and bottom rates must be massively reduced.

  1957
  The hon. Member for Islington, South and Finsbury (Mr. Cunningham) has made some intelligent speeches arguing that the effect of income tax is no longer to be seen as a major redistribution of wealth. We must do more than simply tinker with the system, which is what we are trying to do tonight. We have produced a society that is geared to wealth destruction to the detriment of the wealth creators. I am talking not of unearned income but of earned income. We build in and breed class rigidity and we make absurd decisions based on an idiotic tax structure. We have become a consumption society. The figures show—I am speaking from memory—that 1.58 per cent. of household expenditure goes into savings and investment, and "savings" in general terms includes all levels of insurance. Whatever one's political views this means that we are consuming the past, whereas we should be thinking in terms of capital construction or individual contributions to the future. This cannot be the right way to manage our affairs or to look to the future of our children and grandchildren.
  I have made this brief intervention merely to emphasise that we must examine on a more fundamental basis the degree to which we are currently taxing ourselves into historical relics. That is what a society that is no longer concerned with wealth creation becomes—a society dominated by its past, disconnected from the future and concerning itself with a change of rate from 35 to 34 per cent. This is an idiotic suggestion to make in an amendment.
  Mr. Kimball: At the end of this debate, for the first time since the Budget, we shall know the rate of tax we shall pay this year. In the last four months we have had a most extraordinary situation because nobody has known what his rate of tax for the year will be. Normally after a Budget one sees from the newspapers or learns from one's adviser what one's liability is likely to be. This year, however, we have drifted on because the Government have not been able to make up their mind what the standard rate of tax was to be.
  Whether or not the amendment is accepted and the Government carry the day, we must have no illusions as to the range of tax we shall have to pay or the rate of direct tax, which is far too high.
  1958
  As my hon. Friend the Member for Croydon, Central (Mr. Moore) said, the level of taxation takes away all incentive, enthusiasm and desire to undertake any work.
  On 7th May, the Economist published a table showing a typical production worker's wage. If we take the average income tax on the combined income of a husband receiving a typical week's wage and a wife earning two-thirds of that figure, we see from that table that this country—apart from smaller countries such as Sweden and Denmark—is the highest taxed country in the civilised world. Of course Japanese production is soaring ahead when we have a 33 per cent. rate of tax. Great Britain comes third in the league, with Italy, France and then Japan at the bottom of the league of the percentage of tax that is taken off a married couple. The trouble with this country today is our high level of taxation.
  My hon. Friend the Member for Croydon, Central went on to cite the position of people working and earning in the United States. A Written Answer in another place only last week showed clearly the percentage of earnings retained after income tax. These are really important figures. In the United Kingdom today, on an average manual wage the percentage of earnings retained after income tax by a married man with two children is 76-8. In the United States, that dynamic country, it is 95.6 per cent. That is a terrific difference. In West Germany it is 89-5 per cent. France does even better than America with 97-9 per cent. of earnings retained after standard rate of income tax has been taken off. In Canada it is 95.8 per cent., and even in poor Italy it is 88.7 per cent. It is our position at the top of the league that causes the real trouble in this country today.
  When I first came to the House, hon. Members used to complain in Budget debates that tax evasion was a matter for those who were fortunate enough to be able to get the best advice. Today, however, tax evasion or legitimate judicious mitigation of the amount of tax that anyone has to pay is the main subject of conversation at all levels of society. If one asks an employee to work overtime, one has to say "O.K. You can have it in cash." Of course it is not cash. Nobody

  1959
  breaks the law. One has to tell the employee that one will pay him £50 and then add on the balance of tax for the taxman.
  There is no incentive to work. Overtime does not cost the employer what it says in the wages schedule. It costs a great deal more. The level of tax has killed all desire for anyone to do any work. One simply cannot ask employees to work on Saturdays and Sundays if one has to take off the large amounts of tax that one is supposed to take off their overtime payments. All that workers are interested in is the amount of cash they will get in their packets. They feel that the amount of tax is unfair and unacceptable.
  I do not know what the official policy of my party is on the level of indirect taxation that we would be prepared to tolerate, but I would be happy to see a level of VAT at about 20 per cent. provided we could remove very large numbers of people from the pay-as-you-earn category altogether. I agree with my hon. Friend the Member for Croydon, Central and wish that we could see a top rate of tax on earned and unearned income of not more than 50 per cent. That is the only way we shall restore industrial prosperity in this country.
  The way in which the percentage of direct taxation has risen in the last few years is extraordinary. In the financial year to 5th April 1964, income tax accounted for 44 per cent. of total tax revenue. Today it has risen to 54 per cent. I believe that 2p on value added tax brings in about £650 million to the Treasury in a year. The Chief Secretary will correct me if I am wrong.
  We obviously cannot slash public expenditure just like that. We cannot stop all the public works programmes, new roads and schools in mid-stream. We must raise the money from somewhere. I should be happy to see it raised by a substantial increase in value added tax so that we could achieve a worthwhile reduction in income tax. By no stretch of the imagination can any one of the amendments before us be considered as seeking a worthwhile reduction in income tax.
  8.30 p.m.
  Mr. Kenneth Lewis: My hon. Friend the Member for Gainsborough (Mr. Kimball) was entirely right when he said that the chief topic of conversation wherever one goes today is "How can I get some money without having to pay tax on it?"
  This morning a small builder told me that 80 per cent. of his building force were self-employed. There has been an enormous increase in the numbers of self-employed in recent years. I was told by this builder that the self-employed in his work force were not earning much more than his ordinary employees. But the self-employed get the advantage of being able to count against tax such items as cars, telephones and so on.
  My hon. Friend the Member for Croydon, Central (Mr. Moore) was also right in saying that the Chancellor, by deciding not to reduce the tax rate to 33 per cent., was making a meaningless cut, because the extra amount that people will get in tax cuts in their pay packets at the end of the week will not mean very much to them.
  The country has lost confidence in the Government. Recent by-elections and polls show that. Indeed, the House of Commons shows it, because the Government have had to do all kinds of wheeling and dealing with the Liberal Party to make sure that they get their votes in the Lobbies, even on the Finance Bill. That is bad enough in all conscience. But when we come back in the autumn after the Summer Recess we shall still have a Government in which the country has no confidence and in which we have no confidence either.
  The worst feature of this situation, however, is that the Government have lost confidence in themselves. We are now being controlled by a Treasury Bench that has no confidence in itself. I shall explain why I think I can prove that. The Government are dropping the incomes policy. Yet the Chancellor clearly said that he will try to hold the line on wage rises at 10 per cent. in the public sector. But if the Chancellor cut income tax, he would more easily be able to hold to his 10 per cent.
  There are two ways in which people can get more money in their pockets. One

  1961
  is by getting a pay rise of 10 per cent., 15 per cent. or whatever it is. Naturally, the unions will press for their members to gain more than 10 per cent. if they can get it. The second way in which it is possible for people to get more money in their pockets is by the Government cutting taxes. If there were a meaningful reduction in income tax, neither the unions nor the ordinary man and woman on the factory floor would need to ask for rises of more than 10 per cent. The Government have lost confidence in themselves because, with all the opportunity in the world to give more tax money back to ordinary men and women on the shop floor so that they need not then ask for increases of more than 10 per cent. in wages, the Chancellor has failed to take advantage of those opportunities.
  The Chancellor has failed because the Government have no real belief that by so doing production would be increased. If the Government were to reduce taxes by two points or three points instead of one point, they would be taking a deliberate risk. However, if they could increase productivity by even a minimum amount—always possible if incentive is provided our— unit costs would be reduced and the Government would get back their tax cut money. In that way the nation would be increasing its output and its exports and by the end of the fiscal year the Government would have even more revenue in the kitty. In addition, the balance of payments would be better.
  The truth is that we have had a succession of Governments—I suppose that it started way back in 1964–70—who have produced Finance Bill after Finance Bill with tax increases and never any reductions. The people now believe that there is no possibility of getting any meaningful reduction of their taxation. That is why they follow union leaders who say that they must ask for the maximum pay increase in the hope that they will get rises somewhere in the middle, although that middle is usually beyond what any Treasury Bench wants them to have and is sometimes more than the country can afford to pay.
  The only way in which we shall get out of the cycle is to have a Government who decide that they will take the risk and reduce taxes on income. Taxation
  1962
  has to be reduced right down the line. My hon. Friend the Member for Croydon, Central said that we should reduce the top rate of income tax to 50 per cent. I agree. However, if I were given the choice of bringing some people out of taxation and reducing the top rate to only 60 per cent. or 65 per cent., or reducing the top rate to 50 per cent., I should rather remove and reduce to 60 per cent. or 65 per cent. and take lower levels out of tax.
  It is of advantage if we can allow those at the top rate of tax to keep something moving towards 30 per cent. of their income. It is also an advantage if we can take those at the lower end right out of the tax range. If that can be done, the administrative costs are reduced and we remove a situation in which people can say that it is best to be on social security or unemployed benefit. Unemployment pay and social security benefits do not attract tax, whereas many today pay tax although they are at the lower end of the scale of pay.
  I believe that Nye Bevan once said "Why look into the crystal ball when you can read the book?" I have not always agreed with Conservative Governments in the past. They have sometimes increased taxes more than I would have liked. However, if we look back at the 15 years of Conservative Government before the Labour Party began taking office, excepting the years 1970–74, in every one of the 15 years tax levels were lower than their present levels by more than 50 per cent. If anyone does not believe that we shall cut taxes, they should look at that record. They can read the book. We did it before and I think that we shall do it again.
  I am sure that we must do it again. We shall not get the country off the ground, increase productivity, restore enthusiasm and ensure that skill is rewarded until a Chancellor reduces the standard rate of tax right down the line.
  Mr. Deputy Speaker: The debate has gone on for some time, and I think that it would be for the benefit of hon. Members who have only recently come into the Chamber—because they were engaged elsewhere—if I were to remind them of the amendments under consideration. We are debating Amendment No. 95 and those listed with it on the Amendment Paper.
  Mr. John Cronin: I am grateful to you for your guidance, Mr. Deputy Speaker.
  I listened to the speeches of the hon. Members for Croydon, Central (Mr. Moore), Rutland and Stamford (Mr. Lewis), and Gainsborough (Mr. Kimball). I was astonished to hear the hon. Member for Rutland and Stamford say that the Government lacked confidence. We have the most confident Government that we have had for years, and my right hon. Friend the Chief Secretary is the most confident person in the House of Commons.
  Mr. Kenneth Lewis: That is because the right hon. Gentleman is looking forward to his holidays and will not have us here for the next two or three months. Were that not so, he would not be confident.
  Mr. Cronin: It is the confidence of a person who has for some time been running the financial affairs of this country with skill and distinction.
  I sympathise with the three Conservative Members to whom I have referred. Paying income tax is extremely unattractive. I speak as one who received a large demand only this morning. One can always win political points by saying that taxation should be reduced, but what worries me is hearing Opposition Members talk about a top rate of income tax of 50 per cent. That would mean enormous gains for the richest members of the community, and such statements cannot help but reinforce the impression that Conservative Members are concerned chiefly with providing benefits for the rich members of our society. I have not heard any Conservative Member say what can be done to help those who are caught in the poverty trap.
  Mr. John Moore: I made the point specifically that little revenue would be lost by lowering the figure to 50 per cent., but that the important thing to do was to reduce the figure at the bottom of the scale. The only example that I gave, which indicates this point, was of someone in receipt of £25-plus a week.
  Mr. Cronin: It is clear that I was doing the hon. Gentleman an injustice. I arrived in the middle of his speech, and he must have said that before I entered the Chamber. I am glad that there are hon. Members on both sides of the House
  1964
  who realise that at the bottom end of the scale there are people who are paying much more tax than they should, and to that extent are caught in the poverty trap. But that does not mitigate the argument that there is no reason why people at the top end of the income group should have this enormous extra wealth given to them, as suggested by hon. Gentlemen on the Opposition Benches.
  One has to face the fact that, come what may, income tax is, to a substantial extent, a deflationary financial measure. At a time of massive inflation it is helpful, in general economic terms, to cut purchasing power, although nobody likes that to be done, and it is unattractive. Any Government can obtain political support by cutting taxes. One of the things to be said for the present Government is that, realising the presentl economic situation, they have not been prepared to make any substantial reductions in income tax despite the obvious political advantages of doing so.
  The hon. Members for Rutland and Stamford and for Gainsborough referred to the disincentive effect of income tax. I very much doubt whether it has a disincentive effect, because if a man receives his wages less 35 per cent. there is an incentive for him to earn still more rather than forgo the extra income that he can receive thereby. This was carefully discussed some years ago by the Royal Commission on the taxation of incomes, which came to the conclusion that there was no real evidence that income tax had a disincentive effect on the earning power of the mass of the population.
  8.45 p.m.
  There hon. Member for Croydon, Central referred to the desirability of achieving an economic situation similar to that of the United States. He should bear in mind that in the United States there is more poverty and fewer social services than in any other civilised Western country. If one is earning a low income and is seriously ill in the United States it is catastrophic. The hon. Member's argument is in favour of subjecting the lower income groups to a more disagreeable life.
  There is an excellent case for maintaining taxation at its present level. Perhaps the Chancellor of the Exchequer will, next year, decide that a reduction

  1965
  would be helpful. However, I suggest that now—when we must combat inflation and meet the expense of essential social and other services that make this country a place where those on low incomes are well cared for—there is no case for a substantial change in taxation other than that which the Chancellor of the Exchequer has proposed.
  Mr. John Cope: The hon. Member for Loughborough (Mr. Cronin), made much play of the enormous gains that would result for the richest members of the community if there were a decrease in the top rate of income tax. That has been argued many times before by other members of the Labour Party. I heard the speech of my hon. Friend the Member for Croydon, Central (Mr. Moore), and I can confirm that that was not the nub of his case. The reason that this appears to be the effect is the enormous penalties now being paid by high income earners.
  I am not sure that there is any more logic in saying that there would be enormous gains for the high income groups than there is in saying that there are tremendous penalties being paid by those on high incomes because of our high scale of taxation compared with other countries.
  There is something in what the hon. Member for Loughborough said about the willingness of people to make sacrifices and to work hard if there were reductions only in the top rate. Clearly that would have a cosmetic effect. But we must distinguish between that and the real argument.
  It is because of that effect and because of the morale effect that I should like to see not only reductions in the top rate but a more even arrangement of improvements in income tax rates. I think that the hon. Member for Loughborough did himself a disservice to discount as much as he did the disincentive effect of taxation. I remember the Radcliffe Report, but that was over 20 years ago, and things have changed a good deal since the last Royal Commission on taxation.
  There is little evidence of which I am directly aware, of an academic sort, that proves conclusively the disincentive effect of high taxation. Nevertheless, one has only to talk to people in pubs, streets, or elsewhere—in Loughborough or anywhere
  1966
  else—to realise the reality of the disincentive effect of the sort of rates of taxation that we have at present. I am talking not only about the top rates but about the very high starting point, which is the subject of the amendment, because the standard rate of tax is also the starting point of tax in our system.
  Mr. Cronin: I am trying to follow what the hon. Gentleman is saying, but the argument about whether taxation has a disincentive effect must depend on much closer reasoning than what people say in pubs. The hon. Gentleman must produce a better argument.
  Mr. Cope: I do not think that whether one can prove something statistically makes it right or important, or that if one cannot prove it statistically, it makes it unimportant. What matters concerning incentive or disincentive effects is what people perceive to be the effect, and the way in which that is reflected is in their behaviour and so on, but also in what they say in pubs or anywhere else. The fact that there is no statistical evidence for either argument, for or against the proposition, does not necessarily mean that the proposition is not valid by itself.
  We also have to bear in mind—this is a fundamental point that runs through the whole debate—the real reason why income tax has become so high and why it has risen to such a large proportion of the revenue as a whole. My hon. Friend the Member for Gainsborough (Mr. Kimball) referred to the percentage of revenue that income tax now raises and the amount by which it has increased. The primary reason for that is inflation.
  I remind the House again that before any Budget changes were suggested, the yield of income tax was expected to rise from £15 billion to very nearly £18 billion. All the changes that are being proposed today or have been proposed in this Finance Bill, in Standing Committee, and on the Floor of the House for that matter, would not get income tax back to last year's yield or anything like it. Inflation has increased it, this year as in previous years, by a tremendous amount—so much so that income tax this year, although it will not rise to £18 billion, because of the changes that nave been made today and recently, will rise to £17 billion.

  1967
  The next largest tax in the list is VAT. This contributes only f31,- billion. That is the measure of the tremendous weight of income tax by comparison with the other taxes in the list.
  Some may think that talk of top rates of tax of 50 per cent., reducing the standard rate, and so on, is rather theoretical talk. However, I happen to have had the advantage of having just returned from a country that has a top rate of tax of 48 per cent. and a very high sales tax in order to balance it.
  I have just returned from Rhodesia. There are many interesting things about Rhodesia and many ways in which it differs from this country. One of the ways in which it differs is that it has a siege economy, not by its own choice but by imposition from here and elsewhere. Rhodesia is in the middle of fighting a serious war. It has tremendous public expenditure problems as a result. But the Rhodesians have been able to keep their top rate of income tax down to 48 per cent. on all incomes, partly because they raise more money by indirect taxation.
  One of the results of that is that their economy has remained much more dynamic, in spite of their problems, and this is a message for us. Incidentally, when they decimalised the Rhodesian pound it was divided into two dollars. The Rhodesian dollar is now worth almost £1 sterling. That is a measure of the success that Rhodesia has had in the last few years in spite of its special problems in the handling of its economy.
  Mr. Cronin: The hon. Gentleman must be aware that Rhodesia's economy is based on something very close to a slave State. He ought not to use that as a serious argument in discussion of taxation.
  Mr. Cope: It would not be appropriate at this stage to follow the hon. Gentleman's argument too widely. I disagree with his proposition.
  All the amendments that we are discussing are concerned with very small changes in the rates of income tax. Over the next few years we need to talk not only about small changes such as those but about much larger changes.
  Mr. David Howell: It is a good thing that the opportunity has been given to us by the Report stage of the Finance Bill to discuss at some length, the standard rate of income tax and the amendments that propose changes in it. I say that because I believe that the level of personal income tax, and particularly the way in which the standard rate bites into the weekly wage packet or the monthly salary slip, is one of the key issues in the country. I do not think that it is the prime issue, because I suspect that the main issue is still the appalling rises in prices in the shops. That is still the number one worry in most family budgets and around most breakfast tables.
  I suspect, however, that very close behind comes the issue of the deductions from the weekly wage, and mainly the deduction of income tax. But, as hon. Members, including my hon. Friend the Member for Ashfield (Mr. Smith) in an excellent speech, have rightly pointed out that is not all. To that must be added the weekly national insurance contribution which, even if the amendment is carried, will put the marginal rate of deduction on the pound earned by those on far below average earnings at a rate unchallenged and unequalled anywhere else in the world.
  The issue that we are discussing, which is raised by the proposed Government amendments, to which we have in turn put down amendments, is fundamental. It is therefore right that at the close of this Session Parliament should have an opportunity to discuss this major issue. The amendment which was moved by the Chief Secretary is, as my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) said, the vestigial remnant of what has been called the "prudence deal". That was the statement by the Chancellor that prudence requred him to ensure a satisfactory pay deal before he could cut the standard rate from 35 per cent. to 33 per cent. Now, all that has gone, it is water over the dam and the language is meaning less in the new context into which the Chancellor and his colleagues have been washed by events.
  9 p.m.
  The Chief Secretary alluded to the proposition that a reduction in the standard rate might help moderation in pay. That was an archaeological remnant of a past way of thinking which is clearly

  1969
  still embedded in his mind. I do not blame the right hon. Gentleman. He has been trained to sing a different tune and to put forward different arguments for years, and it must be a trauma suddenly to have to change. So it was not surprising to hear in his speech the relics of the old order, when it was believed that a deal could be done with the unions to ensure pay moderation and that conditional tax cuts could secure it.
  As we have made clear since the Budget, we reject the doctrine of conditionality. We do not believe that that is a proper way to conduct the tax affairs of this nation or for Parliament to secure the tax rates which the citizens should pay. Conditionality was never part of our creed and we are glad to see it go.
  The hon. Member for Cornwall, North (Mr. Pardoe) said that there were three ways of loking at conditionality. It sometimes seems that the Liberals have three ways of looking at everything nowadays —last week's, this week's and next week's. Sometimes, on some issues it seems that they have 63 ways. [Interruption.] I am trying to be nice to the hon. Gentleman. I am very sorry to hear that he is in pain, but I am not surprised after all his contortions.
  This is all the language of "social contract man", who is now as dead as the dodo; that is the end of that approach to policy. The sooner that the Chief Secretary and the hon. Member for Cornwall, North, who is for ever with him—perhaps not for ever, but for the moment at least—understands that that view of public policy is over, the better we shall be able to address ourselves to the issues of the proper levels of income tax.
  I have spent some time on conditionality, as did my right hon. and learned Friend, because it is important to establish how the Chief Secretary will look at income tax and other taxes in future. The level of income tax and the question whether there is still some supposed deal to be done with the unions are directly connected with the issue of the wealth tax, which according to recent reports is again very much a starter.
  We understand that the Chief Secretary is a member of a liaison committee with the TUC—not the one with the Liberals —which has been cooking up the wealth tax. [Interruption.] As the right hon.
  1970
  Gentleman says, he spends all his time now liaising with bodies outside the Government to make these arrangements. There appears to be some residual hankering after the idea that a wealth tax will induce the unions to come back into the deal game. I do not think that it will. This is a wrong approach, and the sooner we can all—including Treasury Ministers—get it out of our minds, the better for public policy.
  One argument is that a wealth tax would be marvellous because it would enable Governments to ease the burden on income tax. It is that sort of argument that has led the Liberal Party to embrace the idea of a wealth tax. 1 understand that the Liberals are keen on it. Presumably the hon. Member for Cornwall, North and the Chief Secretary use the Lib-Lab liaison meetings to work out the details of a wealth tax. It is a good issue for the Chief Secretary because it is the one subject on which, until we see the small print, he can get agreement from the Liberal liaison committee and the TUC-Left-wing liaison committee. There is agreement from the Liberals right across to the Left wing on a wealth tax. Of course, Left-wing hon. Members want a wealth tax for different reasons and in a different form from that wanted by the hon. Member for Cornwall, North. I understand that the Labour Party Left wing, and some members of the various liaison committees in which the Chief Secretary spends all his time want a wealth tax as an addition to existing taxation. They do not concede that there is already a tax on wealth. The hon. Member for Cornwall, North wants a wealth tax instead of income tax, but only a party with the bottomless gullibility of the Liberal Party could fall for that arrangement. It is clear what sort of spider's web they are walking into.
  The hon. Member for Cornwall, North knows that there will not be any substantial cut in income tax under a Labour Government.
  Mr. Pardoe: Just wait and see.
  Mr. Howell: There never has been and there never will be. The Chief Secretary comes virtuously to the Dispatch Box to put before us the delights of moving from 35 per cent. to 34 per cent. The hon. Member for Cornwall, North should remember that the Government started at

  1971
  30 per cent. Now we are asked to clap hands because they have made a 1 per cent. reduction.
  We have always argued that we look for major cuts in income tax. It is common sense that this will cost substantial sums, particularly if there are cuts in the standard rate. My hon. Friend the Member for Croydon, Central (Mr. Moore) pointed out in his excellent speech that cuts at the higher rates would not cost any money and would probably increase revenue. However, there would be a political price to pay. Substantial cuts in the basic rate would cost a substantial amount, and we have to look at the constraints in the way of achieving that goal and how to overcome them.
  First, there is budgetary restraint. The public sector borrowing requirement is a critical and crucial restraint that must not be put aside. On the other side of the budget equation is the public expenditure restraint that we have already debated today. My hon. Friend the Member for Gainsborough (Mr. Kimball) pointed out that, contrary to the enormous slashes in public expenditure in the past year, a sensible approach to public expenditure policy must be gradual. Anyone who says that there should be thousands of millions of pounds worth of cuts in public expenditure just like that does not understand the right approach to public expenditure policy. What has happened in the past year is a good example of a Government who do not understand that. After a long delay, they were eventually forced into making violent and disruptive public expenditure cuts.
  Another constraint is the other forms of revenue, the main one of which is VAT. We have argued that our wish immediately to reduce taxation could be responsibly covered by increasing VAT to 10 per cent. Even if that were done now through the regulator, it would generate enough revenue to finance our amendment without offence to the public sector borrowing requirement. It is fiscally and financially responsible and could be done now. It will not be done under this Government because they do not really believe in cutting the standard rate of income tax. That is their belief, and that is why they are not pursuing the kind of amendment that we have put down.
  Mr. Cronin: The hon. Gentleman is puzzling me. For the last year or so we have heard impassioned pleas from the Opposition to cut public expenditure. Now we hear from them that it is being cut too much so that the whole economy is being disrupted.
  Mr. Howell: I shall put it in the kindest way and say that the hon. Gentleman is mishearing me. There have been substantial cuts, and we look for further cuts. But I have said that common sense dictates that the further cuts have to he more gradual than the hiccups and slashings of the last year. The hon. Gentleman is distorting what I say.
  The other question which is asked about cuts in income tax and a switch to a higher rate of value added tax is whether it would not hurt the poorest in our community. We believe that question to be perfectly sincere and a correct one to put but that it is based on a previous era in the pattern of taxation. Nowadays—incredibly, almost unblievably to visitors from abroad—the vast majority of our people, down to the most modest wage earners, and even the single man with only £26 a week or so, pay income tax. We have reached the stage as the Child Poverty Action Group has said, at which income tax has become the enemy of the poor. It has become a regressive and not a progressive tax. Attempts to reduce the rate and raise the thresholds are now as much help to people on modest wages and salaries as to anyone esle. That is why we go along this road with confidence, in the knowledge that our proposals would help the vast majority of working people, especially those on lower wage levels.
  Secondly, the increase in VAT would be far less regressive than, traditionally, indirect taxes were supposed to be, because VAT does not apply to food and transport, food in particular being a major item in the household budget. Therefore, the transfer between the two taxes, while obviously there are some unfavourable effects— I would not assert that no one could be hurt, because that would be absurd—far from being an attack on those with lower incomes, would have the opposite effect because it is income tax that is biting into wages at all levels.
  The third reason why we are confident that we are pursuing the right policy is

  1973
  that we must get back incentive. Unless we are prepared to put incentive back into the system again, we shall not get the business revival, particularly at the smaller end where the jobs will be. Only by incentive can we restart the business heart of the nation. We hear talk—it may be sincere or not—about the need to restructure this industry or that and about grand industrial strategy. But the reality is that in the great manufacturing industries in this country, just as in places like Japan and Germany, there will not be millions of new jobs. They will have to be found in services, in new businesses that people cannot even categorise and describe yet and in all sorts of commercial undertakings which will employ only a few people each but which will provide future employment, which is so desperately needed, particularly for our younger generation. These are the people who need lower levels of income tax.
  Those are the three reasons why we have no hesitation in pushing for a lower standard rate of income tax and why we intend to work for lower levels still. In Committee the hon. Member for Birmingham, Perry Barr (Mr. Rooker), who played some part in our proceedings, supporting some of our amendments as we did some of his, turned to some of his colleagues and reminded them that they were allowing, through their blindness to the impact of income tax, the issue of income tax to become a major bitterness within the Labour Party and that many people who had previously voted Socialist were not going to do so again.
  The hon. Gentleman recognised the point and the Government should recognise it too. Until they recognise it, they will not be at the heart of our economic problems—that is, that the level of personal income tax is too high on working people, business people, investors and those who have new ideas for the creation of new jobs and services. We must get it down, and if it means changing the level of VAT we are ready to do that.
  That is why we are prepared to pursue our amendment, and that is why I advise my right hon. and hon. Friends to follow me into the Lobby on it.
  9.15 p.m.
  Mr. Joel Barnett: With the leave of the House, may I say that whenever I
  1974
  listen to the hon. Member for Guildford (Mr. Howell) describing me in the graphic words he chooses to use on these occasions I can never recognise myself. But one thing is absolutely clear. He is obviously very jealous of the many liaisons I have—with the TUC, with the Labour Party working party, and with the hon. Member for Cornwall, North (Mr. Pardoe).
  I do not know whether the hon. Member for Guildford was inviting himself to our meetings, but I have to tell him that I am not prepared to invite him. I am enjoying the meetings and I do not seek to widen them. I note his envious looks at these liaisons. I assure him that they are going very well. Indeed, last night's vote and the increasing majorities that we enjoy in the House of Commons are clear indications why the hon. Gentleman is so envious of these liaisons.
  On the general question of direct taxation, and the point made by the hon. Member for Croydon, Central (Mr. Moore) and many others, income tax levels in this country, at both the very lowest and very highest levels, are too high; I do not dispute that, and never have. I want to see them reduced. But we need to understand that 1 p off the basic rate of income tax costs about £500 million. When hon. Members talk about massive cuts in income tax they should be honest with this House and with people outside and say specifically where and how they propose to raise the sort of money of which they talk so glibly.
  No one in this debate or in any debate on previous occasions has told us precisely in what way it is proposed to raise this sort of money. I shall come to some of the points made by the right hon. and learned Member for Surrey, East (Sir G. Howe) and by the hon. Member for Guildford about how they would seek to reduce direct taxation, but let me first take up the initial point made by the right hon. and learned Member concerning the problems of conditionality. It seemed from what he said that he is not the slightest bit interested in having any kind of understanding with the trade union movement. He is not interest in creating the sort of climate in which it is possible for the Government to talk to he trade union movement, and continue to talk to it.

  1975
  The right hon. and learned Gentleman talked about the procedures that we have, and the fact that only tonight, at this part of the Report stage of the Bill, are we settling the basic rate of tax. He said, I think, that it was inconvenient to settle it at this late stage. I am bound to tell him that the House of Commons has always had the opportunity of deciding the basic rate of tax and changing it on Report. That was always the prerogative of the House of Commons, and it will remain so whether we have conditionality or not. That is the situation, and I hope that we shall continue to live with it, because that is the way in which this House of Commons works.
  The question then arises: what should be the basic rate of income tax, and how can we reduce it at this stage? The right hon. and learned Gentleman did not dispute the fact that the borrowing requirement could not be increased. He said—and his hon. Friends supported him—that what we should do is to increase the rate of value added tax. That was a constant theme.
  I am bound to tell the House that we have had suggestions to increase value added tax on so many different occasions and on so many different amendments, in Committee upstairs and on the Floor of the House that it would take an increase of VAT to 20 per cent. to raise the sort of money that he and his hon. Friends have wanted to spend during the passage of the Finance Bill—and, indeed, to cover the areas in which he wishes to increase public expenditure. It really is nonsense for the right hon. and learned Member for Surrey, East to talk about this as some kind of simple way of reducing the basic rate of tax. He knows that that simply is not true.
  But there is a problem about the balance between direct and indirect taxation. I do not dispute that. I have never disputed it. I said during my speeches on the Finance Bill and on the Budget that we have to switch from direct to indirect taxation as fast as we can. However, at a time when prices are of crucial importance in order to ensure that in the next pay round we have moderate pay claims, and when we want to moderate the rate of price inflation, it is absurd to suggest that the Government or House of Commons should want to see that moderation
  1976
  while at the same time deliberately increasing the level of prices. It must be nonsense to suggest that this should be done at this stage.
  Several arguments have been deployed during this debate, and in the past, that by reducing the level of income tax all our problems will be answered. I wish it were as simple as that. We have had periods in our history in this century when the level of income tax has been considerably lower than at present. But our comparative industrial performance with America, Japan and elsewhere has been bad when our levels of direct taxation were much lower than they are today.
  To suggest that somehow or other a simple panacea exists whereby we can transform the whole of our industrial performance is nonsense, which should not enter into our debates.
  We want to see reductions in direct taxation, but let us make a sensible case for them and not suggest that it will solve all our problems. If it were that simple it would have been done a long time ago. The comparison with the United States and Japan is, of course, a bad one. Net take-home pay and living standards in both those countries are very much better than in this country.
  As my hon. Friend the Member for Loughborough (Mr. Cronin) and several other of my hon. Friends said, there are two basic problems. One can, of course, reduce the level of direct taxation if one is prepared to cut public expenditure by a very substantial figure. It is possible to do that. It is possible to give a man on £40 or £50 a week—this applies in my own part of the world where average earnings of £70 or £80 a week are difficult to comprehend—an extra £2 or £3 a week in his take-home pay. But if we charge him £10 a week when a member of his family stays in hospital, that is not much help.
  I was interested to note that the right hon. Member for Sidcup (Mr. Heath), with his traumatic experience, recognised this problem in a recent television programme. He said, and it is worth quoting:
  "If efforts were made to cut it"—
  that is the level of direct taxation—
  "by £5,000 million now there would be major problems. It would undoubtedly mean seriously cutting social service benefits."

  1977
  We all know that is the case, yet that is what the right hon. and learned Member for Surrey, East is saying. [Interruption.] Perhaps I should spell it out for the House and for the country. [Interruption.] What exactly is the right hon. and learned Gentleman saying?
  The hon. Member for Guildford said that there have been substantial cuts in public expenditure. I have been responsible for presiding over many of those. I do not apologise for that, because I believe that it was necessary.
  But to suggest that at this moment we can—
  Mr. David Howell: Too late.
  Mr. Barnett: The hon. Gentleman should stop muttering. Perhaps he will tell us where he will raise the thousands of millions of pounds. I shall spell it out. What he proposes to do is cut social service benefits and transfer payments.
  The hon. Member for Blaby (Mr. Lawson) has a lot of influence on the Front Bench, perhaps more than he

  Division No. 205]

  AYES

  [9.25 p.m.

  Adley, Robert

  Corrle, John

  Hamilton, Michael (Salisbury)

  Aitken, Jonathan

  Costain, A. P.

  Hannam, John

  Alison, Michael

  Critchley, Julian

  Harrison, Col Sir Harwood (Eye)

  Amery, Rt Hon Julian

  Crowder, F. P.

  Harvie Anderson, Rt Hon Miss

  Arnold, Tom

  Dean, Paul (N Somerset)

  Haselhurst, Alan

  Atkins, Rt Hon H. (Spelthorne)

  Dodsworth, Geoffrey

  Hastings, Stephen

  Awdry, Daniel

  Douglas-Hamilton, Lord James

  Hawkins, Paul

  Bain, Mrs Margaret

  Drayson, Burnaby

  Hayhoe, Barney

  Banks, Robert

  du Cann, Rt Hon Edward

  Henderson, Douglas

  Bell, Ronald

  Durant, Tony

  Heseltine, Michael

  Bennett, Sir Frederic (Torbay)

  Dykes, Hugh

  Hicks, Robert

  Bennett, Dr Reginald (Fareham)

  Eden, Rt Hon Sir John

  Higgins, Terence L.

  Berry, Hon Anthony

  Edwards, Nicholas (Pembroke)

  Hodgson, Robin

  Biflen, John

  Elliott, Sir William

  Holland, Philip

  Biggs-Davlson, John

  Emery, Peter

  Hordern, Peter

  Blaker, Peter

  Eyre, Reginald

  Howe, Rt Hon Sir Geoffrey

  Body, Richard

  Fairbairn, Nicholas

  Howell, David (Guildford)

  Boscawen, Hon Robert

  Farr, John

  Howell Ralph (North Norfolk)

  Bottomley, Peter

  Fell, Anthony

  Hunt, David (Wlrral)

  Bowden, A. (Brighton, Kemptown)

  Flnsberg, Geoffrey

  Hunt, John (Bromley)

  Boyson, Dr Rhodes (Brent)

  Fisher, Sir Nigel

  Hurd, Douglas

  Bralne, Sir Bernard

  Fletcher, Alex (Edinburgh N)

  Hutchison, Michael Clark

  Brittan, Leon

  Fletchef-Cooke, Charles

  Irving, Charles (Cheltenham)

  Brocklebank-Fowler, C.

  Fookes, Miss Janet

  Jenkin, Rt Hon P. (Wanst'tt&W'dfd)

  Brooke, Peter

  Forman, Nigel

  Johnson Smith, G. (E Grinslead)

  Brotherton, Michael

  Fowler, Norman (Sutton C'f'd)

  Jones, Arthur (Daventry)

  Brown, Sir Edward (Bath)

  Fox, Marcus

  Jopling, Michael

  Bryan, Sir Paul

  Fry, Peter

  Joseph, Rt Hon Sir Keith

  Buck, Antony

  Galbraith, Hon T. G. D.

  Kaberry, Sir Donald

  Budgen, Nick

  Gardiner, George (Reigate)

  Kellelt-Bowman, Mrs Elaine

  Bulmer, Esmond

  Gardner, Edward (S Fylde)

  Kershaw, Anthony

  Burden, F. A.

  Gilmour, Rt Hon Sir Ian (Chesham)

  Klmball, Marcus

  Butler, Adam (Bosworth)

  Gilmour, Sir John (East Fife)

  King, Evelyn (South Dorset)

  Carlisle, Mark

  Glyn, Or Alan

  King, Tom (Brldgwater)

  Chalker, Mrs Lynda

  Goodhart, Philip

  Kitson, Sir Timothy

  Channon, Paul

  Goodhew, Victor

  Knox, David

  Churchill, W. S.

  Goodilad, Alastair

  Lamonl, Norman

  Clark, Alan (Plymouth, Sutton)

  Gorst, John

  Latham, Michael (Melton)

  Clark, William (Croydon S)

  Gow, Ian (Eastbourne)

  Lawson, Nigel

  Clarke, Kenneth (Rushcliffe)

  Gower, Sir Raymond (Barry)

  Le Marchant, Spencer

  Clegg, Walter

  Grant, Anthony (Harrow C)

  Lewis, Kenneth (Rutland)

  Cockcrolt, John

  Griffiths, Eldon

  Lloyd, Ian

  Cooke, Robert (Bristol W)

  Grist, Ian

  Loveridge, John

  Cope, John

  Grylls, Michael

  Luce, Richard

  should have. But one matter is certain. The hon. Gentleman knows that the only way that he could make cuts in direct taxation is, as his right hon. Friend the Member for Sidcup said, by cutting social service benefits and transfer payments. The hon. Gentleman knows that and, unless he is prepared to deny it, we must accept that that is what he wants to do.
  The Opposition do a great disservice to themselves and to people outside when they pretend that there is a simple way, apart from improving our industrial performance, of cutting income tax by massive amounts. It is not possible. We have made a start in this Budget. We are making a further extension of it now. I recommend my right hon. and hon. Friends to vote for the Government amendment cutting the basic rate by I p and to vote against the Opposition's amendment.
  Question put, That the amendment to the proposed amendment be made:—
  The House divided: Ayes 238, Noes 268.

  McAdden,Sir Stephe

  Oppenheim,Mrs Sally

  Smith, Timothy John(Ashfield)

  McCrindle, Robert

  Osbom, John

  Speed, Keith

  Macfarlane, Neil

  Page, John (Harrow West)

  Spence, John

  MacGregor, John

  Page, Rt Hon R. Graham (Crosby)

  Spicer, Jim (W Dorset)

  MacKay, Andrew James

  Page, Richard (Workington)

  Spicer, Michael (S Worcester)

  Macmillan, Rt Hon M. (Farnham)

  Paitie, Geoffrey

  Sproat, lain

  McNair-Wilson, M. (Newbury)

  Price, David (Eastleigh)

  Stalnton, Keith

  McNair-WIIson, P. (Now Forest)

  Prior, Rt Hon James

  Stanley, John

  Madel, David

  Pym, Rt Hon Francis

  Stewart, Rt Hon Donald

  Mates, Michael

  Rees, Peter (Dover & Deal)

  Stradling Thomas, J.

  Mather, Carol

  Rees-Davies, W. R.

  Taylor, R. (Croydon NW)

  Maude, Angus

  Reid, George

  Tebbit, Norman

  Mayhew, Patrick

  Renton, Rt Hon Sir D. (Hunts)

  Temple-Morris, Peter

  Meyer, Sir Anthony

  Rhodes James, R.

  Thatcher, Rt Hon Margaret

  Miller, Hal (Bromsgrove)

  Rhys Williams, Sir Brandon

  Thomas, Dafydd (Merioneth)

  Mills, Peter

  Ridley, Hon Nicholas

  Thomas, Rt Hon P. (Hendon S)

  Miscampbell, Norman

  Ridsdale, Julian

  Thompson, George

  Mitchell, David (Basingstoke)

  Rifkind, Malcolm

  van Straubenzee, W. R.

  Moate, Roger

  Roberts, Michael (Cardiff NW)

  Vaughan, Dr Gerard

  Monro, Hector

  Roberts, Wyn (Conway)

  Viggers, Peter

  Montgomery, Fergus

  Rossi, Hugh (Hornsey)

  Wakeham, John

  Moore, John (Croydon C)

  Rosl, Peter (SE Derbyshire)

  Walder, David (CliJheroe)

  More, Jasper (Ludlow)

  Royle, Sir Anthony

  Walkef-Smilh, Rt Hon Sir Derek

  Morgan, Geraint

  Sainsbury, Tim

  Wall, Patrick

  Morgan-Giles, Rear-Admfrai

  Scott, Nicholas

  Warren, Kenneth

  Morris, Michael (Northampton S)

  Scott-Hopkins, James

  Weather!!!, Bernard

  Morrison, Charles (Devizes)

  Shaw, Giles (Pudsey)

  Wlgley, Dafydd

  Mudd, David

  Shelton, William (Streatham)

  Wilson, Gordon (Dundee E)

  Neave, Alrey

  Shepherd, Colin

  Wood, Rt Hon Richard

  Nelson, Anthony

  Shersby, Michael

  Young, Sir G. (Eating, Acton)

  Neubert, Michael

  Silvester, Fred

  Newton, Tony

  Sims, Roger

  TELLERS FOR THE AYES:

  Normanton, Tom

  Sinclair, Sir George

  Mr. Jim Lester and

  Nott, John

  Skeet, T. H. H.

  Mr. Peter Morrison,

  On&Iow, Cranley

  Smith, Dudley (Warwick)

  NOES

  Abse, Leo

  Cox, Thomas (Tooting)

  Gould, Bryan

  Anderson, Donald

  Crawshaw, Richard

  Gourlay, Harry

  Archer, Rt Kon Peter

  Cronln, John

  Graham, Ted

  Armstrong, Ernest

  Crowther, Stan (Rothertiam)

  Grant, George (Morpeth)

  Ashton, Joe

  Cryer, Bob

  Grant, John (Islington C)

  Atkins, Ronald (Preston N)

  Cunningham, G. (Islington S)

  Grocott, Bruce

  Atkinson, Norman

  Cunningham, Dr J. (Whiteh)

  Hamilton, W. W. (Central Fife)

  Bagler, Gordon A. T.

  Davidson, Arthur

  Hardy, Peter

  Barnett, Guy (Greenwich)

  Davies, Bryan (Enfleld N)

  Harper, Joseph

  Barnett, Rt Hon Joel (Heywood)

  Davles, Denzll (Llanelll)

  Harrison, Rt Hon Walter

  Bates, Alt

  Davies, Rt Hon J. (Knutsford)

  Hart, Rt Hon Judith

  Bean, R. E.

  Davis, Clinton (Hackney C)

  Hattersley, Rt Hon Roy

  Beith, A. J.

  Deaklns, Eric

  Hatton, Frank

  Benn, Rt Hon Anthony Wedgwood

  Dean, Joseph (Leeds West)

  Hay man, Mrs. Helene

  Bennett, Andrew (Stockport N)

  Dell, Rt Hon Edmund

  Healey, Rt Hon Denis

  Bidwell, Sydney

  Dormand, J. D.

  Heffer, Eric S.

  Bishop, Rt Hon Edward

  Douglas-Mann, Bruce

  Hooley, Frank

  Blenklnsop, Arthur

  Duffy, A. E. P.

  Horam, John

  Boardman, H.

  Dunnett, Jack

  Howells, Geraint (Cardigan)

  Booth, Rt Hon Albert

  Dunwoody, Mrs Gwynelh

  Hoyle, Doug (Nelson)

  Boothroyd, Miss Betty

  Eadie, Alex

  Hughes, Rt Hon C. (Anglesey)

  Bottomley, Rt Hon Arthur

  Edge, Geoff

  Hughes, Robert (Aberdeen N)

  Boyden, James (Blsh Auck)

  Edwards, Robert (Wolv SE)

  Hughes, Roy (Newport)

  Bray, Dr Jeremy

  Ellis, John (Brlgg & Scun)

  Hunter, Adam

  Brown, Hugh D. (Provan)

  Ellis, Tom (Wrexham)

  Irving, Rt Hon S. (Dartford)

  Brown, Robert C. (Newcastle W)

  English, Michael

  Jackson, Colin (Brighousc)

  Brown, Ronald (Hackney S)

  Ennals, David

  Janner, Greville

  Buchan, Norman

  Evans, Fred (Caerphllly)

  Jay, Rt Hon Douglas

  Callaghan, Rt Hon J. (Cardiff SE)

  Evans, loan (Aberdafe)

  Jenkins, Hugh (Putney)

  Callaghan, Jim (Mlddleton & P)

  Evans, John (Newton)

  John, Brynmor

  Campbell, Ian

  Ewing, Harry (Stirling)

  Johnson, James (Hull West)

  Canavan, Dennis

  Faulds, Andrew

  Johnson, Walter (Derby S)

  Cant, R. B.

  Fernyhough, Rt Hon E.

  Johnston, Russell (Inverness)

  Carmichael, Nell

  Fitch, Alan (Wigan)

  Jones, Alec (Rhondda)

  Carter-Jones, Lewis

  Flanrvery, Martin

  Jones, Dan (Burnley)

  Cartwright, John

  Fletcher, Ted (Darlington)

  Kaufman, Gerald

  Castle, Rt Hon Barbara

  Foot, Rt Hon Michael

  Kelley, Richard

  Clemllson, Ivor

  Forrester, John

  Kllroy-SHk, Robert

  Cocks, Rt Hon Michael

  Fowler, Gerald (The Wrekln)

  Klnnock, NeH

  Cohen, Stanley

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

  Lamble, David

  Coleman, Donald

  Ffeeson, Reginald

  Lamborn, Harry

  Concannon, J. D.

  Freud, Clement

  Lamond, James

  Conlan, Bernard

  Garrett, John (Norwich S)

  Latham, Arthur (Paddlngton)

  Cook, Robin F. (Edin C)

  George, Bruce

  Leadbitter, Ted

  Corbett, Robin

  Gilbert, Dr John

  Lee, John

  Cowans, Harry

  Glnsburg, David

  Lestor, Miss Joan (Eton & Slough)

  McAdden,Sir Stephe

  Oppenheim,Mrs Sally

  Smith, Timothy John(Ashfield)

  McCrindle, Robert

  Osbom, John

  Speed, Keith

  Macfarlane, Neil

  Page, John (Harrow West)

  Spence, John

  MacGregor, John

  Page, Rt Hon R. Graham (Crosby)

  Spicer, Jim (W Dorset)

  MacKay, Andrew James

  Page, Richard (Workington)

  Spicer, Michael (S Worcester)

  Macmillan, Rt Hon M. (Farnham)

  Paitie, Geoffrey

  Sproat, lain

  McNair-Wilson, M. (Newbury)

  Price, David (Eastleigh)

  Stalnton, Keith

  McNair-WIIson, P. (Now Forest)

  Prior, Rt Hon James

  Stanley, John

  Madel, David

  Pym, Rt Hon Francis

  Stewart, Rt Hon Donald

  Mates, Michael

  Rees, Peter (Dover & Deal)

  Stradling Thomas, J.

  Mather, Carol

  Rees-Davies, W. R.

  Taylor, R. (Croydon NW)

  Maude, Angus

  Reid, George

  Tebbit, Norman

  Mayhew, Patrick

  Renton, Rt Hon Sir D. (Hunts)

  Temple-Morris, Peter

  Meyer, Sir Anthony

  Rhodes James, R.

  Thatcher, Rt Hon Margaret

  Miller, Hal (Bromsgrove)

  Rhys Williams, Sir Brandon

  Thomas, Dafydd (Merioneth)

  Mills, Peter

  Ridley, Hon Nicholas

  Thomas, Rt Hon P. (Hendon S)

  Miscampbell, Norman

  Ridsdale, Julian

  Thompson, George

  Mitchell, David (Basingstoke)

  Rifkind, Malcolm

  van Straubenzee, W. R.

  Moate, Roger

  Roberts, Michael (Cardiff NW)

  Vaughan, Dr Gerard

  Monro, Hector

  Roberts, Wyn (Conway)

  Viggers, Peter

  Montgomery, Fergus

  Rossi, Hugh (Hornsey)

  Wakeham, John

  Moore, John (Croydon C)

  Rosl, Peter (SE Derbyshire)

  Walder, David (CliJheroe)

  More, Jasper (Ludlow)

  Royle, Sir Anthony

  Walkef-Smilh, Rt Hon Sir Derek

  Morgan, Geraint

  Sainsbury, Tim

  Wall, Patrick

  Morgan-Giles, Rear-Admfrai

  Scott, Nicholas

  Warren, Kenneth

  Morris, Michael (Northampton S)

  Scott-Hopkins, James

  Weather!!!, Bernard

  Morrison, Charles (Devizes)

  Shaw, Giles (Pudsey)

  Wlgley, Dafydd

  Mudd, David

  Shelton, William (Streatham)

  Wilson, Gordon (Dundee E)

  Neave, Alrey

  Shepherd, Colin

  Wood, Rt Hon Richard

  Nelson, Anthony

  Shersby, Michael

  Young, Sir G. (Eating, Acton)

  Neubert, Michael

  Silvester, Fred

  Newton, Tony

  Sims, Roger

  TELLERS FOR THE AYES:

  Normanton, Tom

  Sinclair, Sir George

  Mr. Jim Lester and

  Nott, John

  Skeet, T. H. H.

  Mr. Peter Morrison,

  On&Iow, Cranley

  Smith, Dudley (Warwick)

  NOES

  Abse, Leo

  Cox, Thomas (Tooting)

  Gould, Bryan

  Anderson, Donald

  Crawshaw, Richard

  Gourlay, Harry

  Archer, Rt Kon Peter

  Cronln, John

  Graham, Ted

  Armstrong, Ernest

  Crowther, Stan (Rothertiam)

  Grant, George (Morpeth)

  Ashton, Joe

  Cryer, Bob

  Grant, John (Islington C)

  Atkins, Ronald (Preston N)

  Cunningham, G. (Islington S)

  Grocott, Bruce

  Atkinson, Norman

  Cunningham, Dr J. (Whiteh)

  Hamilton, W. W. (Central Fife)

  Bagler, Gordon A. T.

  Davidson, Arthur

  Hardy, Peter

  Barnett, Guy (Greenwich)

  Davies, Bryan (Enfleld N)

  Harper, Joseph

  Barnett, Rt Hon Joel (Heywood)

  Davles, Denzll (Llanelll)

  Harrison, Rt Hon Walter

  Bates, Alt

  Davies, Rt Hon J. (Knutsford)

  Hart, Rt Hon Judith

  Bean, R. E.

  Davis, Clinton (Hackney C)

  Hattersley, Rt Hon Roy

  Beith, A. J.

  Deaklns, Eric

  Hatton, Frank

  Benn, Rt Hon Anthony Wedgwood

  Dean, Joseph (Leeds West)

  Hay man, Mrs. Helene

  Bennett, Andrew (Stockport N)

  Dell, Rt Hon Edmund

  Healey, Rt Hon Denis

  Bidwell, Sydney

  Dormand, J. D.

  Heffer, Eric S.

  Bishop, Rt Hon Edward

  Douglas-Mann, Bruce

  Hooley, Frank

  Blenklnsop, Arthur

  Duffy, A. E. P.

  Horam, John

  Boardman, H.

  Dunnett, Jack

  Howells, Geraint (Cardigan)

  Booth, Rt Hon Albert

  Dunwoody, Mrs Gwynelh

  Hoyle, Doug (Nelson)

  Boothroyd, Miss Betty

  Eadie, Alex

  Hughes, Rt Hon C. (Anglesey)

  Bottomley, Rt Hon Arthur

  Edge, Geoff

  Hughes, Robert (Aberdeen N)

  Boyden, James (Blsh Auck)

  Edwards, Robert (Wolv SE)

  Hughes, Roy (Newport)

  Bray, Dr Jeremy

  Ellis, John (Brlgg & Scun)

  Hunter, Adam

  Brown, Hugh D. (Provan)

  Ellis, Tom (Wrexham)

  Irving, Rt Hon S. (Dartford)

  Brown, Robert C. (Newcastle W)

  English, Michael

  Jackson, Colin (Brighousc)

  Brown, Ronald (Hackney S)

  Ennals, David

  Janner, Greville

  Buchan, Norman

  Evans, Fred (Caerphllly)

  Jay, Rt Hon Douglas

  Callaghan, Rt Hon J. (Cardiff SE)

  Evans, loan (Aberdafe)

  Jenkins, Hugh (Putney)

  Callaghan, Jim (Mlddleton & P)

  Evans, John (Newton)

  John, Brynmor

  Campbell, Ian

  Ewing, Harry (Stirling)

  Johnson, James (Hull West)

  Canavan, Dennis

  Faulds, Andrew

  Johnson, Walter (Derby S)

  Cant, R. B.

  Fernyhough, Rt Hon E.

  Johnston, Russell (Inverness)

  Carmichael, Nell

  Fitch, Alan (Wigan)

  Jones, Alec (Rhondda)

  Carter-Jones, Lewis

  Flanrvery, Martin

  Jones, Dan (Burnley)

  Cartwright, John

  Fletcher, Ted (Darlington)

  Kaufman, Gerald

  Castle, Rt Hon Barbara

  Foot, Rt Hon Michael

  Kelley, Richard

  Clemllson, Ivor

  Forrester, John

  Kllroy-SHk, Robert

  Cocks, Rt Hon Michael

  Fowler, Gerald (The Wrekln)

  Klnnock, NeH

  Cohen, Stanley

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

  Lamble, David

  Coleman, Donald

  Ffeeson, Reginald

  Lamborn, Harry

  Concannon, J. D.

  Freud, Clement

  Lamond, James

  Conlan, Bernard

  Garrett, John (Norwich S)

  Latham, Arthur (Paddlngton)

  Cook, Robin F. (Edin C)

  George, Bruce

  Leadbitter, Ted

  Corbett, Robin

  Gilbert, Dr John

  Lee, John

  Cowans, Harry

  Glnsburg, David

  Lestor, Miss Joan (Eton & Slough)

  1980

  1981

  Lewis, Ron (Carlisle)

  Padley, Walter

  Strauss, Rt Hon G. R.

  Llpton, Marcus

  Palmer, Arthur

  Summersklll, Hon Dr Shirley

  Lomas, Kenneth

  Pardoe, John

  Swain, Thomas

  Loyden, Eddie

  Park, George

  Taylor, Mrs Ann (Bolton W)

  Luard, Evan

  Parker, John

  Thomas, Jeffrey (Abertlllecy)

  Lyon, Alexander (York)

  Parry, Robert

  Thomas, Mike (Newcastle E)

  Lyons, Edward (Bradford W)

  Pavitt, Laurie

  Thomas, Ron (Bristol NW)

  Mabon, Rt Hon Dr J. Dlckson

  Pendry, Tom

  Thome, Stan (Preston South)

  McDonald, Dr Oonagh

  Perry, Ernest

  Tlerney, Sydney

  McElltone, Frank

  Prescott, John

  Tinn, James

  MacFarquhar, Roderick

  Price, C. (Lewisham W)

  TomHnson, John

  McGuire, Michael (Ince)

  Raoice, Giles

  Torney, Tom

  MacKenzle, Rt Hon Gregor

  Rees, Rt Hon Merlyn (Leeds S)

  Tuck, Raphael

  Maclerman, Robert

  Richardson, Miss Jo

  Urwln, T. W.

  McMillan, Tom (Glasgow C)

  Roberts, Albert (Normanton)

  Walnwright, Edwin (Dearne V)

  McNamara, Kevin

  Roberts, Gwllym (Canneck)

  Wainwrio.nl, Richard (Colne V)

  Madden, Max

  Robinson, Geoffrey

  Walker, Harold (Doncaster)

  Magee, Bryan

  Roderick, Caerwyn

  Walker, Terry (Klngswood)

  Mahon, Simon

  Rodgers, George (Chorley)

  Ward, Michael

  Mallalieu, J. P. W.

  Rodgers, Rt Hon William (Stockton)

  Watklns, David

  Marks, Kenneth

  Rooker, J. W.

  Watkinson, John

  Marshall, Jim (Leicester S)

  Rose, Paul 8.

  Weetch, Ken

  Maynard, Miss Joan

  Ron, Stephen (Isle of Wight)

  Weitzman, David

  Mendeison, John

  Ross, Rt Hon W. (Kllmarnock)

  Wellbeloved, James

  Mikardo, Ian

  Rowlands, Ted

  White, Frank R. (Bury)

  Millan, Rt Hon Bruce

  Ryman, John

  White, James (Pollock)

  Miller, Dr M. S. (E Kilbrlde)

  Sedgemore, Brian

  Whitehead, Phillip

  Mitchell, R. C. (Soton, Itchen)

  Salby, Harry

  Whitlock, William

  Molloy, William

  Shaw, Arnold (llford South)

  Willey, Rt Hon Frederick

  Moonman, Eric

  Sheldon, Rt Hon Robert

  Williams, Rt Hon Alan (Swansea Wf

  Morris, Alfred (Wyihenshawe)

  Shore, Rt Hon Peter

  Williams, Alan Lee (Hornch'ch)

  Morris, Charles R. (Openshaw)

  SUkln, Rt Hon John (Deptford)

  Williams, Rt Hon Shirley (Hertford)

  Morris, Rt Hon J. (Aberavon)

  Sllkln, Rt Hon S. C. (Dulwich)

  Wilson, Alexander (Hamilton)

  Moyle, Roland

  Sillars, James

  Wilson, Rt Hon Sir Harold (Huyton)

  Mulley, Rt Hon Frederick

  Stlverman, Julius

  Wilson, William (Coventry SE)

  Murray, Rt Hon Ronald King

  Skinner, Dennis

  Wise, Mrs Audrey

  Newens, Stanley

  Small, William

  Woodall, Alec

  Noble, Mike

  Smith, John (N Lanarkshire)

  Woof, Robert

  Oakes, Gordon

  Spearing, Nigel

  Wrlgglesworth, Ian

  Ogden, Eric

  Sprlggs, Leslie

  Young, David (Bolton E)

  O'Halloran, Michael

  Stallard, A. W.

  Orbach, Maurice

  Stewart, Rt Hon M. (Fulham)

  TELLERS FOR THE NOES:

  Orme, Rt Hon Stanley

  Stoddart, David

  Mr. James Hamilton and

  Ovender, John

  Stott, Roger

  Mr. Peter Snape.

  Owen, Rt Hon Dr David

  Strang, Gavin

  Question accordingly negatived.
  Amendment No. 95 agreed to.
  Mr. Tony Newton: I beg to move Amendment No. 114, in page 12, line 39, after '£1,500', insert
  'in the case of an individual qualifying for a personal relief under section 8(1)(b) of the Taxes Act or £2,300 in the case of an individual qualifying for a personal relief under section 8(1)(a) of the Taxes Act'.
  Mr. Deputy Speaker (Mr. Oscar Murton): With this it is proposed to group the following amendments: No. 108, in page 12, line 40, leave out '£500' and insert '£1,000'.
  No. 115, in page 13, line 5, at end insert
  'and for the reference to £2,300 of a reference to £3,060'.
  Mr. Newton: Although these amendments have been grouped together and all concern—[Interruption.]
  Mr. Deputy Speaker: Order. Will hon. Members who do not desire to hear the hon. Member for Braintree (Mr.
  1982
  Newton) move his amendment kindly withdraw quietly?
  Mr. Newton: Although these amendments have been grouped together and all concern investment income surcharge, they raise two distinct issues, and I propose to deal with them separately.
  We hope to have Amendment No. 108 distinguished separately if it comes to a vote. I shall deal first with that amendment, it being an official Opposition amendment in the names of my right hon and hon. Friends and myself. It concerns what might be called the secondary threshold for the investment income surcharge. Under the Bill, the first £1,500 of investment income is free of investment income surcharge. The next £500 is chargeable at the 10 per cent. surcharge rate, and thereafter the rate is the full 15 per cent. There is a slight variation for the over 65s, but that is the basic situation.
  9.45 p.m.
  In our view, the basic £1,500 threshold should be raised. At an earlier stage we

  1983
  tabled an amendment to increase it to £4,000. That battle, for this year at least, has been fought and lost, to the discredit of Liberal Members who have consistently spoken in favour of such a change but who failed to support it when it came to the point this year. No doubt it is something to which we shall return. Meanwhile we feel it right to press the Government again by urging this more limited change. Indeed, it might almost be said to be an excessively limited and modest amendment. We ask for relief of no more than 5 per cent. on £500 of investment income in the secondary tranche, the £500 that is above the £1,500 basic threshold.
  All that we are proposing in Amendment No. 108 for a basic rate taxpayer is to reduce from 49 per cent. to 44 per cent. the marginal tax rate on his investment income between £2,000 and £2,500. The arguments were well put by my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) and others when we discussed investment income surcharge in Committee of the whole House a month or two ago.
  This evening 1 need only summarise the main points rather than attempt to detain the House by rehearsing them at length. First and foremost, anything that we can do in this area will primarily bring benefit to retired people. I understand from figures that have been given in the House that something approaching half of all taxpayers who are subject to the investment income surcharge are in the retirement group, over the age of 65. Even with this modest amendment we should be doing something to give additional help to a group of the population who have suffered especially from inflation.
  The claim is made that those on a basic national insurance pension have been protected in some sense from inflation. It remains to be seen whether that is true this year. Many of us doubt whether the pension increase in November will prove to have protected them against inflation, but events will show. At any rate, some measure of protection has been extended to them. The same is true of those who have a private pension or public service pension that is inflation-proofed. They, too, have had some degree of protection, but the group that we have
  1984
  not been able to protect, and which has been a great problem to successive Governments, is composed of those who are dependent for their income, or a significant part of it, in retirement on the income from their savings during their working life, which are not inflation-proofed. Those savings have not kept pace with the rise in prices. It is to that group that I am addressing my argument.
  This has been an intractable problem for every Government. No Government have found an answer to it. We cannot find an answer this evening, but we can at least give some measure of additional relief to those who would otherwise suffer the grinding effect of taxation eroding real incomes still further. At the same time we would reduce the unfairness between those whose retirement income comes from pension taxed income as earned income and those who happen to have saved for their retirement in a different way— by building up investment— and whose income is taxed at the surcharge rate if the investment is significant.
  The next argument goes rather wider. In an earlier debate, my hon. Friend the Member for Horsham and Crawley referred to the effect of the surcharge on small savers and its significant effect on the stock market and the flow of funds to smaller and growing businesses especially. There is real force in that argument irrespective of whether Ministers accept it. Whatever Ministers think of that argument, what surely is common ground between us is that we need to do everything possible to encourage saving.
  It is common ground that in using the resources that will flow to us from North Sea oil we need to invest as much as possible and consume as little as possible. That means that, taken as a whole, our community must save a greater proportion of its income than at present to meet the objectives that are agreed in using North Sea oil resources.
  What is also common ground is that it is no longer open to a society with tax rates as high as ours to achieve such a saving by the forced saving of additional taxation. We on this side of the House have long believed that, but it is now the view to which Ministers and Labour Members are converted. If we need savings, and if we cannot have the tax rates to force that saving, we must have voluntary saving, but at the moment we

  1985
  have a situation in which almost everything militates against it.
  The rate of inflation encourages people to try to put their money into goods rather than into monetary forms of saving. The personal savings ratio turned down in the early part of this year. At the same time, the operation of the social security system is leading a growing number of people who have retired to wonder whether it made sense to save at all because they find that they are no better off than those who did not save. This is another form of disincentive that we have built into our system. Finally, there is the tax disincentive of the surcharge on incomes for which people have saved during their working lives.
  The amendment would do little to help, but it would be an additional sign that the Government meant business and genuinely wanted to encourage people to save and provide the flow of funds for industrial investment which everybody is agreed we need.
  I turn now to the Amendments Nos. 114 and 115, which are not, I hasten to emphasise, Official Opposition amendments but are in my name only. They would ease the burden of investment income surcharge but in a much more specific way. The main amendment is No. 114, and Amendment No. 115 follows it through consequentially to the position for people over 65.
  Essentially, what I am getting at is the present position in which, whether for married or for single people, the threshold for investment income is the same. We have a tax system which recognises that the need of a married couple is less than that of a single person, or perhaps I should say it recognises that the taxable capacity of a married couple is less than that of a single person. We recognise that by having a higher threshold against total income.
  We also have a tax system which acknowledges that there is a need for a separate and distinct kind of threshold against the investment income surcharge — that is, the existing £ 1,500 threshold. What we do not recognise— there is a case for looking at this— is that the surchargeable capacity of a married couple is also less than the surchargeable capacity of a single person, giving rise to a logic which suggests that we ought to consider
  1986
  a higher investment income surcharge threshold for a married couple.
  Whether the present situation would be seen as unjust would vary somewhat according to the exact circumstances of a particular married couple. In the case of a married couple where both had exactly £ 1,500 of investment income genuinely related to savings of their own and not some sharing out that had occurred in relation to the marriage, they would suffer a significant extra burden of investment income surcharge compared with what they would suffer if they were single.
  I recognise that that is probably not a frequent case but it certainly can happen. I have a constituent who has prompted me to raise this matter. He says that he is in that situation. He and his wife have genuine investment incomes of £ 1,500 each. He goes on to say that as two single people they would pay no surcharge at all but that because they are married they pay a surcharge of £ 200. He adds that the absurdity of the situation— and this, too, is a valid point is highlighted by the fact that the richer the couple the less the discrimination, because the larger is the proportion of investment income which would in any event be taxed at the 15 per cent. rate. That is clearly an unfair situation.
  Against that, in reality in many cases the capital is more likely to be in the hands of the husband. One can therefore argue that one would be creating a route down which, by splitting the capital of the married couple, one significantly reduced their tax liability, and it could be said that that argument was strengthened by the change in CTT enabling tax-free transfers of capital to take place.
  I suspect that that is an argument on which the Minister will rely, but the prospect of a married couple splitting their capital to minimise their tax is not one which I find particularly objectionable, for three reasons. First, most of us would like to see capital more widely spread. Secondly, most of us increasingly recognise that the input of a wife into a marriage is more considerable than was previously recognised by both our tax and our legal systems. There is much to be said for treating a wife—if only for the work that she does as housekeeper and mother—as if she was entitled to a personal share of the assets built up by the

  1987
  partnership. Thirdly— and one must not underrate this when there is a high rate of marriage breakdown— there are considerable merits in increasing the financial security of the wife who still suffers most financially from a breakdown of the marriage. That can be done by encouraging the sharing and splitting of capital within and between the family.
  I accept that to follow that logic through would be further than Ministers and others would wish to go. The amendments attempt to do something which is limited and reasonable. The figures are calculated in precise ratio to the existing thresholds on total income. Under the latest proposals, the single man's threshold is £ 845 and the married couple's £ 1,295. I have taken the £ 1,500 investment income surcharge threshold and come up with a figure of £ 2,300 investment income threshold for a married couple. It is a modest amendment. It is one that it is worth examining as a possibility.
  I have made the proposals in Amendments Nos. 114 and 115 tentatively. They raised broad issues about the way in which we tax married couples. We have not heard the last of that. There is still much to be argued from all sides, and we shall not solve the problem by these amendments this evening. However, it is an aspect that the Government should consider.
  Amendment No. 108 is not tentative. We believe that much more should be done to encourage savings and to provide additional help, especially to retired people living on incomes from their savings. The proposals in the amendment would at least do a little more to help in that direction. I hope that my right hon. and hon. Friends are with me in wishing to vote tonight if Ministers are not prepared to accept this moderate and reasonable proposal.
  Mr. Ridsdale: Many people in my constituency are affected by the unfair tax imposition on retired people and those who are near retirement and finding it difficult to get employment. At a time of 17½ per cent. inflation this surcharge on their savings is inhuman. I cannot understand why the Government have not gone further to help.
  1988
  The Liberal Party says that it wishes to help small savers. It appears that Liberal Members will either abstain or vote against the amendment. I can understand why the Liberals suffered such humiliation at Saffron Walden.
  Mr. Pardoe: We did not. Has not the hon. Gentleman noticed?
  Mr. Ridsdale: I read the letter in The Times from the Vice-President of the Liberal Party, who called it a humiliation.
  Be that as it may, this system of double taxation, almost triple taxation, for people who have spent all their lives working and people on very limited means, at a time of inflation, is very inhuman. I ask the Government to think seriously about it. If we are to encourage investment and saving, this is not the way to go about it. I am sure that the common sense of the people of this country will hold this, as well as many other things that the Government have done against them, as a reason for returning a Conservative Government at the next General Election.
  I congratulate my hon. Friend the Member for Braintree (Mr. Newton) on having proposed the amendment.
  10.0 p.m.
  Mr. Kenneth Warren: I rise also to support my hon. Friend the Member for Braintree (Mr. Newton) in the amendment, which was very ably moved. I want briefly to contribute some thoughts on the whole question of the attitude of this House and the Government to investment income. When one takes a decision on a Finance Bill, one thinks that one is taking it only for a year, but in fact one is affecting people's decisions, probably for their lifetime ahead, on the question whether or not they should save. It is not just those who are spending their savings today who experience this taxation but younger people who will have to consider how they will combat the possibilities of inflation in their retirement.
  I am sure that hon. Members on both sides of the House would subscribe to the idea that investment income ought to be available for people to enjoy in their retirement. One could advance a nice economic argument that it is part of

  1989
  the whole restraint, to stop people spending what they earn, and that it is a good idea to have that investment cycled through the economy to create new business enterprises and to sustain current enterprises, but I am extremely concerned that even the terms of these amendments show how shallow budgetary considerations frequently are. They are questions for today rather than problems that people face in a lifetime.
  If one looks at the experience of my hon. Friends the Members for Harwich (Mr. Ridsdale), Eastbourne (Mr. Gow) and Folkestone and Hythe (Mr. Costain), which they share with me as being representatives of constituencies on the coast in which a large proportion of the population are retired, one can appreciate that these clauses and amendments are of vital importance.
  After the years of their saving, they who served us in the front line and have now retired to these places find that not only are they in the front line in the inflation battle but they are also on the poverty line, with the increased erosion of their savings, increased fares, and so on. Not only are they on the poverty line; they have become isolated on islands on the perimeter of the British economy, where they are being shut away, neglected and left, until people speak out on their behalf.
  In the House we hear of the need to moderate pay claims, and that people such as coalface workers may claim £ 135 a week. Perhaps they deserve it, but they can deserve it only if they produce against that pay. If they do not do that, it is the pensioners who will pay for such a pay increase. That means that the consideration of their savings must be much more strongly in our minds.
  Lastly, I am delighted to hear investment income being talked about. It is usually called unearned income, but nothing could be further from the truth. We have been getting into Treasury folklore. I am sorry that the Financial Secretary is no longer present. I hope that he will not mind my criticising him in his absence for one phrase that he used in the debate on a previous amendment. He said that 1p off income tax costs £ 500 million. It does not cost £ 500 million. It means that a penny in someone's pocket is not in the Treasury's pouch. That is the way in which we
  1990
  ought to approach these problems—considering not how much it will cost the Government but how much it will save people.
  This is a serious amendment about the quality of life of people who can no longer save, and whose savings are being eroded in front of their eyes.
  Mr. Giles Shaw: I support what my hon. Friends have said about the amendment. I want to stress the problems of the age-retired in this regard. Many of us know full well that those who are now aged 70, 75 and more were not enabled, during their working life, to save for some kind of contributory pension or to take part in an orthodox pension scheme. To them the importance of what we are discussing is related not to investment income, but to survival income. From that point of view there should be a review of these rates.
  I know that there are age allowances, and so on, for retired persons. There should be a review of the whole system, whereby consideration should be given to the question of surcharge taxation. Quite apart from the equity of this case, a review is long overdue, bearing in mind the appalling effect of inflation on older persons.
  Sir G. Howe: I should like to underline very strongly the importance of the point made in a comprehensive speech by my hon. Friend the Member for Braintree (Mr. Newton), supported by my hon. Friends the Members for Harwich (Mr. Ridsdale), Hastings (Mr. Warren) and Pudsey (Mr. Shaw), and supported silently but vigorously by my hon. Friends the Members for Eastbourne (Mr. Gow) and Folkestone and Hythe (Mr. Costain), who have frequently spoken on this subject in the past.
  The central point of the case is that investment income surcharge is a tax which falls to a great extent on the elderly and the retired. It falls at a level of income which is much too low and at a rate which is much too high. It is unjust to them, it is damaging to the cause of savings and investment, and it should be abated and relieved as quickly and as far as possible.
  My hon. Friend the Member for Braintree in his Amendments Nos. 114 and 115 raised the curtain on a more sophisticated and interesting aspect of this

  1991
  argument —the extent to which it is right or wrong for the investment income of husband and wife, married and living together, to be added together so that they enjoy the benefit of only one allowance. I hope that he will forgive me if I do not follow him down that road.
  His argument raises a question which will be increasingly important in many aspects of our tax law. The income tax system was designed in an age when it bore only on high incomes at low rates, when married women spent a great part of their lives bearing children or looking after young children, when only a few of them went to work, and if they did they did not come within the bands which were subject to income tax.
  We are now living in the world of the working wife, the world of couples both of whom are at work, both of whom have savings and both of whom are accumulating investment income. We are only beginning to analyse the changes which may be necessary to adapt our structure of income tax to the changing world.
  The central point, as my hon. Friend the Member for Braintree said, under Amendment No. 108 is at the very least to increase the amount on which investment income surcharge is payable at a rate of 10 per cent. rather than 15 per cent., from £500 to £1,000, so that that surcharge falls on the band of income between £1,500 and £2,500 instead of on the narrower band.
  That is an excessively modest proposal. It effects those with modest investment incomes— between £ 40 and £ 50 a week. The tax is unjust in bearing upon people who for the most part are elderly and retired. Forty-two per cent. of the tax is extracted from pensioners, generally from those who have no other significant income. These people are living on the savings which they have accumulated during a lifetime and which they thought were adequate for the non-inflationary future in which they were going to retire. Those savings are hopelessly inadequate for the inflationary world in which they find themselves. Such pensioners are not by any means frequently blessed with inflation-proofed pensions. To tax them at a differentially high rate on incomes as modest as these is to do great injustice.
  1992
  It is not easy to defend this action in any kind of society.
  It is also more serious to sustain a tax at this level when one thinks of its impact upon savings and the whole attitude of society towards savings. When one reflects that the total yield of investment income surcharge is about £ 275 million and that the cost of the additional milk subsidy granted by the Chancellor last week is £ 110 million, it is surely worth asking whether that money would not be far more fruitfully spent in relieving the burden of taxation on savings and savings income than in spreading a subsidy thinly on one commodity.
  How crazy are we becoming when we regard it as creating a proper atmosphere for whatever the Government have in mind to introduce a subsidy on milk while cancelling subsidies on bread and cheese? Conjuring tricks of that kind have no impact. The same amount of money would go further towards relieving hardship if spent under our amendment. That would be a signal of a different approach to the kind of society we want.
  We have no use for a subsidy society. We have a great deal of use for a saving society. That is the direction in which the Government should disburse money if they can do it at all. I therefore invite my hon. Friends to support Amendment No. 108, which represents a modest step towards sanity and justice. If we went the whole way and restored the position established by the last Conservative Government, we should have to raise the threshold for investment income surcharge to £ 4,000 before it even started to be paid — and that would be merely tinkering with the most urgent problem, which should never have arisen and which the present Government have tolerated for too long, to their great discredit and shame.
  The Minister of State, Treasury (Mr. Denzil Davies): The hon. Member for Braintree (Mr. Newton), although he moved Amendment No. 114, spoke in the main to Amendment No. 108, which is the official Opposition amendment. Perhaps I may deal first with that amendment.
  The hon. Member based his case to some extent on the need to encourage savings. We would all agree on the importance of that. In fact, the ratio of

  1993
  savings over the last few years has been very high, for various reasons which no one really understands, but despite the high rate of tax, including the investment income surcharge, for which hon. Members constantly criticise us, and a high rate of inflation. For some odd reason, people have not converted their money into goods because of inflation; in fact, they have saved it. That might be perverse, but it has happened. Therefore, to link the amendment with the need to create savings and to say that because the surcharge is too high it has inhibited savings, is not true of the last few years.
  To listen to Conservative Members one would have thought that it was this Government who introduced that surcharge. I accept that they disagree about the levels, but they should remember that it was introduced in 1971 by Lord Barber. Previously, it was called the unearned income surcharge, but it was introduced by a Conservative Government.
  Sir G. Howe: The Minister cannot get away with that literal presentation of the matter. The last time that we discussed this matter in Committee we established clearly that the distinction between earned and unearned income was introduced by a Liberal Chancellor, McKenna, when income tax was at a standard rate of 10 per cent. When that system was replaced by Lord Barber in 1972, the name of the game was changed, but he produced a substantial reduction in the burden of taxation on unearned income, at a level which could be reproduced today only by raising the starting point to £4,000.
  10.15 p.m.
  Mr. Davies: The right hon. and learned Gentleman should not get excited. [HON. MEMBERS: "Withdraw."] They are all getting excited now. I was merely reciting a fact; there is nothing to withdraw. The investment income surcharge was introduced by Lord Barber. I remember pointing out from the Opposition Benches that it did not apply to discretionary trusts, and they changed the law quickly to make it apply to them. As the right hon. and learned Gentleman admitted, what Lord Barber did was to change the name of the process for taxing unearned income. That goes back to McKenna, Lloyd George and the Liberal Party at the beginning of this
  1994
  century, but the Conservative Party decided, when changing our tax system, to make a tax on unearned income, with some exemptions, and to call it the investment income surcharge.
  Inflation has affected savings and especially the income of those who do not have inflation-proofed pensions, or who have to live on what is correctly described as investment income. However, we have given these people certain relief in the Budget—though Opposition Members may dispute the level of the relief. We have increased the threshold to £1,500 for those under 65 and to £2,000 for those over 65. Opposition Members may say that that is not enough, but at least we have done that much.
  The hon. Member for Croydon, South (Mr. Clark) keeps muttering. If he has something to say, let him get up and say it.
  Mr. William Clark: The Minister of State claims to have increased the starting point for the tax, but when the Government came to office the level was higher than he is proposing.
  Mr. Davies: I accept that. All that I am saying is that we have increased the levels in the Budget to £1,500 and £2,000.
  In addition, the increased personal allowances benefit those who have to live on investment income in the same way as everyone else. Hon. Members on the Opposition Benches should not look only at the investment income surcharge. Those who are now shaking their heads do not understand how the tax system works. An increase in allowances naturally benefits people who receive income, whether it is investment income or so-called earned income.
  The reduction in the basic rate of income tax also benefits those with investment income. They pay the same basic rate as everyone else. All these measures have benefited those living on investment income. The cost, or, in deference to the hon. Member for Hastings (Mr. Warren), the reduction in the receipts of the central Government, involved in the amendment would be £ 11 million to £ 12 million. 1 expect that, in their present mood, that does not mean much to the Opposition and that they could easily vote it away, but the £ 11 million has to be balanced

  1995
  against other calls upon our expenditure and, bearing in mind the increase in the threshold and other tax changes, we felt that this was as far as we could go this year. That does not mean that we think that those on investment income do not suffer from inflation, and the level of the surcharge is kept under review.
  In Amendment No. 114, the hon. Member for Braintree seeks to equate an exemption with an allowance. Because there is a single person's and a married person's allowance, he wants allowances for both groups in respect of investment income. This is not the right way to deal with the matter. The married person's allowance benefits couples receiving investment income and recognises that married couples have greater expenses than single people. However, extending allowances in the way proposed in the amendment would not be the best way to proceed.
  There is also the question of disaggregation of investment income. It may be that we shall go down this road because of changes in our society. Who knows how society will develop? If we go along this road, however, we also have to consider the effect on capital transfer tax and capital gains tax. If there is to be disaggregation of investment income,

  Division No. 206]

  AYES

  [10.24 p.m.

  Adley, Robert

  Clark, Alan (Plymouth, Sutton)

  Gllmour, Rt Hon Sir Ian (Chesham)

  Aitken, Jonathan

  Clark, William (Croydon S)

  Gllmour, Sir John (East Fife)

  Alison, Michael

  Clarke, Kenneth (Rushclitle)

  Glyn, Dr Alan

  Arnold, Tom

  Clegg, Walter

  Goodhart, Philip

  Atkins, Rt Hon H. (Spelthorne)

  Cockcrott, John

  Goodhew, Victor

  Awdry, Daniel

  Cooke, Robert (Bristol W)

  Goodlad, Alastair

  Banks, Robert

  Cope,John

  Gorst, John

  Bennett, Sir Frederic (Torbey)

  Costaln, A. P.

  Gow, Ian (Eastbourne)

  Bennett, Dr Reginald (Fareham)

  Critchley, Julian

  Gower, Sir Raymond (Barry)

  Berry, Hon Anthony

  Crowder, F. P.

  Grant, Anthony (Harrow C)

  Bitten, John

  Dodsworth, Geoffrey

  Grist, Ian

  Biggs-Davison, John

  Drayson, Burnaby

  Grylls, Michael

  Blaker, Peter

  du Cann, Rt Hon Edward

  Hamilton, Michael (Salisbury)

  Body, Richard

  Durant, Tony

  Hampson, Dr Keith

  Boscawen, Hon Robert

  Dykes, Hugh

  Hannam, John

  Bottomley, Peter

  Eden, Rt Hon Sir John

  Harrison, Col Sir Norwood (Eye)

  Bowden, A. (Brighton, Kernptown)

  Edwards, Nicholas (Pembroke)

  Haselhurst, Alan

  Boy son, Dr Rhodes (Brent)

  Elliott, Sir William

  Hawkins, Paul

  Bralne, Sir Bernard

  Emery, Peter

  Hayhoe, Barney

  Brittan, Leon

  Eyre, Reginald

  Heseltine, Michael

  Brocklebank-Fowler, C.

  Fairbairn, Nicholas

  Hicks, Robert

  Brooke, Peter

  Farr, John

  Higgins, Terence L.

  Brotherton, Michael

  Fell, Anthony

  Hodgson, Robin

  Brown, Sir Edward (Bath)

  Flnsberg, Geoffrey

  Holland, Philip

  Bryan, Sir Paul

  Fisher, Sir Nigel

  Hordern, Peter

  Buck, Antony

  Fletcher, Alex (Edinburgh N)

  Howe, Rt Hon Sir Geoffrey

  Budgen, Nick

  Fletcher-Cooke, Charles

  Howell, David (Gufldford)

  Bulmer, Esmond

  Forman, Nigel

  Howe-H Ralph (North Norfolk)

  Burden, F. A.

  Fowler, Norman (Sutton C'f'd)

  Hunt, David (WIrral)

  Butler, Adam (Bosworth)

  Fox, Marcus

  Hunt, John (Bromley)

  Carlisle, Mark

  Fry, Peter

  Hurd, Douglas

  Chalker, Mrs Lynda

  Galbralth, Hon T. G. D.

  Hutchison, Michael Clark

  Channon, Paul

  Gardiner, George (Relgate)

  James, David

  Churchill, W. S.

  Gardner, Edward (S Fylde)

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

  there is no reason why capital transfer tax or capital gains tax should be exempt. If the amendment were approved, it would have considerable repercussions and consequences on our tax system. Amendment No. 114 was put forward tentatively. I do not think that we are ready to move along that road, if, indeed, we ever are.
  Nor can I recommend Amendment No. 108 to the House. I know that the Opposition feel strongly about it, but this year we have gone as far as we can in trying to help people in receipt of investment income and we cannot go further at the cost, in this case, of £11 million.
  Question put, That the amendment be made:—
  The House proceeded to a Division; but no Member being willing to act as Teller for the Ayes, Mr. DEPUTY SPEAKER declared that the Noes had it.
  Question accordingly negatived.
  Amendment proposed: No. 108, in page 12, line 40, leave out £500 'and insert £1,000'.—[Mr. David Howell.]
  Question put, That the amendment be made:—
  The House divided: Ayes 213, Noes 250.

  Johnson Smith, G. (E Grinstead)

  Montgomery, Fergus

  Shersby, Michael

  Jones, Arthur (Daventry)

  Moore, John (Croydon C)

  Silvester, Fred

  Jopllng, Michael

  More, Jasper (Ludlow)

  Sims, Roger

  Joseph, Rt Hon Sir Keith

  Morgan, Geraint

  Sinclair, Sir George

  Kaberry, Sir Donald

  Morgan-Giles, Rear-Admiral

  Smllh, Dudley (Warwick)

  Kellett-Bowman, Mrs Elaine

  Morris, Michael (Northampton S)

  Smith, Timothy John (Ashfleld)

  Kershaw, Anthony

  Morrison, Charles (Devizes)

  Speed, Keith

  Klmball, Marcus

  Mudd, David

  Spence, John

  King, Evelyn (South Dorset)

  Neave, Airey

  Splcer, Jim (W Dorset)

  Kitson, Sir Timothy

  Nelson, Anthony

  Spicer, Michael (S Worcester)

  Knox, David

  Neubert, Michael

  Sproat, lain

  Lamont, Norman

  Newton, Tony

  Stainton, Keith

  Latham, Michael (Melton)

  Normanton, Tom

  Stanley, John

  Lawson, Nigel

  Nott,John

  Stewart, Ian (Hltchln)

  Le Marchant, Spencer

  Onslow, Cranley

  Stokes, John

  Lester, Jim (Beeslon)

  Oppenhelm, Mrs Sally

  Stradling Thomas, J.

  Lewis, Kenneth (Rutland)

  Page, John (Harrow West)

  Taylor, R. (Croydon NW)

  Lloyd, Ian

  Page, Rt Hon R. Graham (Crosby)

  Tebblt, Norman

  Loveridge, John

  Page, Richard (Worklngton)

  Temple-Morris, Peter

  Luce, Richard

  Pattie, Geoffrey

  Thatcher, Rt Hon Margaret

  MacCormick, lain

  Price, David (Eastleigh)

  Thomas, Rt Hon P. (Hendon S)

  McCrlndle, Robert

  Prior, Rt Hon James

  van Straubenzee, W. R.

  Macfarlane, Neil

  Pym, Rt Hon Francis

  Vaughan, Dr Gerard

  MacGregor, John

  Ralhbone, Tim

  Viggers, Peter

  MacKay, Andrew James

  Rawlinson, Rt Hon Sir Peter

  Wakeham, John

  Macmlllan, Rt Hon M. (Famham)

  Rees, Peler (Dover & Deal)

  Walder, David (CIHtieroe)

  McNarr-Wllson, M. (Newbury)

  Rhodes James, R.

  Walker-Smith, Rt Hon Sir Derek

  McNair-Wilson, P. (New Forest)

  Rhys Williams, Sir Brandon

  Wall, Patrick

  Madel, David

  Ridley, Hon Nicholas

  Warren, Kenneth

  Marshall, Michael (Arundel)

  Ridsdale, Julian

  Weatherlll, Bernard

  Marten, Neil

  R if kind, Malcolm

  Wells, John

  Mates, Michael

  Roberts, Michael (Cardiff NW)

  Wood, Rt Hon Richard

  Malher, Carol

  Roberts, Wyn (Conway)

  Young, Sir G. (Ealing, Acton)

  Mayhew, Patrick

  Salnsbury, Tim

  Meyer, Sir Anthony

  Scott, Nicholas

  TELLERS FOR THE AYES:

  Miller, Hal (Bromsgrove)

  Scott-Hopkins, James

  Lord James Douglas-Hamilton and

  Miscampbeil, Norman

  Shaw, Giles (Pudsey)

  Mr. Peter Morrison.

  Mitchell, David (Basingstoke)

  Shelton, William (Streatham)

  Moate, Roger

  Shepherd, Colin

  NOES

  Abse, Leo

  Cryer, Bob

  Grant, John (Islington C)

  Anderson, Donald

  Cunningham, G. (Islington S)

  Grimond, Rt Hon J.

  Archer, Rt Hon Peter

  Cunningham, Dr J. (Whiten)

  Grocott, Bruce

  Armstrong, Ernest

  Davidson, Arthur

  Hardy, Peter

  Ashton, Joe

  Davies, Bryan (Enfleld N)

  Harper, Joseph

  Atkins, Ronald (Preston N)

  Davles, Denzil (Llanelll)

  Harrison, Rt Hon Walter

  Atkinson, Norman

  Davies, llor (Gower)

  Hart, Rt Hon Judith

  Bagier, Gordon A. T.

  Davis, Clinton (Hackney C)

  Hattersley, Rt Hon Roy

  Barnett, Guy (Greenwich)

  Deakins, Eric

  Hatton, Frank

  Barnett, Rt Hon Joel (Heywood)

  Dean, Joseph (Leeds West)

  Hayman, Mrs. Helene

  Bean, R. E.

  Dell, Rt Hon Edmund

  Healey, Rt Hon Denis

  Beith, A. J.

  Dormand, J. D.

  Heifer, Eric S.

  Benn, Rt Hon Anthony Wedgwood

  Douglas-Mann, Bruce

  Hooley, Frank

  Bennett, Andrew (Stockport N)

  Duffy, A. E. P.

  Hooson, Emlyn

  Bidwell, Sydney

  Dunwoody, Mrs Gwyneth

  Moram, John

  Bishop, Rt Hon Edward

  Eadie, Alex

  Howells, Geraint (Cardigan)

  Blenklnsop, Arthur

  Edge, Geoff

  Hoyle, Doug (Nelson)

  Boardman, H.

  Edwards, Robert (Wolv SE)

  Hughes, Rt Hon C. (Anglesey)

  Booth, Rt Hon Albert

  Ellis, John (Brigg & Scun)

  Hughes, Robert (Aberdeen N)

  Boothroyd, Miss Betty

  Ellis, Tom (Wrexham)

  Hughes, Roy (Newport)

  Bottomley, Rt Hon Arthur

  English, Michael

  Hunter, Adam

  Brown, Hugh D. (Provan)

  Ennals, David

  Irving, Rt Hon S. (Dartford)

  Brown, Robert C. (Newcastle W)

  Evans, Fred (Caerphllly)

  Jackson, Colin (Brighouse)

  Brown, Ronald (Hackney S)

  Evans, loan (Aberdare)

  Jackson, Miss Margaret (Lincoln)

  Callaghan, Rt Hon J. (Cardiff SE)

  Evans, John (Newton)

  Janner, Greville

  Callaghan, Jim (Mlddleton & P)

  Faulds, Andrew

  Jay, Rt Hon Douglas

  Campbell, Ian

  Fernyhough, Rt Hon E.

  Jenkins, Hugh (Putney)

  Canavan, Dennis

  Fitch, Alan (Wlgan)

  John, Brynmor

  Cant, R. B.

  Flannery, Martin

  Johnson, James (Hull West)

  Carter-Jones, Lewis

  Fletcher, Ted (Darlington)

  Johnson, Walter (Derby S)

  Cartwrlght, John

  Foot, Rt Hon Michael

  Johnston, Russell (Inverness)

  Clemitson, Ivor

  Forrester, John

  Jones, Alec (Rhondda)

  Cocks, Rt Hon Michael

  Fowler, Gerald (The Wrekin)

  Jones, Dan (Burnley)

  Cohen, Stanley

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

  Kaufman, Gerald

  Coleman, Donald

  Freeson, Reginald

  Kelley, Richard

  Concannon, J. D.

  Freud, Clement

  Kllroy-Sllk, Robert

  Conlan, Bernard

  Garret!, John (Norwich S)

  Klnnock, Nell

  Cook, Robin F. (Edln C)

  George, Bruce

  Lamborn, Harry

  Corbett, Robin

  Gilbert, Dr John

  Lamond, James

  Cowans, Harry

  Ginsburg, David

  Latham, Arlhur (Paddington)

  Cox, Thomas (Tooting)

  Gould, Bryan

  Leadbltter, Ted

  Crawshaw, Richard

  Gourlay, Harry

  Lestor, Miss Joan (Eton & Slough)

  Cronln, John

  Graham, Ted

  Lewis, Ron (Carlisle)

  Crowther, Stan (Rotherham)

  Grant, George (Morpeth)

  Lipton, Marcus

  1998

  1999

  Lamas, Kenneth

  Pardoe, John

  Strauss, Rt Hon G. R.

  Loyden, Eddie

  Park, George

  Summefskill, Hon Dr Shirley

  Luard, Evan

  Parker, John

  Taylor, Mrs Ann (Bolton W)

  Lyon, Alexander (York)

  Paviti, Laurie

  Thomas, Jeffrey (Abertillery)

  Lyons, Edward (Bradford W)

  Perry, Ernest

  Thomas, Mike (Newcastle E)

  McDonald, Or Oonagh

  Prescott, John

  Thomas, Ron (Bristol NW)

  McElhone, Frank

  Price, C. (Lewisham W)

  Ttvorne, Stan (Preston South)

  MacFarquhar, Roderick

  Radice, Giles

  Tiemey, Sydney

  McQuire, Michael (Ince)

  Rees, Rt Hon Merlyn (Leeds S)

  Tinn, James

  MacKenzie, R! Hon Gregor

  Richardson, Miss Jo

  Tomlinson, John

  Maclennan, Robert

  Roberts, Albert (Normanton)

  Torney, Tom

  McMillan, Tom (Glasgow C)

  Roberts, Gwilym (Cannock)

  Urwin, T. W.

  McNamara, Kevin

  Robinson, Geoffrey

  Varley, Rt Hon Eric G.

  Madden. Max

  Roderick, Caerwyn

  Wainwright, Edwin (Dearne V)

  Magee, Bryan

  Rodgers, George (Chorley)

  Wainwright, Richard (Colne V)

  Mahon, Simon

  Rodgers, Rt Hon William (Stockton)

  Ward, Michael

  Mallalieu, J. p. W.

  Rooker, J. W.

  Watkins, David

  Marks, Kenneth

  Rose, Paul B.

  Watkinson, John

  Marshall, Jim (Leicester S)

  Ross, Stephen (Isle of Wight)

  Weetch, Ken

  Maynard, Miss Joan

  Rowlands, Ted

  WeUzman, David

  Mendelson, John

  Ryman, John

  Wellbeloved, James

  Mikardo, Ian

  Sedgemore, Brian

  White, Frank R. (Bury)

  Miller, Dr M. S. (E Kilbride)

  Selby, Harry

  White, James (Pollock)

  Mitchell, R. C. (Solon, lichen)

  Shaw, Arnold (llford South)

  Whitehead, Phillip

  Molloy, William

  Sheldon, Rt Hon Robert

  Whitlock, William

  Moonman, Eric

  Shore, Rt Hon Peter

  Wigley, Dafydd

  Morris, Alfred (Wythenshawe)

  Silkin, Rt Hon John (Deptford)

  Williams, Rt Hon Alan (Swansea W)

  Morris, Charles R. (Openshaw)

  Silkin, Rt Hon S. C. (Dulwich)

  Williams, Alan Lee (Hornch'ch)

  Moyle, Roland

  Slllars, James

  Williams, Rt Hon Shirley (Hertford)

  Mulley, Rt Hon Frederick

  Stlverman, Julius

  Wilson, Rt Hon Sir Harold (Huyton)

  Murray, Rt Hon Ronald King

  Skinner, Dennis

  Wilson, William (Coventry SE)

  Newens, Stanley

  Smith, John (N Lanarkshire)

  Wise, Mrs Audrey

  Noble, Mike

  Snape, Peter

  Woodall, Alec

  Oakes, Gordon

  Spearing, Nigel

  Woof, Robert

  Ogden, Eric

  Sprlggs, Leslie

  Wrigglesworth, Ian

  O'Halloran, Michael Orbach, Maurice

  Stallard, A. W.

  Young, David (Bolton E)

  Orbach, Maurice

  Steel, Rt Hon David

  Orme, Rt Hon Stanley

  Stewart, Rt Hon M. (Fulham)

  TELLERS FOR THE NOES:

  Ovenden, John

  Stoddart, David

  Mr. James Hamilton and

  Owen, Rt Hon Dr David

  Stotl, Roger

  Mr. Alf Bates.

  Palmer, Arthur

  Strang, Gavin

  Question accordingly negatived.

New Clause 83

  CAPITAL GAINS: UNIT TRUSTS, ETC.
  '(1) In relation to gains accruing on disposals after 5th April 1977 section 112 of the Finance Act 1972 (reduction of tax liability on certain disposals of shares in unit trusts, investment trusts and funds in court) shall have effect as if for the references in paragraphs (b) and (c) of subsection (3) to 17½ per cent. there were substituted references to 17 per cent.
  (2) Section 113 of that Act (reduced rate of capital gains tax for certain unit trusts and funds in court) shall have effect for the year 1977– 78 and subsequent years of assessment as if the rate specified in it were; per cent. instead of 17½ per cent.'.—[Mr. Joel Barnett.]
  Brought up, read the First and Second time, and added to the Bill.

New Clause 22

  SUB-CONTRACTORS (EXEMPTION)
  'Section 69(2) of the Finance (No. 2) Act 1975 shall have effect and be deemed always to have had effect with the addition of the following words at the end of paragraph (b)that is to say—
  "Provided that for the purposes of this Chapter a person whose trade is the supply and fixing of floor coverings, furniture, fittings and chattels of any description whatsoever shall not be a sub-contractor."'.—[Mr. Ridley.]
  Brought up, and read the First tune.
  Mr. Ridley: I beg to move, That the clause be read a Second time.
  Mr. Deputy Speaker (Sir Myer Galpern): With this new clause, we may consider the following:
  New Clause 23—Sub-contractors.
  New Clause 24—Sub-contractors in the building industry.
  New Clause 25—Sub-contractor, exemption.
  Mr. Ridley: I propose to take immediately, with New Clause 22, New Clause 25. Then I shall discuss New Clauses 23 and 24 as a second subject.
  It is only right that we should return to the vexed subject of sub-contractors in the building industry, if only for the reason that the Government have still not done anything about them. They at least seem to acknowledge that this matter
  2002
  is of paramount importance by so ordering the procedure of the House on Report to take new clauses on sub-contractors in the construction industry as a special category, for some reason, between Clauses 17 and 18.
  We congratulate the Financial Secretary on his having at least recognised the importance of this subject, but he has still not understood the damage that his legislation on sub-contractors is doing. Therefore I make no apology for raising the matter again.
  There are two matters which need to be raised about the scope of the sub-contractors legislation. When we were first discussing this legislation in Committee, Section 69 (3) (a) of the Finance (No. 2) Act 1975 said that it was to apply to
  "any person carrying on a business which includes construction operations".
  That was the definition of the extent of this iniquitous legislation.
  My hon. Friend the Member for St. Ives (Mr. Nott) was sufficiently percipient at the time to realise that that was a rather wide definition.
  "Any person carrying on a business which includes construction operations"
  could be almost anyone. The Financial Secretary himself, presumably, has added a bow window to his house or possibly put a little plastic gnome in his garden. Both would technically be a construction operation.
  Therefore, in Committee on 3rd July 1975 my hon. Friend the Member for St. Ives asked what this definition meant. The Financial Secretary said:
  "Subsection (3) treats the definition of the contractor for the purposes of the subsection as anybody whose business includes construction work. That, of course, includes various public bodies. The 'business' part must include construction operations, but that does not imply— where the business is not construction— cases where an individual or an organisation carries out some small alterations himself or itself."
  The right hon. Gentleman went on to say:
  "A person has got to be in the business of construction operation."—[Official Report, Standing Committee H, 23rd July 1975; &c. 876–7.]
  My hon. Friends in that Committee perhaps unwisely accepted the Financial Secretary's word that it was limited to construction operations—that is, companies carrying out construction. The first group that the Revenue pulled into

  2003
  the net was those who supply floor coverings, furniture, fittings and chattels of any description in the building industry, yet they are not builders in the sense that they hew, plaster and build. They are the people who come with manufactured products that they have made and who install them. By no sense of the imagination could those people be called people who are in the business of "construction operations", yet I have met a number of cases in which firms which supply and install this sort of goods have been asked for 714 certificates before being paid for the contract which they entered into with the main contractor. New Clause 22 therefore deals with their case.
  We want a clear, definitive statement that the Financial Secretary is sticking to the words that he used in Committee on 3rd July 1975. We want his agreement that these people are not within the scope of the legislation. Were he to deny this, he would be going back on his words. I know that Opposition Members are supposed to be naive and gullible, and when a Minister in this Government tells us something we have the weakness of tending to accept his word. That was the mistake we made in 1975. We believed the Financial Secretary.
  Now, the Revenue is busy bringing these people into the net, and we would like to have it out with the right hon. Gentleman. In 1975 he said what I have quoted, and then he authorised the Revenue to include all these people who make carpets, door handles and other things, thus allowing them to be persecuted over 714 certificates.
  I wish to deal next with New Clause 25. Here we are dealing with a much more major issue, although it is not more important in the sense that it involves ordinary working people, for whom the Opposition show real concern. I see that the hon. Member for Birmingham, Perry Barr (Mr. Rooker) is laughing. He should not laugh at ordinary working people. Ordinary working people are part of the mythology of the Labour Party, and it ill behoves the hon. Gentleman to start poking fun at the working people for whom the Opposition are always concerned.
  New Clause 25 is concerned with the gross dereliction from the undertaking
  2004
  that the Financial Secretary gave in that famous Committee stage in 1975. By no sense could those who work in the North Sea in the oil and gas extraction industry be classified as being in the business of construction operations. There is no way that the words "construction operations" could be applied to people who are extracting oil and bringing it ashore from North Sea fields. Yet I am told authoritatively that oil companies have been classified as contractors for the purposes of Section 69.
  Incidentally, I believe that there is a misprint in New Clause 25. The last word should be "contractor", not "subcontractor". But that does not destroy the point that these contractors have been asked to deduct 35 per cent. — now 34 per cent. due to the magnificent munificence of the Government—from payment to those whom they employ for a whole manner of services rendered from welding to diving and other tasks which I do not understand technically but are performed in the extraction of gas and oil.
  10.45 p.m.
  I am sure that if that famous hero who saved the coasts of this country from pollution by stopping up the Norwegian well which became a gusher— Mr. Red Adair— had been on the other side of the median line, he would have been classified as a labour-only sub-contractor and would have had 34 per cent. deducted from his fee. I am not sure that he would have come had he known that that was the name of the game. The miracle was that the gusher was on the other side of the median line in Norwegian, not British, tax jurisdiction. This new clause is designed to let Red Adair have the money that he has contracted to get and not let the Treasury get its hands on it before he has established his right to it as a non-British taxpayer.
  Is it true that sub-contractors working for North Sea oil companies have been classified by the Revenue as people to whom the 714 legislation applies? Have they been forced, rightly or wrongly, to conform with the 35 per cent. deduction in the past, now 34 per cent., and, if so, why? I suggest that in no sense could they be described as being engaged in construction operations. The Financial Secretary knows that. This is a point of personal honour for him, because he gave

  2005
  the assurance in Committee to my hon. Friend the Member for St. Ives that he was thinking of people whose business comprised construction operations, not people who, by a side wind or as some extra part of their activities, engaged in construction operations. We want a convincing answer on that matter before being prepared to leave it.
  The second part of the debate must concern the procedure for those who genuninely are required to obtain certificates under the legislation. I am talking about genuine labour-only sub-contractors in the building industry, not in the furniture or oil industries. These people have been put into the most impossible state because, having been told with legislative authority that they must have certificates and that they would get certificates, the certificates have not been made available.
  In many cases letters have been issued to successful applicants which the Revenue has asked them to take as surety for having no deductions made from their gross emoluments. That is, to say the least, illegal, because the legislation states that any contractor who pays a subcontractor gross when that sub-contractor is not in possession of a certificate is committing an offence. We have only the Revenue's say-so for the fact that such people will not be prosecuted. That was a slipshod piece of administration for which the Government should apologise to the House and to the sub-contractors concerned.
  Still the certificates are not to hand. Still there is an endless queue of people waiting for their certificates. A Mr. Scaffell was told that he would get his certificate, but it never came. He then received a letter from the Revenue, which authorised him to carry on in business without deduction until 5th July 1977. On 11th July he wrote to his inspector stating that he still had not had a certificate although he was allegedly authorised and that his letter of authorisation had already run out.
  How can the scheme be administered so badly? How is it that these people, who do not have recourse to high-powered legal and accountancy advice, can be treated as the Revenue has been treating them? Either they are eligible for a certificate or they are not, in which case they should not be told that they will get one.
  2006
  That is the sort of abuse that the Government, in their lax way, have heaped upon the indecency of the whole scheme. New Clause 23 is designed to ensure that if no certificate is received within 30 days it shall be deemed that the sub-contractor is authorised to trade without deduction— it is not at all a bad idea— in order to smarten up the Revenue's administration.
  One of the worse defects in the scheme lies in appeals. New Clause 24 seeks to remove the inability of the commissioners to hear appeals where the ground for refusal of a certificate is that the applicant's tax history is inadequate. That is what the Financial Secretary calls the concent of the good taxpayer, which he has personally, and on his own authority, introduced into our law and into our practice. It is the idea that if a man is not a good taxpayer certain fundamental rights can be denied to him and certain penalties heaped upon him.
  These appalling and autocratic powers are administered by the tax inspectors without appeal. A person who has not received his certificate has no way that he can appeal except to the commissioners, and the commissioners are debarred from hearing the case if the inspector so much as hints that the reason for refusal is that the tax history is not entirely satisfactory.
  The clause seeks to give the commissioners the power to cross-examine the tax inspector on the reason for the tax history being found to be unsatisfactory and to find that maybe the inspector has been unfair or harsh and that his ground for saying that the tax history of an applicant is not satisfactory can be faulted, which is not the case at present. That would remedy the worst part of the blemish against human rights that is contained in this legislation.
  Surely the least that the right hon. Gentleman can do is to accept the principle of the clause. It may not be perfectly drafted. I have never claimed that anything I have ever drafted is perfect, except when I have drafted to leave out whole clauses. That is when my drafting is at its best. However, I am not having the argument from the right hon. Gentleman that the drafting of any of the clauses is inadequate. These are serious grievances that are felt by the citizenry about the Government's taxation legislation.

  2007
  The opportunity for the grievances to be put right is on Report.
  Each one of the points that I have put forward is valid, having come to the notice of myself and my right hon. and hon. Friends. It is up to the Government to respond to each one. I should not be against advising my hon. Friends to vote for all four of the new clauses, but it may be that in order to save time it will be better to choose the clause to which the Financial Secretary responds least satisfactorily and to vote upon that. 1 assure him that we shall not leave this issue without a vote unless he is prepared to concede the points that I have just made.
  Mr. Graham Page: I hope that the Government will accept New Clause 22, which clears up a difficult issue. It concerns those who are not commonly known as contractors, those who do not carry out constructional operations but attend to provide a supplement to a building, such as floor covering and the installation of manufactured articles after the house, factory or office has been built.
  This is not a fanciful point. I understand that it has been decided by the Inland Revenue that covering a floor with a carpet, linoleum tiles or whatever it might be is a constructional operation and attracts the need for a 714 certificate if the work is carried out by a subcontractor. All that we are asking for in the clause is to clear up the situation. I am sure that what has happened was never intended when the schedule to the Finance (No. 2) Act 1975 was drafted.
  Even more important is New Clause 24. It came as a great shock to most of us that there had crept into Section 70(6) of the 1975 Act the exclusion of any appeal from this quasi-judicial act of the inspector. Inspectors were deciding how these conditions should be applied. They were deciding how, in any particular circumstance, the conditions should be construed and whether the poor unfortunate sub-contractor should be deprived of his certificate if they thought that a condition had been breached.
  We raised this matter in a previous debate on this subject, and it appeared from cases that were cited that even the inspectors of taxes themselves thought that there was a right of appeal. They
  2008
  had encouraged some taxpayers to appeal when there was no appeal available to them under the Act. If it was thought by the inspectors to be right that the taxpayer should have a right of appeal but it was found that for some reason the Act excluded that right, let us remedy that defect now.
  I wonder whether there is any provision in any other legislation of this sort by which the taxpayer has no right of appeal from an administrative decision by someone at the level of inspector of taxes. It is an administrative decision, but it is a quasi-judicial decision and there should be a right of appeal. I hope that the Government will be prepared to put the matter right by accepting New Clause 24.
  Mr. Ian Gow: Constantly when we have debates on economic policy the Chancellor of the Exchequer tells us that he is legislating for what he describes as ordinary working people. Those words fall readily from the Chancellor's lips. Yet when we come to examine some of the legislation that is brought before the House by the Treasury Bench we find that it operates in the most vicious way against precisely the people of whom the right hon. Gentleman claims to be the champion. That is why it falls tonight, as it often has in the past, to my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) to be the champion of ordinary working people. We have come to learn that it is my hon. Friend who is proving that it is the Tory Party that is the people's party— the party of the masses.
  We have seen all the way through this 714 legislation that there is a vicious, cruel result which falls upon the small sub-contractor in the building industry. These clauses seek to redress some of the worst injustices of the 1975 (No. 2) Act. One of the most disquieting features of this legislation, which the clauses go some way to alleviate, is the way in which, when a Member of the House appeals to the Treasury on behalf of a constituent and points out the evils that flow from this legislation, it is possible to have the damage put right. But what about constituents who do not approach their Member of Parliament?
  11.0 p.m.
  I want to give three examples to the House. A constituent of mine was refused

  2009
  a 714 certificate because he had grown a moustache. That absurdity was drawn to the attention of the Minister and, to his credit, it was put right. There was another appalling occasion when a constituent who had been unemployed for six months in the two years before he applied for a certificate was denied it because of his misfortune. Since 28th February 1974 many sub-contractors in the building industry have suffered that misfortune. Under the 1975 Act, an applicant who has suffered this misfortune is to be denied a certificate. I pay tribute to the Financial Secretary, who rightly decided that it was wrong and directed the inspector of taxes to issue the certificate which he had previously refused to issue.
  Mr. John Ryman: I have only just come into the Chamber. Can the hon. Member explain the relevance of a moustache to this matter?
  Mr. Gow: I shall not be drawn by that question. I shall explain to the hon. Member later. We want to get on with the debate.
  Another of my constituents, a small builder, recently purchased from the Tory-controlled Eastbourne Council the council house in which he was living. He applied for a 714 certificate and it was refused. He wrote to me. I received a letter in response to one which I wrote to the inspector of taxes. It was dated 4th July and it stated:
  "I am prepared to immediately consider his current records which should presumably run from March 1977 and if these show that having been advised of his deficiencies in this direction in the past, he has now completely remedied the situation, I shall be only too pleased to look into the possibility of a new style certificate."
  If it had not been for a letter from a Member of Parliament to the inspector of taxes pointing out that the man's case should be reconsidered, he would have been precluded from taking up employment.
  First, the Financial Secretary should accept the clauses. Secondly, he must issue new instructions to inspectors of taxes so that not only do those who ask their MPs to take up their cases receive justice but that the right to work is given to the thousands who have been denied certificates.
  The Financial Secretary stonewalls the subject every time it is raised, because he
  2010
  has been given a Treasury brief. Perhaps I can commend to him a high and rare political virtue. He should be prepared to say that the Government's drafting of the 1975 Act was grievously wrong. The Government should have the courage to come here and adopt the philosophy of my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), because they have sinned and they should put it right.
  Mr. David MitchellWe are talking about an industry in which there are always firms going bust and new firms starting. That is the way of life among small businesses. It is true that today many more small businesses in the building industry are going bust under the pressures of less construction work, more activity by direct labour departments, shortage of finance, the problems of employment protection and all the other things, of which my hon. Friends are only too painfully aware, which press on the small business. As a result of the pattern of life in the small business world and the building industry, in which people go bust and different firms start, that is the way of things I hope that the Financial Secretary will accept that this pattern exists.
  What is happening today is that businesses are going bust but others are not starting. That is one reason why the unemployment figures are going up and up. Whether or not they will reach 2 million is something about which Ministers, one understands, are guessing. The new jobs that start in the construction industry are jobs where very often someone is starting in business for the first time and does not, therefore, have the track record which he is required to have in order to obtain a 714 certificate. But without the certificate, effectively he cannot start. It is a chicken-and-egg argument.
  I have here a letter from a constituent of mine who lives near Highclere. He is a building contractor whose son has just started up in business. He wants to start a business making a particular form of concrete product. He tells me that everything seems to be in order to start and that his son has applied for his income tax exemption certificate from the Inland Revenue, as that is necessary because he will be selling to building contractors as well as to private individuals.

  2011
  The son wrote on 25th April this year seeking his certificate so that he could start the business. He did not get a reply until 6th July. I do not know how anyone, after gathering together and laying out the money required to start a business, can be expected to sit and wait from April to July before he gets his licence to work. But then what comes?
  He is told "I am sorry, you cannot have a licence to work because you have no track record."
  That is just not good enough. We have a situation in which unemployment is rising because of the natural death of some businesses, and there is the man sitting on the Government Front Bench who is preventing the birth of new businesses. His hon. Friends below the Gangway are worried about the level of unemployment rising, as are Opposition Members. I ask him to accept the new clause so that he can help to save at least some of these firms.
  I give one other example. As a direct result of what the Financial Secretary has been doing and the way in which he has been enforcing the legislation, another person, who is not a constituent of mine and who must remain nameless, has decided that, instead of setting up a proper business and doing things in the way in which he should, he will go moonlighting and pay no tax at all. He is moonlighting in the private sector where no certificate is involved.
  The Financial Secretary has stopped up one hole, opened others and made some people into crooks. That is a stupid way in which to behave.
  Mr. Robert Sheldon: We return again to the question of 714 certificates. I note the interest in the House about this matter. During the period over which we have discussed these problems, I have attempted to show the way in which people have been successfully coming forward to obtain certificates. Despite the excessive gloom that usually accompanies these debates, I have to record that the figures have been increasing in the way that was expected and stated by myself over the past months.
  These are the latest figures. Out of 344,000 applications received, 281,000 have now been approved. The hon. Member for Cirencester and Tewkesbury (Mr.
  2012
  Ridley) did not expect anything like that. He will recall his extreme opposition on this problem and describing it as one of the greatest administrative disasters to have befallen the present Government. However, he must accept that these figures are nothing like the situation he foresaw only a few months ago.
  We are, however, faced with dealing with those who have been refused, perhaps because they have decided not to put their tax affairs in order in the way that I indicated, because their returns are still outstanding and awaiting such changes of attitude as may be required on their part, or because technical details are yet to be cleared up.
  The large number of people who now have certificates and are working happily is an illustration of the way in which we have succeeded in overcoming some of the problems that the previous Government attempted but failed to deal with and which this Government have attempted to put right.
  The new clauses view these matters from a fresh angle. New Clause 22 seeks to remove certain operations from the tax deduction scheme. It concerns finishing operations. I do not say that the way in which the legislation is set out and the categories of work which are subject to the tax deduction scheme should remain unchanged for all time.
  I note the point of the right hon. Member for Crosby (Mr. Page). After the scheme has had time to prove itself, we shall want to consider whether those categories should be retained for the indefinite future. As regards finishing operations, the same position existed under the 1971 scheme. The wording was imported from that scheme. Perhaps the hon. Member for Cirencester and Tewkesbury violently disagreed with his Government on that occasion, but I cannot recall his having made then the case he made today.
  Mr. Ridley: Why did the right hon. Gentleman tell the Standing Committee in July 1975 that the scheme was to apply only to persons involved in construction operations? I am asking him to stick to his assurance, but he cannot do that and persist in the argument he is advancing.
  Mr. Sheldon: Construction operations in this scheme cover the whole range

  2013
  dealt with by the previous Conservative Government. The wording in the new legislation was imported from the Conservative measure.
  Mr. Graham Page: It is the recent interpretation of "construction operations" that we complain about. When those measures were introduced, it was not contemplated that people who lay floors, for example, would be included.
  Mr. Sheldon: The categories of work now in the scheme should not be regarded as being there for all time. When the scheme has been operating for a long time, we can see whether some categories might be removed from it.
  New Clause 25 deals with North Sea divers. The problems that the hon. Member for Cirencester and Tewkesbury foresees do not apply. The drilling for or extraction of oil or natural gas is already excluded from the deduction scheme under Schedule 13 to the Finance (No. 2) Act 1975.
  New Clause 24 seeks to allow the appeal Commissioners to overrule the inspector where there is a difference of view. Perhaps I can outline the facts again, since the House may have overlooked them with the passage of time. When someone applies for a 714 certifi-cate—
  11.15 p.m.
  Mr. Ridley: The Oil Taxation Office has claimed that all the companies working in the North Sea are caught, and they have accepted that. Is the Minister now saying that he will tell the tax office— the name of the tax inspector is Hennessey, at City 12— that he was wrong to include the oil companies and that they are excluded from the legislation? That will make a great difference to the work of the Revenue. The Minister seems to have been wrongly briefed, because the companies are being included in the legislation at present. I have given him the reference. Will he now undertake that he will stick to what he has said?
  Mr. Sheldon: Under Schedule 13 to the Finance (No. 2) Act 1975, the drilling for and extraction of oil and natural gas are already excluded from the deduction system. If the hon. Gentleman has in mind any particular case which he would
  2014
  like me to go into further, I shall be happy to do so.
  If someone applying for a 714 certificate satisfies the conditions, the certificate is granted. If his tax performance over the previous three years has not been satisfactory, that condition may be disregarded by the inspector of taxes, in which case the certificate will be granted. If the application is not in order and the certificate is not given, the applicant may appeal to the general commissioners. If they agree with the Revenue the appeal will be rejected, and if they disagree the certificate will be granted.
  New Clause 24 is an attempt to allow the appeal commissioners completely to overrule the inspector on a question of discretion, to give them the discretion to overlook a failure to carry out a basic tax obligation. That would cause inconsistency. The commissioners are lay people, and allowing them to forgive wrongs and grant a certificate would lead to an inconsistency of decision which we are able to avoid in the case of the discretion given to the tax inspector. This suggestion is not the way to proceed.
  Mr. Graham Page: I cannot see how the proviso at the end of Section 70 (6) can be interpreted as the Minister says. If there is a dispute about whether a condition has been satisfied, under that wording the general commissioners, or the special commissioners, are excluded from considering whether, as a fact and not as a discretion, that condition has been satisfied.
  Mr. Sheldon: If the commissioners disagree with the Inland Revenue on questions of fact, they are entitled to put their view and the appeal may go in favour of the applicant. We are talking about the inspector's discretion when it is agreed that a person has done something wrong. We could not allow the procedure suggested in the new clause to be put into effect.
  Mr. David Mitchell: What will be the situation of the man who is at fault because he has not been in business before?
  Mr. Sheldon: A person does not need to have been in business before, otherwise the argument would be circular—he had not been in business before and, therefore, he could not go into business. As long as a man has a tax record, whether

  2015
  as an employee or as self-employed in another area, that is enough for the tax inspector to provide him with a certificate.
  The requirement that the contractor should inspect the certificate is basic to the operation of the scheme. New Clause 23 requires the contractor only to get verification from the tax inspector. That would wreck the scheme. It suggests that the contractor should write to the tax inspector asking him to verify that the certificate held by a person is in order. A great deal of checking would have to be done, and the requirement for letters to be dealt with within 30 days places the whole burden on the tax inspector. It would bring to the system the chaos that the hon. Member for Cirencester and Tewkesbury has always claimed would result from it.
  I agree with what the hon. Member for Basingstoke (Mr. Mitchell) said about the self-employed. It is no part of this scheme to diminish their ability to carry on with their work. The figures I have quoted show that large numbers of them have obtained certificates and are doing their work as well as ever. No self-employed person would say that his operations depend on the possibility of being able to avoid the tax that so many others rightly pay. Those who say that should not be defended by the sort of legislation to which the Opposition's proposals would give rise.
  Mr. Ridley: With the leave of the House, may I reply briefly to the debate? A packed and tense House has been attending on the Financial Secretary's every word because feelings are running high, as the size of the audience at this hour on a Thursday night will demonstrate.
  The Financial Secretary dismissed as unimportant the fact that 50,000 people had been put out of work by the operation of these certificates. He claimed the fact that 344,000 had applied for them as a justification when 50,000 people have been refused and are presumably now on the dole queue.
  An important concession has been obtained. The right hon. Gentleman admitted that he has been forcing the oil
  2016
  industry to operate the scheme when it is excluded for the legislation. I intend to inform the oil industry that it can rely upon the right hon. Gentleman's word and stop operating the scheme. I can quote chapter and verse of what the Financial Secretary said. This is of great importance for the development of North Sea resources, and we are grateful to the right hon. Gentleman for admitting that the Inland Revenue has been operating the scheme illegally in the North Sea.
  The important point was the one pressed by my right hon. Friend the Member for Crosby (Mr. Page)— the question of appeal. The Financial Secretary told us that it would be quite wrong to allow the tax inspector's discretion to be over-ruled by the commissioners and that the giving of such power to the commissioners could not be contemplated. But what on earth are the commissioners for if they are not needed to fight for the taxpayer when the tax inspector makes allegations against him? That is at the heart and nature of the functions of the commissioners. The right hon. Gentleman has admitted that he is denying that very appeal to an impartial authority which goes right throughout the taxation which the individual suffers. For that reason, I invite my right hon. Friends to support New Clause 24.
  On New Clause 22, I beg to ask leave to withdraw the motion.
  Motion and clause, by leave, withdrawn.

New Clause 24

  SUB-CONTRACTORS IN THE BUILDING INDUSTRY
  'The power of the General or Special Commissioners hearing an appeal under subsection (6) of section 70 of the Finance (No. 2) Act 1975 shall include power to review a decision of the Board regarding the treatment of any condition as being satisfied, and accordingly the words in the said subsection "other than a decision that an individual, a company, or a firm is or is not to be treated as satisfying a condition set out in any part of Schedule 12 to this Act." shall be omitted.'.—[Mr. Ridley.]
  Brought up, and read for the First time.
  Motion made, That the clause be read a Second time.—[Mr. Ridley.]
  Question put, That the clause be read a Second time—

  Division No. 207]

  AYES

  (11.26 p.m.

  Adley, Robert

  Gorst, John

  Newton, Tony

  Aitken, Jonathan

  Gow, Ian (Eastbourne)

  Normanton, Tom

  Alison, Michael

  Grant, Anthony (Harrow C)

  Nolt, John

  Arnold, Tom

  Hamilton, Michael (Salisbury)

  Onslow, Cranley

  Atkins, Rt Hon H. (Spelthorne)

  Hampson, Dr Keith

  Oppenheim, Mrs Sally

  Awdry, Daniel

  Hannam, John

  Page, John (Harrow West)

  Baker, Kenneth

  Harrison, Col Sir Harwood (Eye)

  Page, Rt Hon R. Graham (Crosby

  Banks, Robert

  Haselhurst, Alan

  Page, Richard (Workington)

  Bennett, Dr Reginald (Farenam)

  Hawkins, Paul

  Patlie, Geoffrey

  Berry, Hon Anthony

  Hayhoe, Barney

  Powell, Rt Hon J. Enoch

  Bitten, John

  Henderson, Douglas

  Price, David (Easlleigh)

  Biggs-Davlson, John

  Heseltine, Michael

  Prior, Rt Hon James

  Blaker, Peter

  Hicks, Robert

  Pym, Rt Hon Francis

  Body, Richard

  Hlggins, Terence L.

  Rawlinson, Rt Hon Sir Peter

  Boscawen, Hon Robert

  Hodgson, Robin

  Rees, Peter (Dover & Deal)

  Botlomley, Peter

  Holland, Philip

  Rhodes James, R.

  Bowden, A. (Brighton, Kemptown)

  Hordern, Peter

  Rhys Williams, Sir Brandon

  Boyson, Dr Rhodes (Brent)

  Howe, Rt Hon Sir Geoffrey

  Ridley, Hon Nicholas

  Brlttan, Leon

  Howell, David (Gulldford)

  Ridsdale, Julian

  Brocklebank-Fowler, C.

  Hunt, David (Wirral)

  Roberts, Michael (Cardiff NW)

  Brooke, Peier

  Hunt, John (Bromley)

  Roberts, Wyn (Conway)

  Brotherton, Michael

  Hurd, Douglas

  Sainsbury, Tim

  Brown, Sir Edward (Bath)

  Hutchison, Michael Clark

  Scolt-Hopkins, James

  Bryan, Sir Paul

  James, David

  Shaw, Giles (Pudsey)

  Buck, Antony

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

  Shelton, William (Streatham)

  Budgen, Nick

  Johnson Smith, G. (E Grinstead)

  Shepherd, Colin

  Bulmer, Esmond

  Jopllng Michael

  Shersby, Michael

  Burden, F. A.

  Joseph, Rt Hon Sir Keith

  Silvester, Fred

  Butler, Adam (Bosworth)

  Kaberry, Sir Donald

  Sims, Roger

  Carlisle, Mark

  Kershaw, Anthony

  Sinclair, Sir George

  Chalker, Mrs Lynda

  Klmball, Marcus

  Srnilti, Dudley (Warwick)

  Channon, Paul

  King, Evelyn (South Dorset)

  Smith, Timolhy John (Ashfleld)

  Churchill, W. S.

  Kitson, Sir Timothy

  Speed, Keith

  Clark, Alan (Plymouth, Sutlon)

  Knox, David

  Spence, John

  Clark, William (Croydon S)

  Lamont, Norman

  Spicer, Jim (W Dorset)

  Clarke, Kenneth (Rusfrcllffe)

  Lawson, Nigel

  Spicer, Michael (S Worcester)

  Clegg, Walter

  Le Marchant, Spencer

  Sproat, lain

  Cooke, Robert (Bristol W)

  Lester, Jim (Beeston)

  Stainlon, Keith

  Cope, John

  Lloyd, Ian

  Stanley, John

  Costaln, A. P.

  Loveridge, John

  Stewart, Rt Hon Donald

  Crltchley, Julian

  Luce, Richard

  Stewart, Ian (Hitchin)

  Crouch, David

  McCrindle, Robert

  Stokes, John

  Dean, Paul (N Somerset)

  Macfarlane, Neil

  Stradling Thomas, J.

  Dodsworth, Geoffrey

  MacGregor, John

  Tapseli, Peter

  Drayson, Bumaby

  MacKay, Andrew James

  Taylor' Rt (Croydon NW)

  du Cann, Rt Hon Edward

  Macmillan, Rt Hon M. (Farnham)

  Tebbit, Norman

  Dykes, Hugh

  McNair-Wllson, M. (Newbury)

  Temple-Morris, Peter

  Eden, Rt Hon Sir John.

  Thatcher, Rt Hon Margaret

  Madel, David

  Edwards, Nicholas (Pembroke)

  Marshall, Michael (Arundel)

  Thomas, Rt Hon P (Hendon S)

  Elliott, Sir William

  Mates, Michael

  Van Straubenzee, W. R

  Emery, Peter

  Mayhew, Patrick

  Vaughan, Dr Gerard

  Eyre, Regianly

  Meyer, Sir Anthony

  Wakeham,Jothn

  Fairbairn, Nicholas

  Miller, Hal (Bromsgrove)

  Walder,David (Clitheroe)

  Fell, Anthony

  Miscampbell, Norman

  Wall Pafrirk

  Fisher, Sir Nigel

  Mitchell, David (Baslngstoke)

  Warren, Kenneth

  Fletcher, Alex (Edinburgh N)

  Moate, Roger

  Weatherill, Bernard

  Fletcher-Cooke, Charles

  Montgomery, Fergus

  Forman, Nigel

  Moore, John (Croydon C)

  W9IIS, Jwirn

  Fowler, Norman (Sutton C'f'd)

  More, Jasper (Ludlow)

  Wigley, Dafydd

  Fox, Marcus

  Morgan-Giles, Rear-Admiral

  Young, Sir G. (Ealing, Acton)

  Gardiner, George (Relgate)

  Morris, Michael (Northampton S)

  Gilmour, Rt Hon Sir Ian (Chesham)

  Morrison, Charles (Devizes)

  TELLERS FOR THE AYES:

  Goodhart, Philip

  Neave, Alrey

  Mr. Peter Morrison and

  Goodhew, Victor

  Nelson, Anthony

  Mr.Carol Mather.

  Goodlad, Alaslalr

  Neubert, Michael

  NOES

  Abse, Leo

  Benn, Rl Hon Anthony Wedgwood

  Brown, Ronald (Hackney S)

  Anderson, Donald

  Bennett, Andrew (Stockport N)

  Callaghan, Jim (Mlddlelon & P)

  Archer, Rt Hon Peter

  Bldwell, Sydney

  Cant, R. B.

  Armstrong, Ernest

  Bishop, Rt Hon Edward

  Carter, Ray

  Ashton, Joe

  Blenkinsop, Arthur

  Carlwrlght, John

  Atkinson, Norman

  Boardman, H.

  Clemltson, Ivor

  Bagler, Gordon A. T.

  Booth, Rt Hon Albert

  Cocks, Rt Hon Michael

  Barnett, Guy (Greenwich)

  Boothroyd, Miss Betty

  Cohen, Stanley

  Barnett, Rt Hon Joel (Heywood)

  Bottomley, Rt Hon Arthur

  Coleman, Donald

  Bates, Alf

  Brown, Hugh D. (Provan)

  Concannon, J. D.

  Bean, R. E.

  Brown, Robert C. (Newcastle W)

  Conlan, Bernard

  The House divided: Ayes 189, Noes 213

  Cook, Robin F. (Edln C)

  Janner, Grevllle

  Roberts, Albert (Normanto

  Corbett, Robin

  Jay, Rt Hon Douglas

  Roberts, Gwilym (Cannock)

  Cowans, Harry

  Jenkins, Hugh (Putney)

  Robinson, G-eoffrey

  Cox, Thomas (Tooting)

  John, Brynmor

  Roderick, Caerwyn

  Cronln, John

  Johnson, James (Hull West)

  Rodgers, George (Chorley)

  Crowttier, Stan (Rolherham)

  Jones, Alec (Rhondda)

  Rodgers, Rt Hon William (stockton)

  Cryer, Bob

  Jones, Dan (Burnley)

  Rooker, J. W.

  Cunningham, G. (Islington 5)

  Kaufman, Gerald

  Roper, John

  Cunningham, Dr J. (Whileh)

  kefley, Richard

  Rose, Paul B.

  Davidson, Arthur

  Kerr, Russell

  Rowlands, Ted

  Davies, Bryan (Enfleld N)

  Kllroy-Silk, Robert

  Ryman, John

  Oavles, Denzil O-lanelli)

  Kinnock, Neil

  Sedgemore, Brian

  Davies, Ifor (Gower)

  Lomborn, Harry

  Shaw, Arnold (llford South)

  Davis, Clinton (Hackney C)

  Lamond, James

  Sheldon, Rt Hon Robert

  Deakins, Eric

  Latham, Arthur (Paddlngton)

  Shore, Rt Hon Peter

  Dean, Joseph (Leeds West)

  Leadbitter, Ted

  Silkin, Rt Hon John (Deptford)

  Dell, Rt Hon Edmund

  Lestor, Miss Joan (Eton & Slough)

  Sllkin, Rt Hon S. C. (Dulwich)

  Dormand, J. D.

  Lomas, Kenneth

  Silverman, Julius

  Douglas-Mann, Bruce

  Loyden, Eddie

  Skinner, Dennis

  Duffy, A. E. F.

  Luard, Evan

  Smith, John (N Lanarkshire)

  Dunwoody, Mrs Gwyneth

  Lyon, Alexander (York)

  Snape, Peter

  Eadle, Alex

  Lyons, Edward (Bradford W)

  Spearing, Nigel

  Edge, Geoff

  McDonald, Dr Oonagh

  Spriggs, Leslie

  Ellis, John (Brlgg & Scun)

  MacFarquhar, Roderick

  Slallard, A. W.

  Ellis, Tom (Wrexham)

  McGuire, Michael (Ince)

  Stewart, Rt Hon M. (Fulham)

  English, Michael

  MacKenzie, Rt Hon Gregor

  Stoddart, David

  Ennals, David

  Maclemian, Robert

  Stott, Roger

  Evans, Fred (Caerphllly)

  McNamara, Kevin

  Strang, Gavin

  Evans, loan (Aberdare)

  Madden, Max

  Strauss, Rt Hon G. R.

  Evans, John (Newton)

  Magee, Bryan

  Summerskill, Hon Dr Shirley

  Faulds, Andrew

  Mahon, Simon

  Taylor, Mrs Ann (Bolton W)

  Fernyhough, Rt Hon E.

  Mallalieu, J. P. W.

  Thomas, Mike (Newcastle E)

  Fitch, Alan (Wlgan)

  Marks, Kenneth

  Thomas, Ron (Bristol NW]

  Flannery, Martin

  Maynard, Miss Joan

  Thorne, Stan (Preston South)

  Fletcher, Ted (Darlington)

  Mendelson, John

  TInn, James

  Foot, Rt Hon Michael

  Mikardo, lan

  Tomlinson, John

  Forrester, John

  Molloy, William

  Torney, Tom

  Fowler, Gerald (The Wreklfl)

  Moonman, Eric

  Varley, Rt Hon Eric G.

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

  Morris, Alfred (Wythenshawe)

  Wainwright, Edwin (Dearne V)

  Freeson, Reginald

  Morris, Charles R. (Openshaw)

  Walker, Harold (Doncaster)

  Garrett, John (Norwich S)

  Moyle, Roland

  Ward, Michael

  George, Bruce

  Mulley, Rt Hon Frederick

  Watkins, David

  Gilbert, Dr John

  Murray, Rt Hon Ronald King

  Watkinson, John

  Gould, Bryan

  Newens, Stanley

  Wellbeloved, James

  Grant, George (Morpeth)

  Noble, Mike

  White, Frank R. (Bury)

  Grant, John (Islington C)

  Oakes, Gordon

  Whitehead, phillip

  Grocott, Bruce

  Ogden, Eric

  Whiltlock, William

  Hardy, Peter

  O Halloran, michael

  Williams, Rt Hon Alan (Swansea W)

  Harrison, Rt Hon Walter

  Orbach. Maurice

  Williams, Alan Lee (Hornch'ch)

  Hart, Rt Hon Judith

  Or me, Rt Hon Stanley

  Wilson, Rt Hon Sir Harold (Huyton)

  Hattersley, Rt Hon Roy

  Ovenden, John

  Wilson, William (Coventry SE)

  Hatton, Frank

  Owen, Rt Hon. Dr David

  Wise, Mrs Audrey

  Hayman, Mrs Helene

  Palmer, Arthur

  Woodall, Alec

  Healey, Rt Hon Denis

  Park, George

  Woof, Robert

  Hooley, Frank

  Parker, John

  Wrigglesworth, lan

  Horam, John

  Parry, Robert

  Young, David (Bolton E)

  Hoyle, Doug (Nelson)

  Pavitt, Laurie

  Hughes, Rt Hon C. (Anglesey)

  Prescott, John

  TELLERS FOR THE NOES

  Hughes, Roy (Newport)

  Price, C. (Lewisham W)

  Mr. Joseph Harper and

  Irving, Rt Hon S. (Dartford)

  Radice, Giles

  Mr. Ted Graham.

  Jackson, Colin (Brighouse)

  Rees, Rt Hon Merlyn (Leeds S)

  Jackson, Miss Margaret (Lincoln)

  Richardson, Miss Jo

  Question accordingly negatived

New Clause 38

  DECREASE IN DEDUCTIONS TO BE MADE FROM PAYMENTS TO SUBCONTRA CTORS IN THE CONSTRUCTION INDUSTRY.
  'Subsection (4) of section 69 of the Finance (No. 2) Act 1975 (which requires deductions to be made from payments to certain sub-contractors in the construction industry) shall have
  2020
  effect in relation to payments made on or after lst September 1977 with the substitution for "35 per cent." of "33 per cent."'—[Sir G. Howe.]
  Brought up, and read the First and Second time.
  Amendments made to the proposed new clause: (a)leave out 1st September 'and insert 6th November'.
  (b), leave out '33 per cent.' and insert 34 per cent.'.—[Mr. Joel Barnett.]
  Clause, as amended, added to the Bill.

Clause 19
  RATE OF ADVANCE CORPORATION TAX FOR FINANCIAL YEAR 1977
  Amendment made, No. 96 in, page 13, line 20, leave out 'thirty-five sixty-fifths' and insert thirty-four sixty-sixths'— [Mr. Joel Barnett.]
Clause 20

  CORPORATION TAX: SMALL COMPANIES
  Mr. David Mitchell: I beg to move Amendment No. 12, in page 13, line 22, leave out '42' and insert 25'.
  Mr. Deputy Speaker: With this we may take Amendment No. 13, in page 13, line 24, at end insert—
  '(1A) Where in section 95(4) and (5) of the Finance Act 1972 provision is made for restricting the small company relief in respect of associated companies, such provision shall not reduce the total relief below the amount which would have applied if all the associated companies had been one company.'.
  Mr. Mitchell: I trust that I shall have the opportunity of moving Amendment No. 13 formally at a later stage in order that we may have a vote upon it.
  I should declare an interest which I contingently have in the debate. The purpose of the amendment is to help to create jobs. I admit that the amendment would be improved by the insertion of the words "trading company". If that is the Minister's objection, I am quite sure that the insertion could be made later.
  The Minister is very much aware of, and he goes along with me concerning, the importance of the small business sector, but that sector needs to have two things if it is to succeed. It needs to have cash available for investment and it needs to have incentives. I am bound to tell the Minister that the Small Business Bureau, which has been conducting a survey on these matters, has come up with the lack of cash for small businesses as being one of the present largest single causes of lack of expansion and job creation.
  Has the Minister had the opportunity of looking at the evidence given to the Wilson Committee which has been examining the whole question of the financing of businesses? If he has, and if he looks at the evidence given by the
  2022
  Association of Independent Businesses, as it now calls itself, he will see that it has set out clearly the sequence of events which will follow during the life cycle of a small and growing company. The association's memorandum states that.
  "The initial source of finance for smaller businesses is that provided by the people actually managing them and by their friends".
  It states that the next source is usually ploughed-back profits. It is from ploughed-back profits that the growth of this sector comes.
  I should like to take the Minister through the argument. In order to grow, shall businesses, need to plough-back profits. They add to that with borrowing from their joint stock bank. At a time of inflation, every small business requires more money in order to have the same volume of turnover.
  When we have inflation at 17 per cent.—it may be 20 per cent. by the end of the year—it means that substantial additional sums have to be ploughed into businesses in order to enable them simply to have the same volume of turnover. They will need more money for debtors, more money for pre-shipment finance and more money, if they are in the exporting world, for performance bonds, and the like.
  11.45 p.m.
  The Government have made the situation worse by the introduction of the 2 per cent. national insurance surcharge, the 2 per cent. increase in corporation tax for the small business from 40 per cent. to 42 per cent., and so on. Then the Government have sought to relieve the situation by introducing stock relief. I give them full credit for having sought to undo the damage which their policies have caused to the small business sector, but I ask the Minister to accept that there are disadvantages which come from the system of stock relief in the financing of a small business.
  First, it helps the wealthier business and not the very small business which has not enough money to buy the stock that it wants. Secondly, it helps to create inefficiency. As the Minister will know, one of the criteria by which the efficiency of a business is judged is whether it has a quick stock turnover. A high stock ratio is a guide to a business which is less efficient.

  2023
  The third and most important consideration is that stock relief is only a deferred liability. It is not an end to that liability. As such, the money which is invested in a company in the form of increased stock—very large sums are being built up in companies' balance sheets in this way—is not available for borrowing from the bank for the further growth of the business.
  Any banker looking at the company's balance sheet and considering what is the collateral has to take into account what happens if the proprietor walks under a bus. The business runs into financial difficulties. Stock has to be sold off. With the reduction in stock, the tax has to be paid. Therefore, with stock relief there is not the increase in the collateral and in the borrowing ability of the company.
  In its evidence to the Wilson Committee, the Smaller Business Association put this neatly. It said:
  "Few financial institutions will consider providing funds which put them in the position of financing a bigger proportion of assets than the entrepreneur himself."
  In other words, the higher the entrepreneur's assets in a business, the bigger his ability to borrow and to finance the expansion of that business.
  To the extent that the entrepreneur's funds are represented by an increase in stock against which there is a liability in the balance sheet, he is not able to borrow and the expansion of the business is restricted. However, if the Chancellor of the Exchequer will do away with all these reliefs and bring down the level of corporation tax, for every £1 that he leaves in lower tax with the smaller business, the business can borrow another £1 from the bank, so that £2 is available for its expansion. I put it to the Minister that this is a significant and important aspect which ought not to be overlooked. I imagine that the hon. Gentleman will be prepared to accept the point.
  I draw attention to two other matters. First, the Government's various policies ranging from employment protection to the whole parameters of intervention in the area of business are piling up greater and greater disincentives to anyone to start or to expand a business. It is insufficiently appreciated that the higher the disincentives, the higher must be the
  2024
  incentive to make it worth while for people to do it. There are, inextricably mixed and interwoven, the tax on the small business man for his company and the incentives to himself to expand the business.
  Any small business man looking at his business today says "I have to pay corporation tax at 42 per cent. But if I plough back money into the business, I shall have to pay capital gains tax and I may have to pay a wealth tax and capital transfer tax." He will certainly expect to pay 30 per cent. on capital gains tax. The rough calculation that he makes on the back of an envelope will tell him that any profits he makes will be taxed at between 60 per cent. and 70 per cent., which is a massive disincentive against building up or expanding a business.
  The Minister does not appear to be interested in the debate, since he is paying no attention and is chatting to his right hon. and hon. Friends. His hon. Friends below the Gangway are interested in unemployment and in people losing their jobs. It is the failure of the Government to do anything to make it worthwhile for companies to expand that has resulted in increasing unemployment. We see the level of unemployment going up week by week, month by month.
  I estimate that before August is out we shall reach the alarming figure of 11 million unemployed. I do not think that Labour Members below the Gangway would like to take a bet on that. If they will not take up the bet, that is the Minister's answer. If they are not prepared to say that unemployment will not go beyond LI million by August, that is an indication of the Government's failure and the reason why they should accept the amendment. It will provide the opportunity to restore incentive to people to build up businesses and the opportunity to restore the finance with which to do it.
  I have one final point to put to the Minister. In the corporate sector generally, one is rather inclined to be like those who work in local government and say "So what?" Sixty per cent. of the costs of any new office expenditure will be paid for by the Government." The Minister would be surprised at the extent to which savings could be made through a reduced rate of corporation tax. It would

  2025
  reduce the incentive to spend money wastefully throughout the whole business sector.
  I also hope that the Minister will be prepared to accept Amendment No. 13. If he does not, we shall certainly wish to press the matter. It is a straightforward technical matter concerning the relief for small businesses whose pre-tax profits are £40,000 or less and it concerns associated companies. If there are two companies the relief will be £20,000 for each, but if one company makes £5,000 profits and the other makes £25,000 profits the pair of companies does not get the relief that would go to a single company. In fact, they would lose considerably.
  I think the Minister will discover, if he consults his advisers, that the Treasury's advice would be that the amendment should be accepted. There would be no harm in accepting it, and I look forward to hearing the hon. Gentleman say that he can do so.
  Mr. John Wakeham: I support my hon. Friend the Member for Basingstoke (Mr. Mitchell) in Amendment No. 12 and Amendment No. 13, both of which are important for small businesses. I know that it is customary on all occasions when we are discussing small businesses for hon. Members on both sides of the House to say how important small businesses are, and, of course, I go along entirely with those sentiments.
  However, I am one of those who do not believe that just because a business is small it should have special tax treatment for that reason alone. I believe that small businesses have certain advantages and certain disadvantages. Among the advantages of small businesses are that in many cases they have energetic managements, happy work forces and many other things that go towards making their operations a success.
  On the other hand, many small businesses have severe disadvantages. Therefore, it is right for the Government to look at their legislation to see whether small businesses should be relieved of some of the disadvantages that bear unfairly on them. One disadvantage which by definition virtually all small businesses suffer is a shortage of capital. In these inflationary times, shortage of capital has
  2026
  brought in its wake a number of tax disadvantages that the amendments attempt at some point to relieve.
  Businesses with adequate working capital can get two tax advantages. One is an ability to make capital investments whenever necessary to get relief from corporation tax that they would otherwise have to pay. In my experience, very few small businesses are able to make such investments at will. Indeed, there is a good economic argument for saying that the quality of investment in many small companies is that much better because they do not have the ability to turn on the tap and make capital investments to defer a major tax liability which would otherwise arise. Nevertheless, we must face the fact that capital gives the larger businesses a tax advantage that is not enjoyed by the smaller businesses.
  The second advantage is stock appreciation relief. Basically, the same arguments apply. A business which has the ability to borrow has the ability to stock up towards the end of its financial year and thereby defer corporation tax liability. That, too, is an advantage that capital gives to the larger businesses. Such an advantage is not available to the smaller businesses because they do not have the necessary capital.
  Inflation is increasingly making a tax differential in favour of the bigger business which is denied to the smaller business. Therefore, there is a strong argument for the acceptance of Amendment No. 12. I suggest that in practice a 25 per cent. corporation tax liability that is paid is pro rata probably a higher rate than a 52 per cent. tax liability on a major company that is able to defer it. A reduction from 52 per cent. to 25 per cent. might seem substantial, but in practice I suggest that it is nowhere near as substantial as it might appear.
  Amendment No. 13 seeks to correct a disadvantage applying to groups of small companies which are associated for corporation tax purposes. In many instances, when a group of companies is associated for corporation tax purposes the small business relief is divided among them, which can produce a most unfair—[Interruption.]
  Mr. Deputy Speaker: Order. I am having difficulty in hearing what the hon. Gentleman is saying.
  Mr. Wakeham: I do not know how much you have missed, Mr. Deputy Speaker. I hope I shall not have to go back and start again.
  Mr. Deputy Speaker: I have the gist of the argument.
  12 midnight
  Mr. Wakeham: As a group of associated companies is not able to use the shortfall for corporation tax purposes, that not being allowed in one company against another, in many cases the group as a whole loses some of the relief that I think Parliament intended it should have as compared with a small business which is treated as one tax unit, and as one company.
  In many instances, small business men have for various reasons to divide their businesses into several companies when they would not choose to do so. For example, a company dealing in an agency business selling different products might be required by the manufacturers to trade through separate companies. In no sense would that be done from the point of view of administration, tax advantage or anything of that sort. It would be done purely because the principals insisted that it should be done.
  In many instances a small business finds it necessary to divide itself into separate companies to raise additional capital, either by way of loan or preference shares of some sort. That may happen when a person is prepared to invest in a business as long as he is financing only one section of it. That may be the only way in which the required investment is forthcoming.
  In many instances—surely this will be welcomed on both sides of the House—small business men divide their businesses into several companies because that is a practical way of giving employee participation to someone, who might take a small stake in a company. In that way, there might be a separate unit in which the employee who is running that side of the business takes a share without necessarily being involved in the whole of the business.
  At present, the arrangements for corporation tax for those small businesses are unfair because they are often denied small business relief which otherwise they
  2028
  would have had. In practice, we know that if a small business man goes to expensive accountants and works these things out in advance, often by introducing participation agreements and the sharing of profits, these factors can to some extent be mitigated. However, I can see no advantage for these unnecessary complications being present in the small business man's life and, therefore, I warmly support my hon. Friend the Member for Basingstoke.
  Mr. Denzil Davies: The hon. Member for Basingstoke (Mr. Mitchell) has moved Amendment No. 12 and spoken to Amendment No. 13. Amendment No. 12 seeks to reduce the tax on small profits —not necessarily small businesses—from 42 per cent. to 25 per cent. That is a quite substantial reduction. The cost of the amendment would be about £200 million in a full year. As I have said previously, it seems that that is not of great concern to the Opposition.
  We are concerned with small profits, not necessarily small businesses. A large business may make a small profit. If that were so, it would get this benefit. Therein lies a difficulty. Some small companies may make large profits. In that event they would not benefit from the reduction. As a result of the difficulties caused by the introduction of the imputation system of corporation tax that the hon. Gentleman supported, it is necessary to include certain provisions in the Bill. If the hon. Gentleman's party had not mucked around with corporation tax, small businesses would be much better off under the system which applied until 1970 than under the present system.
  It was because of that change, and because of the effect that it would have had on small close companies—this was discussed at length in the Select Committee on Corporation Tax—that the then Conservative Government introduced this special provision. It was a rough and ready provision to try to mitigate the damage that was being caused to small businesses by the change in the imputation system which the Tory Government put through, and which the hon. Gentleman supported. The hon. Gentleman should go away and read the Select Committee's Report on Corporation Tax. If he does that, he will see what the problem was.

  2029
  Small private companies which do not want to distribute their profits in the way that public companies do were better off under the old system, where the rate was 40 per cent. It was by changing the imputation system that the Tory Government damaged small businesses, and they tried to mitigate that damage by introducing this so-called small business relief which the hon. Gentleman now wants to reduce to 25 per cent.
  Whatever the problems of small businesses today—and I accept that they have problems—corporation tax is not one of them. When one takes into account the stock relief provisions and the generous allowance for capital investment, one realises that small companies —indeed, any companies—do not have a problem in relation to corporation tax, especially if they are seeking to plough back their profits for further investment. They may have difficulties with capital transfer tax—this is something that we have debated on many occasions—but corporation tax is the least of the problems of small companies. They have complete exemption if they plough back profits for the sake of developing the business.
  Mr. David Mitchell: Can the hon. Gentleman explain why he has completely and directly contradicted the words of his right hon. Friend the Chief Secretary on this subject on 11th May 1976, at column 419? If the hon. Gentleman wishes me to read out the damaging phrase that his right hon. Friend used, I shall do so. Can he also say how many jobs would be created by ploughing £200 million more into the small business sector?
  Mr. Davies: I never contradict my right hon. Friend. It is clear that the hon. Gentleman has misread what my right hon. Friend said, just as he has misunderstood so much of the tax system.
  Partly because of the cost, and partly because of the generous way in which the Government have dealt with companies in the matter of corporation tax, there is no case, and the hon. Gentleman has not made one, for a reduction from 42 per cent to 25 per cent. in the rate of small profit relief for businesses.
  Mr. John MacGregor: The hon. Gentleman made an
  2030
  interesting comment. He said that small businesses might have problems in relation to capital transfer tax. May we take it that, while he is not sympathetic to the amendment, he has an open mind to look at the problem of capital transfer tax over the next year?
  Mr. Davies: We have had the debate on capital transfer tax. We think that the relief that we have given is generous and solves the problems of small businesses. I concede that it is possible to put that kind of argument on CTT, but it is not possible to put any respectable argument in relation to the effect of corporation tax on small, or any other, businesses, and the hon. Gentleman knows it.
  I turn now to Amendment No. 13, which I understand the hon. Gentleman intends to press to a Division. I have some sympathy with this amendment, because one of the problems of introducing a relief of this kind—I stress that it is a relief—is that it had to be introduced because of the damage that the imputation system introduced by the Tory Government would have caused to small companies. There are difficulties with groups of companies, because if we introduce a lower rate of corporation tax up to certain levels of profits companies will split their operations into groups and associated companies. The Americans found this to be a problem with different rates. In 1971 the Conservative Government had to introduce provisions to prevent avoidance, and in some cases this causes a problem for companies which do not want to split up, for tax and other reasons.
  These amendments would be completely unworkable in practice. Without complicated legislation it is not possible to deal with the problem, and even then I do not think that the problem would be solved. I shall read to the House what the right hon. Member for Wanstead and Woodford (Mr. Jenkin) said in the Finance Bill Committee in 1972 about a similar amendment. He said:
  "I am sorry to have to disappoint the hon. Member, but I feel that I cannot advise the Committee to accept the amendment, if only because it would be unworkable in practice, whereas the scheme written into the Bill would be easily workable, though rough at the edges." —[Official Report, Standing Committee E, 26th June 1972; c. 1495–6.]

  2031
  That was the answer to the problem then and it is the answer that I must give tonight. In practice it is not possible to introduce a workable scheme, for the same reason as the right hon. Member for Wanstead and Woodford gave.
  Mr. David Howell: I recognise the Minister's argument about Amendment No. 12. It is perhaps fair to say that at midnight £200 million is a large sum to expect the Minister to give away. But I am sure that there are plenty of big spenders below the Gangway who would help the hon. Gentleman to dispose of such a sum.
  If it were a question of thinking about people and the creation of jobs, there would be many worse ways than this to be found in the Government's existing programmes through which they pump vast sums of money into industry to create new jobs. But I recognise the point made by the Minister and it is reasonable at this stage in the debate.
  The Minister is on weaker ground on Amendment No. 13. He has used fairly traditional arguments about why nothing can be done. He has claimed that the Government do nothing but think of small businesses and how to help them and create new jobs. With the rising tide of unemployment which hangs like a pall over the country, the Minister uses arguments which have been knocking around for many years.
  The Minister has done justice to my hon. Friend the Member for Basingstoke (Mr. Mitchell) on the first amendment that we are discussing. I should have liked him to take a more positive approach to the second amendment in pursuing the growth of small businesses and the jobs that that would bring.
  Mr. David Mitchell: I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Amendment proposed: No. 13 in page 13, line 24, at end insert—
  '(1 A) Where in section 95(4) and (5) of the Finance Act 1972 provision is made for restricting the small company relief in respect of associated companies, such provision shall not reduce the total relief below the amount which would have applied if all the associated companies had been one company.'.—[Mr. David Mitchell.]
  Question put, That the amendment be made:—
  The House proceeded to a division; but no Member being willing to act as Teller for the Ayes, Mr. DEPUTY SPEAKER declared that the Noes had it.
  Question accordingly negatived.

Clause 21

  RELIEF FOR INTEREST: LIMIT FOR 1977–78
  12.15 a.m.
  Mr. MacGregor: I beg to move Amendment No. 93, in page 14, line 5, at end insert—
  '(2) In paragraph 4(1) of that Schedule, after paragraph (b) there shall be inserted the following additional paragraph—
  "or
  (c) is at the time the interest is paid used as the residence of a divorced or separated spouse, who has borrowed additionally on the security of his main residence to provide for the other former or separate spouse, subject to total borrowing for this purpose or as part of the original mortgage not exceeding the annual limit."'.
  It often seems to be my lot to have to move the last amendment on the various stages of Finance Bills. Tonight appears to be no exception.
  Some of my hon. Friends have rather unkindly dubbed this the "second mortgages for second wives amendment". They might at least have added "second husbands" as well. However, the amendment is not like that. It is neither a libertarian's charter nor an incitement to use divorce to get tax relief on mortgage interest payments.
  I shall explain the background to the amendment. I was browsing through various representations made to the Chancellor in relation to this year's Finance Bill when one particular proposal from the Law Society caught my eye. The Law Society was pointing out that one effect of the Finance Act 1974 in relation to relief for interest was that in some cases divorced or separated spouses seemed to be particularly disadvantaged.
  Mr. Ridley: On a point of order, Mr. Deputy Speaker. Although I am sitting extremely close to my hon. Friend the Member for Norfolk, South (Mr. MacGregor), I am finding it very difficult to hear him because of the hubbub from the other end of the Chamber. Could

  2033
  you possibly secure a certain amount of peace and quiet to enable me to hear my hon. Friend's words of wisdom?
  Mr. Deputy Speaker: I appreciate the hon. Gentleman's point of order. It is a little disturbing when conversation goes on too loudly in the Chamber. I appeal to hon. Members to let us get rid of this final amendment tonight.
  Mr. MacGregor: I am most grateful, Mr. Deputy Speaker, but I hope that we shall not "get rid" of it. I hope that we shall at least make some progress on it.
  Mr. Deputy Speaker: Either way—accepted or rejected.
  Mr. McGregor: The subsidence of the noise has made it unnecessary for me to shout down the ear of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley).
  The Law Society pointed out that, in the case of divorced or separated spouses, the use of lump sum awards in matrimonial financial proceedings was increasing. It pointed out that, as a result of this, it is often necessary, for divorced or separated husbands—or, indeed, wives—to seek to raise the sum awarded to his or her divorced or separated spouse by means of a mortgage on the former matrimonial home, which becomes his or her home after the divorce or separation. However, according to the Law Society, the problem is that if this is done the interest on such a mortgage will not qualify for income tax relief as it is not a loan for house purchase, improvement or development.
  That representation caught my eye because I have been running into a number of such problems in my surgeries, and I have had one or two representations from outside my constituency in relation to some of the ways in which recent legislation on matrimonial settlements is working out. Let me give one or two brief examples. These circumstances apply particularly to people in their 40s, 50s and 60s. In one case a spouse found that as a result of the splitting of the assets of the family—in this case his only assets were matrimonial home—he was forced into a situation in which he would have had to sell the matrimonial home and neither party would have benefited.
  2034
  In another case, a small farming business was having to be split up in order to meet the judgment of a matrimonial settlement.
  I am not questioning the judgments. I say only that it should be possible for us to seek means by which a divorced or separated spouse might be able to raise proceeds in order to meet a judgment. In these circumstances, given that very often the spouse will have very few assets other than the matrimonial home, and probably only a small income, if it is necessary for him to do that by raising an additional mortgage it would surely be desirable. To enable the spouse to do that, we should perhaps look at the provisions of the 1974 Act in order to give him tax relief on the additional mortgage. It will be clear from the amendment that I am not trying to breach any of the conditions of the 1974 Act. I am not tonight suggesting that the total borrowing limit of £25,000 should be exceeded, although I maintain that in view of the rate of inflation the limit should now be raised.
  I think that I have made the point simply and clearly. If the Minister can assure me that in all the circumstances I have outlined tax relief would be forthcoming for any additional mortgage raised on the former matrimonial home, that would fly in the face of the belief expressed by the Law Society but I should rest content. I am sure also that the Law Society would be much relieved. If, on the other hand, the Law Society is right in its fears about this matter, I hope that, since the matter is being pressed late in the proceedings on the Bill, the Financial Secretary will think about the problem with a view to sorting it out at a later stage.
  Mr. Robert Sheldon: The amendment seeks to provide arrangements for second mortgages for separated wives. It seeks to provide for interest relief on any loan that is raised for a lump sum payment to a divorced or separated spouse.
  There are a number of problems associated with the amendment. The drafting of it clearly fails to take account of the many complications, but I shall not go into that aspect. I understand the purpose of the amendment, and I shall direct my remarks at that.
  There is no way to ensure that the money is spent in the way in which the hon. Member for Norfolk, South (Mr.

  2035
  MacGregor) wishes. It is not easy to put the hon. Gentleman's intention into legislative form. Where the relief would be only on the borrowing for a home, there would be no way of undertaking that that money would be spent in that way. A control mechanism would not operate. Why should the loan qualify only if the money is borrowed against the security of the home? Why should it not operate against the security of shares or a bank loan? I am not sure whether what is intended is a minor change or whether there is a fundamental defect in the amendment. I am not clear about the hon. Gentleman's intention on that score.
  Mr. MacGregor: Would there not be many circumstances—the two I had in mind were in point—in which there were no other assets than an owner-occupied house and it was necessary to raise money on it? The real purpose is to enable the court's judgment to be met. It must be for the courts to decide where the proceeds are put.
  Mr. Sheldon: I understand, but in equity it is hard to see why a person who has a large house and wants to provide a home for his divorced or separated spouse should be better enabled to do so than a person with some of his money in shares or other property, or even a policy on which to raise a loan, and a house of a more modest size, on which less money would be raised.
  I can, however, offer the hon. Gentleman some comfort. There are other ways of meeting some of these problems. Under the 1974 Finance Act a husband can buy a house, in addition to the one he has himself, for his ex-wife, and interest relief is allowed against the purchase of the new house. That allows two kinds of interest relief. If there is a legally enforceable income settlement, he would get tax relief on his annual payments and the wife could use the annual payment to pay the mortgage of the house on which she gets the relief.
  There are other ways of ensuring this end. If the hon. Gentleman will discuss the matter with me, I think that I can show him a number of solutions without having to go into these complexities. Although I have an open mind about any
  2036
  changes required to meet these ends, I believe that most of the points can be met in other ways without such complex legislation.
  Mr. MacGregor: I am glad to hear that the Minister has an open mind. I shall seek further guidance in the light of his response with a view to bringing forward a similar amendment at a later stage. In the meantime, I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Further consideration adjourned.—[Mr. Joel Barnett.]
  Bill, as amended (in the Committee and in the Standing Committee), to be further considered upon Monday next.

  DOUBLE TAXATION RELIEF
  Resolved,
  That an humble Address be presented to Her Majesty, praying that on the ratification by the Government of the Kingdom of the Netherlands of the Protocol set cut in the Schedule to the draft Order entitled the Double Taxation Relief (Taxes on Income) (Netherlands) Order 1977, which draft was laid before this House on 21st June, an Order may be made in the form of that draft.—[Mr. Coleman.]
  To be presented by Privy Councillors or Members of Her Majesty's Household.
  Resolved,
  That an humble Address be presented to Her Majesty, praying that the Double Taxation Relief (Taxes on Income) (Kenya) Order 1977 be made in the form of the draft laid before this House on 21st June.—[Mr. Coleman.]
  To be presented by Privy Councillors or Members of Her Majesty's Household.
  Resolved,
  That an humble Address be presented to Her Majesty, praying that the Double Taxation Relief (Shipping and Air Transport Profits) (Zaire) Order 1977 be made in the form of the draft laid before this House on 21st June.—[Mr. Coleman.]
  To be presented by Privy Councillors or Members of Her Majesty's Household.
  Resolved,
  That an humble Address be presented to Her Majesty, praying that the Double Taxation Relief (Air Transport Profits) (Ethiopia) Order 1977 be made in the form of the draft laid before this House on 21st June.—[Mr. Coleman.]
  To be presented by Privy Councillors or Members of Her Majesty's Household.
  Resolved,
  That an humble Address be presented to Her Majesty, praying that on the ratification by the Government of Poland of the Convention set out in the Schedule to the draft Order entitled the Double Taxation Relief (Taxes on Income) (Poland) Order 1977, which draft was laid before this House on 21st June. an Order may be made in the form of that draft.—[Mr. Coleman.]
  To be presented by Privy Councillors or Members of Her Majesty's Household.

  HOUSE OF COMMONS (SERVICES)
  Ordered,
  That the Standing Order of 22nd November 1074 relating to the number of members of the Select Committee on House of Commons (Services) be amended by leaving out the word 'Eighteen' and inserting the word 'Nineteen'. —[Mr. Coleman.]
  Ordered,
  That Mr. Eric Ogden and Mr. Cecil Parkinson be added to the Select Committee on House of Commons (Services).—[Mr. Coleman.]

  GEORGE HENRY INCE
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Coleman.]
  12.28 a.m.
  Mr. Ian Mikardo: This is the second time that I have used an Adjournment debate to bring to the attention of the House the long-drawn-out, strange and sad case of the conviction of George Henry Ince. The previous occasion was on 27th March 1975. Some of my hon. Friends and I had been banging away at the armour-plated obstinacy of the Home Office long before that.
  Mr. Ince is the man who was charged by the Essex police with what came to be called the Barn murder. They built up a dossier against him, which looked absolutely conclusive and irrefutable. The major part of the evidence that they adduced was evidence of identification; it was overwhelming and unanswerable evidence of identification. The only thing wrong with it was that it was wrong, because it identified the wrong man.
  Fortunately, Mr. Ince, by his energy and skill in defending himself, by his continuous passionate restatement of his innocence and by his good fortune in
  2038
  establishing an alibi at the last minute, escaped conviction for the Barn murder, and a short while afterwards two men were arrested, charged and convicted of that murder.
  The identification parade was among matters examined in a report by a distinguished officer of the Metropolitan Police—Commander Howells. That report made clear, as the Under-Secretary at the Home Office admitted in my last Adjournment debate, that the procedures during the identification parade were a gross violation of police rules and that all sorts of rules had been bent in all sorts of ways in order to get a conviction that was "phoney". The Essex police were determined to get a conviction by hook or by crook and they came very near to getting a conviction by crook.
  In all this long argument with the Home Office, extending over several years, I have never said that George Ince is innocent of the crime for which he is serving a prison sentence. I do not know whether he is guilty. I am not a detective, a lawyer or a judge, and I do not presume to pronounce on such a matter. However, I have read every word of the proceedings and I say that, innocent or not, George Ince should certainly not have been convicted on the evidence adduced against him at the trial and subsequently in the appeal, because the overwhelming bulk of that evidence rested upon identification carried out a few days later in the same place by the officers who, it is now known, did a crooked identification in the case of the Barn murder.
  That was evidence of witnesses whose credibility had been absolutely shattered. I do not believe that it was reasonable for the court, even with some warning given to it about the identification evidence, to ignore this lack of credibility of the people who had built up the case.
  Whenever I have put these points to my right hon. Friend the Home Secretary, he has said—and has repeated in writing —that he is not a court of law or an appeal court against the Court of Appeal and that he cannot reopen the case unless he is given fresh evidence that was not available to the court or to the Court of Appeal. But my right hon. Friend's predecessor did not say that in the Confait case, which my hon. Friend the Member

  2039
  for Lewisham, West (Mr. Price) repeatedly drew to the attention of the House.
  On 8th January 1974 the then Home Secretary told the then hon. Member for Lewisham West, Mr. Carol Johnson, that he could reopen the Confait case only on fresh evidence or fresh facts relating to the issues. On 17th July that year the Home Secretary referred to the need for fresh evidence on the affair. On 1st August he said that the case could be reopened on the basis of cogent new factors—not, this time, fresh evidence. On 31st August, he referred to:
  "significant matters which appear to suggest that the jury were not presented with an accurate or adequate picture of what occurred."
  That is a precise description of the presentation to the jury in the case of the Mountnessing robbery.
  On 8th April 1976 the then Home Secretary said that he could reopen the case on some new evidence or other consideration of substance—that is, some consideration other than new evidence. Finally, also on 8th April 1976, answering a different parliamentary Question, he said, without mentioning evidence, that the case could be reopened on some new consideration of substance.
  So, during this period of a year or more, the then Home Secretary was gradually liberalising the criteria under which he could order a fresh look at a case. The present Home Secretary, however, has done a total reversion, right back to before 1974, to a harder line—a very hard line indeed.
  In a letter that the Home Secretary sent to me, however, he promised that if there were any fresh evidence he would look at it. There are two more pieces of fresh evidence. The first is the report of a second investigation into complaints against the conduct of the Essex police, this time carried out by Detective Chief Superintendent Sills of the West Yorkshire Constabulary. I do not know Mr. Sills, but I am told that he is a senior officer of high repute, is widely respected, and has a great record of service. Although the Home Secretary refuses to make Mr. Sills' report available to me or anyone else, I know what is in it. There have been leaks. Some extracts
  2040
  from it were published this morning in The Guardian, in an article by Mr. Peter Chippendale.
  I mention in passing that when Mr. Chippendale rang up the Chief Constable of Essex to check a point or two he was told that if his paper published anything about the Sills report he would be liable to very damaging consequences, whatever that may mean. I would have thought that that was by no means the best way to improve relations between the police and the public.
  I am going to say something very blunt. If my hon. Friend the Minister of State says, in reply, that Mr. Chippendale's account is not correct. I am not going to believe him; nor is anyone else. I do not say that my hon. Friend is a liar, first, because that would be out of order. and, secondly, because it would be inconsistent with the deep regard and affection in which he knows I hold him.
  What I am saying is that my experience of the behaviour of the Home Office with regard to investigations into the conduct of the police gives me confidence, and gives anybody else who has any experience in these matters confidence, in the belief that the Home Office's passion for preventing the public from knowing about the peccadilloes of the occasional police officer who is corrupt overrides every other consideration in its mind, to such an extent that it becomes—I am using tough words, but they derive from experience—unscrupulous in the use of the information available to it.
  If my hon. Friend is going to say that the article is not true, let me bring out one point in the Sills report. Is he going to deny that a large number—nearly 100 —of prosecution documents found their way into the hands of the defence? Is he going to deny that some police officer or officers in Essex at about that time received a sum of rather more than £6,000? Is he going to deny that the Sills report says that it would be naive to imagine that there was no connection between those two occurrences? Will he deny that? I repeat: if he tries to discredit what has been written about the Sills report, I shall not believe him, nor will anyone else.
  There is no time for me to do more than pick out one or two points that were

  2041
  quoted in the article. It points out that the report states that
  "The excess of zeal by Essex police officers to pursue investigatory ends oblivious to the contradictory evidence was not in the best interests of such an investigation."
  That is a nice, discreet, polite, diplomatic way of saying that the Essex police picked out the bits of evidence that suited them and ignored the bits that did not suit them—in other words, that they were not carrying out their duty of seeking the truth. What they were seeking to do, for the second time with the same man, was to get a conviction by hook or by crook, and again they have got one by crook.
  This exposure of the lack of credibility of the people on whose word the prosecution case was built up must constitute new evidence for my hon. Friend to consider. But there is a second piece of evidence. A statement was made a few weeks ago by a man named Sims, who is serving a sentence for his part in the Mountnessing robbery, and who says, quite frankly, "I was involved in the robbery. I admit it. George Ince was not there and had nothing to do with it." He has nothing to gain by saying that. I sent that statement to the Home Secretary some weeks ago. As far as I know, not a finger has been lifted about it.
  If my hon. Friend is to say to me, as I hope he is, that the Home Office will take steps to have Mr. Sims' statement investigated, I want to ask three short and quick questions. First, what has the Home Office been waiting for? Why has the statement not been investigated up to now?
  Secondly, who is to do the examination? Is it to be the Essex police? If it is, that would he an invitation to Satan to rebuke sin, would it not? That would make the Home Office a laughing stock throughout the country.
  Third, may I please have an assurance that no pressure will be put on Mr. Sims to go back on what he is saying? I think that, to make sure, I had better get a visiting order and go to see Mr. Sims myself and have a little chat with him.
  I hope that after my hon. Friend has replied we shall not be in a position to think, as many people do—I am not alone in this—that the history of this case tends to show, or at least leaves open the suggestion, that the Department has throughout
  2042
  been more interested in covering up some unpleasant features of the case than to do justice to a man who has suffered much wrong.
  I hope that when my hon. Friend replies he will indicate some first steps to rectify that gross injustice.
  12.37 a.m.
  The Minister of State, Home Office (Mr. Brynmor John): The case of George Ince's conviction for the Mountnessing bullion robbery is one which, as my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) has said, has achieved a considerable amount of notoriety. I think it fair that I should remind the House that it occupied the time of the trial court for some 60 days and the Court of Appeal for six days. It has been the subject of a complaint under Section 49 of the Police Act 1964, which was investigated, as my hon. Friend says, by Chief Superintendent Ronald Sills. I shall say more about that at a later stage.
  Nevertheless, there has been a continuing interest in the case, as the attendance for the debate shows, and it has been spearheaded, as my hon. Friend says, by himself. He has been extremely vigorous on behalf of his constituent. It has led, as he has said, to Press speculation and, in its turn, to the second Adjournment debate that my hon. Friend has sought on the subject.
  I welcome that, not only as an opportunity of answering the genuine anxieties expressed by my hon. Friend but also to clear up certain misconceptions that arise, not only in this case but in other cases in which my right hon. Friend is involved.
  It goes without saying that the proper forum for judging guilt or innocence is a court of law, particularly where, as in the case of serious crime, we have a jury system, which everyone values. Even if the convicted man, or others on his behalf, nourish the belief that he was wrongly convicted, that itself does not warrant the Home Secretary's interference. He is not appointed to take the place of a court, so that any material that was fully aired and determined by the court cannot be subject to a reference to the Court of Appeal. Consequently, the frequently criticised and often referred to identification parade in the Ince case,

  2043
  which was dealt with very fully in the trial, is not a ground of fresh evidence.
  The trial judge was most careful to sound warning about the matter, and the Court of Appeal confirmed not only the adequacy of the warning but the fact that it was the totality of the evidence upon which Mr. Ince was found guilty. As I said, on that matter alone, however disturbing my hon. Friend finds it, the Home Secretary could not intervene.
  My right hon. Friend can refer a matter to the Court of Appeal under Section 17 of the Criminal Appeal Act 1967 if, upon new evidence or a new consideration, he considers it right to do so. Alternatively, he can recommend the exercise of the Royal Prerogative of Mercy if the evidence is not properly receivable by the court but is tested and undermines the conviction.
  It is in this category of new evidence that the statement of Mr. Francis Sims falls and its potential value lies. Clearly, this raises new matters, which call for further investigation. My right hon. Friend has therefore decided to pass the statement to the police for investigation. This will be done immediately.
  My hon. Friend asked three questions. I have answered one—the statement has been passed on. Secondly, I am authorised to say that the investigation will not be undertaken by the Essex police force but will be placed in the hands of an officer from another force. Thirdly, my hon. Friend raised the question of pressure being put on Mr. Sims in reference to his statement. If my hon. Friend is asking whether pressure will be put on Mr. Sims to withdraw his statement I can stay that none will be put on. Of course his evidence will be tested and all matters that are proper for my right hon. Friend to consider—not only whether he should refer it back to the Court of Appeal but whether he follows the other course that I have mentioned in this matter—will he tested. But no pressure will be placed upon Mr. Sims to change a story that he believes to be true.
  If my hon. Friend wishes to have a pass to visit Mr. Sims and talk to him I shall be happy to try to facilitate it.
  Mr. Mikardo: Thank you very much.
  Mr. John: I now deal with the second limb of the speech of my hon. Friend—
  2044
  the question of the Sills report. I am sorry that there is so much similarity in the names, but I shall not get them mixed up: My hon. Friend asked my right hon. Friend on an earlier occasion to see a copy of the report. The report takes the form of an investigation of complaints against policemen in the case—an investigation commissioned by the Chief Constable of the Essex police. The report was forwarded to the Director of Public Prosecutions and a copy was sent to my right hon. Friend because of its connection with the other matters concerning Mr. Ince.
  The report is a private report and not a public one, and such reports have not been disclosed in the past, any more than police investigations have been published. My right hon. Friend does not feel able to depart from the normal practice, and does not feel able to publish this document, for the reasons set out in Home Office Circular 63/77, a copy of which is available in the Library. Basically this sets out some of the disadvantages, and potential disadvantages, of publishing the material in this case. I quote from one part of it. It says:
  "Many reports contain information which could certainly not be freely disclosed such as the names and addresses of witnesses or criminal records of named persons, as well as statements made to the police and facts disclosed in the course of investigation which may be prejudicial to named persons. Investigation of a complaint against the police follows in many respects the same lines as a criminal investigation and it is equally undesirable that any report of the investigation of a complaint should be published."
  That certainly post-dates the Sills report, but these are mere reiterations of the principle that has always obtained and which, I believe, obtained in this case with equal validity.
  The request made by my hon. Friend has been given a new twist by a report in The Guardian this morning purporting to give extracts from the Sills report. I understand that my hon. Friend has discounted in advance what I shall say. Nevertheless, because of the affection with which we regard each other I hope that he will listen carefully and sympathetically to what I shall say. I do not believe that I have a reputation for misleading the House or for trying in any way to bide behind a distortion of the facts in order to protect the Department or personal interests.

  2045
  The major point in the article in The Guardian suggested that Mr. Sills had recommended Mr. Ince's release from prison pending further inquiries. This is a major point which, if true, would oblige my right hon. Friend to explain why he had not accepted such a recommendation and, indeed, why he gave the parliamentary Answer that he did to our mutual hon. Friend the Member for Paddington (Mr. Latham) on 20th May 1977. But it is not true. Mr. Sills made no such recommendation.
  Clearly, someone has gone to a great deal of trouble to draw up the document from which the article in The Guardian is drawn. In view of recent events I hope that The Guardian has tried to check its information. I can only assume that the intention behind the article is to force publication of the real Sills report. As I have explained, my right hon. Friend has no such intention. He will not depart from the long-standing principle of the confidentiality of such reports.
  I believe that it would be to the long-term detriment of people involved in these investigations if such reports were to be published. Even where there is a public inquiry it is often necessary to check with people who have given evidence as to whether they agree that the particular proposal should be published. I therefore say to my hon. Friend that it is clear from the article in The Guardian, as I read it, that whatever document The Guardian thinks it has seen, it is not the Sills report. The printed extracts bear no resemblance to the report that Mr. Sills submitted to the chief constable.
  My hon. Friend has made a number of points, some of which have already been discussed between us and some of which I shall need to consider in the light of what he has said. I shall consider them and write to him.
  My contention tonight is that the Home Office is not here to cover up or to hide behind a smoke-screen. But my right hon. Friend has limitations on his power. It is not merely discontent with a verdict which entitles him to intervene. If that were so, the independence of the judiciary and of our legal system might well be undermined. My right hon. Friend can
  2046
  intervene only where there is some new consideration or new evidence of substance.
  I believe that, at any rate potentially, Mr. Sims' statement falls within that category, which is why my right hon. Friend has passed it on and why the investigation will now take place. The investigation is designed merely to establish the truth of the matter. It is not designed to prejudge or to achieve a desired object. It will establish the truth so far as, in a complex case of this kind, that can be achieved.
  The process of testing is necessary not only because the Court of Appeal can sometimes be rough on a Home Secretary who has made a premature referral but because such a referral can be prejudicial to the man himself. If there are matters that need clarification and there is a premature referral to the Court of Appeal, the court, examining only that evidence, may come to the conclusion that the appeal should be dismissed. That may lead to greater disillusion and greater unhappiness on the part of the accused person.
  As soon as the investigation has been completed and checks have been made into the statement, we shall be in touch with my hon. Friend. I assure him that I take this case seriously. It is a case which, as he said, has caused a great many people a great deal of anxiety. But I am far from accepting my hon. Friend's strictures on my right hon. Friend or on the Home Office. I assure him that this investigation will be carried out with diligence and that he will be made aware as soon as the result is received by the Home Office.
  With that assurance, I hope that the Ince case may be gone into yet again by my right hon. Friend and by the relevant authorities, so that we can see at least, if not total acceptance, a greater acceptance of the underlying basis of the case, because it is importance that justice should not only be done but should be seen to be done.
  Question put and agreed to.
  Adjourned accordingly at three minutes to One o'clock.

  PRIME MINISTER (ENGAGEMENTS)
  PRIME MINISTER (ENGAGEMENTS)
  NATIONAL ECONOMIC DEVELOPMENT COUNCIL
  NATIONAL ECONOMIC DEVELOPMENT COUNCIL
  PICKETING
  PICKETING
  TUC
  TUC
  CBI
  CBI
  PERINATAL CARE
  PERINATAL CARE
  MOZAMBIQUE
  MOZAMBIQUE
  EASTBOURNE
  EASTBOURNE
  PRIME MINISTER (SPEECH)
  PRIME MINISTER (SPEECH)
  EUROPEAN COMMUNITY HEADS OF GOVERNMENT
  EUROPEAN COMMUNITY HEADS OF GOVERNMENT
  INCOMES
  INCOMES
  DEVELOPING COUNTRIES
  DEVELOPING COUNTRIES
  BEXLEY
  BEXLEY
  NATIONALISED INDUSTRIES
  NATIONALISED INDUSTRIES
  CHELTENHAM
  CHELTENHAM
  HONG KONG
  HONG KONG
  POLICE FEDERATION
  POLICE FEDERATION
  DISABLED PERSONS (VEHICLES)
  DISABLED PERSONS (VEHICLES)
  LAW CENTRES
  LAW CENTRES
CIVIL SERVICE
  Departmental Staff
  Departmental Staff
  PALACE OF WESTMINSTER (SECURITY)
  PALACE OF WESTMINSTER (SECURITY)
HOME DEPARTMENT
  Entry Applications
  Entry Applications
  Metropolitan Police
  Metropolitan Police
  Mrs. Narmada Pragji Bharadia
  Mrs. Narmada Pragji Bharadia
  Football Grounds
  Football Grounds
  Police (Special Branches)
  Police (Special Branches)
  Fire Precautions (Hotels)
  Fire Precautions (Hotels)
  Bromley Byelaws (Inquiry)
  Bromley Byelaws (Inquiry)
  Prison Hospitals
  Prison Hospitals
  Departmental Staff
  Departmental Staff
DEFENCE
  Canberra Aircraft Accident (Huntingdon)
  Canberra Aircraft Accident (Huntingdon)
  Rents
  Rents
  Pre-retirement Courses
  Pre-retirement Courses
EDUCATION AND SCIENCE
  University Fees
  University Fees
  Grants
  Grants
  Autistic Children
  Autistic Children
  Pupil Costs
  Pupil Costs
  Class Size (Staffordshire)
  Class Size (Staffordshire)
  Teacher-pupil Ratios
  Teacher-pupil Ratios
  Departmental Staff
  Departmental Staff
  Mentmore Towers Collection
  Mentmore Towers Collection
  School Uniforms
  School Uniforms
FOREIGN AND COMMONWEALTH AFFAIRS
  Indonesia
  Indonesia
  Departmental Staff
  Departmental Staff
  Television Copyright
  Television Copyright
  Rhodesia
  Rhodesia
TRADE
  Bankruptcies
  Bankruptcies
  Life Assurance
  Life Assurance
  Agricultural Chemicals (Aerial Spraying)
  Agricultural Chemicals (Aerial Spraying)
  OPEC Countries
  OPEC Countries
  Merchant Navy (Deck Officers)
  Merchant Navy (Deck Officers)
  Air Freight Charges (United States of America)
  Air Freight Charges (United States of America)
  Departmental Staff
  Departmental Staff
  Japan
  Japan
  Insurance Industry (Code of Practice)
  Insurance Industry (Code of Practice)
SCOTLAND
  Fishery Protection
  Fishery Protection
  Education (Green Paper)
  Education (Green Paper)
  Ministerial Appointments
  Ministerial Appointments
  Teachers
  Teachers
  Fishing Limits
  Fishing Limits
  Prisoners
  Prisoners
  Carstairs Hospital (Escape)
  Carstairs Hospital (Escape)
  Criminal Damage Compensation
  Criminal Damage Compensation
  Housing Needs
  Housing Needs
  Departmental Questionnaires
  Departmental Questionnaires
SOCIAL SERVICES
  Invalid Care Allowance
  Invalid Care Allowance
  Child Benefit
  Child Benefit
  Disabled Persons
  Disabled Persons
  Homeless Persons
  Homeless Persons
  Pay Beds
  Pay Beds
  School Dental Service (Staffordshire)
  School Dental Service (Staffordshire)
  Children in Care
  Children in Care
  Elderly Persons (Accommodation)
  Elderly Persons (Accommodation)
  Elderly Mentally Infirm Persons in Care
  Elderly Mentally Infirm Persons in Care
  Abortions (Thanet)
  Abortions (Thanet)
  Cumbrian Health Authority (Finance)
  Cumbrian Health Authority (Finance)
  Unemployment Benefit
  Unemployment Benefit
  Prisoners (Girl Friends' Visits)
  Prisoners (Girl Friends' Visits)
  Dithranol Paste
  Dithranol Paste
  Unemployed Persons
  Unemployed Persons
  Population
  Population
  Broadmoor Hospital
  Broadmoor Hospital
  Committee on Safety of Medicines
  Committee on Safety of Medicines
  Regional Health Authorities
  Regional Health Authorities
SOCIAL SERVICES
  Supplementary Benefits Commission Re-establishment Centres
  Supplementary Benefits Commission Re-establishment Centres
  Occupational Pensions Board
  Occupational Pensions Board
  British Pharmacopoeia Commission
  British Pharmacopoeia Commission
  National Insurance Advisory Committee
  National Insurance Advisory Committee
  Industrial Injuries Advisory Council
  Industrial Injuries Advisory Council
  Dental Patients
  Dental Patients
  Children in Care
  Children in Care
  Departmental Staff
  Departmental Staff
  Family Income Support
  Family Income Support
ENVIRONMENT
  Litter
  Litter
  Palace of Westminster (Interior Redecoration)
  Palace of Westminster (Interior Redecoration)
  Regional Development Fund
  Regional Development Fund
  Housing Repairs
  Housing Repairs
  Derelict Land
  Derelict Land
  New Towns (Staffs)
  New Towns (Staffs)
  Rate Support Grant
  Rate Support Grant
  Housing Action Areas
  Housing Action Areas
  Planning Appeals
  Planning Appeals
  Departmental Staff
  Departmental Staff
  Fire Precautions
  Fire Precautions
INDUSTRY
  Government Aid
  Government Aid
  Shipbuilding
  Shipbuilding
  Wales
  Wales
  Regional Aid
  Regional Aid
  Vauxhall Motors
  Vauxhall Motors
  Accelerated Projects Scheme
  Accelerated Projects Scheme
  Departmental Staff
  Departmental Staff
PRICES AND CONSUMER PROTECTION
  Price Commission (References)
  Price Commission (References)
  Departmental Staff (Pre-retirement Courses)
  Departmental Staff (Pre-retirement Courses)
  School Uniforms
  School Uniforms
  Prices
  Prices
  Credit Reference Agencies
  Credit Reference Agencies
  Beer
  Beer
NORTHERN IRELAND
  Factory (Dundonald)
  Factory (Dundonald)
  Londonderry (Development Scheme)
  Londonderry (Development Scheme)
  Crumlin Road Prison
  Crumlin Road Prison
  Licensing Laws
  Licensing Laws
  Maghaberry Prison
  Maghaberry Prison
  Regional Development Fund
  Regional Development Fund
  Horticulture
  Horticulture
  Departmental Staff
  Departmental Staff
  Beef Imports
  Beef Imports
AGRICULTURE, FISHERIES AND FOOD
  Green Pound
  Green Pound
  Wine
  Wine
  Potatoes (Levy)
  Potatoes (Levy)
  Fishery Protection
  Fishery Protection
  Viticulture
  Viticulture
  Accession Compensatory Amounts
  Accession Compensatory Amounts
  Ministerial Appointments
  Ministerial Appointments
  Departmental Staff
  Departmental Staff
ENERGY
  Research and Development
  Research and Development
  Departmental Staff (Pre-retirement Courses)
  Departmental Staff (Pre-retirement Courses)
  Coal Mining
  Coal Mining
  Nuclear Material
  Nuclear Material
  Oil-related Industry
  Oil-related Industry
TRANSPORT
  Trunk Road Assessment
  Trunk Road Assessment
  Railway Fares (Scholars)
  Railway Fares (Scholars)
  Driver and Vehicle Licensing Centre
  Driver and Vehicle Licensing Centre
  Departmental Staff
  Departmental Staff
WALES
  Students
  Students
  Ministerial Appointments
  Ministerial Appointments
  Migrants
  Migrants
  Family Aid
  Family Aid
  St. Clears Bypass
  St. Clears Bypass
NATIONAL FINANCE
  Wages and Salaries
  Wages and Salaries
  Industry Act Assistance
  Industry Act Assistance
  Monetary Forecasts
  Monetary Forecasts
  Oil Production
  Oil Production
  Oil Revenue
  Oil Revenue
  Pay Settlements
  Pay Settlements
  Value Added Tax
  Value Added Tax
  Ministers of the Crown
  Ministers of the Crown
  Child Benefit
  Child Benefit
  Tax Thresholds
  Tax Thresholds
  European Investment Bank
  European Investment Bank
  Armed Services Personnel (Travel Expenses)
  Armed Services Personnel (Travel Expenses)
  European Community Aid
  European Community Aid
EMPLOYMENT
  Trade Unions
  Trade Unions
  Community Industry
  Community Industry
  National Dock Labour Board
  National Dock Labour Board
  Grimsby
  Grimsby
  Leek
  Leek
  Merseyside
  Merseyside
  Arundel
  Arundel
  Disabled Persons
  Disabled Persons
  Holiday Pay
  Holiday Pay
  Departmental Staff
  Departmental Staff
  Wales
  Wales

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Leicester.

SKYTRAINS: US PERMIT
Lord GISBOROUGH: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are satisfied that the United States Skytrain is fair to Laker Airways.
Lord ORAM: My Lords, the Government consider that the conditions attached to the United States permit for Laker Airways Skytrain are both onerous and unreasonable. Nevertheless, Laker Airways have announced that the Skytrain service will start in September.
Lord GISBOROUGH: My Lords, I thank the noble Lord for that Answer, which was not what I expected. May we have an assurance that, in the event that British Airways followed with a similar service, it would be without any form of public funds but on a purely commercial basis?
Lord ORAM: My Lords, consideration will have to be given to other applications for this kind of service. There have been reports of Pan-Am and TWA entering into this kind of business and we shall have to wait until their proposals are finalised.
Lord O'HAGAN: My Lords, would the Minister think it a good idea if our new Ambassador to the United States travelled on Skytrain to see for himself whether the set conditions are fair?
Lord BOYD-CARPENTER: My Lords, will the Government contemplate imposing similarly onerous conditions on any reciprocal American Skytrain service?
Lord ORAM: As I have indicated, my Lords, we shall have to consider any fares filed by the United States airlines in order to compete with Skytrain. I understand that the airlines are considering their proposals within IATA this week, but I do not know when they will be ready to file their applications. We shall have to await that situation.

NUCLEAR EXPLOSIONS AND THE ENVIRONMENT
3.8 p.m.
Lord KENNET: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether under the UK/USSR Joint Environmental Protection Agreement they have discussed either the Soviet Union's Northern River Reversal Programme, including the use of nuclear explosives, or the recently reported accidental nuclear explosion which is understood to have taken place in the Soviet Union in 1957 or 1958, and, if so, with what result.
Baroness STEDMAN: My Lords, there have been no formal discussions under the UK/USSR Joint Agreement on Co-operation in the Field of Environmental Protection on either matter, though some of the environmental implications of the river reversal scheme have been discussed informally by a delegation of water experts visiting the USSR under the Agreement.
Lord KENNET: My Lords, are the Government aware that it is very good that at least there have been informal discussions? Should there not be discussions on the terrible nuclear accident which has been reported? Nobody should be ashamed of an accident. Could we not learn lessons from them that we could then build into our own planning for the future of our nuclear industry? As for the river reversal scheme, given that it is likely to increase the level and decrease the salinity of the water in the Arctic and is likely to change the rainfall pattern all over central Asia, is it really acceptable that at a time of new and

413
intense climatic instability worldwide, such as we now have, such matters should go undiscussed formally and, if possible, multilaterally?
Baroness STEDMAN: My Lords, so far as the accident is concerned, we know no more than what has been reported in the Press. So far as discussions are concerned, I understand that the International Atomic Energy Authority, which is concerned with the peaceful uses of nuclear energy, has established an advisory group on the usefulness of peaceful nuclear explosions, and the Soviet Union are making a positive contribution to the group's work. So far as the river reversal programme is concerned, from the informal discussions which we have had we understand that the Soviet Union are very well aware of the potential risks to the Arctic icecap and that they are carrying out an extensive programme of research at all stages to ensure that the risks do not materialise.
Lord AVEBURY: My Lords, is the noble Baroness aware that, although the Soviet Union have denied that this accident ever took place, in scientific journals a number of papers have appeared by Russian authors on the contamination of fresh-water lakes by large volumes of radio nucleoli and that, because the current Windscale inquiry is examining the question of the possible contamination of the Irish Sea by the effluent from Windscale, it might be extremely relevant to have further data as a result of the Soviet experience? Would the noble Baroness make further inquiries into this incident with a view to ascertaining what actually took place and what measures the Soviet Union have for defending themselves in this area?
Baroness STEDMAN: My Lords, as I said earlier, we have no official reports of the nuclear incident other than what we have read in the Press. So far as any application to the Windscale inquiry is concerned, I am sure noble Lords will accept that I could not pronounce on anything to do with that while the inquiry is in progress.
Lord WYNNE-JONES: My Lords, have Her Majesty's Government any evidence, either of their own or from the
414
United States, that such an accident ever occurred?—because on the scale which is suggested it would almost certainly have been detected by both the United States and this country, and probably by other countries as well.
Baroness STEDMAN: No, my Lords; we have no information at all other than what we have read in the scientific Press.

"FOOD FROM OUR OWN RESOURCES" AND FISH
3.11 p.m.
Lord KENNET: 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 the new version of the White Paper Food from Our Own Resources which has been announced for next year will, unlike the earlier version, cover fish and, if not, why not.
Lord STRABOLGI: My Lords, the 1975 White Paper did not extend to fishery matters because the Government recognised that the fishing industry faced major uncertainties, placing it in a fundamentally different position from that of agriculture and necessitating separate consideration. That remains the Government's view today.
Lord KENNET: My Lords, is it really the Government's view that, if an industry faces major uncertainties, that is a reason for not considering it in a White Paper or a Green Paper? Should that not be a reason for considering it? If the uncertainties are present, as indeed they are, is it not possible to take maximum and minimum estimates of what may be the yield of fish in our waters in the future and to base certain arguments thereon? Without these, the White Paper as a whole will be virtually valueless. On the other hand, would they not provide useful ammunition for our negotiations in Brussels as well as for public education?
Lord STRABOLGI: My Lords, circumstances generally in the agricultural and horticultural sectors are such that strategic planning is feasible. A comparable facility does not exist, nor can

415
it exist, until the Common Fisheries Policy and other matters affecting future fishing opportunities have been resolved.
Baroness EMMET of AMBERLEY: My Lords, may I ask the Minister whether the committee, made up partly of the fishing industry and partly of the Ministry, which I understand have been considering the difficulties that the fish farming community encounter, are going to report soon, and whether we shall have some information on this matter?
Lord STRABOLGI: My Lords, we are still awaiting their report.
Lord BRUCE of DONINGTON: My Lords, is my noble friend aware that the European Economic Commission is already setting up its own separate directorate-general to deal with the whole question of fisheries? Therefore, would it not be convenient for us also to publish a separate White Paper dealing exclusively with the aspects of the fishing industry connected with the European side of it?
Lord STRABOLGI: My Lords, I do not think so, because this is very much a changing situation. Community agreement was reached in certain aspects of conservation matters, as I announced in your Lordships' House recently. Ministers will return to this question at further meetings of the Council in October.
Lord GLENKINGLAS: My Lords, does the Minister not agree that, important though the fishing industry perhaps is, there are also (to use his phrase) very great difficulties continuing in the agricultural industry? This does not prevent the Government from producing a White Paper, but does seem to prevent their doing anything about it. Will he therefore ask his colleagues to include fishing and agriculture in a White Paper, and do something about both?
Lord STRABOLGI: My Lords, one of the difficulties about fishing is that, while we have control of our agricultural produce, we have no control over the fish. They may spawn in one place and migrate hundreds of miles outside Community boundaries. I am afraid the fish have not heard of the Community.
Viscount THURSO: My Lords, is the noble Lord aware that this does not
416
apply to fish at fish farms? Why cannot fish farms be included in the White Paper?
Lord STRABOLGI: My Lords, fish farming is at the moment being considered by the fish farming industry, which will come to the Government with further recommendations, and we shall then have to consider this matter. I may say that, with regard to fish farming, it can affect only a very small proportion of our fish supplies —2,000 tons at the moment, as against 850,000 tons of landed deep-sea fish.
Baroness EMMET of AMBERLEY: My Lords, could the noble Lord not agree that this is because fish farming has not been sufficiently encouraged?
Lord STRABOLGI: No, my Lords. There are also difficulties in producing fish; difficulties of breeding, and so on. It is not the same as producing motor cars. Furthermore, we are limited by the water in this country.
Lord JANNER: My Lords, on the question of fish farming, may I ask my noble friend whether he has been in communication with the fish farmers of Israel, who have established a very highly developed fish farming industry there? Perhaps that would help the Government and those who are in the fish farming industry here to produce very much more than is being produced at present.
Lord STRABOLGI: My Lords, the fish produced in large quantities in Israel is carp, which is not suitable for the British Market.
Lord KENNET: My Lords, has not the main line of my noble friend's answers been a classic case of: first decide what to do and then define the problem?
Lord STRABOLGI: No, my Lords; because we are dealing with indefinables, and not with academic questions.

MULTIPLE SCLEROSIS: PRESCRIPTION CHARGES
3.16 p.m.
Baroness YOUNG: 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 those suffering from multiple sclerosis are excluded from the groups of persons entitled to an exemption from, or a refund of, prescription charges.
Lord WELLS-PESTELL: My Lords, the list of medical conditions which qualify for automatic exemption from prescription charges was the maximum on which agreement was possible with representatives of the medical profession. However, sufferers from multiple sclerosis who are housebound can claim exemption as having continuing physical disability which prevents them from leaving their residences except with the help of another person. The noble Baroness will know that exemption is also available on grounds of age or income; and, where exemption cannot be claimed, the prepayment certificate is available for those who need frequent prescriptions.
Baroness YOUNG: My Lords, in thanking the noble Lord for that full reply, may T ask him whether it would be possible for reconsideration to be given to the question of the exclusion of those suffering from multiple sclerosis from the list of illnesses for which an exemption can be claimed? Secondly, does he not think that, in the case of people who suffer from multiple sclerosis but who are just sufficiently able to leave their house, it is very hard that they are not eligible for this help in the way that other sufferers are eligible?
Lord WELLS-PESTELL: My Lords, I have some sympathy with the point of view which the noble Baroness puts forward. Our difficulty is that when the arrangements for exemption of those with specified medical conditions were discussed with the British Medical Association in 1968, the profession made it perfectly clear that they could agree to exemption only for readily identifiable medical conditions which called automatically for continuous long-term medication. That was in 1968. The list of exempt specified medical conditions has been periodically reviewed by all Governments since that date in consultation with the medical profession, and it was last discussed with the British Medical Association
418
in 1976, but I regret to say that it was not possible to agree to any extension. I do not think I can take it beyond that, but that is the position.
Lord WINSTANLEY: My Lords, does the noble Lord recollect that this provision was originally made to fulfil a commitment made by the then Prime Minister to exempt the chronic sick? Does he agree that, far from exempting the chronic sick, it merely exempts a group of people suffering from any one of a small number of chronic ailments, most of which, with the exception of diabetes, are very rare? In these circumstances, does the noble Lord not think that it is high time we reviewed this list again, particularly with a view to considering multiple sclerosis but also certain psychiatric and circulatory disorders which require long-term continuous medication?
Lord WELLS-PESTELL: My Lords, I thought I had made it clear that a succession of Governments had, since 1968, tried to get this extended with the BMA and have not succeeded. The reason why this is so is only part of what the noble Lord has said. The profession's representatives are unwilling that doctors should have to make discretionary judgments about individual patients seeking exemption. They did not feel that they could accept responsibility for identifying, for the purpose of exemption, conditions other than those specified. A succession of Governments have tried to get this reviewed since 1968.
Lord GEORGE-BROWN: My Lords, is the Minister aware that this raises a very serious issue? If successive Governments have taken the view that this is a medical condition which ought to qualify the sufferer for exemption, it is not satisfactory that the BMA should tell the Government or this House that it cannot be done. We do not accept that when other trade unions try to impose their will. At least, we say that we do not. Many in this House do not see why we should treat doctors differently. Should not this Government, backed by Parliament, tell the BMA, "Sorry, but Parliament has decided that this is a case for exemption from the requirements"?
Lord WELLS-PESTELL: My Lords, the questions that have been raised in this

419
House this afternoon can do nothing but good. I will see that they are conveyed to my right honourable friend in the hope that he may feel able to do something about the matter.
Baroness VICKERS: My Lords, can the noble Lord say how many cases of this disease exist? Does he realise that this is a very long-term disease and that it will be very desirable if some help can be given to the sufferers because this is a disease of which very little is known and for which there appears to be no cure? Will the noble Lord look into this to see the number involved and to push for action in the future?
Lord WELLS -PESTELL: My Lords, I cannot give the numbers off-hand without notice. I would remind the noble Baroness that sufferers from multiple sclerosis can claim exemption if their physical disability makes them house-bound. That helps only a small number and I take your Lordships' view about the need for this to be more widely applied.
Lord SEGAL: My Lords, has not the Department its panel of expert medical advisers? Cannot they be guided by the advice of their own panel instead of by the advice of the BMA?
Lord WELLS-PESTELL: My Lords, I think that I am treading on thin ice here. I will take note of my noble friend's observations.
Lord PLATT: My Lords, although I have great sympathy with anyone who is suffering from this horrible disease, did not the noble Baroness, Lady Vickers, put her finger on the spot, perhaps unwittingly, when she said that there is no cure. Am I not right in thinking that if a cure or a powerful drug which could cause amelioration of the symptoms were to be discovered tomorrow it would be put immediately on to the list?
Lord WELLS-PESTELL: My Lords, the crucial phrase in the present agreement is "continuous long-term medication". It may be necessary to look at that in the light of what has transpired here this afternoon.
Baroness EMMET of AMBERLEY: My Lords, does the noble Lord not
420
think that it is terrible to make people choose between declaring themselves house-bound or having their medication free?
Lord WELLS-PESTELL: My Lords, they cannot declare themselves housebound. That has to be established as a medical fact.
Baroness WOOTTON of ABINGER: My Lords, can my noble friend tell us what is the position about diabetics? They are, mainly, not house-bound. Do they get free prescriptions?
Lord WELLS-PESTELL: My Lords, they do. I was at some pains not to list all those who are entitled to exemption—largely because some of the words I cannot pronounce.

EDUCATION IN SCHOOLS IN ENGLAND AND WALES
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House, at a convenient moment after 3 p.m., my noble friend Lord Donaldson of Kingsbridge will repeat a Statement on Education in Schools in England and Wales.
THE SUMMER RECESS
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, the House will also want to know the dates of the Summer Recess. It is proposed that the House should rise on Friday, 29th July, and return on Wednesday, 26th October.

BRITISH LINEN BANK ORDER CONFIRMATION BILL
Report received.
Then, Standing Order No. 43 having been suspended (pursuant to Resolution of 13th July), Bill read 3a, and passed.

CRIMINAL LAW BILL [H.L.]
3.5 p.m.
The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich): My Lords, I beg to move that the Commons Amendments be now considered.
Moved, That the Commons Amendments be now considered.—(Lord Harris of Greenwich.)
On Question, Motion agreed to.

CRIMINAL LAW BILL [H.L.]

  COMMONS AMENDMENTS
  [References are to[Bill 108]as first printed for the Commons]
  1 Clause 1, page 2, line 14, leave out from "offence" to end of line 17 and insert
  "which is not punishable with imprisonment"
  2 Clause 3, page 2, line 43, leave out from "indictment" to end of line 46 and insert—

  "(a) in a case falling within subsection (2) or (3) below, to imprisonment for a term related in accordance with that subsection to the gravity of the offence or offences in question (referred to below in this section as the relevant offence or offences); and

  (b) in any other case, to a fine.

  Paragraph (b) above shall not be taken as prejudicing the application of section 30(1) of the Powers of Criminal Courts Act 1973 (general power of court to fine offender convicted on indictment) in a case falling within subsection (2) or (3) below".
  3 Page 3, leave out from beginning of line 11 to end of line 8 on page 4 and insert—
  "(3) Where in a case other than one to which subsection (2) above applies the relevant offence or any of the relevant offences is punishable with imprisonment, the person convicted shall be liable to imprisonment for a term not exceeding the maximum term provided for that offence or (where more than one such offence is in question) for any one of those offences (taking the longer or the longest term as the limit for the purposes of this section where the terms provided differ).
  In the case of an offence triable either way the references above in this subsection to the maximum term provided for that offence are references to the maximum term so provided on conviction on indictment".
  4 Clause 4, page 4, line 9, at beginning insert "Subject to subsection (1A) below"
  5 Clause 4, page 4, line 13, at end insert—
  "(1A) In relation to the institution of proceedings under section 1 above for conspiracy to commit—

  (a) an offence which is subject to a prohibition by or under any enactment on the institution of proceedings otherwise than by, or on behalf or with the consent of, the Attorney General, or

  (b) two or more offences of which at least one is subject to such a prohibition.

  subsection (1) above shall have effect with the substitution of a reference to the Attorney General for the reference to the Director of Public Prosecutions".
  6 Clause 4, page 4, line 15, after "offence" insert "which is not a summary offence".
  7 Clause 5, page 5, line 13, leave out "one year" and insert "six months".
  8 Clause 5, page 5, line 22, leave out "indictable".
  9 Clause 5, page 5, line 23, leave out "on conviction on indictment".
  10 Clause 5, page 5, line 29, at end insert—
  "(6A) Indictment and attempt to commit the offence of conspiracy (whether the conspiracy incited or attempted would be an offence at common law or under section 1 above or any other enactment) shall cease to be offences.".
  The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Lord Donaldson of Kingsbridge): My Lords, with the leave of the House, I beg to move that this House doth agree with the Commons in their Amendments Nos. 1 to 10. Amendment No. 1 is included in the interests of simplification; it does not alter the sense of the clause. The purpose of Amendments Nos. 2 and 3 is to make a change in the penalty provisions for conspiracy to commit offences carrying a penalty of imprisonment of one year or less and for conspiring to commit offences which do not carry a penalty of imprisonment. The effect is to make the penalty of imprisonment for conspiracy to commit an offence carrying a penalty of one year's imprisonment or less the same as for the related substantive offence. The penalty for conspiracy to commit an offence which is not punishable by imprisonment is limited to a fine. Amendments Nos. 8 and 9 are consequential. These Amendments are in line with the Law Commission's basic principle that the penalty for a conspiracy offence should be the same as, or closely related to, the penalty for the substantive offence.
  Amendments Nos. 4, 5 and 6 correct a defect in the drafting of Clause 4, whereby, in the case of conspiracy to commit summary offence for which the consent of someone other than the Director of Public Prosecutions is required, the consent of both the Director of Public Prosecutions and the other person would be required for the conspiracy charge. This would be unnecessary and administratively clumsy. The effect of the Amendments is to require the Attorney-General's consent for the conspiracy charge if his consent is required for the substantive offence and otherwise the Director of Public Prosecution's consent alone.
  Amendment 7 is a drafting Amendment, consequential on Amendment No. 24

  423
  which we shall come to later. The effect of Amendment No. 10 is to abolish the offence of incitement to conspire and attempt to conspire. During discussion of the Bill in Standing Committee in another place, the Government accepted that it was desirable to make it clear that there is to be no offence of "attempting" to conspire. The reason for this is that conspiracy is an inchoate offence, the essence of which is an agreement to do something unlawful and it is too remote from behaviour that actually does damage to have an offence of "attempting" to get someone to agree, or "inciting" them to agree. This Amendment has the support of the Law Commission.
  Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Donaldson of Kingsbridge.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  11 Clause 6, page 6, line 21, leave out subsection (3) and insert—
  "(3) In any proceedings for an offence under this section it shall be a defence for the accused to prove—

  (a) that at the time of the alleged offence he or any other person on whose behalf he was acting was a displaced residential occupier of the premises in question; or

  (b) that part of the premises in question constitutes premises of which he or any other person on whose behalf he was acting was a displaced residential occupier and that the part of the premises to which he was seeking to secure entry constitutes an access of which he or, as the case may be, that other person is also a displaced residential occupier".

  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 11. This Amendment has been linked with Amendment No. 14. With the leave of the House, it may also be convenient for me to refer to Amendments Nos. 15, 19, 20 and 29 to 35 which can then be dealt with formally later. These Amendments are essentially all concerned with the definition of "premises". When the Bill was before this House previously, the noble Earl, Lord Mansfield, asked during the Committee stage whether the Government thought it satisfactory for the Bill not to include a comprehensive definition of "premises". I undertook to look at the point. There was a Government
  424
  Amendment at Report stage to make it clear that in Clauses 6 and 8 "premises" meant a building and the adjacent land used in connection with the building. I argued that there were some dangers in going further by attempting an exhaustive definition of "premises", and that it might be better to leave it to the courts to reach a sensible interpretation in the light of the facts of each particular case. I do not think that the noble Earl, Lord Mansfield, was persuaded by that argument and he pressed the case for a full definition.
  Subsequently, the Government reexamined the matter and concluded, as the noble Earl hoped we would, that it is unsatisfactory for Parliament not to define "premises", particularly in view of the question whether "premises" should or should not include the access to those premises. The Amendments cover that point and, indeed, a number of others. I beg to move.
  Moved, That this House cloth agree with the Commons in the said Amendment.—(Lord Harris of Greenwich.)
  The Earl of MANSFIELD: My Lords, I will not detain your Lordships for more than a second or two, but will merely say that I am grateful to the Government and, in particular, to the noble Lord, Lord Harris of Greenwich, for considering the matter and, if I may say so, coming to a more satisfactory conclusion than when the Bill was last before your Lordships' House.
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  12 Page 6, line 37, leave out paragraph (b).
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 12 and with the consequential Amendment to Amendment No. 12 (Amendment 12A) standing in my name. With the leave of the House I will speak about Amendment 22. The main effect of these Amendments is to provide a more appropriate scale of penalties for the offences in Clauses 6 and 8. Having considered the views of interested parties both inside and outside Parliament, the Government are content that the maximum penalties available on summary conviction are adequate. I beg to move.
  Moved, That this House doth agree with the Commons in the said Amendment. —(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  AMENDMENT CONSEQUENTIAL ON COMMONS AMENDMENT No. 12
  12A Page 6, line 36, leave out second ("or").
  Lord HARRIS of GREENWICH: My Lords, I beg to move.
  Moved, That Amendment No. 12A be agreed to.—(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  13 Page 6, line 39, after "constable" insert "in uniform".
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 13. At the same time, perhaps I might speak to Amendments Nos. 21, 23, 25, 27 and 28. When this Bill was before this House, the noble Lord, Lord Wigoder, suggested that the powers of arrest under this Part of the Bill should be limited to constables in uniform. I undertook to consider the matter further and I subsequently wrote to the noble Lord with the Government's first thoughts, that it was not necessary to make this change in the Bill. Since then we have, as on the previous matter, reflected again, and there was a discussion in Standing Committee on this point. We have come to the conclusion that it is right to make the Amendment which is now before the House, which meets the point of the noble Lord, Lord Wigoder. I beg to move.
  Moved, That this House doth agree with the Commons in the said Amendment. —(Lord Harris of Greenwich.)
  Lord LEATHERLAND: My Lords, one petty point. The penultimate line on page 6, which is in the area of the Amendment we are considering, says:
  "A constable may arrest without warrant anyone who is, or whom he with reasonable cause, suspects to be, guilty of n offence under this section".
  Does that mean "an offence" or "no offence"? Both those phrases include the letter "n" which stands in isolation at the foot of this page.
  Lord HARRIS of GREENWICH: That is a shrewd point, my Lords, made by my noble friend. I will look into it. Clearly it is a typing mistake which can be dealt with without any formal Amendment coming before the House.
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  14 Page 7, line 4, at end insert "or of any access to any premises".
  3.35 p.m.
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in Amendment No. 14. This was discussed with Amendment No. 11. I beg to move.
  Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENTS
  15 Clause 7, page 7, line 5, leave out "subsection (2) below" and insert "the following provisions of this section".
  16 Clause 7, page 7, line 6, after "trespasser" insert "after having entered as such"
  Lord DONALDSON of KINGS-BRIDGE: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 15 and 16 and doth disagree with the Commons in their Amendments Nos. 17, 18, 19 and 20 but propose the Amendments on the Order Paper in the name of my noble friend Lord Harris in lieu thereof.
  Amendment No. 15 has already been debated with Amendment No. 11. Amendment No. 16 is technical. The effect is to secure that in no circumstances could the offence in Clause 7 be committed by a person who had entered premises lawfully, for example, to occupy them as a licensee, even though he had subsequently become a trespasser as a result of the withdrawal of his licence. I am sure that all noble Lords would agree that a person who had occupied premises lawfully ought not to have to leave them instantly on request in order to avoid arrest and conviction of a criminal offence. The civil procedure should be used in such cases.
  When Amendments Nos. 17 and 18 were debated in another place, my right honourable friend the Home Secretary said that the Government saw difficulties

  427
  about extending the scope of Clause 7 in the way the Amendments proposed because of the danger of abuse and the difficulties of enforcement. After the Amendments were debated at Report stage in another place there was further discussion between the Government and the Opposition about the possibility of some more limited extension of Clause 7 which would be less prone to abuse and more straightforward to enforce than the Amendments we have before us. It was agreed that Amendments Nos. 17 and 18 should be incorporated in the Bill on the understanding that they would be replaced at this stage of the Bill by something along the lines of these Government Amendments, which I will now briefly explain.
  The position of the displaced residential occupier is left undisturbed. But, in addition, the benefits of Clause 7 are extended to a "protected intending occupier", that is a person who has been allocated a tenancy by a local authority or a housing association and a person who has bought the freehold or a long lease on premises which he requires for occupation by himself as a residence. In each case there are supplementary provisions to prevent abuse, to ensure that the trespasser clearly understands his liability to be convicted of a criminal offence, and to give a police constable a firm basis on which to exercise the powers conferred by the clause. In the case of a local authority tenant there will have to be a certificate signed by the authority concerned to confirm that the tenancy has been allocated. In the case of a person who has bought a house or flat, he will have to make a properly witnessed statement to declare his interest in the premises and that he requires them for his own occupation.
  Amendments Nos. 19 and 20 belong with the group of Amendments on the definition of "premises" and "access" which we have already debated. They have to be replaced as a consequence of the Amendments proposed in lieu of Amendments Nos. 17 and 18. These Amendments extend the scope of Clause 7 to catch a carefully defined but important set of circumstances. We believe that there are sufficient safeguards against abuse and against the police being unable to act because it is too difficult to establish the position. They deserve to be welcomed by the House. I beg to move.
  Moved, That this House doth agree with the Commons in their Amendments Nos. 15 and 16.—(Lord Donaldson of Kingsbridge.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  17 Page 7, line 8, at end insert—
  "(1A) Subject to the following provisions of this section, any person who is on any premises used wholly for residential purposes as a trespasser is guilty of an offence if he fails to leave those premises on being required to do so by or on behalf of a person who, not being a displaced residential occupier, is nevertheless entitled to occupy the premises and who, at the time when the requirement to leave the premises is made, both intends within six weeks either to occupy the premises himself or (while remaining so entitled) to secure their occupation by some other person and informs the trespasser or causes him to be informed accordingly. The provisions of this subsection shall not make guilty of an offence any person holding over after the expiry of a tenancy or licence."
  AMENDMENTS MOVED IN LIEU THEREOF
  17A Page 7, line 8, leave out from first ("of") to end of line 8 and insert—
  ("(a) a displaced residential occupier of the premises; or
  (b) an individual who is a protected intending occupier of the premises by virtue of subsection (1A) or subsection (1C) below.
  (1A) For the purposes of this section an individual is a protected intending occupier of any premises at any time if at that time—

  (a) he has in those premises a freehold interest or a leasehold interest with not less than 21 years still to run and he acquired that interest as a purchaser for money or money's worth; and

  (b) he requires the premises for his own occupation as a residence; and

  (c) he is excluded from occupation of the premises by a person who entered them, or any access to them, as a trespasser; and

  (d) he or a person acting on his behalf holds a written statement—

  (i) which specifies his interest in the premises; and

  (ii) which states that he requires the premises for occupation as a residence for himself; and

  (iii) with respect to which the requirements in subsection (1B) below are fulfilled.

  (1B) The requirements referred to in subsection (1A)(d)(iii) above are—

  (a) that the statement is signed by the person whose interest is specified in it in the presence of a justice of the peace or commissioner for oaths; and

  429

  (b) that the justice of the peace or commissioner for oaths has subscribed his name as a witness to the signature;

  and a person is guilty of an offence if he makes a statement for the purposes of subsection (1A)(d) above which he knows to be false in a material particular or if he recklessly makes such a statement which is false in a material particular.
  (1C) For the purposes of this section an individual is also a protected intending occupier of any premises at any time if at that time—

  (a) he has been authorised to occupy the premises as a residence by an authority to which this subsection applies; and

  (b) he is excluded from occupation of the premises by a person who entered the premises, or any access to them, as a trespasser; and

  (c) there has been issued to him by or on behalf of the authority referred to in paragraph (a) above a certificate stating that the authority is one to which this subsection applies, being of a description specified in the certificate, and that he has been authorised by the authority to occupy the premises concerned as a residence.

  (1D) Subsection (1C) above applies to the following authorities:—

  (a) any body mentioned in section 14 of the Rent Act 1977 (landlord's interest belonging to local authority etc.);

  (b) the Housing Corporation; and

  (c) a housing association, within the meaning of section 189(1) of the Housing Act 1957, which is for the time being either registered in the register of housing associations established under section 13 of the Housing Act 1974 or specified in an order made by the Secretary of State under paragraph 23 of Schedule 1 to the Housing Rents and Subsidies Act 1975.")

  17B Page 7, line 8, line 9, leave out ("this section") and insert ("subsection (1) above")
  17C Page 7, line 8, line 14, leave out ("this section") and insert ("subsection (1) or (1B) above")
  17D Page 7, line 8, line 20, leave out ("this section") and insert ("subsection (1) above")
  Lord DONALDSON of KINGS-BRIDGE: My Lords, I beg to move that this House doth disagree with the Commons in their Amendment No. 17 and propose Amendments Nos. 17A to 17D in lieu thereof.
  Moved, That the House doth disagree with the Commons in the said Amendment and propose Amendments Nos. 17A
  430
  to 17D in lieu thereof.—(Lord Donaldson of Kingsbridge.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  18 Page 7, line 13, at end insert "or, as the case may be, a person within the description provided in subsection (1A)."
  AMENDMENT MOVED IN LIEU THEREOF
  18A Page 7, line 13, line 12, leave out from ("occupier") to end of line 13 and insert ("or protected intending occupier of the premises or a person acting on behalf of a displaced residential occupier or protected intending occupier").
  Lord DONALDSON of KINGS-BRIDGE: My Lords, I beg to move that this House doth disagree with the Commons in their Amendment No. 18 but propose Amendment No. 18A in lieu thereof.
  Moved, That the House doth disagree with the Commons in their Amendment No. 18 but propose Amendment No. 18A in lieu thereof.—(Lord Donaldson of Kingsbridge.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  19 Page 7, line 13, at end insert—
  "(2A) In any proceedings for an offence under this section it shall be a defence for the accused to prove—

  (a) that the premises in question are or form part of premises used mainly for non-residential purposes; and

  (b) that he was not on any part of the premises used wholly or mainly for residential purposes."

  AMENDMENT MOVED IN LIEU THEREOF
  19A Page 7, line 13, at end insert—
  ("(2A) In any proceedings for an offence under subsection (1) above it shall be a defence for the accused to prove—

  (a) that the premises in question are or form part of premises used mainly for non-residential purposes; and

  (b) that he was not on any part of the premises used wholly or mainly for residential purposes.

  (2AA) In any proceedings for an offence under subsection (1) above where the accused was requested to leave the premises by a person claiming to be or to act on behalf of a protected intending occupier of the premises—

  (a) it shall be a defence for the accused to prove that, although asked to do so by the accused at the time the accused was requested to leave, that person failed at that time to produce to the accused such a statement as is referred to in subsection (1A)(d) above or such a certificate as is referred to in subsection (1C)(c) above; and

  431

  (b) any document purporting to be a certificate under subsection (1C)(c) above shall be received in evidence and, unless the contrary is proved, shall be deemed to have been issued by or on behalf of the authority stated in the certificate.").

  Lord DONALDSON of KINGS-BRIDGE: My Lords, I beg to move that this House doth disagree with the Commons in their Amendment No. 19 but propose Amendment No. 19A in lieu thereof.
  Moved, That the House doth disagree with the Commons in their Amendment No. 19 but propose Amendment No. 19A in lieu thereof.—(Lord Donaldson of Kingsbridge.)
  On Question. Motion agreed to.

  COMMONS AMENDMENT
  20 Page 7, line 13, at end insert—
  "(2B) Any reference in the preceding provisions of this section to any premises includes a reference to any access to them, whether or not any such access itself constitutes premises, within the meaning of this Part of this Act."
  AMENDMENT MOVED IN LIEU THEREOF
  20A Page 7, line 13, at end insert—
  ("(2B) Any reference in the preceding provisions of this section, other than subsections (1A) to (1C) above, to any premises includes a reference to any access to them, whether or not any such access itself constitutes premises, within the meaning of this Part of this Act; and a person who is a protected intending occupier of any premises shall be regarded for the purposes of this section as a protected intending occupier also of any access to those premises.").
  Lord DONALDSON of KINGS-BRIDGE: My Lords, I beg to move that this House doth disagree with the Commons in their Amendment No. 20 but propose Amendment No. 20A in lieu thereof.
  Moved, That this House doth disagree with the Commons in their Amendment No. 20 but propose Amendment No. 20A in lieu thereof.—(Lord Donaldson of Kingsbridge.)
  On Question, Motion agreed to.

  COMMONS AMENDMENTS
  21 Page 7, line 18, after "constable" insert "in uniform"
  22 Clause 8, page 7, line 34, leave out paragraph (b).
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 21 and 22. At the same time I would point out that these were discussed with Amendments Nos. 12 and 13.
  Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT AS AN AMENDMENT TO THE BILL, CONSEQUENTIAL ON COMMONS AMENDMENT No. 22
  22A Page 7, line 33, leave out second ("or")
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 22A.
  Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  23 Page 7, line 36, after "constable" insert "in uniform".
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 23.
  Moved, That this House doth agree with the Commons in the said Amendment. —(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  24 Clause 9, page 8, line 38, leave out from "both" to end of line 40 and insert—
  "(5A) Proceedings for an offence under this section shall not be instituted against any person except by or with the consent of the Attorney General".
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 24. This Amendment has two effects: first, it brings the penalties into line with those in the rest of Part II of the Bill and in addition it requires the consent of the Attorney-General before a prosecution may be brought. In view of the possible international and public policy implications of the occupation of diplomatic premises, this seems to us a sensible precaution. It is quite a common

  433
  ground for requiring the consent of the Attorney-General.
  Moved, That this House doth agree with the Commons in the said Amendment. —(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  25 Page 8, line 41, after "constable" insert "in uniform".
  Lord HARRIS of GREENWICH: My Lords, I beg to move that the House doth agree with the Commons in their Amendment No. 25. We discussed this with Amendment No. 13.
  Moved, That this House doth agree with the Commons in the said Amendment. —(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  26 Page 9, line 8, at end insert—
  "(1A) Subsection (1) above does not apply unless the judgment or order in question was given or made in proceedings brought under any provisions of rules of court applicable only in circumstances where the person claiming possession of any premises alleges that the premises in question are occupied solely by a person or persons (not being a tenant or tenants holding over after the termination of the tenancy) who entered into or remained in occupation of the premises without the licence or consent of the person claiming possession or any predecessor in title of his".
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 26. It replaces a subsection which your Lordships' House removed. Clause 10 makes it a criminal offence to resist or obstruct a court officer executing a court judgment or order for the possession of premises. The Law Commission recommended the offence on the grounds that there is an increasing tendency for those occupying property without licence seriously to obstruct court officials seeking to enforce court orders. The Commission pointed out that it is mainly in relation to the enforcement of orders for possession under the summary procedure that the problems of enforcement have arisen on a fairly widespread scale.
  The summary procedure under Order 113 of the Rules of the Supreme Court and Order 26 of the County Court Rules
  434
  were introduced in 1970 to provide a quick remedy especially for cases involving squatters. Because that is where the greatest problem lay, the Commission propose that the offence should be limited to the obstruction of court officers executing orders under the summary procedure.
  When the clause was considered by your Lordships' House, some concern was expressed about this restriction and an Amendment in the name of the noble and learned Viscount, Lord Dilhorne, to remove it was carried at Report stage. The subsection was restored in another place in the Standing Committee. The Government do not seek to reintroduce it on the ground that an important principle is at stake—clearly, all court orders should be obeyed—but in considering proposals to extend the criminal law, we must have regard to the practicalities of the situation and in particular to the likely burden which the clause would impose upon the police. This point, I know, has been fully argued at previous stages of the Bill and your Lordships will not want me to rehearse again the Government's argument on this point. I hope your Lordships' House will show its regard for the many other difficult and important problems with which the police have to grapple by now agreeing with the other place in this Amendment.
  Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENTS
  27 Page 9, line 16, after "constable" insert "in uniform"
  28 Clause 11, page 9, line 27, after "constable" insert "in uniform".
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 27 and 28. They were discussed with Amendment No. 13.
  Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENTS
  29 Page 9, line 28, leave out "or other place"
  30 Clause 12, page 9, line 30, at beginning insert—
  "(1A) In this part of this Act—

  (a) "premises" means any building, any part of a building under separate occupation, any land ancillary to a building, the site comprising any building or buildings together with any land ancillary thereto, and (for the purposes only of sections 10 and 11 above) any other place; and

  (b) "access" means, in relation to any premises, any part of any site or building within which those premises are situated which constitutes at ordinary means of access to those premises (whether or not that is its sole or primary use).

  (1B) References in this section to a building shall apply also to any structure other than a movable one, and to any movable structure, vehicle or vessel designed or adapted for use for residential purposes; and for the purposes of subsection (l) above—

  (a) part of a building is under separate occupation if anyone is in occupation or entitled to occupation of that part as distinct from the whole; and

  (b) land is ancillary to a building if it is adjacent to it and used (or intended for use) in connection with the occupation of that building or any part of it".

  31 Clause 12, page 9, line 32, leave out "the premises" and insert "those premises, or any access to those premises".
  32 Clause 12, page 9, line 41, at end insert—
  "(2A) A person who by virtue of subsection (1) above is a displaced residential occupier of any premises shall be regarded for the purposes of this Part of this Act as a displaced residential occupier also of any access to those premises."
  33 Page 10, line 13, leave out "vacate" and insert "leave"
  34 Page 10, line 13, line 14, leave out from "shall" to end of line 16 and insert "anyone cease to be a displaced residential occupier of any premises by virtue of any such allowance of time to a trespasser".
  35 Page 10, line 13, line 21, leave out subsection (6).
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 29 to 35 en bloc. They were discussed with Amendment No. 11.
  Moved, That the House doth agree with the Commons in the said Amendments.— (Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  36 Clause 15, page 11, line 37, leave out "(4) Subsection (1) above is" and insert—
  "(3A) The following offences under the Night Poaching Act 1828 shall be
  436
  triable only summarily (instead of only on indictment), namely—

  (a) offences under section 2 of that Act (assaults by persons committing offences under the Act);

  (b) offences under section 9 of that Act (entering land, with others, armed and for the purpose of taking or destroying game or rabbits).

  (4) Subsections (1) and (3A) above are"
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 36. With the leave of the House, I should also like to speak now to Amendments Nos. 41, 73, 79, 85, 86, 101, 104, 105, 135,160, 161,180 and 195. The objects of this fairly formidable number of Amendments are, first, to deal with an oddity known as the conditionally indictable offence and, secondly, to update and rationalise penalties for offences under the Night Poaching Act.
  Moved, That the House doth agree with the Commons in the said Amendment.— (Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENTS
  37 Page 14, line 5, at end insert—
  "(1A) Before so considering, the court—

  (a) shall cause the charge to be written down, if this has not already been done, and read to the accused; and

  (b) shall afford first the prosecutor and then the accused an opportunity to make representations as to which mode of trial would be more suitable."

  38 Page 14, line 5, line 16, leave out "provisions of subsections (1) and (2) above" and insert "preceding provisions of this section"
  39 Page 14, line 5, line 23, leave out from "shall" to "in" in line 25 and insert "explain to the accused"
  40 Clause 22, page 15, line 3, leave out from "indictment," to end of line 39 and insert "the court shall tell the accused that the court has decided that it is more suitable for him to be tried for the offence by a jury, and shall proceed to inquire into the information as examining justices."
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 37 to 40 en bloc. The object of this group of Amendments is to simplify the procedure set out in Clauses 20 to 22 for determining the mode of trial of an "either way" offence. The changes have been suggested to us by the Justices' Clerks Society, and we think

  437
  they represent a significant improvement in the proposed procedures.
  Moved, That the House doth agree with the Commons in the said Amendments.—(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  41 Clause 30, page 22, line 37, at end insert—
  "(2A) A person who (by virtue of section 15 above) is summarily convicted of an offence under section 2 (assaults by persons committing offences under the Act) or section 9 (entering land, with others, armed and for the purpose of taking or destroying game or rabbits) of the Night Poaching Act 1828 shall be liable to imprisonment for a term not exceeding six months or to a fine not exceeding £500, or to both (instead of to a maximum penalty on conviction on indictment of seven years imprisonment or a fine or both for an offence under the said section 2, or of fourteen years imprisonment or a fine or both for an offence under the said section 9)."
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 41. This was discussed with Amendment No. 36.
  Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENTS
  42 Clause 31, page 23, line 6, at end insert—
  "(1A) This subsection applies to the following enactments (by virtue of which certain byelaws may make persons contravening the byelaws liable on summary conviction to a fine not exceeding £20), namely—

  (a) section 183 of the Public Health Act 1875 and section 237 of the Local Government Act 1972 (local authorities' byelaws) in their application to byelaws under any public general Act; and

  (b) paragraph 5 of Schedule 6 to the Weights and Measures Act 1963 (byelaws about solid fuel), including that paragraph as extended to wood fuel by paragraph 4 of Part IV of Schedule 7 to that Act.

  (1B) In the enactments to which subsection (1A) above applies for any reference to £20 there shall be substituted a reference to £50; and any provision in force at the coming into force of this subsection which—

  (a) is contained in any byelaw made under a public general Act by virtue of—

  438

  (i) any enactment to which subsection (1A) above applies; or

  (ii) section 251 of the Local Government Act 1933; and

  (b) specifies £20 as the maximum fine which may be imposed on summary conviction in respect of a contravention of, or offence under, any byelaw mentioned in that provision,

  shall have effect as if it specified £50 instead (but with no change by virtue of this subsection in the maximum daily fine, if any, for which it provides).
  The preceding provisions of this subsection are without prejudice to subsection (2) below."
  43 Clause 31, page 23, line 23, leave out "that" and insert "any such".
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 42 and 43. I should also like to speak at the same time to Amendments Nos. 129, 176 and 178. The first Amendment is the one of substance. The remainder are consequential. The Amendment increases from £20 to £50 the maximum fine which may be prescribed in local authority by-laws made under the more important by-law parent Acts. It also increases to £50 the maximum fine for all by-law offences made under the relevant enactments which carry £20 and are already in force. The increases, I should tell the House, have been welcomed by the local authority associations. The new maximum fine of £50 is in line with the lowest point on the new scale of summary maximum fines and is generally appropriate for the sort of offences covered by these by-laws.
  The increases apply to existing by-laws carrying a maximum of £20 made under the relevant Acts and will save local authorities having to remake all their recent by-laws to carry a higher maximum fine. A similar procedure was followed in the Criminal Justice Act 1967. My Lords, I beg to move.
  Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Harris' of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENTS
  44 Page 24, line 19, at end insert—
  "(7A) In section 67(6) of the Medicines Act 1968, for '£400' (which gives the maximum fine on summary conviction which can be imposed by regulations under section 66 for contravention of the regulations) there shall be substituted '£1,000'."
  45 Clause 32, page 24, line 43, at end insert—
  "(3) In paragraph 1(1) (d) of Schedule 2 to the European Communities Act 1972, for the words '£5 a day' (which give the maximum daily fine with which an offence created under the powers conferred by section 2(2) of that Act can under those powers be made punishable on summary conviction) there shall be substituted the words '£100 a day'."
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 44 and 45. It may be helpful if I deal at the same time with Amendments Nos. 74, 75, 100, 107 to 112 inclusive, 115, 117 to 119 inclusive, 133 and 137. The Amendments all involve an increase in the maximum summary fine for purely summary offences. I do not propose to go into detail about each one of them, since they are all fairly self-evident. But I can assure the House that each proposed increase is reasonable, and each fits in with the new scale of maximum summary fines provided in Schedule 6. Several of the increases are designed to bring financial maxima into line with those in the Bill as introduced, or those which were inserted at an earlier stage in this House. I commend these increases to the House. My Lords, I beg to move.
  Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  46 After Clause 32, insert the following new Clause—
  Penalty for offences under s. 3 of Explosive Substances Act 1883
  "For an offence under section 3 of the Explosive Substances Act 1883 (attempt to cause explosion, or making or keeping explosive, with intent to endanger life or property in the United Kingdom or the Republic of Ireland) the maximum term of imprisonment which may be imposed by a court in Great Britain shall be increased from twenty years to life".
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 46. With the leave of the House, I shall speak at the same time to Amendments Nos. 76, 80 and 136. These Amendments change the penalty in Section 3 of the Explosive Substances Act 1883 for conspiracy to cause an explosion from 20 years' imprisonment to life
  440
  imprisonment. This is in line with the penalty structure for conspiracy in the Bill. The Amendments to Clause 48 extend the provision to Scotland.
  Part I of the Criminal Law Bill prescribes comprehensive rules to determine the maximum penalty for a conspiracy by reference to the penalty for the object of the conspiracy. In its present form, the Bill has no effect on Section 3 of the Explosive Substances Act 1883, which makes it an offence to conspire to cause an explosion with a penalty of 20 years' imprisonment. The Law Commission made no recommendation for change here, apparently because they did not feel it to be their business. But this leaves Section 3 of the 1883 Act as the only example of conspiracy known to us, where the penalty for conspiracy to commit an offence will still be less than the penalty for the offence itself once the Bill becomes law. This is in no way an academic question since, as the House may recall, in the QE2 explosives trial at Winchester Mr. Justice Ackner sentenced two men to 20 years' imprisonment under Section 3, but suggested that life imprisonment should have been available to him. My Lords, I beg to move.
  Moved, That this House doth agree with the Commons in the said Amendment. —(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  47 After Clause 35, insert the following new clause—
  Supervision Orders
  " .—(1) In section 12 of the Children and Young Persons Act 1969 (power to include requirements in supervision orders) there shall be inserted after subsection (3) the following subsections:
  '(3A) This subsection applies to—

  (a) any supervision order made under section 7(7) of this Act in respect of a child or young person found guilty as there mentioned; and

  (b) any supervision order made in respect of a person under section 21 (2) of this Act by a court on discharging a care order made in respect of him under the said section 7(7).

  (3B) Subject to the following subsection (but without prejudice to subsection (2) or (4) of this section) a supervision order to which subsection (3A) of this section applies may require the supervised person to do as mentioned in all or any one or more of paragraphs

  441
  (a) to (c) of this subsection, that is to say—

  (a) to be of good behaviour;

  (b) to comply, for as long as the order remains in force, or until the end of some shorter period specified in the order, with such requirements as may be so specified, being requirements which, having regard to the circumstances of the case, the court making the order considers appropriate for the purpose of preventing the commission of further offences by the supervised person;

  (c) if he is of compulsory school age, to comply, for as long as he is of that age and the order remains in force, with such arrangements for his education as may from time to time be made by his parent, being arrangements for the time being approved by the local education authority.

  Expressions used in paragraph (c) of this subsection and in the Education Act 1944 have the same meaning there as in that Act.
  (3C) A requirement to do as mentioned in paragraph (b) of the preceding subsection shall not be included in a supervision order to which subsection (3A) of this section applies unless the supervised person, or if he is a child, his parent or guardian consents to its inclusion; and there shall not be included in such an order by virtue of the said paragraph (b)—

  (a) any requirement that would involve the co-operation of a person other than the supervisor and the supervised person unless that other person consents to its inclusion; or

  (b) any requirement requiring the specified person to reside with a specified individual or live at a specified place; or

  (c) any such requirement as is mentioned in subsection (4) of this section.'.

  (2) In section 15 of the Children and Young Persons Act 1969 (variation and discharge of supervision orders), after subsection (2) there shall be inserted the following subsection—
  '(2A) If while a supervision order to which section 12(3A) of this Act applies is in force in respect of a person who has not attained the age of eighteen it is proved to the satisfaction of a juvenile court, on the application of the supervisor, that the supervised person has failed to comply with any requirement included in the supervision order in pursuance of section 12 or section 18 (2)(b) of this Act, the court may, whether or not it also makes an order under subsection (1) of this section—

  (a) order him to pay a fine of an amount not exceeding £50; or

  (b) subject to section 16(10) of this Act, make an attendance centre order in respect of him.'

  442
  (3) The preceding provisions of this section, and any related amendment or repeal provided for in Schedule 9 or 10 to this Act, shall not apply in relation to supervision orders made before the coming into force of those provisions.".
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 47. With the leave of the House, I will speak at the same time to Amendments Nos. 98, 149, 150, 151 and 181. The purpose of these Amendments is to provide additional or more flexible powers to courts and supervisors in regard to children and young people placed under supervision, which are intended to strengthen the order and increase its effectiveness, particularly in dealing with the more difficult and recidivist offenders. Amendment No. 47 implements Recommendation 23 of the Eleventh Report of the Expenditure Committee in another place, that when making a supervision order the court should have the power to specify conditions with which the juvenile must comply, and that for any breach of these conditions (which would be with consent) the supervisor should be able to return the juvenile to the court, which would have the power to impose a fine or an attendance centre order while continuing the supervision order. Amendment No. 47 is limited to supervision orders made following criminal proceedings.
  The new clause provides sanctions by an amendment of Section 15 of the 1969 Act. The court will have power to impose a fine or, in the case of a boy, to make an attendance centre order. These sanctions would apply not only to the new requirements, but to existing requirements under Section 12 and Section 18(2)(b) of the 1969 Act, including requirements to participate in intermediate treatment.
  Amendment No. 149 implements a recommendation of the Personal Social Services Council for more flexible powers of supervisors in arranging intermediate treatment for children and young people placed under their supervision. It is hoped that the greater discretion provided will add to the effectiveness of the order, particularly in controlling and helping the more difficult offenders. My Lords, I beg to move.
  Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

EDUCATION IN SCHOOLS IN ENGLAND AND WALES
3.56 p.m.
Lord DONALDSON of KINGS-BRIDGE: My Lords, with the leave of the House, I wish to repeat a Statement made by my right honourable friend the Secretary of State in another place. She said this afternoon:
"With permission, Mr. Speaker, I should like to make a Statement about education in schools in England and Wales, on which my right honourable friend the Secretary of State for Wales and I are today presenting a Green Paper to the House.
"The Green Paper assesses the present stage of development of our schools and makes proposals and recommendations for their future development. Substantial progress has been made towards full comprehensive reorganisation of secondary education, and the Government are determined to press ahead to complete this process so that secondary education shall be equally available to all children over the full range of ability. Having secured that aim, the Government look to a period of stability in organisation and of improvement in educational standards.
"The Green Paper points to the need for positive discrimination to help those most in need; those handicapped in different ways including the disadvantage of a deprived environment; the ethnic minorities; travelling children and others; special measures are needed, both to help the pupils themselves and to encourage the recruitment of teachers with those attributes which can be of special value to disadvantaged children.
"It also underlines the importance of offering equal educational opportunities to girls as well as boys: the curriculum needs to reflect this, from the study of science to training in parenthood and domestic responsibilities.
"The Green Paper recognises that schools benefit in many ways from
444
building close links with the community; and that the groups most deeply involved with a school must always be the teachers and the parents. The Taylor Committee Report to be published in September will have more to say on this subject. Meanwhile, a circular on a matter of special importance—the information which is available to parents about their children's schools—is already out for consultation and comment and should be issued early in the new school year.
"It must be our concern together with our partners in the school education system in England and Wales—the local education authorities and the teachers—that the school curriculum should match the aptitudes and aspirations of boys and girls and of their parents for them as well as responding to national needs. The Government reject any idea of a central control of the curriculum; but they believe that all those with responsibility for the schools should consider whether these needs are now properly met. We therefore propose to ask each local education authority to consult with the local representatives of the teachers and with parents, employers and trades unions, in carrying out a review of their curricular arrangements. This review, and a joint study of what it reveals, will precede the preparation of any curriculum advice which we might then issue to local education authorities.
"The Green Paper also deals with the accountability of schools and the need for a soundly based means of assessment for the educational system as a whole, for the schools, and for individual pupils. The assessment of the school system as a whole rests with Her Majesty's Inspectorate who are moving towards quantitative analyses of what is done—for example, through the current surveys of primary and secondary schools which complement their traditional methods. Secondly, local education authorities need to be able to identify schools' problems in performance and to take remedial action. But league tables' based on standardised tests in isolation can be seriously misleading, as they neglect many important factors such as the school catchment area, the school's own objectives and external factors.

445
Thirdly, the assessment of individual pupils is a continuous process in which the teacher's own competence and knowledge are of prime importance. The development of diagnostic tests and greater consistency of practice in their use will be encouraged by the Education Department, but the Government reject the view that universal national testing basic literacy and numeracy is desirable.
"The Green Paper proposes further study of the concept of a leaving certificate for all pupils, and it stresses the need for high standards of professional accuracy in record-keeping of pupils' progress. The keeping of records should be included in the review of curricula arrangements.
"Any plans for improving the curriculum and raising standards must depend in large part on the full understanding and support of the teaching profession and on the quality of its members. We are concerned to improve the quality and relevance of initial training in a number of ways. First, we shall set higher minimum standards for entry and we shall require a qualification in English and in Mathematics; we also aim to continue the recruitment of mature people to teaching who can bring useful experience of the outside world into the profession, as well as more teachers from ethnic minorities. We are seeking ways of improving the college curriculum and the professional relevance of the training process.
"As the number of newly qualified teachers entering the schools falls, we intend to consult our partners regarding better arrangements for the induction period for newly qualified teachers entering the schools. They need support in a number of ways. The arrangements might involve some reduction in new teachers' workload, and experienced members of staff could be given special responsibility for overseeing their work and progress. I intend to consult the local authority associations and the teachers about these proposals and about other possible developments—for example, whether new teachers might be given an interim status when they complete their training and receive fully qualified status upon the satisfactory completion of probation. The Green Paper also envisages a major initiative in in-service training. This
446
would build upon the wide variety of provision already made and would aim to include the development of specialist centres, on a regional or national level.
"May I now turn to an aspect of our proposals which I should like to deal with in rather more detail. The Green Paper points to the need for employing authorities to develop more systematic approaches to the recruitment, training and deployment of their teachers during the period of declining pupil numbers. This changed situation will give scope for authorities to give more positive attention to the career development of their teachers, and to consider, for example, whether their present arrangements are such as to secure the best appointments to headships. I am confident that they will wish to proceed in the closest consultation with the teachers' representatives in all these matters.
"Various aspects of all these matters may need to be reviewed. I, for my part, pledge my willingness to join sympathetically in any discussions, especially where action on my part may be required. The overwhelming majority of teachers give devoted and efficient service throughout their careers. A difficult problem is posed by the small minority whose performance falls below an acceptable level of efficiency, for a variety of reasons—for example, from the effects of stress. Any cases of this nature will raise sensitive personal issues, and I expect authorities to offer the fullest consultation to the teachers' associations in working out procedures for dealing with them which clearly satisfy the requirements of fair practice.
"The Green Paper proposes the further development of links, both nationally and locally, between schools and productive industry; for more direct contacts between those working in schools and in industry to increase understanding on both sides. In particular, the Green Paper emphasises the need for a much wider development of careers education to widen the scope and expectations of boys and girls in their career plans and to take fuller advantage of the contributions which employers and trade unionists can make. The curriculum, interpreted in its widest sense, should be more outward

447
looking; it should place more emphasis on preparation for adult life in an internationally orientated, democratic and industrial society. Parents, local industry and the community at large all have a valuable part to play in helping schools to meet these needs.
"Mr. Speaker, there can be no end to debate on the education of our children, but there are times for self-examination and for the setting down of new objectives and new ways of reaching them. I believe this is such a time, and I look forward with confidence to the continued progress of our schools along the lines we have set out in the Green Paper".
My Lords, that is the end of the Statement.
4.6 p.m.
Lord BELSTEAD: My Lords, I am grateful to the noble Lord, Lord Donaldson of Kingsbridge, for repeating the Government's Statement on their Green Paper on Education. It would have been nice to have had a copy of this Statement before it was made.
Several noble Lords: Hear, hear!
Lord BELSTEAD: My Lords, I acquit the noble Lord in particular and the Government Front Bench in general of any discourtesy, because they are always extremely kind in this respect, but it makes me wonder whether the extraordinary gyrations which seem to have been going on in the Cabinet—The Times Educational Supplement referred to it as some members of the Cabinet crying "Forward" and others crying "Back"—led to the typing of this Statement literally being finished only in time for it to be put into the nervous hands of the Government spokesman on this occasion.
Lord DONALDSON of KINGS-BRIDGE: My Lords, I am not nervous.
Lord BELSTEAD: My Lords, the noble Lord has given us quite a lot of information; but the one thing which he did not say was that today's Statement stems from the Prime Minister's speech
448
at Oxford nine months ago, in which he identified, in particular, ways in which he thought that education could contribute to the recovery in our industrial and commercial life, which is so desperately needed. I am bound to say that in the nine months which have passed those problems have become more and not less apparent. I am also bound to say that having listened to the noble Lord, Lord Donaldson of Kingsbridge, I believe that this Statement comes dangerously near to saying that our education is good but ought to be better and that it is to this particular wheel that the Government are putting their shoulder—and very little else. May I substantiate that belief.
The Statement tells us that there is to be a review of the curriculum in each local education authority. Each local education authority will undertake this review, in company with widespread consultations, and then, as I understand the Statement, they will come back again to the Government from whom they have received this remit. Then it may be that the Government will indulge in giving some central advice. However, the Statement which has been made today has been preceded by a tremendous fanfare—by what has been called "the great debate". I had understood that in the great debate the local education authorities would be consulting representatives of the Government all over the country, and all those other bodies, to find out what everybody thought and that, as a result, the Government would then say what was to happen. I had genuinely thought that the Government would give the signal for some action today.
I should like to ask the Government whether they are aware that there is something of a crisis of confidence in the Education Service and that at the heart of the crisis lies the Government's insistence upon reorganising schools in the way which they believe to be right—on a totally blanket comprehensive basis. The Government have been warned on all sides in both Houses of Parliament that, although whether or not this is the right policy is arguable, one thing which is absolutely certain is that this policy will do no good to sixth-form teaching in this country.
There are certain points in this Statement which bear upon that view and which I

449
welcome. Indeed, it would be churlish of me not to do so. May I pick out two of them. The first relates to the teacher training proposals, and these I broadly welcome. I am sure that the Secretary of State is on the right lines, and the House will probably welcome the opportunity to debate at a later date this particular aspect of the Green Paper. The second relates to the sending out of prospectuses by schools, about which the noble Lord, Lord Elton, spoke when the Education Act was going through your Lordships' House.
However, today's Statement leaves unanswered some absolutely basic questions. First, should there be a common core to the curriculum? It was mentioned, but the Government presumably have no view. Should there be some national assessment of pupils at the start of their secondary courses? Again, assessment was mentioned but presumably the Government have no view on this basic question. Then we come to the members of Her Majesty's Inspectorate, the numbers of which are very much below par—so much so that the Secretary of State is apparently no longer able to have independent schools inspected for recognition status and has indeed told representatives of the independent schools that HMIs are not inspecting maintained schools in the same way. What is being done about that? Again, apparently, the Government have no view.
How are we to overcome the shortage of mathematics teaching?—the very thing that the Prime Minister laid his finger on when he made his Oxford speech. What is Government policy on strengthening sixth forms in a comprehensive system? Here—and I am nearly at the end—may I remind the Government that the Secretary of State's panacea—having more and more sixth form colleges—has been fundamentally criticised, not by the Opposition in either House of Parliament but by none other than the Chief Education Officer for the Inner London Education Authority, as being a panacea which is totally unworkable. Should there be an inquiry into religious education? I should have thought that this would have been the one opportunity that the Government could have taken, in answer to representations from all parts of your Lordships' House, to make a Statement
450
on that. Apparently, the Government have no views.
My Lords, I apologise for being so critical, but I had really thought that this Statement was going to be something of a mountain, which is what we had been led to believe. It sounds perilously as though it were a mouse, but to reach a final conclusion we must wait to read the document in full.
4.12 p.m.
Lord BEAUMONT of WHITLEY: My Lords, I, too, should like to thank the noble Lord for repeating that Statement. As the noble Lord, Lord Belstead, has said, it is difficult to react to it without having been able to see a copy, particularly since it is a very complicated Statement. Luckily, we have been able to have the Green Paper for 35 minutes, but 35 minutes is not a long time in which to study a Green Paper.
On the whole, we on these Benches very much welcome this Green Paper. It contains a large number of sensible proposals, a number of which we ourselves have been putting forward for some time past. I shall not take up the time of your Lordships' House by enumerating them, but I should not like the one or two criticisms that I have to make to detract from the fact that I think this a considerable advance.
It is a pity that we are apparently not going to discuss the possibility of altogether doing away with an externally monitored examination at 16. We are still about the only country in Europe which has one and we do not appear seriously to be considering this important reform. I think it a great pity that, as far as I can see, the Green Paper does not deal with the major problem of the relationship between schools and colleges of further education. The noble Lord, Lord Belstead, mentioned the whole question of sixth form colleges. In my view, this is something which ought to be explored in depth and we should like to know rather more than we do about Government thinking on the matter.
I have one small caveat. Of course, we should all welcome high standards for teachers and I very much welcome the Secretary of State's thinking that, at a time when there is widespread unemployment among teachers, we must concentrate

451
on seeing that we have the best teachers. I hope, though, that initial qualifications will be flexible. I am highly alarmed by the feeling that all teachers must be both numerate and literate to quite a large degree. Of course we should all like to be that but it is not entirely necessary. I am reminded that Professor C. S. Lewis was totally incapable of passing his mathematics responsions to get into Oxford University. He never would have got in had he not been exempted by the War, and we should have lost one of the greatest English scholars this country has ever had. This raising of arbitrary barriers must be subject to exceptions and must be made flexible, but there does not appear to be any sign of that in the Green Paper.
The only main question I have to ask is, where do we go from here? We now have a Green Paper and presumably, since that is the purpose of Green Papers, we are now going to continue with the great debate up and down the country about that Green Paper. Are we to have a White Paper and, if so, when are we to have it? Where do we go from here, my Lords?
4.5 p.m.
Lord DONALDSON of KINGS-BRIDGE: My Lords, I am grateful to the two noble Lords who have spoken—perhaps rather more grateful to the latter than to the former. The noble Lord, Lord Belstead, criticised the Green Paper really because it was not a White Paper. That seems to me to be rather short-sighted. The problems of education are colossal, enormous, extremely difficult and controversial. If I had come forward with a core curriculum and half a dozen other things that the noble Lord asked for, I should have got the stick from everywhere, and quite rightly. This must be dealt with slowly and carefully. The series of meetings which my right honourable friend has had about the country has done two things: to some extent it has told her what people are thinking, and to some extent it has told her how much people differ. Therefore I think she would be absolutely wrong to come out now with a series of hard and fast propositions.
Take, for example, the question of the core curriculum. The noble Lord says the Government have no views on this. I
452
apologise for the fact that the noble Lord has not had long to study this Green Paper, but when he has been able to study it he will see that the Government have perfectly clear views on the matter. The Government hold the view that a total curriculum centrally enforced is not what is required; but the Government also think that there probably ought to be a core, which is agreed—not enforced but agreed—among local authorities, of certain subjects which should not be eroded. That is a tentative position to take up, but it is a perfectly sensible one and, in my view, quite a satisfactory one. I do not think I can satisfy the noble Lord that my right honourable friend has done what she ought to have done; I can only satisfy him that I think she has done what she ought to have done, and I think it would have been a great mistake if she had done what he thinks she ought to have done.
In relation to the one comment made by the noble Lord, Lord Beaumont of Whitley, about standards, in the first place nothing is laid down for certain here, which is the virtue of the Paper because there is still room to discuss on the lines he raised; but I think that to say that because one man of genius managed to get to the top without passing an examination is not a reason for not giving anybody an examination. I think one should be very careful not to use such arguments.
Lord BEAUMONT of WHITLEY: My Lords, if the noble Lord will give way, that was not the point that I was making. The point I was making was that one does not have to be numerate in order to teach something like English extremely well, and that people who are in that unfortunate position should not be stopped from being able to pursue a teaching career.
Lord DONALDSON of KINGS-BRIDGE: My Lords, I accept the difference, which seems to be marginal. I have to confess that I think a modest equipment of numeracy is probably desirable in nine cases out of ten, even for teaching English. I will say no more. I am grateful to noble Lords for having received the Paper, and I apologise on behalf of my right honourable friend that your Lordships received it so late.
Baroness VICKERS: My Lords, I apologise for not being here for the

453
opening remarks of the noble Lord, but in view of the fact that infant classes have so few male teachers and that there are so many single or divorced women now, would it not be advisable to have in the schools more male teachers—this, I gather, is not mentioned in the Green Paper—in order to give the necessary support to the children?
Lord DONALDSON of KINGS-BRIDGE: My Lords, the Green Paper refers to the desirability of bringing more mature teachers into use, but it does not specify whether they should be men or women. The suggestion made by the noble Baroness is something which should be looked at very carefully.
Lord BOYD-CARPENTER: My Lords, can the noble Lord explain why, when the Government are, very properly, consulting parents, teachers and local education authorities on all sorts of important matters such as the curriculum, there is not included in that consultation the question of the retention of a limited number of selective grammar schools, where that is locally desired? Why is that excluded? Will the noble Lord, Lord Donaldson of Kingsbridge, also explain as regards the Government's attitude to selection, why selection is permitted, as I understand it, in the case of children who show proficiency in music and dancing but not in academic ability?
Lord DONALDSON of KINGS-BRIDGE: My Lords, we spent goodness knows how many hours discussing those points. If the noble Lord, Lord Boyd-Carpenter, had been here and had listened to those discussions he would not need to ask that question to which I propose to make no answer at the moment.
Lord BOYD-CARPENTER: My Lords, is the noble Lord, Lord Donaldson of Kingsbridge aware that that reply ensures that he will have to discuss the matter a great deal more.
Baroness GAITSKELL: My Lords, would it not be true to say that the answer to the question of the noble Lord, Lord Boyd-Carpenter, is that the Government are interested in educating most children—not just a few, and not just a select few?
454
They do not want to have entirely selective education; they want to educate most children to the highest degree of their potentiality.
Lord DONALDSON of KINGS-BRIDGE: My Lords, I am very grateful to the noble Baroness, Lady Gaitskell.

CRIMINAL LAW BILL [H.L.]
4.22 p.m.
Consideration of Commons Amendments resumed.

CRIMINAL LAW BILL [H.L.]

  COMMONS AMENDMENTS
  48 Insert the following new clause:
  Execution throughout United Kingdom of warrants of arrest
  ".—(1) A warrant issued in Scotland or Northern Ireland for the arrest of a person charged with an offence may be executed in England or Wales by any constable acting within his police area; and subsection (4) of section 102 of the Magistrates' Courts Act 1952 (execution without possession of the warrant) shall apply to the execution in England or Wales of any such warrant.
  (2) A warrant issued in England, Wales or Northern Ireland for the arrest of a person charged with an offence may be executed in Scotland by any constable appointed for a police area in like manner as any such warrant issued in Scotland.
  (3) A warrant issued in England, Wales or Scotland for the arrest of a person charged with an offence may be executed in Northern Ireland by any member of the Royal Ulster Constabulary or the Royal Ulster Constabulary Reserve; and sub-sections (4) and (5) of section 159 of the Magistrates' Courts Act (Northern Ireland) 1964 (execution without possession of the warrant and execution on Sunday) shall apply to the execution in Northern Ireland of any such warrant.
  (4) A warrant may be executed by virtue of this section whether or not it has been endorsed under section 12, 14 or 15 of the Indictable Offences Act 1848 or under section 27, 28 or 29 of the Petty Sessions (Ireland) Act 1851.
  (5) Nothing in this section affects the execution in Scotland or Northern Ireland of a warrant to which section 123 of the Bankruptcy Act 1914 applies".
  49 Insert the following new clause:
  Service of summonses and citation throughout United Kingdom
  ".—(1) A summons requiring a person charged with an offence to appear before a court in England or Wales, may, in such manner as may be prescribed by rules of court, be served on him in Scotland or Northern Ireland.
  (2) A summons requiring a person charged with an offence to appear before a court in Northern Ireland may, in such

  455
  manner as may be prescribed by rules of court, be served on him in England, Wales or Scotland.
  (3) Citation of a person charged with a crime or offence to appear before a court in Scotland may be effected in any other part of the United Kingdom in like manner as it may be done in Scotland, and for this purpose the persons authorised to effect such citation shall include, in England and Wales and Northern Ireland, constables and prison officers serving in those parts of the United Kingdom."
  50 Insert the following new clause:
  Transfer of fine orders
  " . Schedule (Transfer of fine orders) to this Act (which confers powers on courts in Northern Ireland, and extends the existing powers of courts in England, Wales and Scotland, to make transfer of fine orders) shall have effect".
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 48, 49 and 50 which, with the consent of the House, I shall move en bloc. I should like at the same time to speak to Amendments Nos. 77, 89, 90, 92 to 94, 99, 120, 130, 165, 170, 175, 179, 183, 185 to 187 and 189 to 193. This formidable looking set of Amendments is concerned with the service and execution of process throughout the United Kingdom. As your Lordships will recall, we had a debate on this subject during the Report stage of the Bill, I think on 10th March, when the noble Lord, Lord Campbell of Croy, moved on behalf of the noble Lord, Lord Inglewood, Amendments with much the same objectives as these Amendments.
  On that occasion I indicated that the Government shared the concern which was felt about the inability of the police to prosecute people who commit minor offences, especially road traffic offences, in England, Wales or Scotland and who then return to Northern Ireland, where they are immune from prosecution because the law does not allow summonses to be served there. I said that consultations were already in progress about the formulation of proposals for legislation, and that while we could not guarantee that these would have been concluded in time to introduce the appropriate Amendments, we would certainly do our best. These Amendments are the result and your Lordships can judge of the complexity involved by the number and, indeed, the length of the Amendments.
  456
  The important Amendments are Nos. 48, 49, 50 and 120. Amendment No. 48 enables a warrant of arrest issued in one part of the United Kingdom to be executed in another part of the United Kingdom without the need to have the warrant backed, that is to say, signed by a magistrate in the other jurisdiction—an unnecessary formality which at present has to be gone through. Amendment No. 49 enables a summons which requires a person charged with an offence to appear before a court in one part of the United Kingdom, to be served on him in any other part of the United Kingdom. Amendment No. 50 confers powers on courts in Northern Ireland to make transfer of fine orders, and extends the existing English and Scottish powers to make such orders so as to enable them to make transfers to, and receive transfers from, Northern Ireland. The Schedule—Amendment No. 120—sets out in detail the procedure for doing this.
  I think that these formidable Amendments demonstrate the problem which the noble Lord, Lord Campbell of Croy, identified at the Report stage. It would be only right to pay a considerable tribute to the officials not only in my own Department but in others, who have wrestled with this problem and come up with this solution which I think will meet with the satisfaction of the House.
  Moved, That this House doth agree with the Commons in the said Amendments. —(Lord Harris of Greenwich.)
  Lord CAMPBELL of CROY: I should like to express the appreciation both of myself and my noble friend Lord Inglewood for the fact that the Government have been able to put down this large number of Amendments clearly dealing with a complicated situation. I assume from what the noble Lord, Lord Harris of Greenwich, has said, that they will remove the anomaly which existed and will enable summonses to be served on operators of vehicles in Northern Ireland whose vehicles commit offences in Scotland, England or Wales. There are many more vehicles now coming over from Northern Ireland, and this has been an increasing source of grievance especially in South-West Scotland and North-West England.
  I, too, should like to pay a tribute to the work which the officials must have

  457
  carried out in the time between the Report stage and when these Amendments were considered in another place. I am sure that they will be welcomed, not only in the areas that I have mentioned but in other parts of the country where there has been this grievance about the apparent immunity of certain drivers of vehicles.
  On Question, Motion agreed to.

  COMMONS AMENDMENTS
  51 Before Clause 36, insert the following new clause:
  Transfer of remand hearings
  ".—(1) A magistrates' court adjourning a case under—

  (a) section 6 of the Magistrates' Court Act 1952 (committal proceedings), or

  (b) section 14(1) of that Act (trial of information), or

  (c) section 19(4) above,

  and remanding the accused in custody may, if he has attained the age of seventeen, order that he be brought up for any subsequent remands before an alternate magistrates' court nearer to the prison where he is to be confined while on remand.
  (2) The order shall require the accused to be brought before the alternate court at the end of the period of remand or at such earlier time as the alternate court may require.
  (3) While the order is in force, the alternate court shall, to the exclusion of the court which made the order, have all the powers in relation to further remand (whether in custody or on bail) and the grant of legal aid which that court would have had but for the order.
  (4) The alternate court may, on remanding the accused in custody, require him to to be brought before the court which made the order at the end of the period of remand or at such earlier time as that court may require; and, if the alternate court does so, or the accused is released on bail, the order under subsection (1) above shall cease to be in force.
  (5) Schedule (Transfer of remand hearings) to this Act shall have effect to supplement this section."
  52 Insert the following new clause:
  Remand of accused aready in custody
  ".—(1) When a magistrates' court remands an accused person in custody and he is already detained under a custodial sentence, the period for which he is remanded may be up to 28 clear days.
  (2) But the court shall enquire as to the expected date of his release from that detention; and if it appears that it will be before 28 clear days have expired, he shall not be remanded in custody for more than 8 clear days or (if longer) a period ending with that date.
  (3) So long as he is detained under a custodial sentence, an application for him to be further remanded in custody may be made and determined without his appearance in court, provided that he is represented
  458
  by counsel or a solicitor who signifies the accused's consent to the application being heard in his absence".
  Lord HARRIS of GREENWICH: My Lords, I beg to move that the House doth agree with the Commons in their Amendments Nos. 51 and 52 which, with the consent of the House. I should like to move together. At the same time I should like to speak to Amendment No. 121. These Amendments are related because they all concern difficulties which can arise from the requirement that a person who was remanded in custody before trial must be brought back before a magistrates' court within eight days.
  Amendments Nos. 51 and 121 have been brought forward with the object of avoiding the lengthy journeys from prison to court for what are often routine remand hearings, in cases where both the prosecution and defence are not yet in a position to proceed. This is achieved by empowering a magistrates' court which is adjourning a case and remanding the accused in custody, to order that, for any subsequent remands, he is to be brought up before a magistrates' court nearer to the prison where he will be kept in custody which, in the Amendments we refer to as "the alternate magistrates' court". The order will transfer to the alternate court all the powers relating to further remands, including the power to grant bail and legal aid. But the alternate court will have no power to deal with the substance of the charge, that is, it will not be able to try him or to hold committal proceedings and so on. It is given jurisdiction for a very limited purpose and as soon as the prosecution and defence are ready to proceed with the substance of the matter, they will inform the alternate court which, at the next remand hearing will remand the accused back to the first court. We believe that these provisions will afford some significant relief to the prisons and to the police; and accordingly, I commend the Amendments to the House.
  Moved, That this House doth agree with the Commons in the said Amendments. —(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  53 Insert the following new clause:
  Peremptory challenge of jurors
  " . The provisions of section 12(1) of the Juries Act 1974 shall be amended so as to substitute in paragraph (a) thereof 'three' for 'seven'."
  53A The Lord Gifford to move, That this House doth disagree with the Commons in their Amendment No. 53.
  [Amendment No. 53 A not moved.]
  Lord HARRIS of GREENWICH: My Lords, in the absence of my noble friend Lord Gifford I think that I should move that this House doth agree with the Commons in their Amendment No. 53.
  Section 12(1) of the Juries Act 1974 provides that a person on trial for an offence on indictment may challenge not more than seven jurors without cause and all or any of the jurors for cause. This new clause would have the effect of reducing from seven to three the number of challenges without cause, or peremptory challenges as they are normally called, permitted to each defendant in such circumstances. It reflects the growing criticism that the defendant's right of peremptory challenge is being increasingly abused by certain defence counsel who hope, by its manipulation, to secure a jury which they feel will be more likely to favour their client's case. Having considered these criticisms most carefully, the Government have come to the conclusion that it would be wrong to permit the present system of peremptory challenges, whereby each defendant can challenge up to seven jurors without showing cause, to continue unaltered.
  Moved, That this House doth agree with the Commons in the said Amendment. —(Lord Harris of Greenwich.)
  Lord WIGODER: My Lords, I am sorry that the noble Lord, Lord Gifford, is not here to move Amendment No. 53A because this is a matter that requires some little attention, and perhaps rather more attention than it received in the other place, where the issue was disposed of extremely rapidly with very little argument on either side. I have no intention of standing in in place of the noble Lord, Lord Gifford, because I support the Amendment as it was passed in another place—which is that there should be a reduction in the number of jurors who may be challenged without cause.
  I should like to make three comments on this proposal. First, there is not and there never has been any magic in the number seven, which is the present number of jurors who may be challenged without
  460
  cause. I suppose that there was a theoretical argument that seven was one more than half the number of the jury and therefore if one objected to a jury as a whole one could get rid of over half of them before the trial started. I doubt whether that argument has any force any longer; certainly it cannot have had since majority verdicts came into force, which means that the number seven no longer has any magic power about it. Therefore, a lesser number might well be substituted for the figure seven.
  Secondly, I hope that the noble Lord, Lord Harris of Greenwich, will forgive me if I dissociate myself as strongly as possible from his observation that the present right of challenge without cause has been abused. It has not been abused and it cannot be abused. There is a complete and absolute right in a defendant and, through a defendant, his legal representative to challenge a juror for any reason or for none, for good reason or for bad; because he does not like the colour of his hair or the colour of his skin; or because he does not like the political content of the newspaper that he happens to be carrying with him into the jury box. Any defendant, or any member of the Bar on a defendant's instructions, who has challenged seven jurors in those circumstances has been fully entitled to do so, and I am sure that the Bar would not accept the criticism that the system has in any way been abused. The system exists, with a complete, absolute unarguable right and it is, indeed, an abuse of language to suggest that any defendant can be abusing a system in exercising his rights.
  The third observation I wish to make—and it is this that leads me to think that it might be sensible to reduce the figure from seven to three—is that these days there are a number of very long trials in the course of which a very large number of defendants appear in the dock; many of us would say that very often there are too many defendants. However, it is not in any way unusual to start a long trial with 10, 15 or sometimes 20 defendants in the dock. Indeed, on one occasion I represented 38 defendants who could not all get into the dock because of sheer weight of numbers.
  At the beginning of a trial each defendant has at present a right to challenge seven jurors, which has to be taken into account.

  461
  One must take into account the fact that some jurors may be challenged for cause; one has to take into account the fact that if it is a long trial a large number of jurors who are called into the box will say that they cannot serve for reasons of personal hardship. In the result it is no exaggeration to say that before a long trial starts some 200 to 300 members of the public are called to court and wait at the back of the court in order that 12 of them might be chosen to serve on a particular jury.
  That is a very great waste of public time and public expense and it is a great inconvenience to those people who are called. It does not lead the jurors who are not chosen to respect our system of law. In these circumstances, it is perhaps right that the right of summary challenge—that is, of peremptory challenge—should be maintained but that a reduction in the numbers could properly be made without in any way impairing a defendant's right to a fair trial. Therefore, I venture to support the Amendment in the form in which it has come back from another place.
  The Earl of MANSFIELD: My Lords, I was intrigued by the remark of the noble Lord, Lord Wigoder, that counsel have never abused the right of peremptory challenge. I well remember that I used to abuse it when I defended robbers. I want to ask the noble Lord, Lord Harris of Greenwich, whether the system still continues. I have on occasions, in company with the noble Lord, Lord Wigoder, defended a number of "high-class robbers", if I may so call them, so I know what used to happen. We got hold of the roll of jurors at the Old Bailey and used to go down it; anyone who came from W.1 or S.W.3 was immediately challenged by one of us. Equally, if there was a lady on the jury who looked what I might call "well turned out and presentable" she also was challenged.
  There was absolutely no doubt that we could influence the composition of a jury if there were five or six robbers before a court by means of 35 challenges, so that eventually we got a layabout lot of unemployed males on the jury. If that system still prevails, I support Amendment No. 53. However, if it does
  462
  not and defendants really are left to peremptory challenge—which simply depends on the appearance of the would-be juror—then I think it is pointless.
  Lord HALE: My Lords, I am grateful to the noble Lord, Lord Wigoder, for his comments. Like the noble Lord, I am sorry that the noble Lord, Lord Gifford, did not move his Amendment. I imagine that he did not anticipate that we should have dealt with 50 or 60 Amendments by 4.30 p.m., including a Statement. I must say that I had the same feeling; I never thought that we should be able to do so either. When we move Amendment No. 20 with Amendment No. 78, Amendment No. 103 and Amendment No. 139, someone might wonder what the common or garden Back-Bencher can do except shuffle papers like a pack of cards and fail to find the ace.
  I entirely agree with the comment of the noble Earl, Lord Mansfield. In the provinces we used to obtain a copy of the jury list and probably in serious cases where our clients were liable to a considerable charge we looked down it —we usually employed a retired policeman for the purpose. If he came back on a case involving drink and said that one of the jurymen was the president of the teetotallers' Association, we put a tick against that man. In Ireland, where deep religious issues were involved, there used to be—and it was not considered to be terribly wrong—a famous Lord Chief Justice who was colloquially called "Peter the Packer" because he could pack any jury, and by some mysterious means when there was a Catholic in the dock 12 Protestants were invariably summoned to sit in the jury box. If he was asked his reasons—and he was a very cheerful and witty man—he would say, "It is the only way of getting a conviction in Ireland", which is true. On the other hand, it is not the duty of a solicitor or an advocate for the defence greatly to assist in securing a conviction. So it was a valuable right.
  I should not want to press this any further because, as one knows, the pressure on the courts and the multiplicity of actions in the courts make jury service a very considerable burden on people, and one many people are reluctant to undertake. In those circumstances, and with reluctance, I am not prepared to

  463
  suggest that opposition to the Commons Amendment goes any further. Whether or not it will be good I am not sure.
  4.10 p.m.
  Lord SIMON of GLAISDALE: My Lords, I should also like to support the Commons in their Amendment. As the noble Lord, Lord Wigoder, said, it is perhaps wrong to speak of an abuse of a constitutional right, but undoubtedly it is a misuse to use the right of challenge to get a jury which is other than what a jury should be—namely, a microcosm of the whole of our democratic society. It was always said that, in Ireland in the last century, the Crown counsel automatically challenged any man who came into the jury box without a collar on. Obviously if everybody without a collar has to stand by for the Crown, the jury is unlikely to be a microcosm of society. I entirely agree that where one has a multiplicity of defendants, to allow each to challenge without cause seven people coming into the jury box is inherently likely to get a jury which is other than a complete microcosm of society, and I think is a misuse of a constitutional process.
  Lord PONSONBY of SHULBREDE: My Lords, I, like the noble Lord, Lord Wigoder, am sorry that the noble Lord, Lord Gifford, has been unable to be here this afternoon to press his Amendment, because I must confess some worry about the Commons Amendment in this case. As has been said, the essence of our jury system is that a man is being tried by his fellow citizens, or by a microcosm of his fellow citizens as seen in the jury. It is important that it should be seen from the prisoner's point of view that the jury does in fact represent that microcosm of society.
  One can think of the cases when the person to be tried is a woman, for example, or is a member of a particular racial group, when the counsel defending a particular client will want to be sure that in fact that particular constituent of society as a whole is adequately represented in the jury. It may take a number of challenges in order to bring that section of the community on to the jury. Therefore, the fact that one is proposing to reduce the number of challenges from
  464
  seven to three seems to me to make it that much more unlikely that one will in fact get a microcosm of society as a whole on a particular jury.
  Lord HARRIS of GREENWICH: My Lords, I shall speak only briefly in reply because I think that all who have spoken have, broadly speaking, accepted the Commons Amendment, with the possible exception of my noble friend Lord Ponsonby. I would settle with the noble and learned Lord. Lord Simon of Glaisdale, for "misuse" of the present system rather than "abuse", if I can carry the noble Lord, Lord Wigoder, with me in that, although I am bound to say that what we were told by the noble Earl, Lord Mansfield, sounded rather more like abuse than misuse of the present system.
  The Earl of MANSFIELD: My Lords, I must set the record straight. When appearing on behalf of the Crown I used to stand by jurors on behalf of the prosecution just as shamelessly.
  Lord HARRIS of GREENWICH: My Lords, this has been a fascinating exercise, certainly, to a non-lawyer like myself, who has been aware of the mounting concern about the practice of a number of counsel in using the peremptory challenge very vigorously. I have found this a highly educational experience, as I think have all others who have sat here during this short debate.
  Let me give one or two examples of the sort of problem with which we have been confronted. I think that the noble Earl, Lord Mansfield, invited me to do just that. In a case at the Old Bailey in March 1973, seven defendants were charged with offences involving conspiracy to defraud. They initially challenged approximately 40 jurors off the jury and when, subsequently, following the arrest of another person in the same connection, a new jury was empanelled to try the case, they challenged another 22 potential jurors. In the opinion of the trial judge, those challenges seemed designed to secure a jury of people who would be unlikely to understand the intricacies of fraud. To me, that sounds an extremely disturbing situation.
  It is important to maintain the confidence of the accused person that he will

  465
  be tried fairly, and I think that what is provided for in these Amendments will achieve that. There will still be three peremptory challenges for every defendant. It is also important to maintain public confidence in the administration of the criminal justice system of the country. I do not believe that practices of this sort create that climate of confidence. Nor do they do so in the police service, whose interests should also not be totally ignored in considerations of this sort.
  On Question, Motion agreed to.
  [Amendment No. 53A not moved.]

  COMMONS AMENDMENTS
  54 After Clause 36, insert the following new clause:
  Cases where magistrates' court may remit offender to another such court for sentence
  ".—(l) Where a person who has attained the age of seventeen ('the offender') has been convicted by a magistrates' court ('the convicting court') of an offence to which this section applies (' the instant offence ') and—

  (a) it appears to the convicting court that some other magistrates' court (the other court) has convicted him of another such offence in respect of which the other court has neither passed sentence on him nor committed him to the Crown Court for sentence nor dealt with him in any other way; and

  (b) the other court consents to his being remitted under this section to the other court,

  the convicting court may remit him to the other court to be dealt with in respect of the instant offence by the other court instead of by the convicting court.
  (2) The offender, if remitted under this section, shall have no right of appeal against the order of remission.
  (3) Where the convicting court remits the offender to the other court under this section, it shall adjourn the trial of the information charging him with the instant offence, and—
  (a) section 105 of the Magistrates' Courts Act 1952 (remand in custody or on bail) and all other enactments (whenever passed) relating to remand or the granting of bail in criminal proceedings shall have effect in relation to the convicting court's power or duty to remand the offender on that adjournment as if any reference to the court to or before which the person remanded is to be brought or appear after remand were a reference to the court to which he is being remitted; and (b) subject to subsection (4) below, the other court may deal with the case in any way in which it would have power to deal with it (including, where applicable, the remission of the offender under this section to another
  466
  magistrates' court in respect of the instant offence) if all proceedings relating to that offence which took place before the convicting court had taken place before the other court.
  (4) Nothing in this section shall preclude the convicting court from making any order which it has power to make under section 28 of the Theft Act 1968 (orders for restitution) by virtue of the offenders' conviction of the instant offence.
  (5) Where the convicting court has remitted the offender under this section to the other court, the other court may remit him back to the convicting court; and the provisions of subsection (3) above (so far as applicable) shall apply with the necessary modifications in relation to any remission under this subsection.
  (6) This section applies to—

  (a) any offence punishable with imprisonment; and

  (b) any offence in respect of which the convicting court has a power or duty to order the offender to be disqualified under section 93 of the Road Traffic Act 1972 (disqualification for certain motoring offences);

  and in this section 'conviction' includes a finding under section 26(1) of the Magistrates' Courts Act 1952 (remand for medical examination) that the person in question did the act or made the omission charged, and 'convicted' shall be construed accordingly."
  55 Clause 37, page 28, line 18, after "him" insert "(being an offence of which he has been convicted by that or any other court)".
  4.44 p.m.
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 54 and 55 which, if it is for the convenience of the House, I should propose to take en bloc. Your Lordships will recall that, during the Committee stage in this House, we discussed an Amendment, inspired by the Magistrates' Association and moved by the noble Earl, Lord Mansfield, with the general object of concentrating in the hands of one court the task of sentencing a person convicted of offences by different magistrates' courts. The Government accepted the principle behind the Amendment and undertook to examine the proposal in detail with a view to bringing forward its own Amendment, and this Amendment is the outcome of our deliberations.
  Although it appears at first sight to be somewhat complex, this is mainly because of the need to adapt certain procedural matters. Essentially, the clause enables a magistrates' court, after

  467
  convicting a person of an offence which carries imprisonment or disqualification from driving, to transfer the case to another magistrates' court for sentence, if that other court has already convicted the person in question of such an offence but has not yet sentenced him. The proposal is designed to avoid separate—perhaps incompatible—sentences being imposed on a person within a short space of time by different courts. I think that this meets the point put to us by the noble Earl, Lord Mansfield, and I am very grateful to him for having put it to us.
  Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  56 After Clause 37, insert the following new clause:
  Prison sentence partly served and partly suspended
  ".—(1) Where a court passes on an adult a sentence of imprisonment for a term of not less than six months and not more than two years, it may order that, after he has served part of the sentence in prison, the remainder of it shall be held in suspense.
  (2) The part to be held in suspense shall be not more than three quarters and not less than one quarter of the whole term, and the offender shall not be required to serve that part unless it is restored under subsection (3) below; and this shall be explained to him by the court, using ordinary language and stating the substantial effect of that subsection.
  (3) If at any time after the making of the order he is convicted of an offence punishable with imprisonment and committed during the whole period of the original sentence, then (subject to subsection (4) below) a court which is competent under this subsection may restore the part of the sentence held in suspense and order him to serve it.
  (4) If a court, considering the offender's case with a view to exercising the powers of subsection (3) above, is of opinion that (in view of all the circumstances, including the facts of the subsequent offence) it would be unjust fully to restore the part of the sentence held in suspense, it shall either restore a lesser part or declare, with reasons given, its decision to make no order under the subsection.
  (5) Where a court exercises those powers, it may direct that the restored part of the original sentence is to take effect as a term to be served either immediately or on the expiration of another term of imprisonment passed on the offender by that or another court.
  (6) 'Adult' in this section means a person who has attained the age of twenty-one;
  468
  and 'the whole period' of a sentence is the time which the offender would have had to serve in prison if the sentence had been passed without an order under subsection (1) above and he had no remission under section 25(1) of the Prison Act 1952 (industry and good conduct in prison).
  (7) Schedule (Matters ancillary to section (Prison sentence partly served and partly suspended)) to this Act has effectwith respect to procedural, sentencing and miscellaneous matters ancillary to those dealt with above in this section, including in particular the courts which are competent under subsection (3) above.
  (8) This section and paragraphs 1 to 6 of Schedule (Matters ancillary to section (Prison sentence partly served and partly suspended)) to this Act and the Powers of Criminal Courts Act 1973 shall be construed and have effect as if this section and those paragraphs of the Schedule were contained in that Act.".
  4.48 p.m.
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 56. I should like to speak at the same time to Amendment No. 95 and to the related new Schedule which is Amendment No. 122. The new clause and the related Schedule introduce a new form of sentence of which part should be served in custody and part held in suspense, to be activated if the offender is convicted of an imprisonable offence committed during the period of sentence. Courts already have the power, in relation to prison sentences of up to and including two years, to order that the sentence shall not take effect unless the offender is convicted of a fresh imprisonable offence. In that event, the original sentence must be activated in full unless the court decides that it would be unjust to do so—in which case it may impose a lesser term or make no order. There is at present no power to suspend part of a sentence, and that, of course, is what we now have before us.
  The new sentence differs from full suspension in several significant aspects. To start with, the offender serves the first portion of his sentence in prison, whereas a defendant made subject to a fully suspended sentence will not, unless he reoffends, go to prison at all. Secondly, partial suspension is only available for those over 21 years of age. Young prisoners under 21 are released from prison on licence, under the terms of which they may, of course, be returned to prison if they misbehave. It would not be right for

  469
  a young prisoner to be subject on release from prison to the requirements of a young prisoner licence and also to the liability to activation of the suspended portion of a partially suspended sentence. A young prisoner licence is, from some points of view, very close indeed to partial suspension.
  Thirdly, the sentence may be suspended only for its nominal length and not, as in the case of full suspension, for longer. Finally, there is now power for courts to make a supervision order on the suspended portion of the sentence. Partial suspension is different from full suspension; the experience of prison gives the offender an extra incentive not to commit another offence during the suspended portion. If courts see the need for supervision as paramount in a particular case, then I hope that they will continue to use their present powers of full suspension.
  Partial suspension will not apply to sentences of more than two years—the present limit for full suspension—so as not to overlap with the requirements of the parole system. The minimum sentence is six months, which means that the shortest period which may be ordered to be spent in custody is six weeks. A period shorter than that would, in our judgment, present a number of practical difficulties. Both the maximum period which could be suspended and the minimum to be spent in custody on a sentence of less than six months would really be too short to be worthwhile. By making a sentence of six months available, the new order is within the range of sentences which may be used by magistrates' courts.
  The new sentence will, in our judgment, enlarge the scope of the sentencing power of courts. It should provide a salutary check to a number of offenders who will not only see how disagreable deprivation of liberty can in fact be but will also be given an extra incentive to keep out of trouble. I have taken rather more of the time of the House on this particular Amendment than on others, because I think that it will generally be agreed that this is an important matter which deserves the attention of the House. I beg to move.
  Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Harris of Greenwich.)
  4.52 p.m.
  Baroness WOOTTON of ABINGER: My Lords, far be it from me to throw a spanner in the works on an Amendment which my noble friend is prepared to accept, but I do think that we ought to realise that we are getting into an extremely complicated situation. If we accept this Amendment, there will be three different sets of circumstances in which persons can be released from prison before the end of their nominal sentence. First, there is the normal one-third remission. In each of these three sets of circumstances, they will come out under different controls or no control. If they come out after their ordinary remission, they will be free men, as free as anybody here or outside this House who has never been convicted of anything. If they come out on parole, they will be on licence, and will be liable to be recalled, so long as their nominal sentence lasts, if they break the conditions of their parole. If they come out on this partially suspended sentence then they will be liable, if they should commit another offence, for so long as the suspended period continues, to serve the remainder of the sentence that has been suspended, plus anything they may be given for the subsequent offence.
  So we have three sets of circumstances and three kinds of possible release. I think we shall all, both those on the Bench and those in the dock, need to take to court our little calculators and computers. I do see that this has been carefully designed so that there should not be an overlap with parole in the sense that the same person may be eligible both for parole and for a partial suspension, but do we really need a totally new sentence for this? That, I think, is arguable.
  What may also be important is not just the complications but the fact that this will be a temptation, particularly as it is available to magistrates' courts. The words "over six months" would have put a different complexion on it and would have confined it to the Crown Court, but the words used are,
  "not less than six months and not more than two years."
  The "not less than six months" brings it into the purview of the magistrates' courts. In magistrates' courts, sentences are decided by the common view of several

  471
  magistrates, usually three. One magistrate may say, "I think this chap ought to go inside for three months". Another magistrate may say, "No, I think he ought to have a suspended sentence for six months". After a certain amount of discussion, the third magistrate, probably the chairman, will say, "Let us have a compromise; let us give him six months and suspend half of it", or, "Let us give him a four months sentence and suspend two months of it." This is a temptation which may lead courts to put into prison for very short terms with a suspended period afterwards, a lot of people who would never have gone to prison before. The one thing we do not want to do, surely—even if we think a taste of prison may have a salutary effect—is to clutter up the prisons with a lot of "ins and outs" with very short sentences, which will add enormously to the prison burdens.
  If we really want to release people after a shorter period than at present provided by parole, which is either after one year or a third of the sentence, whichever is the longer, a simpler means to the same effect would be to alter the conditions of parole. We are now inventing a new variety of suspension in order to cover what must be a very small number of people—those who are not eligible for parole because their sentences are not long enough, and those for whom we do not feel able to fix a term which would be satisfactory for them to spend inside. I do not want to resist this Amendment, but I do want to point out that it creates certain risks and immense complications.
  Lord WIGODER: My Lords, I welcome this new clause because it is a further weapon in a range, which should be as extensive as possible, in the hands of the Judiciary in passing sentence. At the same time, I am bound to echo the fears expressed by the noble Baroness. I can quite see that there will be cases in which a court may feel that the appropriate sentence is one of, let us say, two years' imprisonment, but that it is not necessary that the defendant should serve the whole of the sentence, although it is not possible to suspend the whole of the sentence.
  Baroness WOOTTON of ABINGER: My Lords, if I may intervene, why is the two years necessary if it is not necessary
  472
  to serve it? Why do we have to say two years when we mean half that period?
  Lord WIGODER: My Lords, I accept that. I am only seeking to point out that I can see that there are certain circumstances in which this clause might be used, and as a result a person might go to prison for a shorter period of time than he otherwise would; so to that extent the clause will serve its purpose. But I have a very real anxiety that the opposite situation may also arise. It very frequently happens that a Crown Court judge is faced with a situation in which he feels that the appropriate sentence is one of 18 months or two years, and he is genuinely undecided as to whether that sentence should be suspended or not. As the law stands at present, I think more often than not the judge who is anxious to be lenient would suspend the sentence and the man would not go to prison.
  I think there is a very real danger that under this clause a compromise would be reached, by the judge deciding that he would still pass the sentence and suspend a certain part of it. I would suggest to the noble Lord, Lord Harris, that the most careful scrutiny will have to be given during the next year or two to the way in which this clause operates, to ensure that it is serving its purpose and not leading to more rather than fewer people being put into prison.
  The other matter I would raise is this. Is it really necessary, where a part of a sentence is ordered to be served, that it has to be as much as a quarter of the whole term? I raise that question for this reason. There is a very substantial and growing school of thought which believes that the effective part of a prison sentence, at least upon a person of good character, is what is sometimes referred to as the "door clanging behind him syndrome". It is the first few days of realising that he is in a situation in which he has lost his liberty and contact with his family and friends and is finding life extremely unpleasant.
  There is much to be said for the view that a short sentence, actually served, of perhaps two, three or four weeks, might be more than sufficient to ensure that a first offender in those circumstances is extremely unlikely to offend again. Therefore I wonder whether, at least in due course, though obviously not at this stage, when one sees how this provision is

  473
  working, it may be possible to consider combining it with a situation in which very short immediate custodial sentences might be passed as part of a long-term suspended sentence.
  The Earl of MANSFIELD: My Lords, I too welcome the new Clause, and for similar reasons to those given by the noble Lord, Lord Wigoder. It provides a new part of a judge's or bench's armoury which I think, especially in the case of a short, sharp sentence, will be very welcome. I see the noble and learned Lord, Lord McCluskey, in his place, and I hope it is not an abuse of the procedures of the House to say—and I say this in my capacity as president of the Scottish Association for the Care and Resettlement of Offenders—that I hope he is following what is going on (I do not say that rudely) and that he will talk to the Lord Advocate about it. If the present Government are in power next Session—and of course I hope they are not—and we do not have a very full legislative timetable, I hope that something of the same nature might be considered for Scotland, where as yet we do not even have suspended sentences.
  Baroness MACLEOD of BORVE: My Lords, I welcome the new clause and think it will help magistrates. However, I am wondering why an adult has to be 21 because, as we know, the rate of crime from 17 to 21 is escalating, as it is in the juvenile courts. I think it would be more helpful if this provision could apply directly the juvenile becomes an adult. I agree with the noble Baroness that unless something further is laid down for magistrates it is quite likely that more use will be made of sending some people to prison whereas now suspended sentences are given, and that would in some cases be defeating the object of the Bill. With the proviso of hoping that the age limit may be reduced to 17, I welcome the new clause.
  5.4 p.m.
  Lord HARRIS of GREENWICH: My Lords, I am grateful to all noble Lords who have spoken. I do not find myself in a great deal of disagreement with the noble Lord, Lord Wigoder, or indeed with my noble friend Lady Wootton. This is a difficult matter and it would be foolish to make any firm predictions about what the courts will do with this
  474
  power. Our view—and certainly we should not have favoured the Amendment had we not come to this view—is that it will, on balance, lead to a reduction rather than an increase in the size of the prison population. However, this is a matter in which it is perfectly possible to have two views and we will certainly study the matter with the greatest care. As my noble friend Lady Wootton said, it is indeed a complicated matter. There is, as she rightly said the, question of one-third remission; but of course the one-third remission will apply to this sentence as well, as it does to parole cases too, and now there will be the partially suspended sentence.
  The noble Baroness, Lady Macleod of Borve, raised the question of the under 21s. The point here is that an under 21 offender who comes out of prison, comes out on the basis of a YP licence and, as I said earlier, it is not in our view appropriate to have both a partially suspended sentence and a YP licence affecting the same people. It would be incredibly complicated and in my view would lead to an unsatisfactory situation; therefore, we have taken the view that it should be 21 and over.
  As for the point made by the noble Lord, Lord Wigoder, on the 25 per cent. figure, again the position is the very difficult one of balance. What would be the effect of following the noble Lord's advice? Our view is that, on balance, it would lead to a possible increase in the size of the prison population. I accept that it is perfectly possible to take a different view. Nevertheless, on balance we have come to the conclusion that this provision is desirable in order to ensure that the whole thing does not get out of hand. Again, my thanks to noble Lords who have participated in this short and interesting debate, and I can certainly undertake that we shall keep the closest watch on how this new sentence works out.
  On Question, Motion agreed to.

  COMMONS AMENDMENTS
  57 Clause 38, page 28, line 37, leave out "an offence triable either way" and insert "a prescribed offence or an offence of any prescribed class"
  58 Page 29, line 13, leave out "and"
  59 Page 29, line 13, line 17, at end insert and (c) may make different provision with

  475
  respect to different offences or offences of different classes."
  60 Page 29, line 13, line 18, leave out from beginning to second "to" in line 20 and insert "It shall not be open to a person convicted of an offence".
  5.6 p.m.
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 57 to 60 en bloc. This group of Amendments relates to a matter which has attracted debate at every stage in your Lordships' House, though on this occasion I do not think we need spend long on it. The Amendments to Clause 38, which contains the power to make rules providing for advance disclosure of the prosecution case—the noble Lord, Lord Wigoder, and I devoted a great deal of attention to this, as did many others—are Amendments which I think the noble Lord will have had the opportunity to study; they make rather more sense of the provision and make the drafting a great deal more satisfactory.
  Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Harris of Greenwich.)
  Lord WIGODER: My Lords, I very much welcome this as a substantial step forward and I am grateful to the Government for their co-operative attitude in the matter. If it is within our rules of order, perhaps I might raise a small matter. Even after the Amendment was carried in Standing Committee in the other place, when the Bill was reprinted it still contained in the side note and in the table of contents at the beginning the words:
  "Power to make rules for offences triable either way".
  That is now a wholly misleading description and I hope that in due course that will be rectified before the Bill is finally printed.
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  61 After Clause 38, insert the following new clause:
  Power to order search of person before Crown Court
  After section 34 of the Powers of Criminal Courts Act 1973 there shall be inserted—
  34A.—(1) Where—

  (a) the Crown Court imposes a fine on a person or forfeits his recognizance;

  (b) the Crown Court makes against a person any such order as is metioned
  476
  in paragraph 3, 4 or 9 of Schedule 9 to the Administration of Justice Act 1970 (orders for the payment of costs);

  (c) the Crown Court makes against a person any such order as is mentioned in paragraph 12 of that Schedule (fines etc. payable by parents or guardians) other than an order under section 35 of this Act; or

  (d) on the determination of an appeal brought by a person under section 83 of the Magistrates' Courts Act 1952 a sum is payable by him, whether by virtue of an order of the Crown Court or by virtue of a conviction or order of the magistrates' court against whose decision the appeal was brought,

  then, if that person is before it, the Crown Court may order him to be searched.
  (2) Any money found on a person in a search under this section may be applied, unless the court otherwise directs, towards payment of the fine or other sum payable by him; and the balance, if any, shall be returned to him".'.
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 61. This Amendment has been brought forward in the hope that it will improve the enforcement of sums ordered at the Crown Court and, at the same time, will afford some small relief to magistrates' courts, which are responsible for enforcing Crown Court orders. The I clause gives the Crown Court power to order a person who is before it and who, broadly speaking, has been ordered to pay a sum of money by way of fine, costs, forfeited recognizance or certain other sums to be searched while he is at court and any money found on him to be applied, at the discretion of the court, towards payment of the sum. Such a power is already available to magistrates' courts and is found to be useful in circumstances where courts have reason to think that the defendant has the means on him to pay his fine.
  Moved, That this House doth agree with the Commons in the said Amendment. — (Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  62 After Clause 39, insert the following new clause:
  Bomb hoaxes.
  ".—(1) A person who—

  (a) places any article in any place whatever; or

  477

  (b) dispatches any article by post, rail or any other means whatever of sending things from one place to another,

  with the intention (in either case) of inducing in some other person a belief that it is likely to explode or ignite and thereby cause personal injury or damage to property is guilty of an offence.
  In this subsection article' includes substance.
  (2) A person who communicates any information which he knows or believes to be false to another person with the intention of inducing in him or any other person a false belief that a bomb or other thing liable to explode or ignite is present in any place or location whatever is guilty of an offence.
  (3) For a person to be guilty of an offence under subsection (1) or (2) above it is not necessary for him to have any particular person in mind as the person in whom he intends to induce the belief mentioned in that subsection.
  (4) A person who maliciously threatens otherwise than by letter or writing to kill or murder any person is guilty of an offence.
  (5) A person guilty of an offence under this section shall be liable—

  (a) on summary conviction, to imprisonment for a term not exceeding three months or to a fine not exceeding £1,000, or both;

  (b) on conviction on indictment, to imprisonment for a term not exceeding five years."

  AMENDMENTS MOVED IN LIEU THEREOF
  62A After Clause 39, insert the following new clause:—
  Bomb hoaxes.
  (" . — (1) A person who—

  (a) places any article in any place whatever: or

  (b) dispatches any article by post, rail or any other means whatever of sending things from one place to another,

  with the intention (in either case) of inducing in some other person a belief that it is likely to explode or ignite and thereby cause personal injury or damage to property is guilty of an offence.
  In this subsection "article" includes substance.
  (2) A person who communicates any information which he knows or believes to be false to another person with the intention of inducing in him or any other person a false belief that a bomb or other thing liable to explode or ignite is present in any place or location whatever is guilty of an offence.
  (3) For a person to be guilty of an offence under subsection (1) or (2) above it is not necessary for him to have any particular person in mind as the person in whom he intends to induce the belief mentioned in that subsection.
  (4) A person guilty of an offence under this section shall be liable—

  (a) on summary conviction, to imprisonment for a term not exceeding three
  478
  months or to a fine not exceeding £1,000, or both;

  (b) on conviction on indictment, to imprisonment for a term not exceeding five years.")

  62B Page 47, line 15, leave out ("sending letters threatening to murder ") and insert (" threats to kill ")
  62C Page 49, line 20, leave out (" sending letters threatening to murder ") and insert (" threats to kill ")
  62D Page 75, line 40, at end insert—
  ("OFFENCES AGAINST THE PERSON ACT 1861 (c. 100)
  For section 16 (sending letters threatening to murder) substitute—
  "Threats to kill
  16. A person who without lawful excuse makes to another a threat, intending that that other would fear it would be carried out, to kill that other or a third person shall be guilty of an offence and liable on conviction on indictment to imprisonment for a term not exceeding ten years.".")
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth disagree with the Commons in their Amendment No. 62 but propose Amendments, Nos. 62A, 62B, 62C, and 62D in lieu thereof. It may assist the House if I begin by explaining that there are two matters which have become entangled here. The first is the provision on bomb hoaxes, which was introduced by the Government in another place. The second is the provision on threat to kill or murder which was added later but which now appears as subsection (4) of the new clause proposed by Amendment No. 62. The effect of the Amendments which I am now moving is to separate the two provisions, leaving one new clause dealing solely with bomb hoaxes and then dealing elsewhere in the Bill with threats to kill.
  The first Amendment which I am moving provides new offences to deal with bomb hoaxes, and was, as I have explained, incorporated into the Bill during its Committee stage in another place. The new offences reflect the careful consideration given to these matters by the Law Commission, and also, indeed, the views of senior police officers. They are intended as a measure to counter the practical problems faced by the police in dealing with bomb hoaxes, and not as a comprehensive reform of the law. The provisions which can be used against bomb hoaxes at present are, frankly, inadequate, in that they do not apply to all possible hoaxes; and it is difficult to

  479
  fit some hoaxes into the existing range of offences at all. Moreover, the penalties for the most widely applicable offence are too small, and would not be raised without a disproportionate and distorting effect on other penalties. The new clause should rectify these failings. In brief, it would make it an offence to place or to send a hoax bomb, or to give a false warning of a hoax bomb. In both cases, a full element of intent is included, and there is nothing in this Amendment that will discourage those who genuinely wish to give information and to help the police.
  I think the present defect in the law is, frankly, a serious one. Bomb hoaxes can cause a great waste of police time, often when the police are already stretched dealing with genuine bomb attacks. The Metropolitan Police have left me in no doubt about the serious problems the hoax bomber can cause, including great inconvenience to the public, or even danger. I think the Amendment will serve, both to clarify the law and, indeed, to help the police in a practical way.
  Just to give an illustration of the scale of this problem, I am told that in 1976 the Metropolitan Police alone received an average of 10 false calls a day saying that there was a bomb on the premises, or something of that sort, and this number rose to 100 a day during the period of the bomb attacks. This gives an indication of the scale of this problem in the capital city of this country alone, and I think it is generally recognised to be a serious one. For the reasons I have indicated, I think it is desirable to deal with this matter adequately, and this new clause achieves that objective.
  The other Amendments which I am moving relate to the offence of threatening to kill or murder, covered by subsection (4) of Commons Amendment No. 62. During discussion of the bomb hoax provisions in Committee in another place, it was pointed out that the existing offence in Section 16 of the Offences against the Person Act 1861 is limited to written threats; thus, persons making spoken threats, for example over the telephone, cannot be dealt with under that section. That, indeed, is why we have put this Amendment before the House, and I beg to move.
  Moved, That this House doth disagree with the Commons in the said Amendment
  480
  but propose Amendments Nos. 62A to 62D in lieu thereof.—(Lord Harris of Greenwich.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  63 Insert the following new clause:
  Misuse of Drugs Act 1971: redefinition of cannabis.
  In section 37(1) (interpretation) of the Misuse of Drugs Act 1971, for the definition of 'cannabis' there shall be substituted—
  '"cannabis" (except in the expression "cannabis resin") means any plant of the genus Cannabis or any part of any such plant (by whatever name designated) except that it does not include cannabis resin or any of the following products after separation from the rest of the plant, namely—

  (a) mature stalk of any such plant,

  (b) fibre produced from mature stalk of any such plant, and

  (c) seed of any such plant; '."

  5.13 p.m.
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 63. This new clause amends the definition of "cannabis" as at present set out in Section 37(1) of the Misuse of Drugs Act 1971. The background of this situation is as follows. In a recent case the Court of Appeal first decided that the leaves of the plant did not fall within the existing definition, which defines cannabis as the flowering and fruiting tops of the plant. The scientific evidence, however, shows that the leaves are quite capable of producing an intoxicating effect very nearly as great as the flowering and fruiting tops. Indeed, it was on the strength of the psycho-active content of the leaves that, in the same case to which I have just referred, the defendant, having been found not guilty by the Court of Appeal in relation to the charge of possessing cannabis, was subsequently found guilty in relation to a charge of possessing cannabinol derivatives on the strength of precisely the same material, and the Court of Appeal upheld that conviction in a judgment delivered the day after this Amendment was added to the Bill in another place. Cannabinol derivatives, however, are a Class A substance, the penalties for which under the Misuse of Drugs Act 1971 are greater than in respect of cannabis itself.

  481
  It is clear that the two decisions of the Court of Appeal have left the law in a profoundly unsatisfactory condition, with the leaves of the plant treated as a Class A drug, in the same category, for example, as heroin, which is manifestly unjust and contrary to the intention of Parliament. The Government have accordingly decided to take the opportunity this Bill has provided to redefine "cannabis". In doing so, we are supported by the Advisory Council on the Misuse of Drugs, which has recommended the Home Secretary to take this course in the letter from the chairman which my right honourable friend has already published. I beg to move.
  Moved, That this House doth agree with the Commons in the said Amendment. —(Lord Harris of Greenwich.)
  Baroness WOOTTON of ABINGER: My Lords, I should like to ask my noble friend one question. In thus altering the definition of "cannabis", are we making it rather more comprehensive than that of the international convention to which we are a signatory?
  Lord HARRIS of GREENWICH: No, my Lords. I think that the redefinition has been found necessary solely as a result of these particular cases which came before the Court of Appeal. It does not Change the substance of the law in any way; it simply achieves some clarification of it.
  Baroness WOOTTON of ABINGER: My Lords, my noble friend has not answered my question. Is our definition now exactly the same as the definition of the international convention to which we are a signatory, or is it different?
  Lord HARRIS of GREENWICH: My Lords, so far as I am aware, the answer is, certainly, yes.
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  64 Insert the following new clause:
  Amendments of Obscene Publications Act 1959 with respect to cinematograph exhibitions.
  ".—(1) In the proviso to section 1(3) of the Obscene Publications Act 1959 (which excludes from the scope of that Act anything done in the course of a cinematograph exhibition taking place
  482
  otherwise than in a private house to which the public are not admitted and anything done in the course of television or sound broadcasting) the words from 'a cinematograph exhibition' to in the course of ' shall be omitted.
  (2) In section 2 of that Act (prohibition of publication of obscene matter) at the end of subsection (3) there shall be inserted the following subsection:—
  (3A) Proceedings for an offence under this section shall not be instituted except by or with the consent of the Director of Public Prosecutions in any case where the relevant publication or the only other publication which followed or could reasonably have been expected to follow from the relevant publication took place or (as the case may be) was to take place in the course of a cinematograph exhibition; and in this subsection "the relevant publication" means—

  (a) in the case of any proceedings under this section for publishing an obscene article, the publication in respect of which the defendant would be charged if the proceedings were brought; and

  (b) in the case of any proceedings under this section for having an obscene article for publication for gain, the publication which, if the proceedings were brought, the defendant would be alleged to have had in contemplation.'

  (3) In section 2 of that Act after subsection (4) there shall be inserted the following subsection: —
  (4A) Without prejudice to subsection (4) above, a person shall not be proceeded against for an offence at common law—

  (a) in respect of a cinematograph exhibition or anything said or done in the course of a cinematograph exhibition, where it is of the essence of the common law offence that the exhibition or, as the case may be, what was said or done was obscene, indecent, offensive, disgusting or injurious to morality; or

  (b) in respect of an agreement to give a cinematograph exhibition or to cause anything to be said or done in the course of such an exhibition where the common law offence consists of conspiring to corrupt public morals or to do any act contrary to public morals or decency.'

  (4) At the end of section 2 of that Act there shall be added the following subsection—
  (7) In this section "cinematograph exhibition" means an exhibition of moving pictures produced on a screen by means which include the projection of light.'
  (5) In section 3 of that Act (which among other things makes provision for the forfeiture of obscene articles kept for publication for gain) at the beginning of subsection (3) there shall be inserted the words "Subject to subsection (3A) of this

  483
  section" and at the end of that subsection there shall be inserted the following sub-section:—
  (3A) Without prejudice to the duty of a court to make an order for the forfeiture of an article where section 1(4) of the Obscene Publications Act 1964 applies (orders made on conviction), in a case where by virtue of subsection (3A) of section 2 of this Act proceedings under the said section 2 for having an article for publication for gain could not be instituted except by or with the consent of the Director of Public Prosecutions, no order for the forfeiture of the article shall be made under this section unless the warrant under which the article was seized was issued on an information laid by or on behalf of the Director of Public Prosecutions.'
  (6) In section 4 of that Act (defence of public good) at the beginning of subsection (1) there shall be inserted the words ' Subject to subsection (1A) of this section' and at the end of that subsection there shall be inserted the following subsection:—
  (1A) Subsection (1) of this section shall not apply where the article in question is a moving picture film or soundtrack, but—

  (a) a person shall not be convicted of an offence against section 2 of this Act in relation to any such film or soundtrack, and

  (b) an order for forfeiture of any such film or soundtrack shall not be made under section 3 of this Act,

  if it is proved that publication of the film or soundtrack is justified as being for the public good on the ground that it is in the interests of drama, opera, ballet or any other art, or of literature or learning.'
  (7) At the end of section 4 of that Act there shall be added the following subsection: —
  (3) In this section "moving picture soundtrack" means any sound record designed for playing with a moving picture film, whether incorporated with the film or not.' "
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 64, and with the leave of the House I should like to speak at the same time to Amendments Nos. 64A and 167. The new clause results from a widespread feeling which has become evident during the proceedings on the Bill, particularly as embodied in Amendments moved by Opposition spokesmen in the Committee in another place, that the law on films was currently so unsatisfactory as to require an interim solution pending the conclusions of the committee which my right honourable friend the Home Secretary has appointed,
  484
  under the chairmanship of Professor Bernard Williams, to undertake a fundamental review of the laws in the general field of obscenity. The Government responded to this pressure by introducing a new clause which deals with films along the lines recommended by the Law Commission in its report on the law of conspiracy, but which leaves the wider changes proposed by the Commission to be looked at in the context of the review by the new committee. It remains the Government's view, as I explained in your Lordships' House during earlier stages of the Bill, that it is desirable not to seek changes in the basis of the present law while it is being examined by a departmental committee, but in the limited respect set out in this new clause we have agreed that, as a kind of holding operation, concern about the state of the present law might for now be met by placing films on the same legal footing as books and plays.
  The new clause follows broadly the Law Commission's proposed form for making films subject to the Obscene Publications Acts, but instead of abolishing the common law offences entirely it provides in subsection (3), in a provision similar to that in the Theatres Act 1968, that proceedings at common law shall not lie against a cinematograph exhibition. The common law offences will, pending the review of the Departmental Committee, be preserved for other forms of activity not at present covered by the Statutes, but films will be subject only to proceedings for the statutory offences of obscenity. This will mean that cinema clubs, as well as cinemas, will be brought within the obscenity laws.
  The new clause contains two particular modifications of the Obscene Publications Acts in applying them to film exhibitions, both of them recommended by the Law Commission. In subsections (2) and (5) there are provisions designed to forestall frivolous or vexatious proceedings against films by requiring the consent of the Diretor of Public Prosecutions to prosecutions. There is a small departure in subsection (2) from the clause drafted by the Law Commission, in that the Commission had wished to give the protection of the Director's consent only to licensed cinemas and film societies, leaving private prosecutors free to institute proceedings against cinema clubs.

  485
  The test adopted by the Law Commission in attempting to distinguish film societies—of whether or not a body was an "exempted organisation" under the provisions of the Cinematograph Act 1952—was found not to work in practice. The Government concluded that it would be better to adopt the simple course of requiring the Director's consent generally, but, as a result of concern about the effect the clause as drafted might unwittingly have in relation to the trade in obscene home movies, Amendment No. 64A has been tabled to limit the application of subsections (2) and (5). This will require the Director's consent in relation to 35 mm. and 16 mm. films—which will effectively protect cinemas and film societies in the way proposed by the Law Commission—but will not provide such a requirement in respect of 8 mm. films, which are those more likely to be distributed as pornography. In consequence of this limitation, the Director of Public Prosecutions will not need to give his consent in cases involving the wholesalers or retailers of obscene 8 mm. films, nor need the police be inhibited, when executing a warrant issued other than on the Director's application, from seizing such films as they might find along with other pornographic material. It will however continue to be a requirement of the Prosecution of Offences Regulations that the police should consult the Director of Public Prosecutions about all proceedings in obscene publications cases. I beg to move.
  Moved, That this House cloth agree with the Commons in the said Amendment. —(Lord Harris of Greenwich.)
  The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, Amendment No. 64A is proposed as an Amendment to Commons Amendment No. 64.

  AMENDMENT TO COMMONS AMENDMENT No. 64
  64A Line 13, after (" where ") insert (" the article in question is a moving picture film of a width of not less than sixteen millimetres and ").
  5.22 p.m.
  Lord BEAUMONT of WHITLEY: My Lords, I would congratulate the Government on putting together a very useful, temporary solution to this problem. It is
  486
  not a permanent solution and some of the objections to it can be seen from this Amendment as it is: for instance, the exclusion of 8mm film. I see why the Government have clone it. It seems to me a rather ingenious way of meeting the problem. But there is really no logic or justification for this division. Super Eight films are now used quite a lot as a serious art form, and in film societies—not in cinemas—by people who are studying the film as an art. It would be a pity that, if this kind of law applied for any length of time, there should be this division and that perfectly serious film societies producing Super Eight films for production might find themselves victims of this loophole in the law from the kind of frivolous products which have been spoken of. Therefore, it is limited support that I want to give to this Amendment. I think it is very useful and I am delighted that the Government have gone this way. It is no substitute for what we hope to see happen after the report of the Williams Committee, which we hope will be as soon as possible.
  The Lord Bishop of LEICESTER: My Lords, I am sorry to delay the House and the Minister when he is having something so much similar to a clear round, but am going to ask the House to disagree both with him and with the Commons in this particular Amendment. I must admit that when I saw the headline in the Press that cinemas were to be brought under the law of obscenity I was temporarily pleased because this is what some of us argued for at the time of the discussions on the Longford committee on pornography. But the more one looks into it, the more doubtful one becomes about whether what is proposed is really going to be helpful or the reverse.
  To begin with, as has been said, the proposal is to bring cinematograph displays under the Obscene Publications Act 1959. Many noble and learned Lords and other high legal luminaries have admitted the extremely unsatisfactory nature of that Act; and that is one of the reasons why the Special Departmental Committee is sitting at this moment on the whole question of the law of obscenity.
  The weakness of the present Act hardly needs to be emphasised but it all turns on the phrase that the material "must tend

  487
  to deprave or corrupt". This leaves a way out at both ends. You can always say that the people likely to see it are already so depraved and corrupted that it is impossible to do them any more harm; or, alternatively, that they are so mature and integrated that nothing could befoul them on the principle of purrs omnia pura. But it is proved that this is just about the most unsatisfactory way of giving a jury anything clear to settle when they get these cases brought before them.
  There are other objections. The rights of the citizen under common law are very much restricted. They were so, to some extent, under the Obscene Publications Act 1959 because there, although it was an Act to deal with obscene publications, it was specifically stated that there was to be no prosecution under the common law if the principle thing objected to in the article under consideration was its obscenity. But the present Amendment has done a good deal further than that. It has said now that it is not only the question of obscenity that shall make an action under common law impossible, but that it is also forbidden if the material is said to be
  " obscene, indecent, offensive, disgusting or injurious to morality …".
  Anyone looking at this casually would immediately think that these are the bad things, but these are the things which are to extract the cinemas from any action under common law. So there is a whole range of material there for serious discussion. The whole matter is brought again under the personal control of the Director of Public Prosecutions, and one can see here again that there is a very considerable limitation put upon the likelihood of any effective action being taken because the Director of Public Prosecutions himself is in an embarrassing position. He has to deal, to some extent, with the Board of Film Censors. It would be extremely embarrassing for him to have to bring a case against something that had escaped the eye of that particular Board.
  On the whole, I, and I think some other Members of this House, feel that it would be better not to bring in this wholly new clause at this late stage in the consideration of the Bill but to wait until the departmental committee has produced
  488
  its report on the law of obscenity and, if there are cases urgently needing attention in the meanwhile, to hope that they can be dealt with under what is still left of the common law provisions.
  I would respectfully ask your Lordships to adhere to the decision you made on 1st March when a similar proposal was made in this House and rejected. I hope very much that we shall not agree with the Commons in this particular step.
  Lord ROBERTSON of OAKRIDGE: My Lords, I feel that this is an important Amendment and I should like to support the right reverend Prelate the Bishop of Leicester in what he said in opposing it. I do so for two reasons. First, I believe that it carries the distinct risk of increased indecency in films exhibited to the public. Secondly, it seems to me inopportune to make such a change just when a general review of the laws on obscenity is about to be made by a Home Office Committee.
  On the first point, I would draw your Lordships' attention to the fact that we would be replacing the clear, common law standards of what is or what is not an indecent public exhibition—and I understand that this is a standard which can easily he applied by a jury—by the requirements of a law of which the right reverend Prelate has already pointed out the defects. If any further evidence were required as to the limitations of the Obscene Publications Act, I believe that this evidence was given in remarks made by Mr. John Lindsay last week, who had just been cleared on three counts of possessing obscene articles for publication for gain. The Times quoted him as saying:
  " This makes pornographic films legal in this country at long last".
  It is therefore to be welcomed that the Home Secretary has set up the Williams Committee to review the laws concerning obscenity, indecency and violence in publications, displays and entertainments, and to review the arrangements for film censorship. But to make such a substantial change in the law as is now envisaged, with all the risks involved, just before this committee gets down to work would, in my view, be unwise and inopportune.
  Lord SUDELEY: My Lords, I should like to support the right reverend Prelate

  489
  in his remarks about the unsatisfactory statutory definition of obscenity as opposed to the common law. In everything that the legal luminaries have said, criticism of the 1959 Obscene Publications Act has been well borne out by the recent cases reported in the Press. The film trade journal entitled Screen International may have reported on 11th June that a fear of contravening not the statute law but the common law persuaded the British Board of Film Censors to make some cuts in a "soft porn" film called "Phantasm", from Australia. The producer of the film, who did not like the cuts, had to content himself with showing the film in film clubs for the time being. On the other hand, there is the case of Mr. John Lindsay to which the noble Lord, Lord Robertson of Oakridge, referred. There the test for obscenity under the statutory test of obscenity was applied and a jury at the Old Bailey overturned an attempt by the Director of Public Prosecutions to secure a conviction on three pornographic films. The three pornographic films showed lesbianism, intercourse and oral sex.
  5.34 p.m.
  The Lord Bishop of NORWICH: My Lords, I hope that the noble Lord will give full account to what has been said because this matter is something which cannot really be thought to be in the public good. The very description used on page 21, showing that we are thinking about films which could be considered, in whatever way they are looked at under common law or in this new system under the new Amendment, in any way related to being obscene, indecent, offensive, disgusting, or injurious to morality, shows that we are thinking not so ranch of what the noble Lord referred to as serious art forms, but this area. If so, then surely for the public good we ought not to go further down this rather slippery slope, which it is easy for us to go down, in the sacred name of what is called freedom. But whose freedom? Freedom to do what, and freedom for which people? I hope very much that we shall seek to continue what we are doing this evening, which is not to deny freedom for the public good, but to deny freedom for those who are seeking to spoil the public good.
  I listened carefully to the clear way in which the noble Lord, Lord Harris of
  490
  Greenwich, set out most of the other Amendments; nearly all of them have been designed—take the matter of the bomb hoax situation—to maintain the breadth of public freedom and only to contain the narrowness of freedom of those who will not do the country good, but harm. I take comfort from this because, so far as I can tell, this Amendment was not brought forward originally in another place as a piece of serious Government thinking, but I think it came through in other ways. Therefore, I hope that if a matter of this importance is pressed to a Division there will be no question of the Government asking their supporters to support this Amendment. Quoting from the noble Lord, Lord Donaldson of Kingsbridge, a week or two ago, when we were discussing a film so disgusting that a Member of this House had to refer to what happened in it in Latin (which unfortunately most of us were able to translate), means that we should have a free and conscience vote on this particular Amendment.
  Lord DONALDSON of KINGS-BRIDGE: My Lords, it so happens that I have spoken to somebody who has seen the film, and the "Latin event" did not occur in it.
  The Lord BISHOP of NORWICH: My Lords, I thank the noble Lord for that. I am sorry that I was able to translate what was meant to take place; but I am encouraged to hear that it did not. None the less, it sounded as though the nuances of the film might come in the broadest terms within page 21 in which we are considering these words
  This reinforces the point that I was seeking to make, that enough is enough and we ought not to weaken the rather gentle controls that are already put on this type of film, which we know produces a great deal of money for people who are in the film business not only for great and serious art forms but for the money. After those of us who are innocent about matters of law have heard of how difficult it is to get a jury to be ready to act and, following the rather terrifying revelations from the Opposition Front Bench about which the noble Earl, Lord Mansfield, told us about the jury system, we would be most unwise in common sense to pass this Amendment. I hope therefore that

  491
  all noble Lords of good will—which I gather all of us are—will in good sense object to this Amendment.
  Viscount DILHORNE: My Lords, there are two aspects which worry me. I am grateful to the right reverend Prelate the Bishop of Leicester for drawing my attention to these provisions, which I confess I had not studied at all closely. The first is the reference to the Obscene Publications Act. That definition to corrupt and deprave is of course taken from the case of Hickling which was a common law case. It has been the defect throughout that that definition was retained in that Obscene Publications Act. That has led to all the trouble. I do not think it is just confined to statutory law. Instead of letting the word "obscene" be given its ordinary, natural meaning, there has been a growing tendency in this country of seeking to define in strict language the meaning to be attached to ordinary English words.
  I am glad to hear that the whole scope of that Act is being reconsidered. That being the case, it seems to me very undesirable to extend its operation at the present time. I can see no case for doing that now. But the other objection that I have is perhaps more fundamental. In this country, apart from a few exceptions, it has been the general rule that anyone can institute a prosecution for a criminal offence. The exceptions are always exceptions created by Statute, requiring the consent—and we have had it already today—of either the Attorney General or the Director of Public Prosecutions. Each time you make that exception, my Lords, you are departing from what has been the general practice, the general rule, of our law.
  Sometimes it is very desirable. Some of your Lordships may remember publications which were called horror comics. They were, in fact, incapable of definition. In, I think, my time in the Commons, a Bill was introduced to make the publication of those horror comics an offence. It not being possible to define them, the requirement was inserted that there should be no prosecution without the Attorney-General's consent. That Bill was passed. The Attorney-General has never had to give his consent, there has been no prosecution and there have been no more
  492
  horror comics. I mention that as an instance.
  Some of your Lordships may remember a case fairly recently where comments were made, which received widespread publicity, about denying access to the courts. On this occasion, I shall not make any observations with regard to that. But if you are to let this provision operate to the effect that you are taking away the right that an individual now has to institute a prosecution for an offence at common law for something obscene, indecent, offensive, disgusting or injurious to morality, you are by Act of Parliament denying that individual's access to the courts.
  It is a great safeguard for there not to be that restriction. After all, if it is left to the Attorney-General to decide whether or not a case warrants a prosecution, he may be subjected to a great deal of fair or unfair criticism. It is much better that he should be able to say "I do not think this case warrants a prosecution. I do not think the evidence is strong enough. But, of course, it is open to you if you wish to start your own prosecution, with the risk that that may entail to you of, perhaps, a subsequent action for malicious prosecution on your part, with your being ordered to pay the costs of the prosecution." This is taking away what is a generally established right, and I see no reason for it.
  I do not know what pressures have been put upon the Home Office to introduce in the Commons this clause which was not in the original Bill. I hope this House will say that there should be second thoughts on this matter, and if the right reverend Prelate proposes to divide the House upon it I shall certainly find myself in the same Lobby with him.
  5.43 p.m.
  Lord SIMON of GLAISDALE: My Lords, may I express three misgivings about this Amendment? The first is that it was quite advisedly that cinematograph exhibitions were left out of the ambit of the Obscene Publications Act 1959. I had myself the privilege of being a Home Office representative on the Select Committee of 1957, which heard extensive evidence leading to the Bill which became the Act and drafted the Bill. In short, the reason why cinematograph films were left

  493
  out was this. Although there was considerable evidence that the law was illiberal, so far as works of literature, works of science and scientific works were concerned, and, on the other hand, allowed hard pornography to be purveyed, the evidence was overwhelming that, so far as cinematograph exhibitions were concerned, the law and the administrative back-up of the law operated successfully and satisfactorily. There was virtually no demand for change there. I have been out of touch with the problem ever since, but I have heard nothing to suggest that there is any need now to change the decision which was come to in 1959, after extensive debate and after a Select Committee of the other House had heard widespread and weighty evidence.
  The second misgiving I have is the one that has been adverted to by my noble and learned friend Lord Dilhorne. The right of the private citizen to invoke the criminal law is an important constitutional right and constitutional safeguard. It has, of course, sometimes to be limited. Your Lordships earlier today, in relation to Clause 9 which affects trespasses on foreign embassies, made it incumbent that the consent of the Attorney-General should be given to prosecutions. That is perfectly understandable. That is perfectly the kind of area in which consent is called for, in which the citizen's right might just be limited, but it should be quite exceptional. If the decision is otherwise, it should be taken seriously, solemnly and advisedly over a wide front, and not haphazardly leading to a gradual erosion of what has long been regarded as an important constitutional right of the private citizen in this country.
  The third reason was adverted to by the noble Lord, Lord Robertson, and the right reverend Prelate. It is surely ill-advised, at a moment when a departmental committee is considering the whole of this problem, to pre-empt it on one narrow aspect. In view of the controversial nature of this Amendment, I did not put down a Motion that the Amendment should be disagreed to. But if the House is divided, I shall myself go into the Lobby against the Amendment.
  5.48 p.m.
  Lord BESWICK: My Lords, it would seem to me that this is a case where it would be entirely proper for this House
  494
  to ask the Government to think again. In the first place, the Bill was fully considered in your Lordships' House. It then went to the other place. Apparently, the Opposition there suggested for certain reasons that there should be an Amendment at this point in the Bill, and the Government produced a form of words. But according to the spokesman of the Opposition in the other place, the form of words here is not entirely appropriate and is not entirely satisfactory. Indeed, it was suggested that, in the meantime, there might be amendments to this Amendment before it came to your Lordships' House. As I understand it, apart from the narrow point which my noble friend mentioned, there has been no attempt to meet the doubts which were expressed in the other place.
  We are now left with a very extensive Amendment, which Government Ministers affirmed more than once in the other place is only an interim solution, or, as one Minister described it, a temporary solution. I look at this temporary solution in a quite simple way. I have listened with enormous respect to the views that have been put by the noble and learned Lords on the Cross-Benches here, but my own attitude is somewhat less learned than theirs and, one might say, more simple.
  I ask myself the simple question: Does this help, as I believe a growing majority of people in this country would wish it to help, to curb that process which started as freedom of expression but which has degenerated into licence? Does it help to curb that process or not? On all the evidence that I am given, it does not curb that process. Indeed, it would facilitate a process which, as I say, I think a growing majority of people in this country would now like to see reversed. If the right reverend Prelate presses this Amendment I, for one, would certainly go into the Division Lobby with him.
  Lord HARRIS of GREENWICH: My Lords, I will deal with one point at the outset. The noble and learned Viscount, Lord Dilhorne, asked why this Amendment had come before us. The reason is that we were subjected to substantial pressure from both sides in another place and promised to do what is in effect now before us. The language of these Amendments is clearly something for which the Government accept responsibility, but

  495
  there is no doubt that very substantial feeling was expressed in another place. That is why the Amendment is now before the House.
  I certainly understand the argument—and indeed we had a discussion on it when the matter was last before us—that, as the present law of obscenity is found by many to be profoundly unsatisfactory, any proposal to extend it is bound to be controversial. It is for that reason, as I explained to your Lordships during earlier stages of the Bill, that we had wished to keep the existing law unchanged for the time being. But there was this considerable feeling expressed in another place on both sides; that is, that it is anomalous for the cinema to be singled out for a form of regulation which does not apply to plays or books. The argument runs that there is a good case for these media to be equated under the law while the Committee is deciding what form of law should apply generally in future. In addition, the argument was adduced that in the present law there might be a discouragement for local authorities to continue exercising their censorship functions. It is those arguments, coming from very different quarters, which led to the Commons Amendment which we now have before us.
  What is proposed in the new clause is not an unconsidered, last-minute thought. It is based on the thorough review which the Law Commission carried out into the common law on public morals and decency. Generally, as I have said, it follows the Law Commission's recommendations. They concluded that some kind of consent provision to protect cinemas and film societies from frivolous and vexatious proceedings was desirable; and the clause represents a sensible rationalisation of the law. It is difficult to argue that the cinema ought to be in a wholly different position from publications and theatre plays. That is the argument which was put to us. Nevertheless, even with the enactment of this clause, the cinema will continue to be, of course, more tightly controlled by virtue of the film censorship system, with which the clause does not interfere in any way.
  Lord SIMON of GLAISDALE: My Lords, I am grateful to the noble Lord for giving way. I wanted merely to ask this. Did not the Government fail to accept the recommendations of the Law Commission as to the conspiracy to corrupt public morals and conspiracy to outrage public decency, and instead refer the matter to the Williams Committee? Surely this falls precisely within that class of case.
  Lord HARRIS of GREENWICH: Yes, my Lords, I understand precisely the argument of the noble and learned Lord. It is the view of those who have spoken that in fact this matter should be put off and considered by the Williams Committee. But the Williams Committee, although I am sure it will work with diligence, will clearly take some time to report: and I must repeat that it was the view of both sides in another place that it was desirable to move at the moment on this question and to clear up what was regarded as a highly anomalous situation.
  As for the present position, with great respect to all those who have spoken, I should like to draw their attention to one very remarkable statistic. That is, that there has only once ever been a conviction in respect of an indecent film shown in a cinema; and the prevention of prosecutions in relation to indecency can hardly be said, therefore, to have had a substantial effect on the way in which the law will apply in practice. Moreover, the clause will clear up a confused situation in relation to what may be shown in cinema clubs and will bring them within the law on obscenity.
  Certainly, I agree at once that we have to bear in mind that we are not here legislating for the long term, as the noble and learned Viscount has pointed out. It is very much an interim solution which will be subject to revision in the light of the conclusions of the Williams Committee.
  5.56 p.m.
  On Question, Whether the said Amendment (No. 64A), as an Amendment to Commons Amendment No. 64, shall be agreed to?
  Their Lordships divided: Contents, 70; Not-Contents, 68.

  CONTENTS

  Alexander of Tunis, E.

  Elton, L.

  Morris, L.

  Amherst, E.

  Emmet of Amberley, B.

  Mottistone, L.

  Amherst of Hackney, L.

  Falkland, V.

  Mountgarret, V.

  Arran, E.

  Gainford, L.

  Newall, L.

  Auckland, L.

  Geoffrey-Lloyd, L.

  Northchurch, B.

  Avon, E.

  Granville of Eye, L.

  Platt, L.

  Barrington, V.

  Hailsham of Saint Marylebone, L.

  St. Aldwyn, E.

  Beaumont of Whitley, L.

  St. Davids, V.

  Belstead, L.

  Hanworth, V.

  Sandford, L.

  Berkeley, B.

  Hawke, L.

  Sandys, L.

  Bledisloe, V.

  Henley, L.

  Simon, V.

  Boyd-Carpenter, L.

  Hornsby-Smith, B.

  Simon of Glaisdale, L.

  Brougham and Vaux, L.

  Hylton-Foster, B.

  Spens, L.

  Campbell of Croy, L.

  Inglewood, L.

  Stamp, L.

  Carr of Hadley, L.

  Killearn, L.

  Strathclyde, L.

  Cathcart, E.

  Limerick, E.

  Strathcona and Mount Royal, L.

  Colwyn, L.

  Lloyd of Kilgerran, L.

  Swinfen, L.

  Cullen of Ashbourne, L.

  Long, V.

  Terrington, L.

  Daventry, V.

  Luke, L.

  Trefgarne, L.

  de Clifford, L.

  Lyell, L. [Teller.]

  Vickers, B.

  De Freyne, L.

  Macleod of Borve, B.

  Vivian, L.

  Denham, L.

  Mansfield, E.

  Wade, L.

  Derwent, L.

  Margadale, L.

  Wakefield of Kendal, L.

  Dilhorne, V.

  Merrivale, L.

  Ward of North Tyneside, B.

  Dormer, L.

  Mills, V.

  Wedgwood, L.

  Drumalbyn, L.

  Monck, V.

  Westbury, L.

  Elliot of Harwood, B.

  Monson, L.

  Wigoder, L. [Teller.]

  NOT-CONTENTS

  Ardwick, L.

  George-Brown, L.

  Peddie, L.

  Aylestone, L.

  Gifford, L.

  Phillips, B.

  Birk, B.

  Gordon-Walker, L.

  Pitt of Hampstead, L.

  Blyton, L.

  Gosford, E.

  Ponsonby of Shulbrede, L.

  Boston of Faversham, L.

  Hale, L.

  Ritchie-Calder, L.

  Brimelow, L.

  Harris of Greenwich, L.

  Segal, L.

  Brockway, L.

  Henderson, L.

  Shepherd, L.

  Bruce of Donington, L.

  Houghton of Sowerby, L.

  Stedman, B. [Teller.]

  Burton of Coventry, B.

  Kagan, L.

  Stewart of Alvechurch, B.

  Champion, L.

  Kirkhill, L.

  Stone, L.

  Collison, L.

  Leatherland, L.

  Stow Hill, L.

  Cooper of Stockton Heath, L.

  Llewelyn-Davies of Hastoe, B.

  Strabolgi, L.

  Crook, L.

  Longford, E.

  Wallace of Coslany, L. [Teller.]

  Davies of Leek, L.

  Lovell-Davis, L.

  White, B.

  Delacourt-Smith of Alteryn, B.

  McCluskey, L.

  Willis, L.

  Donaldson of Kingsbridge, L.

  Melchett, L.

  Winterbottom, L.

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

  Milner of Leeds, L.

  Wootton of Abinger, B.

  Faithfull, B.

  Murray of Gravesend, L.

  Wynne-Jones, L.

  Gaitskell, B.

  Oram, L.

  Gardiner, L.

  Peart, L. (L. Privy Seal.)

  On Question, Motion agreed to.

  Resolved in the affirmative, and Amendment to the Amendment agreed to accordingly.
  On Question, Amendment No. 64, as amended by Amendment No. 64A, agreed to.

  COMMONS AMENDMENT
  65 Leave out Clause 43.
  65A The Lord Wigoder to move, That this House do disagree with the Commons in their Amendment No. 65.
  6.5 p.m.
  Lord WIGODER: My Lords, I beg to move that this House doth disagree with the Commons in their Amendment
  498
  No. 65. I do so, while first assuring your Lordships that, so far as I can see, in no way can this be regarded as a Party political issue. Certainly I hope that my noble friends ort these Benches will vote entirely on the merits of the argument and with no other considerations in mind. Secondly, may I suggest that it is desirable that the other House should have an opportunity to reconsider this matter because of the rather unfortunate circumstances in which it comes before your Lordships today. Your Lordships passed an Amendment at the Report stage which was considered in Standing Committee in the other place where it was defeated by one vote, there being absent one

  499
  Member of the Standing Committee. I am sorry to have to say that it was the Liberal Member who would, in fact, have voted for your Lordships' Amendment. It is, therefore, in a sense accidental that the Amendment which your Lordships passed was thereby defeated in the other place.
  Amendment No. 65A is not in itself very informative. Amendment No. 65 merely reads: "Leave out Clause 43". That is not very informative, either. Clause 43 simply reads that:
  "Section 3 of the Criminal Justice Act 1961 … is hereby repealed".
  That, in its turn, is not particularly informative. Therefore your Lordships will perhaps forgive me if I indicate that what we are now dealing with are the merits or demerits of Section 3 of the Criminal Justice Act 1961, which prescribes that:
  "… a sentence of imprisonment shall not be passed by any court on a person within the limits of age which qualify for a sentence of borstal training except—(a) for a term not exceeding six months; or (b) … for a term of not less than three years".
  Then there is a futher provision, that in certain circumstances where a young person has already served a borstal sentence the sentence should be 18 months rather than three years. In other words, I am seeking to urge upon your Lordships that that provision is harmful and should be repealed. It is a harmful provision because it has fettered the discretion of the courts, which wish to deal as leniently as possible with young people who are in trouble.
  I hardly think that it is necessary to rehearse all the arguments. Your Lordships heard them at both the Committee and Report stages. Your Lordships heard the noble and learned Lords, Lord Dilhorne, Lord Hailsham of Saint Marylebone, Lord Morris of Borth-y-Gest, Lord Salmon and Lord Edmund-Davies all speak in support of this proposition. The position is that if a young person has committed an offence and borstal is clearly not an appropriate sentence, the law as it stands compels the judge to make the decision that the sentence of imprisonment, if he decides that that is inevitable, has to be either six months or less, or three years or more. What the results are it is not easy to discover by any kind of statistical
  500
  analysis. There are, no doubt, certain cases in which, faced with this section, judges have sent a young man to borstal rather than to prison. I doubt whether there are very many cases of this kind. I venture to think that most judges take the view, on the facts of the case, either that imprisonment is or is not necessary or that borstal is or is not necessary, and that they are unlikely to be influenced by this section in preferring borstal to imprisonment.
  Secondly, there are certain cases in which a court, dealing with a young person and deciding that imprisonment is necessary, feels that a sentence of nine or 12 months is appropriate but, because of this section, passes a sentence of six months' imprisonment. That is desirable, and to that extent one can commend this section.
  Thirdly, it is within the experience of everyone who practices in the criminal courts or who tries cases in the criminal courts, that there have been any number of cases in which young people have been convicted of serious offences for which the appropriate penalty might be one of 18 months or 21 months or two years, but the judge finds himself impelled by this section to pass a sentence of three years' imprisonment. One can state that categorically as a fact because the Law Reports and the Court of Appeal Criminal Division are littered with cases in which people have been sentenced to three years' imprisonment simply because of the terms of this section, the judge having specifically said that he would very much rather have passed a lesser sentence.
  I put the case for repealing this section in a very simple way. In passing sentence, the golden rule is never to send a person to prison for one day longer than is absolutely necessary. This section compels judges over and over again to send young people to prison for substantial periods in excess of the appropriate sentence. In those circumstances, I hope your Lordships will agree that it would be desirable that the other place should be asked to reconsider their opposition to your Lordships' Amendment. I beg to move that this House doth not agree with the Commons in their Amendment No. 65.
  Moved, That this House doth not agree with the Commons in the said Amendment.—(Lord Wigoder.)
  6.12 p.m.
  Viscount DILHORNE: My Lords, I am glad the noble Lord, Lord Wigoder, tabled this proposed rejection of the Amendment made in the other House. The House will remember that this subject was initially raised by my noble and learned friend Lord Morris of Borth-y-Gest, and he has asked me to say how very much he regrets that, owing to his having an important public duty to discharge in the country tomorrow, he is unable to be here this evening. He has asked me also to say that if he had been here he would have spoken in support of the noble Lord, Lord Wigoder, and indeed he has handed me very full notes of his speech, but I will not attempt to deliver it.
  We have debated this subject now twice in this House and, despite encouragement from the noble and learned Lord, Lord Hailsham of Saint. Marylebone, I do not propose to repeat what I have said. I should like to summarise one or two things. It is the fact, and I do not think it can be disputed, that Section 3 of the Criminal Justice Act prevents the proper administration of justice. The noble Lord, Lord Wigoder, spoke of the golden rule of not passing a day longer sentence of imprisonment than was absolutely essential. That is only one side of the golden rule; the other side is that you do not pass a sentence of imprisonment if there is any possible alternative.
  Under this particular section passed in 1961 the judge, in the exercise of his judgment, passing what he considers to be the appropriate sentence for a young offender, is completely restricted. If this Amendment by the Commons is rejected it will indeed restore—to use the words of the noble Lord, Lord Harris of Greenwich—the freedom of judges to relate the length of a sentence more directly to the particular offence. I do not think it can be disputed that this particular section of this Act does impede the proper administration of justice, and in fact in its operation does lead to injustice.
  It is no use criticising Her Majesty's judges for passing unduly light sentences when by Act of Parliament that really is the only thing they can do. If in a case you are faced as a last resort with sending a young person to prison, your choice is
  502
  either a sentence of up to six months or one of more than three years. If a man under 21 is a member of a gang and the gang crime has been so serious that the others ought to go to prison for, say, two years, you cannot send the young one to prison for two years, although perhaps it would be unfair to send him for six months and the others for two years. So in all the cases that fall within this bracket the judge is faced frequently with the choice of either passing a sentence which he regards as being too light, or of going to the other end of the scale and passing a sentence which, if it errs at all, errs on the side of severity. That is the position which will remain if this section of the 1961 Act is retained.
  What are the arguments for its retention? They boil down to the simple proposition that the view of the Home Office is that it will lead to an increase in the prison population. That is worth examining. As a secondary argument it is said that it will lead to some people being sent to prison who would now go to borstal.
  Lord GARDINER: Hear, hear!
  Viscount DILHORNE: My Lords, when the noble and learned Lord, Lord Gardiner, says "Hear, hear", he ignores Section 3 of the Criminal Courts Act 1973, which provides that no court shall impose imprisonment on a person under 21 years of age unless the court is of opinion that no other method of dealing with him is appropriate. It may be that in years gone by, in 1961, in some cases some young persons were sent to prison who might have been sent to borstal; but in the light of this statutory provision we must rule out the possibility of a borstal sentence being adequate before any question of sending to prison ever arises for consideration. It is only if there is no alternative that a prison sentence can now lawfully be considered and, if it is considered, as the law now stands, and will stand if the Commons Amendment is accepted, the sentence of imprisonment is restricted in that way.
  Taking this into account too, I approach the question: Will this change in the law by the repeal of Section 3 of the 1961 Act increase the prison population? People can speculate about that. I

  503
  think the noble Lord, Lord Harris of Greenwich, answered a Question for Written Answer about it the other day. It really is impossible to predict the answer with any certainty at all. It may be on balance it will do so slightly; it may be that it will not do it at all. It is no use looking, as the Home Office repeatedly do, simply at the case of those who might be sentenced to nine or 12 months' imprisonment instead of now being sentenced to six months. We have to look at the other end and consider the case where the judge, knowing it is a very serious crime, would, if left to his own choice, perhaps pass a sentence of 21 months, but says: "As I have to choose between three years on the one hand or six months on the other, and as three years really is not an impossibly heavy sentence, I will give him three years"; yet if he was free to do so, he would give him 21 months. I give that as an illustration, my Lords, because it is quite impossible to say how this would work out in practice.
  I raise this other proposition. Let me assume for a moment that it increases the prison population. It really is not the judge's exercise of his powers to administer justice which brings about the great increase in prison population which we see recorded on the tape this afternoon. In these days it is because of the prevalence of serious criminal offences. That is the cause, and it really is ridiculous to try to restrict the judicial powers of punishment to suit the punishment to the offence with a view to relieving the prisons of a possible increase of population. That is all it is.
  We are told that some who are engaged in penal reform would regard this as a retrograde step. I have no doubt there are such people, but I do not think your Lordships would find a single judge who has had experience in administering the criminal law who would agree, or indeed my noble and learned friends who sit in this House with me, some of whom have had great experience of that aspect of the law, including my noble and learned friends Lord Edmund-Davies, Lord Salmon and Lord Diplock. I do not think that one will find any judge experienced in the administration of criminal law who does not think that Section 3 is a great blot on our system and that the sooner it goes the better our justice will be.
  Lord HARRIS of GREENWICH: As I think the noble Lord, Lord Wigoder, indicated at the beginning of his speech, we have been around this track, not once, not twice, not three times, but four times. Therefore, I hope that my speech, too, will be mercifully brief. I shall try to cover slightly different territory from that which I covered on the last occasion. However, I point out to the noble and learned Viscount, Lord Dilhorne, that he will not be altogether astonished to learn that the conclusion I have reached is rather similar to the one I reached on the previous occassion.
  I say at the outset that we are facing an extremely difficult situation. I can certainly understand people coming to a different conclusion from the one that I reach, but I must ask the House directly to examine what the real effect would be on the prison population if the Amendment were to be carried. I agree with the noble and learned Viscount, Lord Dilhorne, that there can be no certainty in this matter. The noble and learned Lord, Lord Morris of Borth-y-Gest, put down a Written Question to me on this matter last week. He asked what evidence the Government had to show what the effect would be upon sentence lengths. Of course, there is no evidence. I, no more than the noble Lord or noble Viscount, can precisely predict what the judicial reaction would be to a future, hypothetical event. However, that is not the central issue. What is clear is that repeal is likely to lead to a displacement of borstal sentences by prison sentences, as borstal ceases to be the mandatory, medium-term custodial sentence for this age group. If I am right in what I have just said, and I think that I am because it was generally accepted by most of those who participated in the debate in another place—
  Viscount DILHORNE: Before the noble Lord, Lord Harris of Greenwich, leaves the point he is making about borstal and ignores that section of the Act, I would point out that one cannot, without breaking the law, send a person to prison if one can send him to borstal for an intermediate term. In view of those provisions, it is really a nonsense to say that this will affect the numbers who go to borstal.
  Lord HARRIS of GREENWICH: With respect to the noble Viscount, Lord

  505
  Dilhorne, I do not reach the same conclusion as he reaches. It is a matter of judgment. I understand the Statute to which he is referring me, but it is a matter for the judge at the trial. It is a matter of fact and not of argument that borstal will cease to be the mandatory medium-term custodial sentence for this age group. That must be right. That being so, there will be an effect on the size of the borstal population; fewer people will be sent to borstal. However, the gains here will be wiped out in a matter of days because the borstal system, like the young offenders system as a whole, is overflowing. For example, in the North of England there is a queue of young people already sentenced to borstal training who are lining up in the remand and allocation centres to await the first vacant borstal places. Most of the gaps left in the borstal system, will, in this situation, be wiped out within a matter of days.
  The situation in the young prisoner sector is a great deal worse. Here it is not a question of young people queueing up for places in the young prisoners' centres, but an acceptance of the fact that a substantial proportion of young prisoners will never see at any stage in their sentence the inside of a young prisoners' centre, but will serve their sentences in overcrowded local prisons. On 30th June there were 2,157 young prisoners in custody, but only 927 were in young prisoners' establishments—just about a third. The remaining, 1,230 were mostly in very congested local prisons or remand centres. That means that the majority are serving their sentences in establishments designed neither to receive them nor to cater for their needs. I shall give way to the noble Viscount, Lord Dilhorne, in a moment, but with respect I must have an opportunity to deploy my argument. If Section 3 is repealed, that majority will, in our judgment, further increase.
  Viscount DILHORNE: Is it not the case that the Home Office is responsible for there being an inadequacy of accommodation?
  Lord HARRIS of GREENWICH: With great respect to the noble and learned Viscount, Lord Dilhorne, that question is unworthy of him. Of course, there has been a substantial increase in the
  506
  prison population. The Government of which the noble Viscount was a member and the Government between 1964 and 1970 must accept a measure of responsibility for the inadequacy. However, the fact is that that is the situation with which we are now confronted and it would be many years before we could provide extra places in these establishments.
  What we must do at present is consider what would be the effect of a change in the law of the kind which is being advocated by the noble Lord, Lord Wigoder. As I have indicated, if Section 3 were to be repealed in our view the pressure in the young prisoners' centres would get worse and there would be more young prisoners who would spend their sentences in already grossly overcrowded, local prisons.
  Although it is true that in the local prisons every effort is made—and I know that it is—to segregate young prisoners from adult prisoners, the conditions in which they have to be held are, frankly, in many cases highly unsatisfactory. They are not only severely overcrowded; they are often without the opportunity of work or association and are locked up in their cells for the greater part of the day, seven days a week. Let me quote some concrete examples. The young offender wing at Wormwood Scrubs Prison in London has places for only 38 young prisoners. However, on 30th June there were over 100 there. Additional cellular accommodation has had to be made available at the expense of other sections of the population of that prison, but there is still severe overcrowding and insufficient work for all. While some have part-time education, others are locked up nearly all day, with association for just one hour on only two evenings a week, and none at all at weekends. That is the situation in one London prison.
  This situation is repeated up and down the country. At Leeds on 30th June, there were 112 young prisoners in unsuitable conditions with wholly inadequate workshop facilities. Only 20 can have association on any one evening and there is no association at all at weekends. That means that they go out of their cells for a meal and for a short period of exercise and that is all. At Birmingham, on the

  507
  same date, there were only 47 young prisoners, but it was not possible to provide any of them with work and, apart from a short daily educational period and association about twice a week, they spend the rest of their sentence locked up.
  I am only too well aware of conditions of this kind when I visit prisons myself. A few months ago I went to Winchester. I was appalled to see the degree of overcrowding among the young offenders in that establishment. At that time there were over 100 offenders, almost a third of whom were sentenced young prisoners, in cellular accommodation designed for 62. It does not require must imagination to see what life is like in overcrowded conditions with totally inadequate facilities in one establishment after another within our prison system.
  In my judgment that situation will become worse if the Amendment is carried. These are not spurious arguments which have been worked out in a backroom of the Home Office in order to defeat the will of this House. They are facts and figures about a flesh and blood situation with which we are confronted at the moment. If we believed for a moment what the noble Lord, Lord Wigoder, said at the beginning of his speech, that passage of this Amendment would lead to a reduction of the pressure in our prison system, we would, of course, re-examine the situation at once. What we are confronted with at the moment are dangerously over-crowded prisons, with no immediate prospects of improving the situation, and what I must say with the utmost emphasis to your Lordships is that in our judgment passage of this Amendment will make that situation worse.
  The Earl of MANSFIELD: My Lords, this is a matter which has occupied the attention of your Lordships' House on a number of occasions, certainly since 1972 when, as I said before, it was the very first thing I ever moved in your Lordships' House. I do not think that this is an argument which can be continued very much further. Almost everything has been said which can be said. Sometimes it has been said more than once, and sometimes it has been said more attractively than at other times.
  508
  It seems to me that there are three real reasons why this Amendment, which commended itself to the House on Report, should be sent back to the other place. I accept, of course, the arguments of the noble Lord, Lord Harris, about the overcrowding in prisons and so on. I am bound to say it is an argument which we have not heard made quite so vociferously before. I am sure it is not spurious; I do not think that for a moment. But it is obviously made as a justification to the reforming zeal in all our bosoms, that we should perhaps think twice before we do what, if we look at the matter calmly, we can see is our plain duty.
  My first reason for making these remarks is this. The system at the moment, as any practitioner or any judge will agree, is manifestly unfair to the defendants themselves, certain people who come before the court for sentence. On many occasions, if borstal for one reason or another is inappropriate, the sentence of the court should lie somewhere between the six months and the three years which are at the heart of Section 3. One asks why it is that this unfairness on these young people should continue a moment longer than is absolutely necessary. I fully concede that at the time when the original Act came to be passed it was a good idea and it was passed in the way that it was with the best of intentions. I think that period has long since gone.
  Secondly, this section acts, as I regard it, as a totally unjustified fetter on the judges and the Judiciary. There seems to me very little point in having judges if they cannot be trusted to get on with the process of sentencing. Again and again they have said—and, let us face it, they should know better than most—that they have to undertake a course of action which they are disinclined to take bringing to bear their judgment, as they are supposed to do; because of this particular section they are enjoined to do it and they have to do so.
  Thirdly—and this, I think, is almost the most important matter—so far as the administration of justice is concerned this has now become a highly unsatisfactory way of going about sentencing these people. So often, as has been said, you get defendants of different age groups, or defendants who are in varying different ways blameworthy according to the part

  509
  that they may have played in the crime with which they are jointly charged. It may be that because somebody is over 21 the judge can deal with him in a way which is fair and which is seen to be fair. But because a young person is beneath that age this fetter is placed on the judge, and he has to take a course of action which is not only unfair on the young person himself but is also something which is a source of great aggrievement so far as joint defendants are concerned.
  How often one sees—and the newspapers, unfortunately, these days are very quick to point out what they consider to be the shortcomings of judges when it comes to sentencing—that judges are accused of either being soft or, indeed, being hard, when in fact all they have been doing is carrying out Section 3. That is something which the public does not understand and quite rightly questions, because it thinks the Judiciary are out of touch with what they are meant to be doing or else somehow are not fulfilling their duties.
  As I say, I can see the argument of the noble Lord, Lord Harris. If one thought that the abolition of Section 3 was going to lead to a large increase in the prison population, one would think very hard twice and thrice before pressing for its abolition. For myself, nothing that he has said has convinced me that in fact we are going to have the difficulties which he describes. If I may say so, he has put up the best argument he possibly can. He has put up an argument that Ministers of State from both the main political Parties have put up with varying degrees of charm and forcefulness from time to time. On the last occasion I was sitting somewhere near where the noble Baroness, Lady Wootton, is now sitting. I complained to my noble friend Lord Colville that he was trying to exercise justice by cash register and he got very angry. I at least am consistent. I intend to go on being consistent, and I hope a number of other noble Lords will agree. I do believe that my noble and learned friend Lord Hailsham agrees, and I hope that a few others do as well.
  Baroness WOOTTON of ABINGER: My Lords, anyone listening to the noble Lord, Lord Wigoder, the noble and learned Viscount, Lord Dilhorne, and the noble
  510
  Earl, Lord Mansfield, will hear an impeccable academic case and I would not dispute it for one moment. Nobody in their senses, writing Statutes within the four walls of the rooms of the Parliamentary draftsmen or within the four walls of this Chamber, designing the pattern of Statutes, makes a distinction of this kind, that you could only send persons of a certain age to prison for three years, and for a serious offence you would have to do something else with them. I notice the something else has been very little referred to.
  Most of the speeches have made very little reference to the fact that custodial sentences for these young people are possible. It is true that they are not very satisfactory at the moment, but they are a sight more satisfactory than what we optimistically call the young prisoner centres. The young prisoner centres at best tend to be wings attached to ordinary prisons, and at worst, as my noble friend Lord Harris has said, they are simply local gaols which are not different from adult prisons at all. If you cease to perform an academic exercise, and you put this exercise against the realities of the present situation, you do see that you are doing a monstrous thing by unnecessarily putting young people into prisons when they could go into institutions, which, though overcrowded, have at least been designed for people of their age.
  The difference between custodial sentences at borstal and custodial sentences in prison is that prisons, even those with young prison centres attached to them, have been designed by and large for the regime, and with, at one time adequate, but now inadequate, accommodation for grown-up men. Borstals at least were designed for people of the age group we are discussing. Though they are also overcrowded and also working under great difficulties, they at least are geared to the needs of this section of the population. If an offence is so serious that it necessitates detention for quite a long time, a borstal can keep an inmate for two years. If an offence is less serious, they can keep him for a shorter period, something between six months and two years. When noble Lords say that these people are not suitable for borstal, one wonders on what ground they have decided that prison is right and borstal is wrong, and one wonders how up to date

  511
  is their acquaintance with these various institutions.
  It is a year or two ago since I visited most of the borstals in this country and also a number of the so-called young prisoners' centres. I was absolutely convinced that it is totally wrong to send anyone who, I admit, must be kept in custody but who has not committed a very serious offence—such offence perhaps requiring a sentence of three years for reasons of public safety—to a prison establishment when there are borstals which are geared to deal with that kind of person.
  Baroness MACLEOD of BORVE: My Lords, as a humble magistrate, may I say that I have always looked up to the Judiciary. I am very surprised to hear tonight that the noble Lord, Lord Harris of Greenwich, obviously does not do that. In fact, as far as I can make out, he is suggesting that not only the Home Office, but he himself and others do not trust the Judiciary.
  Lord HARRIS of GREENWICH: No, my Lords; with great respect, that overstates very substantially the case that I put.
  Baroness MACLEOD of BORVE: My Lords, perhaps I should say "trusting the judgment of the Judiciary". They have very wide experience—far wider than any member of the Home Office or any Member of this House, apart from those who actually preside as judges. If they want the repeal of this clause I. for one would support them.
  Lord WIGODER: My Lords, it is apparent to your Lordships House that, however long this matter is discussed, there is practically no point of contact between those of us who wish to see this clause repealed and the Home Office who wish to see it maintained. The law is that no court may send a young person to prison unless no other way of dealing with him is appropriate. If that law is abided by then, whether this clause is repealed or not, the number of people who finish up in borstal cannot be affected.
  In those circumstances much of the appalling statistical information which has been given to us by the noble Lord, Lord
  512
  Harris of Greenwich—interesting though it is—is quite irrelevant to the discussion. With great respect to the noble Baroness, Lady Wootton of Abinger, equally, argument about the merits of demerits of borstal and prison as penal institutions becomes irrelevant to this discussion.
  Baroness WOOTTON of ABINGER: My Lords, would the noble Lord say where the young people who are now sent to prison and who the Judiciary think perhaps need 18 months in custody now go while this provision lasts?
  Lord WIGODER: My Lords, the present position is that if a court comes to the conclusion that imprisonment is necessary and there is no other way of dealing with a young man except by a sentence of imprisonment, then a sentence of imprisonment has to be passed.
  Baroness WOOTTON of ABINGER: My Lords, that is not an answer to my question, if I may respectfully say so. My question was: If a custodial sentence of something like 18 months is thought to be necessary, what do they do with them now?—they send them to borstal.
  Lord WIGODER: My Lords, no; they send them to prison for three years, and that is precisely what we want to stop. There is really little point in pursuing the matter. I venture to say that I am perhaps the only Member of your Lordships' House who has the distressing task for four or five weeks a year in a Crown Court of sentencing people who have committed offences. One sees young people, and I assure your Lordships that no judge would ever send a young person to prison unless it was absolutely necessary. What is an impossible burden is that, having come to the reluctant conclusion that it is absolutely necessary, one's hands are then tied and one is unable to impose the appropriate sentence.
  6.44 p.m.
  On Question, Whether this House doth disagree with the Commons in their Amendment No. 65.
  Their Lordships divided: Contents, 80; Non-Contents, 58.
  Resolved in the affirmative, and Commons Amendment disagreed to accordingly.

  COMMONS AMENDMENTS
  66 After Clause 45, insert the following new clause:
  Alteration of maximum periods of imprisonment in default of payment fines etc.
  "For the Table in paragraph 1 of Schedule 3 to the Magistrates' Courts Act 1952 (maximum periods of imprisonment in default of payment of fines etc.) there shall be substituted the following Table:—

  "TABLE

  An amount not exceeding £25

  7 days

  An amount exceeding

  £25 but not exceeding £50

  14 days

  An amount exceeding £50 but not exceeding £200

  30 days

  An amount exceeding £200 but not exceeding £500

  60 days

  An amount exceeding £500 but not exceeding £1,000

  90 days

  An amount exceeding £1,000 but not exceeding £2,500

  6 months

  An amount exceeding £2,500 but not exceeding £5,000

  9 months

  An amount exceeding £5,000

  12 months."."

  67 Clause 47, page 36, line 11, after "sum", insert "or sums".
  68 Clause 47, page 36, line 12, leave out "was" and insert "were".
  69 Clause 47, page 36, line 14, after "sum", insert "or sums".
  70 Clause 47, page 36, line 15, leave out "as appears" and insert "or sums as appear".
  71 Clause 47, page 36, line 21, at end insert—
  "(d) the Table in paragraph 1 of Schedule 3 to the Magistrates' Courts Act 1952 (maximum periods of imprisonment in default of payment of fines etc.)".
  6.51 p.m.
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 66 to 71. If I may, I will speak also to Amendments Nos. 87, 145, 162, 164, 166, 171, 174, 195 and 197. All these, except No. 145, are consequential on Amendment No. 66. The new clause, Amendment No. 66, amends the ratio of maximum periods of imprisonment which may be imposed for fine default to the amount of money outstanding. The present table provides that for a sum not exceeding £2 a maximum sentence of seven days may be imposed, for between £2 and £5, 14 days for £5 to £20, 30 days, for £20 to £50, 60 days and for more than £50, 90 days may be given. As the House will see from the figures in the new clause we have drastically amended the relationship between the sum and the period.
  The Amendment goes beyond the adjustment which would have been necessary to take account of inflation and this reflects a growing concern about the practice of imprisoning fine defaulters. Amendment No. 145 alters the fine enforcement procedure to ensure that magistrates may only imprison those defaulters who have failed to pay a fine through wilful refusal or culpable neglect. The two taken together will, I hope, greatly reduce the number of fine defaulters in prison. On 30th June 1976, of a sentenced male prison population of 28,093, 1,149 prisoners, or just over 4 per cent. were there through defaulting of the payment of fines.
  All the evidence we have indicates that it is the threat of prison rather than the actual time served that is effective in ensuring the payment of fines. I know of no suitable alternative sanction, in the last analysis, for fine defaulters other than imprisonment, but given that it is the
  516
  sight of a warrant of commitment that in many cases results in payment, I feel that it is absolutely right to reduce the liability to longer periods of imprisonment and this is what the new clause seeks to do. I beg to move.
  Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Harris of Greenwich.)

  COMMONS AMENDMENTS
  72 After Clause 47, insert the following new clause:
  Right to have someone informed when arrested
  " . Where any person has been arrested, other than under the Prevention of Terrorism Act 1976, and is being held in custody in a police station or other premises, he shall be entitled to have intimation of his arrest and of the place where he is being held sent to a person of his choosing."
  AMENDMENTS TO COMMONS AMENDMENT No. 72
  72A Line 1, leave out from ("arrested") to ("and") in line 2.
  72B Line 5, leave out ("a person of his choosing") and insert ("one person reasonably named by him, without delay or, where some delay is necessary in the interest of the investigation or prevention of crime or the apprehension of offenders, with no more delay than is so necessary.")
  6.54 p.m.
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 72, as amended by Amendments Nos. 72A and 72B. The clause as drafted was added to the Bill at a late stage and against Government advice. It seeks to give a person who is arrested in England or Wales—other than a person arrested under the terms of the Prevention of Terrorism Act—a statutory and unqualified right to have intimation of his arrest and the place of his detention conveyed to a person of his choosing.
  The main reason why the Government objected to the clause was this. The subject matter of this clause is only one aspect of the police procedures in the investigation of crime and the questioning of suspected persons. It is an important point but it is only part of a much wider picture. This wider picture is now to come under review by the Royal Commission

  517
  which has recently been set up to look at pre-trial procedures as a whole. The Government did not consider it desirable, at a time when the Royal Commission has just been set up, to attempt to tackle one aspect of this remit in isolation in this way. We thought that the Royal Commission should be given the opportunity to take a broad view of the situation and to bring forward balanced and comprehensive proposals.
  As for the clause itself, as drafted, it confers an absolute and unqualified right on a person in custody to have intimation of the fact of his arrest and place of his detention conveyed to any person of his choosing. This was to be done without reference to the wider implications of such an intimation. No one disputes that as a general rule, and in accordance with good police practice, an arrested person should be able to inform relatives or of course his solicitor of his arrest. But there are some cases where notification can have grave effects by way of the escape of the arrested person's criminal associates, the destruction of evidence or interference with witnesses.
  The Association of Chief Police Officers has issued a statement underlining the serious implications which such an unqualified right could have for investigating officers in dealing with crime and thus for society. This is not a factor which it would be right to ignore. Perhaps I can give your Lordships two examples of the considerations which could arise. The police may be dealing with a gang rape. They may have arrested one of the gang but not the others. If early news of his arrest leaks out to the other members of the gang they may escape, and it may prove much more difficult to bring them before the courts. The second example is a kidnapping case where the police have arrested one of the kidnappers but not the others, and are not aware of the place where the victim is being held. Clearly in that situation premature news of the arrest could lead to harm—perhaps grave harm—to the victim, and the escape of the other kidnappers. I think, and I suspect that most of your Lordships would think, that considerations of this sort are pretty persuasive.
  However, it was clear from the debate in another place that there was a considerable measure of support for the principle
  518
  underlying the new clause to which my right honourable friend the Home Secretary wished to respond. My right honourable friend has accordingly been giving further consideration to the question of how there should be some recognition of the principle set out in the clause as drafted in the period before the Royal Commission is able to complete its work. It is as a result of this consideration that the Government have put down the Amendments on the Order Paper.
  These Amendments incorporate a number of changes. First, the exception referring to persons arrested under the Prevention of Terrorism legislation is removed, so that the clause applies to such persons as well as to those arrested under other powers. Secondly, it is proposed that the intimation should be sent "without delay"; by comparison no requirement as to the urgency of the intimation is included in the present clause. Thirdly, the intimation may be sent only to a person "reasonably named" by the person in custody. Fourthly, and perhaps most importantly, the Amendments have the effect of enabling the police to delay sending the intimation, if this is necessary in the interest of the investigation or the prevention of crime or the apprehension of offenders, for so long as those considerations apply, but no longer.
  I explained earlier some of the considerations which may make it necessary to delay intimation and we would propsoe to set out what we think is good practice and to give some examples of the need for delay in the circular which the Home Office will be sending to chief officers of police on the Bill when it comes into force. The Government believe that these Amendments have the effect of preserving the spirit of the clause while removing the risk that it will impose an unfair handicap on the police in the work which they do on behalf of all of us in preventing and detecting crime.
  Moved, That the House doth agree with the Commons in the said Amendment, as amended by Amendments Nos. 72A and 72B.—(Lord Harris of Greenwich.)
  Lord HALE: My Lords, I understood that the noble Lord, Lord Wigoder, was about to move Amendment No. 72C.
  The DEPUTY SPEAKER (Lord Der-went): When we come to Amendment No. 72C it will not be moved, my Lords.
  Lord HALE: In the light of that, my Lords, I feel that I must make a brief observation. My difficulty is that, when considering the criminal situation at the moment, this is an Amendment which as a young man I should have voted for unhesitatingly, without reservation and without inhibition of any kind. I say again that we have a metropolitan mind in this House, despite the type of assembly we are. We would not think twice about ringing up a solicitor at two o'clock in the morning and asking him to see a man's wife; what response one might receive is a different matter. People get arrested in Nether Wallop, Oswaldtwistle and in counties like Cumberland or mid-York-shire, where to put a reference to a solicitor is not such an easy matter.
  The normal object of what we are discussing, in times when crime was not the menace it is, arose quite simply. When I was in practice 50 years ago I was surprised at the number of my clients who were arrested at just before midnight when they were away from home; it was almost standard practice. All they wanted to do, as most of them were charged with offences which might affect their honour, probably with no question of security arising, was to telephone their wives to let them know what had happened. Probably the wife was sitting up anxiously and he had been arrested with some damsel at an Oddfellows' dinner or possibly even at a Frothblowers' feast. Probably at about 3 o'clock in the morning he was asked whether he would like to sign a statement and, because he wanted to go home to his wife, he signed it and then he could be released on bail by an officer of the rank of inspector. That often happened and indeed it was the practice. It worked, although it may not have been very desirable, and in those days the need to have the right to communicate with one's home was surely a reasonable one.
  Now we are dealing—my noble friend Lord Harris of Greenwich showed he appreciated this when he accepted offences under the special Act dealing with terrorism—with a different state of affairs. Today one cannot really ask the police, who are trying to round up a gang using explosives
  520
  and other terrorist methods—some of whom, probably the nucleus, are still in London while some of whom are on the train to Liverpool, perhaps en route for Southern Ireland—to allow messages to go out conveying information. Clearly the people on the train would be the first to be informed that an arrest had been made and clearly they would be assisted in their getaway.
  If a police officer in these days of organised gangs was told, "I have been arrested and I demand my right under section so and so and I want somebody informed" and the officer says, "Who do you want to inform?" and the man replies, "My twin brother" and the officer asks, "What is your name?" and the man replies "Kray", then the policeman—he might not know anything about the main arrest, being, say, an attendant at the police station cells—could be in considerable difficulty. He could be informing a gangster's brother, who is perhaps already under suspicion and whom the police are hoping to find, and that could result in crime being committed to suppress evidence or aid the getaway. It becomes a very serious matter to consider and something which, if possible, one should not make mandatory. Lord Harris explained the reason for the drafting of the Amendments and those reasons are perfectly obvious. Indeed, part of them I have already expressed.
  I think there is more than one objection to the Amendment No. 72C, standing in the name of the noble Lord, Lord Wigoder, but if, as I understand, that Amendment is not to be moved, I need not mention them. I would point out, however, that apart from anything else, it is not a good thing for the police to select a solicitor if one does not have a solicitor. I read the noble Lord's Amendment and I felt that in his effort to deal with these possibilities his proposal would make the Commons Amendment almost unenforceable. I do not suggest that was his intention and I quite understand the difficulties of drafting an Amendment of that kind and leaving a discretion. However, I have reluctantly come to the conclusion that in the present circumstances the police should have a discretion in dealing with gangster crimes, with mass conspiracies and so on. I could have wished that the provision was made a little more explicit, but it is not always a good thing to make legislation too

  521
  explicit. In the circumstances, therefore, I shall not dissent from my noble friend. I felt I should express my reasons for having altered my mind about some things that years ago, in a different situation, I should have been much more in sympathy with.
  7.10 p.m.
  The Earl of MANSFIELD: My Lords, I do not suppose that any noble Lord will be out of sympathy with what the movers of this Amendment wanted to achieve, but I am bound to point out that I think they have gone about it in a very silly way, and that silliness has not been altogether cured by the Amendment which the noble Lord, Lord Harris, asks us to accept. I suppose that there are three reasons why somebody in police custody wishes to communicate with the outside world. First of all, and most innocently, he wants to tell his family where he is. Secondly, and innocently or not, he wants to make some form of preparation for obtaining legal advice. Thirdly, and much more sinisterly, he wants to get word to his fellow criminals that, so far as he is concerned, "the balloon has gone up", and, so far as they are concerned, they must either make good their escape or at any rate try to get rid of the stolen property, the swag, the evidence or whatever it is which may in the near future make life even more uncomfortable for the man in custody.
  My Lords, if such a man's reason has either of the first two of the aims that I have enumerated, then I have no doubt that under the existing Judges' Rules the police will do everything they can, at least at the proper time, to comply with the arrested person's wishes. Obviously, if he merely wants word sent to his family, they will send it. If he wants the services of a solicitor, in my experience the police will probably wait until dawn the next day, but they will convey to the solicitor of his choice, or indeed to any solicitor on the legal aid panel, that his services are required. If the police think that the purpose of communication is less innocent, then they will do everything they can to obstruct the relaying of the message, by whatever means, until they think that the danger is passed or their inquiries are complete. I say all this because I think that this is a very silly Amendment, and I think that it is particularly silly because it
  522
  brings the police into an area where they can be criticised unfairly when they are merely trying to carry out their already very difficult job, which is to clear up crime.
  This new clause does not say how the intimation of the arrest is to be sent, or by what means; nor does it say what is to happen if it is not sent or if it is not sent without delay. One is bound to ask the noble Lord, Lord Harris, because he is in charge of the Bill: suppose that at some later stage, at a man's trial, his counsel gets up and indignantly says that notification of arrest was delayed, what is then to happen? It will merely prejudice the matters which the jury will have to consider and it will not really do the accused person any good. All in all, one can see that, at best, this Amendment is going to cause trouble for the police, and, at worst, it is going to cause miscarriages of justice.
  Lord MONSON: My Lords, while I accept the validity of the arguments set out by the noble Lord, Lord Harris, against the Commons Amendment as it stands, essentially desirable though I think the Commons Amendment is—and here I must disagree with the noble Earl, Lord Mansfield, because I think there have been a couple of cases of abuse recently—may I put two questions to the noble Lord? First, is it not the case that in Scotland a detained person has an unfettered right to communicate with another person of his choice? Secondly, who is to be the judge of whether someone is or is not "reasonably named", to use the rather curious phraseology employed in the Amendment of the noble Lord, Lord Harris?
  7.14 p.m.
  Lord HARRIS of GREENWICH: My Lords, I will deal, if I may, with the various points which have been raised. I think we were clearly presented with a difficult situation, to which the noble Earl, Lord Mansfield, has drawn our attention. As we are proceeding in a very harmonious way, I will not make any comment about what actually happened in terms of a Division on this matter which took place in the House of Commons, but the noble Earl may have observed on looking at Hansard that there were not many

  523
  members of his Party who went into the Lobby against it. But the point I would put to the noble Earl is this. These issues, of course, are put at criminal trials now; and, of course, there are the Judges' Rules. It is often alleged that a person has not had the opportunity to consult his solicitor, to notify his relatives or something of this sort, and that becomes something of an issue. In certain circumstances, of course, if it can be argued that the police have behaved harshly and oppressively, no doubt it may affect the attitude of the judge to the admissibility of any statement which might have been made. Issues of that sort have been raised in the past, and they will be raised in the future as well, no doubt.
  But, my Lords, so far as this particular clause is concerned, there is no penalty section. It is a declaratory statement of the situation. It will have an effect on the police, and, as I have indicated, we will deal with this matter by means of a circular when the Bill is in fact published. As I indicated, I think that the Association of Chief Police Officers were seriously disturbed about the Amendment as passed in another place, and I very much hope that they will take a different attitude to this Amendment. Certainly, if a policeman behaves unreasonably there are steps which can be taken; and we have now a complaints procedure against police officers who in fact violate the disciplinary code of their force. So that is one way in which action could be taken if—and, I repeat, "if"—a policeman has behaved harshly and oppressively. But, as the noble Earl has pointed out, as indeed I did when I spoke a few moments ago, the fact of the matter is that in a number of cases it could raise very dangerous issues indeed were the police to be compelled immediately to notify someone nominated by an accused person, simply at the bidding of that man. I gave two examples, but there are many others which could be cited to demonstrate the difficulties which could arise were the police to be compelled to do that, even though they thought it could seriously damage the interests of justice.
  So far as concerns the noble Lord, Lord Monson, he raised one particular point. I will, if I may, deal with the Scottish point in a letter to him. It is a complicated matter. It is not quite as he suggested, but I will gladly tell him about the situation.
  524
  I think it can probably be more sensibly dealt with in correspondence. The point he raised with me concerned the rather curious phrase—and I entirely agree with him—about
  "one person reasonably named by him".
  The reason for that is this. We of course considered the possibility of putting in a long list of people, but where does that list stop? Do you say "the spouse"? What about the common law wife? Does she go in, or does she not? What about other members of the family, assuming he is a single man? If you have a long catalogue of people, it makes something of a nonsense of the situation; and, apart from anything else, there is always the risk that you will leave somebody out.
  There is also another risk, that an accused person who has an absolute right to have his whereabouts communicated to somebody may name, to take an example, the Archbishop of Canterbury, or somebody of that sort. It would be an absurdity if the police were under a compulsion to notify the Archbishop of Canterbury or the President of the United States, or somebody of that sort, because of the language of the Statute. Therefore, we have said "reasonably named" simply in order to deal with this particular problem. I think it makes more sense than any alternative form of words.
  The Earl of MANSFIELD: My Lords, before the noble Lord sits down, would he confirm that Section 19 of the Criminal Procedure (Scotland) Act 1975 reads:
  "Where any person has been arrested on any criminal charge, such person shall be entitled immediately upon such arrest to have intimation sent to a solicitor that his professional assistance is required by such person …"?
  Would the noble Lord agree that, mutatis mutandis, the same section applies to both summary and non-summary offences, as I might call them? Would he further agree that, in a way, that clears up the matter raised by the noble Lord, Lord Monson? I say this for the record now.
  [Amendment No. 72C not moved.]
  Amendment No. 72, as amended, agreed to.

  COMMONS AMENDMENTS
  73 Clause 48, page 37, leave out line 20 and insert—"section 15(2), (3) and (3A); section 30(2A);"
  74 Clause 48, page 37, line 20, at end insert "section 31 (7A);"
  75 Clause 48, page 37, line 20, at end insert "section 32(3);"
  76 Clause 48, page 37, line 20, at end insert "section (Penalty for offences under s. 3 of Explosive Substances Act 1883);
  77 Clause 48, page 37, line 20, at end insert sections (Execution throughout United Kingdom of warrants of arrest, (Service of summonses and citation throughout United Kingdom). (Transfer of fine orders) and Schedule (Transfer of fine orders);
  78 Clause 48, page 37, leave out line 21 and insert "sections 39, (Bomb Hoaxes) and (Misuse of Drugs Act 1971: redefinition of cannabis);
  79 Clause 48, page 37, line 24, at end insert "Night Poaching Act 1828,"
  80 Clause 48, page 37, line 25, at end insert "Explosive Substances Act 1883,"
  81 Clause 48, page 37, line 27, at end insert "Adoption Act 1958,"
  82 Clause 48, page 37, line 34, at end insert "Companies Act 1967,"
  83 Clause 48, page 37, line 34, at end insert "Gaming Act 1968,"
  84 Clause 48, page 37, line 34, at end insert "section 179 of the Road Traffic Act 1972,"
  85 Clause 48, page 37, line 38, at end insert "Night Poaching Act 1828, Truck Act 1831,"
  86 Clause 48, page 37, line 42, at end insert "Truck Amendment Act 1887,"
  87 Clause 48, Page 38, line 1, at beginning insert "section 283 of the"
  88 Clause 48, Page 38, line 4, at end insert "Penalties for Drunkenness Act 1972."
  89 Clause 48, Page 38, line 4, at end insert "Criminal Justice (Scotland) Act 1973"
  90 Clause 48, Page 38, line 7, leave out "and insert" 92(8) and 106(2)(f)"
  91 Clause 48, Page 38, line 4, after second "and", insert "' in relation to enactments mentioned therein which extend to Scotland, Part I of"
  92 Clause 48, Page 38, line 10, at end insert "section 59(5)(e) of and paragraph 48(a) of Scheuled 8 to the Courts Act 1971."
  101 Clause 48, Page 41, line 5, at end insert:

  "NIGHT POACHING ACT 1828 (c. 69)

  1. Offences under section 1 (taking or destroying game or rabbits by night or entering land for that purpose).

  Section 1.

  For the words from "such offender" onwards substitute "he shall be liable on summary conviction to a fine not exceeding £200".

  (a) for a first offence, on summary conviction, 3 months or £100 and, in default of finding sureties of £10, a further 6 months;

  £200

  (b) for a second offence, on summary conviction, 6 months or £100 and, in default of finding sureties of £20, a further 12 months;

  (c) for a third offence, on conviction on indictment, 2 years or a fine or both.

  TRUCK ACT 1831 (c. 37)

  2. Offences under section 9 (entering into illegal contracts or making illegal payments).

  Section 9.

  For the words from "for the first" onwards substitute "be liable on summary conviction to a fine not exceeding £200.".

  (a) for a first offence, £10;

  £200."

  (b) for a second offence £20;

  (c) for a third offence, £100.

  93 Clause 48, Page 41, line 12, at end insert "section 58(a) of the Powers of Criminal Courts Act 1973,"
  94 Clause 48, Page 41, line 14, at end insert "Criminal Procedure (Scotland) Act 1975,"
  95 Clause 48, Page 41, line 15, at end insert "Schedule (Matters ancillary to section (Prison sentence partly served and partly suspended.)) paragraph 3(3)"
  96 Clause 50, page 38, line 38, leave out "Part III of this Act so far as it relates" and insert "The provisions of sections 14 to 32 and 38 above, so far as they relate".
  97 Clause 50, page 38, line 40, leave out "the said Part III" and insert "those provisions"
  98 Clause 50, Page 39, line 7, at beginning insert "Subject to the transitional provisions contained in this Act,"
  99 Clause 50, Page 39, line 27, leave out paragraph (b) and insert—
  (b) the following provisions extend to Northern Ireland namely—

  sections (Execution throughout United Kingdom of warrants of arrest), (Service of summonses and citation throughout United Kingdom) and (Transfer of fine orders),

  section 36,

  section (Misuse of Drugs Act 1971: redefinition of cannabis),

  section 41(4) to (6),

  subsections (1), (3) and (6) to (10) of this section,

  Schedule (Transfer of fine orders), in Schedule 11, paragraph 4;

  100 Clause 50, page 40, line 7, after "Scotland);" insert—
  "(e) section 32(3) extends to all places (except Scotland) to which section 2 of the European Communities Act 1972 extends (as well as, by virtue of paragraph (a) above, to Scotland), and the provisions of section 28(6) and (7), in their operation in relation to the provision that may be made under section 2(2) of the said Act of 1972, extend to all such places (except Scotland);"
  102 Page 42, leave out lines 32 to 38.
  103 Page 46, line 15, column 5, leave out paragraph (b) and insert—
  "(b) where in any other case it is shown that the offender was in charge of a motor vehicle on a road or other
  106 Page 56, line 16, at end insert:

  "LICENSING ACT 1872 (c. 94)

  Offences under the first paragraph of section 12 (being found drunk in a highway or other public place).

  Section 12 (as amended by section 1 of the Penalties for Drunkenness Act 1962).

  £5.

  £25.

  MERCHANT SHIPPING ACT 1894 (c. 60)

  Offences under the following provisions—

  Section 287 (as amended by section 1 of the Penalties for Drunkenness Act 1962).

  £5.

  £25.

  section 287(1)(a) (attempting to board a steamer while drunk or disorderly);

  section 287(1)(b) (refusing to leave a steamer while drunk or disorderly).

  LICENSING ACT 1902 (c. 28)

  Offences under section 2(1) (being drunk in a highway or other public place while in charge of a child).

  Section 2(1) (as amended by section 1 of the Penalties for Drunkenness Act 1962).

  £10.

  £50."

  107 Page 46, line 27, at end insert:

  "Offences under section 49 (newspaper reports of proceedings in juvenile courts).

  Section 49(2).

  £50.

  £500."

  108 Page 51, line 32, column 4, leave out "£50" and insert "£200".
  109 Page 58, line 12, at end insert:

  "Any offence consisting in a contravention of section 67 of Schedule 3 (interference with valve or apparatus).

  Section 67 of Schedule 3.

  £5.

  £200."

  110 Page 58, line 18, at end insert:

  "Any office consisting in a contravention of section 33 of Schedule 4 (causing the supply of water to be intered with).

  Section 33 of Schedule 4.

  £5.

  £200."

  111 Page 59, line 8, at end insert:

  "AGRICULTURE (SCOTLAND- ACT 1948 (c. 45)

  Offences under section 50(1) (prohibition of night shooting and use of spring traps).

  Section 50(2)).

  £20 for a first offence and £50 for a second or subsequent offence.

  £200

  Offences under section 50A(1) (open trapping of hares and rabbits).

  Section 50A(2).

  £20 for a first offence and £50 for a second or subsequent offence.

  £200."

  112 Page 61, line 9, at end insert:

  "FOOD AND DRUGS ACT 1955 (4 & 5 ELIZ. 2) (c. 16)

  Offences under section 55(1) (selling specified articles near a market in market hours without a hawker's licence).

  Section 55(1) (as amended by Schedule 3 to the Criminal Justice Act 1967).

  £10.

  £50."

  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 73 to 112 en bloc.

  COMMONS AMENDMENTS
  113 Page 61, line 14, at end insert—

  "HIGHWAYS ACT 1959 (s. 25)

  Offences under section 119(3) (failure to make good the surface of a public path after ploughing).

  Section 119(4)(b)

  £50.

  £200."

  public place, 3 months or £500, or both."
  104 Schedule 2, page 47, leave out lines 6 and 7.
  105 Schedule 3, page 49, leave out lines 11 and 12.
  Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Harris of Greenwich.)
  AS AMENDMENTS TO COMMONS AMENDMENT No. 113
  113A Line 2, column 1, leave out ("119(3)") and insert ("119(4)(b)")
  113B Line 2, column 2, at end insert ("(as amended by Schedule 3 to the Criminal Justice Act 1967)")
  AMENDMENTS TO THE BILL, CONSEQUENTIAL ON COMMONS AMENDMENT No. 113
  113C Page 75, line 23, at end insert ("Highways Act 1959")
  113D Page 94, line 2, column 3, after ("1953") insert ("section 119(4)(b) of the Highways Act 1959")
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 113. At the same time I should like to speak to Amendments Nos. 113A, 113B, 113C and 113D. Amendment No. 113 which was accepted in another place at Report stage increased the maximum fine for failing to make good a public park after ploughing from £50 to £200. This is a relatively modest increase in the maximum fine for an offence which can cause great concern to ramblers. The maximum fine was last

  COMMONS AMENDMENTS
  114 Page 62, line 23, at end insert—

  "Offences under section 174(2) (refusal of person who is drunk etc, to leave licensed premises on request).

  Section 174(2).

  £5.

  £25."

  115 Page 63, leave out lines 29 and 30 and insert—

  "Offences under the following prosions—

  Section 7(1).

  £100 for a first offence and £200 for a second or subsequent offence.

  £500."

  section 1(1) (prevention of unnecessary pain and distress to livestock); section 2(2) (breach of regulations with respect to welfare of livestock).

  116 Page 64, line 21, at end insert—

  " LATE NIGHT REFRESHMENT HOUSES ACT 1969 (c. 53)

  Offences under section 9(4) (refusal of person who is drunk, etc. to leave licensed late night refreshment house on request).

  Section 11(3).

  £5.

  £25."

  117 Page 65, line 7, at end insert—

  "POISONS ACT 1972 (c. 66)

  Any offence under section 8(1) (contravention of provisions of sections 1 to 7, other than section 6(4), or of the Poisons Rules).

  Section 8(1).

  £50.

  £500.

  Offences under section 6(4) (using title etc. falsely to suggest entitlement to sell poison).

  Section 6(4).

  £20.

  £50.

  Offences under section 9(8) (obstructing an inspector etc.).

  Section 9(8).

  £5.

  £50."

  increased in 1967. Although the Government were happy to accept this suggested increase, it is unfortunate that the Amendment as put down was defective in its drafting and Amendments Nos. 113A and 113B rectify the faults. Amendments Nos. 113C and 113D are consequential.
  Moved, That this House doth agree with Amendments Nos. 113A and 113B as Amendments to the Commons Amendment No. 113.—(Lord Harris of Greenwich.)
  The DEPUTY SPEAKER: The Question now is that this House doth agree with Amendments Nos. 113C and 113D.
  The DEPUTY SPEAKER: The Question now is that this House doth agree with the Commons in their Amendment No. 113, as amended.
  118 line 22, at end insert—

  "CONTROL OF POLLUTION ACT 1974 (c. 40)

  Offences under section 78(1) (burning insulation from a cable).

  Section 78(2) (as substituted by the Clean Air Enactments (Repeals and Modifications) Regulations 1974).

  £400.

  £1,000."

  119 at end insert—

  "CRIMINAL PROCEDURE (SCOTLAND) ACT 1975 (c. 21)

  Offences under section 169(2) (publishing any matter in contravention of a direction by the court under section 169(1)).

  Section 169(2).

  £50.

  £500.

  Offences under section 365(2) (publishing any matter in contravention of a direction by the court under section 365(1)).

  Section 365(2).

  £50.

  £500.

  Offences under section 374(4) (publishing any matter in contravention of section 374).

  Section 374(4).

  £50.

  £500."

  120 After Schedule 6, insert the following new Schedule—

  SCHEDULE TRANSFER OF FINE ORDERS
  England and Wales
  1.— For sections 72A and 72B of the Magistrates' Courts Act 1952 there shall be substituted:—
  "Transfer of fines to Scotland or Northern Ireland
  72A.—(1) Where a magistrates' court has, or is treated by any enactment as having, adjudged a person by a conviction to pay a sum, and it appears to the court that he is residing

  (a) within the jurisdiction of a court of summary jurisdiction in Scotland, or

  (b) in any petty sessions district in Northern Ireland,

  the court may order that payment of the sum shall be enforceable by that court of summary jurisdiction or, as the case may be, in that petty sessions district.
  (2) An order under this section shall specify the court of summary jurisdiction by which or petty sessions district in which payment of the sum in question is to be enforceable; and if—

  (a) that sum is more than £100 or is a fine originally imposed by the Crown Court or the sheriff court, and

  (b) payment is to be enforceable in Scotland,

  the court to be so specified shall be the sheriff court.
  (3) Where an order is made under this section with respect to any sum, any functions under this Part of this Act relating to that sum which, if no such order had been made, would have been exercisable by the court which made the order or by the clerk of that court shall cease to be so exercisable.
  "Transfer of fines from Scotland to Northern Ireland
  72B.—(1) Where a transfer of fine order under section 403 of the Criminal Procedure (Scotland) Act 1975 or section 104A of the Magistrates' Courts Act (Northern Ireland) 1964 provides that payment of a sum shall be enforceable in a specified petty sessions area in England and Wales, a
  532
  magistrates' court acting for that area, and the clerk of that court, shall, subject to the provisions of this section, have all the like functions under this Part of this Act in respect of the sum (including power to make an order under section 72 or section 72A of this Act) as if the sum were a sum adjudged to be paid by a conviction of that court and as if any order made under the said Act of 1975 or, as the case may be, 1964 in respect of the sum before the making of the transfer of fine order had been made by that court.
  (2) For the purpose of determining the period of imprisonment which may be imposed under this Act in default of payment of a fine originally imposed by a court in Scotland, Schedule 3 to this Act shall have effect as if for the Table set out in paragraph 1 there were substituted the Table set out in section 407(1) of the Criminal Procedure (Scotland) Act 1975.
  (3) Where a transfer of fine order under section 403 of the Criminal Procedure (Scotland) Act 1975 or section 104A of the Magistrates' Courts Act (Northern Ireland) 1964 provides for the enforcement in a petty sessions area in England and Wales of a fine originally imposed by the Crown Court, a magistrates' court acting for that area shall have all the like functions under this Part of this Act, exercisable subject to the like restrictions, as if it were the magistrates' court by which payment of the fine fell to be enforced by virtue of section 32(1) of the Powers of Criminal Courts Act 1973, and as if any order made under the said Act of 1975 or, as the case may be, 1964 in respect of the fine before the making of the transfer of fine order had been made by that court."
  Scotland
  2.—(1) Section 403 of the Criminal Procedure (Scotland) Act 1975 shall be amended as follows.
  (2) In subsection (1)—

  533

  (a) at the end of paragraph (b) there shall be inserted the words ", or (c) in any petty sessions district in Northern Ireland,";

  (b) the words "if no term of imprisonment has been fixed by the court in default of payment of the fine" shall be omitted; and

  (c) after "petty sessions area" there shall be inserted the words "or petty sessions district".

  had been made, would have been exercisable by the court which made the order or by the clerk of that court shall cease to be so exercisable.
  "Transfer of fines from elsewhere in United Kingdom
  104B.—(1) Where a transfer of fine order under section 72A of the Magistrates' Courts Act 1952 or section 403 of the Criminal Procedure (Scotland) Act 1975 provides that payment of a sum shall be enforceable in a petty sessions district in Northern Ireland, a court of summary jurisdiction acting for that district and the clerk of that court shall, subject to subsection (2), have all the like functions under any statutory provision in respect of the sum (including power to make an order under section 104A) as if the sum were a sum adjudged to be paid by a conviction of that court and as if any order made under the said Act of 1952 or, as the case may be, 1975 in respect of the sum before the making of the transfer of fine order had been made by that court.
  (2) Where a transfer of tine order under section 72A of the Magistrates' Court Act 1952 or section 403 of the Criminal Procedure (Scotland) Act 1975 provides for the enforcement of a fine originally imposed by the Crown Court, the term of imprisonment which may be imposed under this Act shall be—

  (a) the term fixed in pursuance of section 31 of the Powers of Criminal Courts Act 1973 by the Crown Court, or

  (b) a term which bears the same proportion to the term so fixed as the amount of the fine remaining due bears to the amount imposed by that court,

  notwithstanding that the term exceeds the period applicable to the case under Schedule 4."'.
  121 Insert the following new Schedule:
  "SCHEDULE
  TRANSFER OF REMAND HEARINGS
  1. A court which, on adjourning a case, makes an order under section (Transfer of remand hearings) (1) above is not required at that time to fix the time and place at which the case is to be resumed but shall do so as soon as practicable after the order ceases to be in force.
  (3) In subsection (2) after the words "petty sessions area" there shall be inserted the words "or petty sessions district".
  (4) In subsection (4)—
  534

  (a) for the words from "within" to "Magistrates' Courts Act 1952" there shall be substituted the words "under this section, section 72A of the Magistrates' Courts Act 1952 or section 104A of the Magistrates' Courts Act (Northern Ireland) 1964"; and

  (b) for the words "or the said Act of 1952" there shall be substituted the words ", the said Act of 1952 or the said Act of 1964".

  (5) Subsection (5) shall cease to have effect.
  (6) In subsection (6) after the words "section 72A of the Magistrates' Courts Act 1952" there shall be inserted the words "section 104A of the Magistrates' Courts Act (Northern Ireland) 1964".
  Northern Ireland
  3. After section 104 of the Magistrates' Courts Act (Northern Ireland) 1964 there shall be inserted:—

  104A.—(1) Where a magistrates' court has, or is treated by any statutory provision as having, adjudged a person by a conviction to pay a sum and it appears to the court that he is residing—

  (a) in any petty sessions area in England and Wales, or

  (b) within the jurisdiction of a court of summary jurisdiction in Scotland,

  the court may order that payment of the sum shall be enforceable in that petty sessions area or, as the case may be, by that court of summary jurisdiction.

  (2) An order under this section shall specify the petty sessions area in which or the court by which payment of the sum in question is to be enforceable; and if—

  (a) that sum is more than £100 or is a fine originally imposed by the Crown Court or the sheriff court, and

  (b) payment is to be enforceable in Scotland,

  the court to be so specified shall be the sheriff court.

  (3) Where an order is made under this section with respect to any sum, any functions under any statutory provision relating to that sum which, if no such order

  2. Where an order under subsection (1) of section (Transfer of remand hearings) above is made in the course of proceedings which, for the purposes of section 3 of the Criminal Justice Act 1967 (reporting restrictions and their removal), are committal proceedings, proceedings relating to the accused before the alternate court are also committal proceedings for those purposes.
  3. A court making an order under subsection (1) of section (Transfer of remand hearings) above or remanding the accused under subsection (4) shall at once notify the court before which the accused is to be brought as to the terms of the order or remand.
  4. A person to whom an order under section (Transfer of remand hearings) (1) above applies shall, if released on bail, be bailed to appear before the court which made the order.
  5. Section (Transfer of remand hearings) above and this Schedule have effect notwithstanding anything in sections 6 and 14 of the Magistrates' Courts Act 1952 or section 19(4) above."
  122 Insert the following new Schedule:

  SCHEDULE
  MATTERS ANCILLARY TO SECTION (Prison sentence partly served and partly suspended) Probation orders
  1. Where a court makes an order under section (Prison sentence partly served and partly suspended) (1) above with respect to a sentence of imprisonment, it shall not make a probation order in the offender's case in respect of another offence of which he is convicted by or before that court, or for which he is dealt with by that court.
  Courts competent to restore sentence held in suspense
  3.—(1) In relation to a sentence of imprisonment part of which is held in suspense, the courts competent under section (Prison sentence partly served and partly suspended) (3) above are—

  (a) the Crown Court; and

  (b) where the sentence was passed by a magistrates' court, any magistrates court before which the offender appears or is brought.

  (2) Where an offender is convicted by a magistrates' court of an offence punishable with imprisonment and the court is satisfied that the offence was committed during the whole period of a sentence passed by the Crown Court with art order under section (Prison sentence partly served and partly suspended) (1) above—

  (a) it may, if it thinks fit, commit him in custody or on bail to the Crown Court; and

  (b) if it does not, it shall give written notice of the conviction to the appropriate officer of that court.

  (3) For the purposes of this and the next following paragraph, a sentence of imprisonment passed on an offender with an order under section (Prison sentence partly served and partly suspended) (1) above shall be treated as having been passed (with such an order) by the court which originally sentenced him.
  Recall of offender on re-conviction
  3.—(1) If it appears to the Crown Court, where that court has jurisdiction in accordance with sub-paragraph (2) below, or to a justice of the peace having jurisdiction in accordance with that subparagraph that an offender has been convicted in Great Britain of an offence punishable with imprisonment committed during the whole period of a sentence passed with an order under section (Prison sentence partly served and partly suspended) (1) above and that he has not been dealt with in respect of the part of the sentence held in suspense, that court or justice may, subject to the following provisions of this paragraph, issue a summons requiring the
  536
  offender to appear at the place and time specified therein, or a warrant for his arrest.
  (2) Jurisdiction for the purposes of subparagraph (1) above may be exercised—

  (a) if the sentence was passed by the Crown Court, by that court;

  (b) if it was passed by a magistrates' court, by a justice acting for the area for which that court acted.

  (3) Where an offender is convicted by a court in Scotland of an offence punishable with imprisonment and the court is informed that the offence was committed during the whole period of a sentence passed in England and Wales with an order under section (Prison sentence partly served and partly suspended) (1) above, the court shall give written notice of the conviction to the appropriate officer of the court by which the original sentence was passed.
  (4) Unless he is acting in consequence of a notice under sub-paragraph (3) above, a justice of the peace shall not issue a summons under this paragraph except on information and shall not issue a warrant under this paragraph except on information in writing and on oath.
  (5) A summons or warrant issued under this paragraph shall direct the offender to appear or to be brought before the court by which the original sentence of imprisonment was passed.
  Miscellaneous (procedural)
  4. Where the offender is before the Crown Court with a view to the exercise by that court of its powers under section (Prison sentence partly served and partly suspended) (3) above, any question whether and, if so, when he has been convicted of an offence shall be determined by the court and not by the verdict of a jury.
  5. Where the offender has been before a court with a view to its exercising those powers, the appropriate officer shall—

  (a) if the court decided not to exercise the powers, record that fact; and

  (b) whether or not it exercised them, notify the appropriate officer of the court which passed the original sentence as to the manner in which the offender was dealt with.

  6. For the purposes of any enactment conferring rights of appeal in criminal cases, the restoration by a court under section (Prison sentence partly served and partly suspended) (3) above of a part of a sentence held in suspense shall be treated as a sentence passed on the offender by that court for the original offence, that is to say the offence for which the original sentence was passed with an order under section (Prison sentence partly served and partly suspended) (1) above.
  Miscellaneous (consequential)
  7. Where a sentence of imprisonment is passed with an order under section (Prison sentence partly served and partly suspended) (1) above, it is still to be regarded for all purposes as a sentence of imprisonment for the term stated by the court, notwithstanding that part of it is

  537
  held in suspense by virtue of the order; and, for the avoidance of doubt, a sentence of which part is held in suspense by virtue of such an order is not to be regarded as falling within the expression "suspended sentence" for the purposes of any legislation, instrument or document.
  8. Where an offender is sentenced to imprisonment with an order under section (Prison sentence partly served and partly suspended) above and, having served part of the sentence in prison, is discharged under section 25(1) of the Prison Act 1952 (remission for industry and good conduct), the remainder of the sentence being held in suspense, the sentence is not to be regarded as expiring under that section.
  9. In section 21 of the Firearms Act 1968 (prohibition on possession of firearms by persons previously convicted of crime), after subsection (2) there shall be inserted—
  "(2A) For the purposes of subsection (2) above, 'the date of his release', in the case of a person sentenced to imprisonment with an order under section (Prison sentence partly served and partly suspended) (1) of the Criminal Law Act 1977, is the date on which he completes service of so much of the sentence as was by that order required to be served in prison".
  10. In section 67 of the Criminal Justice Act 1967 (computation of sentence where offender has been previously in custody), in subsection (1), after "arose, but" there shall be inserted "(a)", and at the end of that subsection there shall be inserted—
  "(b) in the case of a person sentenced to imprisonment with an order under section (Prison sentence partly served and partly suspended) of the Criminal Law Act 1977, this subsection operates to reduce the part of the sentence ordered to be served in prison, but not any part held in suspense and restored under subsection (3) of that section".
  11. In section 1 of the Rehabilitation of Offenders Act 1974 (general principle as to rehabilitation when convict ion is spent), after subsection (2) there shall be inserted—
  "(2A) Where in respect of a conviction a person has been sentenced to imprisonment with an order under section (Prison sentence partly served and partly suspended) (1) of the Criminal Law Act 1977, he is to be treated for the purposes of subsection (2) above as having served the sentence as soon as he completes service of so much of the sentence as was by that order required to be served in prison".
  123 Page 67, line 8, after "with" insert "(i)".
  124 Page 67, line 9, leave out "with" and insert "(ii)".
  125 Page 67, line 11, leave out "with" and insert "(iii)".
  126 Page 67, line 17, leave out "not mentioned in the preceding paragraph" and insert "(whether or not involving the death of a person other than the deceased)".
  127 Page 67, line 19, after "deceased", insert "not being art offence within paragraph (a)(i), (ii) or (iii) above".
  128 Page 68, line 13, leave out from "proceedings" to end of line 20 and insert—
  "(b) the coroner shall, after the termination of the inquest, furnish the registrar of deaths with a certificate under his hand stating the result of the relevant criminal proceedings; and
  (c) the provisions of paragraph (3) of section 18 of the Coroners Act 1887 and section 23(1) of the Births and Deaths Registration Act 1953 (duty of coroner to send registrar certificate containing information as to death and finding of inquest) shall not apply in relation to that inquest".
  129 Schedule 8, page 71, line 26, at end insert—

  "(1A) This subsection applies to the following enactments (by virtue of which certain byelaws may make persons contravening the byelaws liable on summary conviction to a fine not exceeding £20), namely—

  (a) section 203 of the Local Government (Scotland) Act 1973 (offences against byelaws) but (the provisions of section 462(11) of this Act notwithstanding) not that section as applied to byelaws made under any provision contained in a local or private Act other than by a local authority; and

  (b) paragraph 5 of Schedule 6 to the Weights and Measures Act 1963 (byelaws about solid fuel), including that paragraph as extended to wood fuel by paragraph 4 of Part IV of Schedule 7 to that Act.

  (1B) In the enactments to which subsection (1A) above applies for any reference to £20 there shall be substituted a reference to £50; and any provision in force at the coming into force of this subsection which—

  (a) is contained in any byelaw made by virtue of any enactment to which subsection (1A) above applies; and

  (b) specifies £20 as the maximum fine which may be imposed on summary conviction in respect of a contravention of, or offence under, any byelaw mentioned in that provision,

  shall have effect as if it specified £50 instead (but with no change by virtue of this subsection in the maximum daily fine, if any, for which it provides).".

  130 Page 73, line 26, at end insert—
  "7A. In section 397(1) for the words 'or under section 72A of the Magistrates' Courts Act 1952' there shall be substituted the words ', under section 72A of the Magistrates' Courts Act 1952 or under section 104A of the Magistrates' Courts Act (Northern Ireland) 1964'.".
  131 Page 74, line 18, leave out from "under" to end of line 32.
  132 Page 75, line 13, at end insert—

  Licensing Act 1872

  Licensing Act 1902

  133 Page 75, line 22, at end insert "Food and Drugs Act 1955"
  134 Page 75, line 30, at end insert "Late Night Refreshment Houses Act 1969"
  135 Schedule 9, page 75, line 33, at end insert—
  "NIGHT POACHING ACT 1928 (c. 69)
  1. In section 2 (assaults by persons committing offences under the Act), for the words from 'whether it be' onwards substitute 'be liable on summary conviction to imprisonment for a term not exceeding six months or to a fine not exceeding £500, or to both'.
  2. In section 9 (entering land, with others, armed and for the purpose of taking or destroying game or rabbits), for the words from 'at the discretion of the court' onwards substitute 'on summary conviction to imprisonment for a term not exceeding six months or to a fine not exceeding £500, or to both.'."
  136 Schedule 9, page 75, line 46, at end insert—
  "EXPLOSIVE SUBSTANCES ACT 1883 (c.3)
  In section 3(1) (attempt to cause explosion, or making or keeping explosive, with intend to endanger life or property in the United Kingdom or the Republic of Ireland), for 'a term not exceeding twenty years' substitute 'life'.".
  137 Page 76, line 29, at end insert—
  "REPRESENTATION OF THE PEOPLE ACT 1949 (c. 68)
  In section 149(9) (procedure where person prosecuted before an election court subsequently attends or is brought before a magistrates' court)—

  (a) in paragraph (b), for 'hear' substitute 'try'; and

  (b) after that paragraph add 'and sections 19 to 26 of the Criminal Law Act 1977 shall (in either case) not apply.'.".

  138 Page 78, line 32, at end insert—
  "BIRTHS AND DEATHS REGISTRATION ACT 1953 (c. 20)
  In section 29(4) (correction of error in register resulting from error in information given by a coroner's certificate), for the words preceding 'the coroner, if satisfied' substitute—
  (4) where—

  (a) an error of fact or substance (other than an error relating to the cause of death) occurs in the information given by a coroner's certificate concerning a dead body upon which or a death touching which he has held an inquest; or

  (b) such an error relating to the cause of death occurs in the information given by a coroner's certificate issued under section 20(4) of the Coroners (Amendment) Act 1929 in the case of an inquest which was adjourned in compliance with section 20(1) of that Act (adjuornment in cases of murder etc. or at request of D.P.P.) but was subsequently resumed,'.".

  139 Page 78, line 32, leave out lines 34 to 36 and insert—

  "1. A prosecution for an offence to which paragraph 14 or 15 (incest and attempts thereat) of Part II of Schedule 2 table of offences with mode of prosecution) relates shall not be commenced except by
  540
  or with the consent of the Director of Public Prosecutions; and accordingly in sub-paragraph (a) and (b) of each of those paragraphs, in the second column, for the words from 'without' to 'behalf' substitute 'except by or with the consent'.

  2. In paragraphs 17 and 18 of the said Part II (indecent assault)—".

  140 Page 78, line 44, at end insert—
  "ADOPTION ACT 1958 (7 & 8 Eliz. 2. c. 5.)
  In section 50 (prohibition of certain payments), after subsection (3) insert:—
  '(3A) This section does not apply to—

  (a) any payment made by an adoption agency to a person who has applied or proposes to apply to a court for an adoption order or an order under section 53 of this Act (provisional adoption orders), beng a payment of or towards any legal or medical expenses incurred or to be incurred by that person in connection with the application; or

  (b) any payment made by an adoption agency to another adoption agency in consideration of the placing of a child in the actual custody of any person with a view to the child's adoption; or

  (c) any payment made by an adoption agency to a voluntary organisation for the time being approved for the purposes of this paragraph by the Secretary of State as a fee for the services of that organisation in putting that adoption agency into contact with another adoption agency with a view to the making of arrangements between the adoption agencies for the adoption of a child,

  and never has applied to payments of the kinds mentioned in paragraphs (a) and (b) of this subsection.
  In paragraph (c) of this subsection
  "voluntary organisation" means a body, other than a public or local authority, the activities of which are not carried on for profit.'".
  141 Page 78, line 44, at end insert:
  "OBSCENE PUBLICATIONS ACT 1959 (c. 66)
  In section 3(3) (powers of search and seizure) at end add:
  'Provided also that this subsection does not apply in relation to any article seized under subsection (1) of this section which is returned to the occupier of the premises or, as the case may be, to the user of the stall or vehicle in or on which it was found'."
  142 Page 80, line 30, at end insert:
  "2. In section 169 (serving or delivering intoxicating liquor to or for consumption by persons under 18)—

  (a) in subsection (1) (which prohibits in licensed premises, licence holder or his servant from knowingly selling intoxicating liquor to a person under 18 or allowing such a person to consume it in a bar, and the licence

  541
  holder from knowingly allowing any person to sell it to a person under 18), for 'subsection (4)' substitute 'subsections (4) and (10)'; and

  (b) after subsection (9) add—

  '(10) Where, as regards any licensed premises, the holder of the licence is charged with an offence under subsection (1) of this section in a case in which it is proved or admitted that he did not personally have the knowledge required for the commission of the offence charged, he shall not be convicted of the offence on the basis of anothor's knowledge if he proves that he exercised all due diligence to avoid the commission of an offence under that subsection.'".
  143 Page 82, line 14, at end insert:
  "1A. In section 22, as amended by paragraph 37 of Schedule 2 to the Bail Act 1976 (extension of power of High Court to grant, or vary conditions of, bail)—

  (a) in subsections (1) and (2) for 'inferior court' substitute 'magistrates' court'; and

  (b) in subsection (4) omit '"inferior court" means a magistrates' court or a coroner and'.".

  144 Page 82, line 14, at end, insert:
  "1B. In section 23(2) (requirements as to bringing before a justice of the peace or court a person arrested after admission to bail), after paragraph (b) insert—
  'In reckoning for the purposes of this subsection any period of twenty-four hours, no account shall be taken of Christmas Day, Good Friday or any Sunday.'".
  145 Page 82, line 35, at end insert—
  "2A. In section 44(5) (restrictions on magistrates' court's power to issue a warrant of commitment for a default in paying a sum adjudged to be paid by conviction), for paragraph (b) substitute—
  '(b) the court—

  (i) is satisfied that the default is due to the offender's wilful refusal or culpable neglect; and

  (ii) has considered or tried all other methods of enforcing payment of the sum and it appears to the court that they are inappropriate or unsuccessful.'".

  146 Page 85, line 11, at end insert—
  "6. In section 91 (Drunkenness in a public place) omit subsection (5)."
  147 Page 85, line 11, at end insert—
  "COMPANIES ACT 1967 (c. 81)
  1. In section 49(1) (certain offences to be triable summarily), after 'triable' insert 'only'.
  2. Paragraph 1 above shall be deemed to have had effect as from the passing of the Companies Act 1967.".
  148 Page 85, line 50, at end insert—
  "GAMING ACT 1968 (c. 65)
  In section 8(7) (offences) for 'section 67' substitute 'section 68'
  149 Page 86, line 1, at end insert—
  "Al.—(1) Section 12 (power to include
  542
  requirements in supervision orders) shall be amended as follows.
  (2) In subsection (2) (directions which order may empower supervisor to give), omit paragraph (a) (directions to live for a single period at a place specified by the supervisor) and for 'paragraph (a) or (b) or paragraph (a) and (b)' substitute 'paragraph (b)'.
  (3) In subsection (3) (restrictions as to periods specified in supervisor's directions)—

  (a) for paragraph (a) substitute—

  '(a) the aggregate of the periods specified in directions given by virtue of that subsection shall not exceed ninety days or such shorter period, if any, as the order may specify for the purposes of this paragraph;'

  (b) omit paragraphs (b), (c) and (d) and, in paragraph (e), the words from 'and if' onwards.".

  150 Page 86, line 5, at end insert—

  "1A. In Section 15(1) (variation and discharge of supervision order where supervised person is under the age of eighteen) for the words from 'twelve months' to 'with that date' substitute 'three months beginning with the date when the order was originally made', and omit 'in either case'.

  1B. In section 16(10) (meaning of attendance centre order' etc. for the purpose of section 15(4)(a))

  (a) after 'In', where it first occurs, insert paragraph (b) of subsection (2A) and';

  (b) for 'that paragraph' substitute 'each of those paragraphs';

  (c) for section 15(4) substitute 'section 15(2A) or (4)'.".

  151 Page 86, line 9, at end insert—
  "3. Paragraphs A1 and 1A above, and any related repeal provided for in Schedule 10 to this Act, shall not apply in relation to supervision orders made before the coming into force of those paragraphs.".
  152 Page 86, line 9, at end insert—
  "ROAD TRAFFIC ACT 1972 (c. 20)
  1. In section 179 (restrictions in prosecutions for certain offences), in subsection (1) (offences to which section applies), after paragraph (a) insert —
  '(aa) any offence under subsection (4) of section 13 of the Road Traffic Regulation Act 1967 (traffic regulation on special roads) consisting of failure to observe a speed limit imposed by regulations under that section; and'.
  2. In Part I of Schedule 4 (prosecution and punishment of offences), in column 7 (additional provisions)—

  (a) in the entry relating to section 3, for '4' substitute '3A, 4, 5';

  (b) in the entry relating to section 18, after 'paragraphs' insert '3A'.

  3.—(1) Part IV of Schedule 4 (supplementary provisions as to prosecution, trial and punishment of offences) shall be amended as follows.
  (2) After paragraph 3 insert the following paragraph—
  '3A.—(1) Where on a person's trial on indictment in England or Wales for an offence under section 1, 2, or 17 the jury find him not guilty of the offence specifically charged in the indictment, they may (without prejudice to section 6(3) of the Criminal Law Act 1967) find him guilty—

  (a) if the offence so charged is an offence under section 1 or 2, of an offence under section 3; or

  (b) if the offence so charged is an offence under section 17, of an offence under section 18.

  (2) The Crown Court shall have the like powers and duties in the case of a person who is by virtue of this paragraph convicted before it of an offence under section 3 or 18 as a magistrates' court would have had on convicting him of that offence.'.
  (3) In paragraph 5 (by virtue of which, on a prosecution on indictment for an offence to which section 179 does not apply, subsection (2) of that section does not prejudice any power of the jury to find him guilty of an offence under section 2)—

  (a) after 'apply', insert 'or (if that section does not apply) as regards which the requirement of section 179(2) has been satisfied, or does not apply,';

  (b) after 'section 2', add 'or 3 '.".

  153 Page 86, line 9, line 14, at end insert:
  "1. In section 34(1) (power of constable to take drunken offender to a place approved by the Secretary of State as a medical treatment centre for alcoholics), omit 'medical'.".
  154 Page 86, line 17, leave out "twenty-one" and insert "twenty-eight".
  155 Page 87, line 50, at end insert:
  "4. In section 15(2) (period within which work under a community service order is to be performed), at the end add'; but, unless revoked, the order shall remain in force until the offender has worked under it for the number of hours specified in it.'."
  156 Page 90, line 31, at end insert:
  "ADOPTION ACT 1976 (c. 36)
  1. In section 28(8), for 'subsection (6)' substitute 'subsection (7)'.
  2. In section 57 (prohibition of certain payments), after subsection (3) insert—
  '(3A) This section does not apply to—

  (a) any payment made by an adoption agency to a person who has applied or proposes to apply to a court for an adoption order or an order under section 55 (adoption of children abroad), being a payment of or towards any legal or medical expenses incurred or to be incurred by that person in connection with the application; or

  (b) any payment made by an adoption agency to another adoption agency
  544
  in consideration of the placing of a child in the actual custody of any person with a view to the child's adoption; or

  (c) any payment made by an adoption agency to a voluntary organisation for the time being approved for the purposes of this paragraph by the Secretary of State as a fee for the services of that organisation in putting that adoption agency into contact with another adoption agency with a view to the making of arrangements between the adoption agencies for the adoption of a child.

  In paragraph (c) "voluntary organisation" means a body, other than a public or local authority, the activities of which are not carried on for profit.'."
  157 Page 90, line 34, at end insert—
  "2. In section 3(8) (power of court granting bail to vary conditions of bail or impose conditions in respect of bail (granted unconditionally)—

  (a) for 'it may' substitute 'that court or, where that court has committed a person on bail to the Crown Court for trial or to be sentenced or otherwise dealt with, that court or the Crown Court may'

  (b) for 'it was' substitute 'bail was'

  (c) for 'it has' substitute 'has been'.".

  158 Page 90, line 34, at end insert—
  "3. In section 7(4) (requirements as to bringing before a justice of the peace or court a person arrested after release on bail), after paragraph (b) insert—
  'In reckoning for the purposes of this subsection any period of 24 hours, no account shall be taken of Christmas Day, Good Friday or any Sunday.'."
  159 Page 90, line 34, at end insert—
  "4.—(1) Section 5 (supplementary provisions about bail) shall be amended as follows.
  (2) After subsection (8) insert—

  '(8A) An order under subsection (7) above shall, unless previously revoked, take effect at the end of twenty-one days beginning with the day on which it is made.

  (8B) A court which has ordered the forfeiture of a security under subsection (7) above may, if satisfied on an application made by or on behalf of the person who gave it that he did after all have reasonable cause for his failure to surrender to custody, by order remit the forfeiture or declare that it extends to such amount less than the full value of the security as it thinks fit to order.

  (8C) An application under subsection (8B) above may be made before or after the order for forfeiture has taken effect, but shall not be entertained unless the court is satisfied that the prosecution was given reasonable notice of the applicant's intention to make it.

  (3) After subsection (9) insert—
  '(9A) Where an order is made under subsection (8B) above after the order for forfeiture of the security in question

  545
  has taken effect, any money which would have fallen to be repaid or paid over to the person who gave the security if the order under subsection (8B) had been made before the order for forfeiture took effect shall be repaid or paid over to him'."
  160 Page 91, line 11, at end insert—

  "9 Geo. 4. c. 69.

  Night Poaching Act 1828.

  Sections 4 and 11.

  1 & 2 Will.4 c. 37.

  Truck Act 1831.

  Section 10."

  161 Page 91, line 35, at end insert—

  "5O&51 Vict. c. 46.

  Truck Amendment Act 1887.

  Section 13(1) and (3)."

  162 Page 92, line 5, column 3, leave out 'paragraph 2(3)' and insert 'paragraphs 2(3) and 3(1)'.
  163 line 11, at end insert—

  "12,13 & 14 Geo. 6 c. 101.

  Justices of the Peace Act 1949.

  Section43(3)."

  164 Page 92, line 13, column 3, at end insert—

  "Section 285(1)."

  165 Page 92, line 17, column 3, at end insert—

  "Section 102(3)."

  166 Page 92, line 25, column 3, at end insert—

  "In Schedule 3, paragraph 3.",

  167 Page 92, line 50, column 3, at beginning insert—

  "In the proviso to section 1(3), the words from 'a cinematograph exhibition' to 'in the course of'."

  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 114 to 167 en bloc.
  Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Harris of Greenwich.)

  COMMONS AMENDMENT
  168 Page 92, line 55, column 3, leave out "Sections 3 and" and insert "Section".
  The Earl of MANSFIELD: My Lords, to move this Amendment might stick in the throat of the noble Lord, Lord Harris. I think that, faute de mieux, I had better move this Amendment. I beg to move that this House doth not agree with the Commons in their Amendment No. 168.
  546
  The reason is that this Amendment is consequential upon Amendment No. 165 upon which this House pronounced not so long ago.
  Moved, That this House doth not agree with the Commons in the said Amendment. —(The Earl of Mansfield.)
  Lord HARRIS of GREENWICH: My Lords, once again I am in total agreement with the noble Earl. The words would have stuck in my throat. I am grateful to him for moving the Amendment.

  COMMONS AMENDMENTS
  169 Page 93, line 9, at end insert—

  "10&11 Eliz.2. c. 52.

  Penalties for Drunkenness Act 1962.

  In section l(2)(a) the words from "the first paragraph of section twelve" to "1894".

  In section 1(2)(b) the words "section two of the Licensing Act 1902".

  170 Page 93, line 9, at end insert—

  "1963 c. 39.

  The Criminal Justice (Scotland) Act 1963.

  Section 26. In section 53(1), the entries relating to section 26 and Schedule 3.

  In Schedule 3, Part II."

  171 Page 93, line 18, at end insert—

  "1967 c. 1.

  Land Commission Act 1967.

  Section 82(5)."

  172 Page 93, line 38, column 3, at beginning insert 'In section 22(4) the words "'inferior court' means a magistrates' court or a coroner and".'.
  173 Page 93, line 44, column 3, at end insert "Section 91(5)."
  174 Page 93, line 45, column 3, at end insert "Section 93."
  175 Page 93, line 45, column 3, at end insert—

  "In section 106(2)(f) the words "the Summary Jurisdiction (Scotland) Act 1954,"."

  176 Page 93, line 46, column 3, after "In", insert "Part I of".
  177 Page 94, line 2, column 3, after '1953', insert 'section 55 of the Food and Drugs Act 1955,'.
  178 Page 94, line 5, column 3, at end insert—
  'In Part II of Schedule 3, the entry relating to the Public Health Act 1875.'.
  179 column 3, at end insert—

  "In Schedule 6, paragraphs 14 to 16 and 21."

  180 Page 94, line 6, column 3, leave out from '57(4),' to end of line 9 and insert 'the definition of "indictable offence",'.
  181 Page 94, line 35, column 3, at end insert—

  "In section 12, subsection (2)(a) and, in subsection (3), paragraphs (b) to (d) and, in paragraph (e), the words from "and if" onwards."

  182 Page 94, line 37, column 3, at end insert—

  "In section 15(1), the words "in either case"."

  183 Page 94, line 42, column 3, at beginning insert—"In Section 41(6)(a), the words from "and in" to "Scotland)" and the words "in each case'."
  184 Page 94, line 44, column 3, at end insert—

  "In paragraph 4 of Part I of Schedule 9, the words "or inquisition"."

  185 Page 94, line 45, column 3, at end inert—

  "In section 59(5'(e), the words from "and" in the first place where it occurs to the end."

  186 Page 94, line 47, leave out 'and in paragraph 34' and insert 'in paragraph 34(1)'.
  187 Page 94, line 48, column 3, at end add 'paragraph 34(3) and in paragraph 48(a) the words "14, 16, 21(c)"'.
  188 Page 95, line 13, column 3, at beginning insert—

  "In section 34(1) the word 'medical'"

  189 Page 95, line 27, column 3, at end insert—

  "Section 33".

  190 Page 95, line 49, at end insert—

  "In section 58(a), the word '33'".

  191 Page 95, line 58, at end insert—

  "In Schedule 5, paragraphs 6 and 8"

  192 Page 96, line 19, column 3, at end insert—

  "in Section 27(1) the words 'to the Magistrates' Courts Act 1952 and'.

  In Schedule 1, paragraph 26."

  193 Page 96, line 20, at end insert—

  "1975 c. 21.

  Criminal Procedure (Scotland) Act 1975.

  Section 17.

  Section 325.

  548

  In section 403(1), the words from "if" to "of payment of the fine".

  In Section 403(4) the words from "or that Table" to the end. Section 403(5).

  In section 463(1), in paragraph (a) the word "17", in paragraph (b) the words "325" and in paragraph (d) sub-paragraphs (i) and (iii).

  In Schedule 9, paragraphs 15 and 35."

  194 Page 96, line 26, column 3, after '4', insert 'in paragraph 37(4), the word "and" where it first occurs'.
  195 Schedule 11, page 97, line 13, at end insert 'section 30(2A) above, in'.
  196 Page 96, line 26, at end insert—
  '3A. Section (Alteration of maximum periods of imprisonment in default of payment of fines etc.), and any related repeal provided for in Schedule 10 to this Act, shall not apply to a term of imprisonment to be served by a defaulter which has been fixed or imposed before the commencement of that section.'.
  197 Page 96, line 28, after '29', insert or any provision mentioned in paragraph 3A above.'
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House doth agree with the Commons in their Amendments Nos. 169 to 197 en bloc.
  Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Harris of Greenwich.)
  7.27 p.m.
  Lord HARRIS of GREENWICH: My Lords, I beg to move that this House do now adjourn during pleasure.
  House adjourned during pleasure.
  House resumed.

POST OFFICE BILL
7.37 p.m.
Lord WINTERBOTTOM: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, that the House do now resolve itself into Committee.—(Lord Winter-bottom.)
House in Committee accordingly.
[The LORD ALPORT in the Chair.]
Lord TREFGARNE Lord TREFGARNE moved Amendment No. 1:
Page 1, line 18, at end insert—
("(4) This Act shall come into force at the expiration of the period of six months beginning with the day on which it is passed.")
The noble Lord said: We have before us tonight a short Bill and, had it not been for the publication yesterday of the Carter Report, we may not have been involved in this Committee stage—at least with not the same vigour as I hope and believe we shall be. The purpose of the Bill is to facilitate an experiment in industrial democracy in the Post Office. Why the Post Office was selected it is not for me to say. However, the fact that they have a large majority of their employees in union membership may have been one factor in the Government's mind. The fact that it is a nationalised industry was no doubt another. Both those are good reasons.
The purpose of this Amendment, however, is to insert a new subsection at the end of Clause 1. I want to emphasise that it is not my intention, if the Committee is persuaded to agree to this Amendment, to delay the final passage of the Bill, let alone to kill it. I see no difficulty in this Bill, amended if that be your Lordships' wish, returning to the other place and for them to consider the amended Bill and return it to us before the end of the Session.
Lord WINTERBOTTOM: Is the noble Lord not moving to leave out Clause 1? Has that disappeared by now? Are we just talking about the starred Amendment?
Lord TREFGARNE: No. I apologise for not explaining that point. I was advised before the Committee stage began that the two Amendments were printed the wrong way round on the Marshalled List and that it was incumbent upon me to move the Amendment first. Then we will consider whether to include the clause, amended or otherwise. However, I should say in parenthesis that the fact that the two Amendments are to be considered in a different order will enable me to telescope my two speeches together.
550
I hope to cover most of the points that I would have made on the question of whether the clause shall stand part of the Bill in my speech now, and I will speak only formally—if at all—to the question whether the clause shall stand part of the Bill.
First, I hope to persuade the Government to reconsider the merits of this experiment. Secondly, I hope to persuade them to allow the House of Commons another opportunity to consider the principle of the Bill. We might be questioned as to why we should do this because the Bill has only latety been through all its stages in the Commons, and we had a Second Reading only last week when I spoke and did not indicate at that stage my intention to move an Amendment such as this. I wish to explain that only yesterday the Report of the Carter Committee was published and that report impinges directly upon the content of the Bill. It seemed to me and my colleagues that an Amendment such as this ought to be inserted in the Bill this evening. I was only just able to table an Amendment yesterday evening so that it could be printed for today.
With reference to the report of Mr. Carter's Committee, we have not yet heard the Government's conclusions. Indeed, I imagine that the Government have not yet reached any conclusions. Yesterday, the right honourable gentleman Mr. Kaufman gave a Written Answer to a very opportune Question about this report from Mr. Wrigglesworth. Mr. Wrigglesworth wanted to know what action it was proposed to take in this connection. The Written Answer no doubt will have been read by some of your Lordships, and one of the points made is that the issues raised in the report are to be considered both by Parliament and by the country as a whole, and a period of approximately six months is to be allowed for representations to be made to the Secretary of State in the Posts and Telecommunications Division of the Post Office. The Written Answer went some way towards telling us where the Government stood, and it was clear that they had reached no conclusion on the content of the report and its recommendations.
My objections to the scheme of industrial democracy now proposed by the Post

551
Office are objections not of principle but of detail. For example, I am anxious that the consultation procedures, and indeed the selection of worker-members, should apply equally to those employees of the Post Office who are not members of a union. I recognise that most Post Office employees are union members, but none the less about 10 per cent.—which is nearly 50,000 people—are not members of a union, and no provision is made in this experiment for consultation with them.
I am also concerned because it seems that consumer representation on the new Board is hardly adequate. Apparently there are to be only two consumer representatives out of 19 Board members, and we do not yet know how they are to be selected. I am equally concerned that there seems to be too much power vested in the Secretary of State, because he has to approve all the appointments to the new Post Office Board. However, as I have said, I would emphasise that these are objections of detail rather than of principle.
What of the Carter Report itself? It refers specifically to this legislation, and it does so in what can only be called derogatory and unsatisfactory terms. Apparently, the Committee members learned of the decision to introduce legislation only at a late moment in their deliberations, but nevertheless there was sufficient time for them to include their thoughts and comments in the report. I do not want to quote great tracts of what they have said, but if your Lordships care to refer to paragraphs 9.15 and 9.16 on page 68, you will see, from those paragraphs and others, that their views are very clear. For example, they say in paragraph 9.15:
"Had we been consulted, therefore, we would have recommended the Government to be cautious in encouraging developments in the superstructure of worker representation".
Later, they say:
"We are strengthened in the view that the action taken was not well considered".
There are many more quotations from subsequent paragraphs which f could use which are in a similar vein. So much for the timing question. I believe that an experiment in industrial democracy is desirable, particularly if it is an operation which is Well thought out and well timed; but I believe that neither of those descriptions can apply to this experiment.
552
I should now like to refer to the general points which, had we taken the point first, I would have raised on the Question, Whether the clause shall stand part of the Bill? By doing so at this point, I shall spare your Lordships having to listen to a second speech from me later in these proceedings. If, in the fullness of time, an experiment such as the Government have described, and broadly as they have indicated, comes to be tried in the Post Office, I am anxious to know what procedures are to be used to determine who shall be the five independent members of the Board. We are already aware that two of them are to be consumer representatives, but I am anxious to know how the five independent members are to be chosen and what part the Secretary of State will play in their selection.
We know that the worker representatives are to be chosen by the Post Office unions. I wonder whether or not the Government are satisfied that the procedures used by the Post Office unions to select their officials, which are the procedures to be used for selecting their Board representatives, are equally suitable for the new selection process. I would not, of course, normally wish to interfere in the internal electoral affairs of the Post Office unions while those procedures were confined to the election of union officials; but now they are to be used for the selection of members of the Post Office Board, and therefore I believe we are entitled to know what procedures the Post Office unions use—for example, whether secret ballots are involved, or whether there is some less satisfactory procedure such as procedures we have thought fit to criticise in the past from this side of the House. What procedures will be used to consult with those workers who are not members of a union but who constitute some 10 per cent. of the workforce of the Post Office which, as I said earlier, must be nearly 50,000 people?
I am also anxious to know the scale of salaries to be paid to these new part-time directors. Will they be in line with the recommendations of the Boyle Committee? After all, the noble Viscount, Lord Boyle, and his Committee recommended a scale of salaries some two years ago, and those salaries have not yet been implemented, even in part—
Lord BOYD-CARPENTER: If the noble Lord will allow me to say so,

553
he is understating the case: it is very nearly three years ago. These recommendations were made in December 1974.
Lord TREFGARNE: I am greatly obliged to my noble friend. I was anxious not to overstate the case, and in my anxiety I seem to have understated it. Then, it is clearly even more important that the Government should state quite clearly what part of the Boyle increase, which was due in 1974—never mind 1977—the new part-time directors will be paid and, if these salaries are to be restricted in any way, whether the Government are satisfied that they will be in a position to attract representatives of sufficient calibre.
May I now briefly return to the Amendment on the Marshalled List? I am firmly convinced that the proposals contained in the Bill are defective, and it is for that reason that I invite your Lordships to amend the Bill so that the other place may have a further opportunity to consider it. I would also say that, since the Government's proposals are diametrically opposed to the proposals contained in the Carter Committee's Report, which, as I said, was published only yesterday, the Government, too, ought to think again.
It is not possible to dismiss the Carter Committee's Report as anything other than good and reliable, particularly from the point of view of the trade unions. The membership of the Carter Committee included a distinguished representative from the trade union movement, a Mr. Buck, and there was no dissenting voice from him on any of the recommendations in the report. Furthermore, there were 10 or more trade union bodies which were consulted by the Carter Committee and whose views are no doubt contained in the final report. It is for those reasons that I invite your Lordships to include the Amendment that I have put on the Marshalled List. I beg to move.
7.52 p.m.
Lord PEDDIE: The noble Lord opposite has paid tribute to Professor Carter and his report dealing with the Post Office. I join him in that, and I believe that the report itself is deserving of commendation and of the most detailed study. I would not normally have participated in this
554
debate—and in the not too distant future this House will probably have an opportunity to give far more detailed consideration to the whole question of the Carter Committee's report—but in effect, the noble Lord is inviting the Committee to reject the present proposal to increase the number on the Post Office Board, merely because of his support for the Carter proposals. I do not think that that in itself justifies the steps that he is asking the Committee to take.
He said that he has no objection in principle to the arguments advanced by this Bill or to its basic purpose, but he has some objections to the method. I ask him to consider what would be the effect if the Committee accepted his proposal, and if we were able to defer the operation of this Bill. At once, we would exacerbate the whole situation. We would create added difficulties, so far as the trade unions were concerned. We would throw it all into a state of turmoil. I may go along with most of his arguments, but I am concerned that this Bill lays down quite clearly that there is to be an experimental period of two years. Surely the Carter proposals and the operation of this Bill, when it becomes an Act, can run in parallel. We would gain from the experiment, at a time when the Carter proposals are being considered.
I am sure that no one in this Committee believes that there will be final decisions on the Carter proposals in the next six months. There will be a far longer period than that, and I would express no personal criticism if it were a longer period, because we are dealing with very fundamental matters which affect not only the Post Office but every nationalised industry. So I hope that the noble Lord opposite will withdraw his Amendment, because, although he is entitled to his point of view, it would worsen the situation. It would create added difficulties in the proper, fair, full and frank consideration of the Carter proposals.
This will be an experiment, and we must not throw a spanner into the works now, after discussions over a long period of time, and say, "No, we are going to stop it, because of Carter." Rightly or wrongly, the Government decided to go along with this idea when the Carter proposals were being formed. I share the view that that was probably a mistake, but it is

555
now done and the whole Post Office situation could be worsened, and the whole relationship between the staff in the Post Office, the unions in the Post Office and even users of the Post Office, could be undermined if we adopted this suggestion.
While I have full sympathy with the noble Lord's point of view, which urges detailed consideration of the Carter proposals, I do not think this is the way to proceed. This could have very serious and difficult consequences, and could make it increasingly difficult for a fair consideration of the Carter proposals. Therefore, I sincerely hope, in the interests of the Post Office—which I know the noble Lord has at heart—that he will withdraw his Amendment. If it is not withdrawn, I sincerely hope that this House will reject it.
7.57 p.m.
Lord WINTERBOTTOM: The noble Lord, Lord Trefgarne, has argued that, since we now have the benefit of the Post Office Review Committee's thoughts on industrial democracy in the Post Office, we should postpone the implementation of the Bill for six months. While I think he is right to draw attention to the Committee's views on this subject, I think, for a number of reasons, that it would be profoundly undesirable to delay this experiment because the Carter Committee has taken a slightly different view of how it should work.
Let us consider the practical effects of this Amendment. It is the intention of the Government to appoint the members of the new Board as soon as possible after the Bill has been passed and the arrangements have been ratified by all the unions. We certainly hope to reach this situation in less than six months. If this Amendment were accepted, it would delay the procedure. Not only that, but if the experiment were to run for two years the period allowed at the end for review would be reduced. Surely, the importance of an experiment is in the analysis of its results.
The Amendment tonight will not stop the Bill from getting on to the Statute Book. All it will do is cut down the period of study of the results of the experiment, and such study is, perhaps, the object of the exercise. I am sure noble Lords will agree that to reduce this all-
556
important period of review would be wholly undesirable; and I do not think it is the intention of the noble Lord, Lord Trefgarne, that this should be the case. These are the reasons why I think that the Amendment has grave practical disadvantages. But I recognise that the noble Lord's main concern is that we should allow time for reflection upon the recommendations of the Carter Committee, and it is to that point that I shall direct my attention.
First, I must make clear exactly why the Government did not wait for the report before introducing this Bill. The Post Office management and unions were considering the possibility of an experiment in industrial democracy even before the Carter Committee was appointed by the Government. I believe that the Committee's reaction to the decision to go ahead with the Bill was an overreaction. They must have known that the subject was under discussion when they started work. It was clear from an early stage that there were excellent prospects of management and unions reaching agreed proposals, and these were presented to the Government in February of this year.
Recognising the degree of commitment which lay behind these proposals, the Government were convinced that this would be a worthwhile experiment and that it would be most undesirable to risk losing momentum by delaying its start. To have waited for the publication of the Carter Report would have ruled out the possibility of any Bill this Session. The Government decided that the opportunity for an early experiment in industrial democracy in a major nationalised industry was not lightly to be cast aside, and the Government therefore decided that they should proceed with the Bill.
At this point I should like to thank my noble friend Lord Peddie for the very concise and important statement which he has made on the results of the Bill. He is quite right in saying that study of the Carter proposals and the experimental period during which the Bill will run can take place in parallel; the experiment and the consideration can go along side by side. With the interchange of information arising from the experiment, the final decisions on Carter will doubtless be a great deal better than if the experiment were not to take place.

557
When we speak about delay, the noble Lord must remember the practicalities of the situation. If it is decided to implement Carter, the legislative load that will arise from it will be substantial. The Post Office Act 1969 is a massive document. It would have to be split into two and rewritten. I believe that it would be at least a two-year job before the Carter proposals could be introduced in the form of legislation. I beg the noble Lord—and, indeed, noble Lords on all sides of the House—to consider the disruption caused to the various parties concerned with the Bill, all of whom are now prepared to make it work, if suddenly they find that a period of unexpected delay is imposed upon them. It would cause a great deal of bitterness and concern and could be damaging in the future.
To underline the point that I am making, we are speaking here about a set of proposals which have been worked out by the Post Office management and the unions—the people who will be carrying out the experiment. The arrangements which they agreed upon, after long and detailed negotiations, represent, in the Government's view, a sensible and constructive approach to industrial democracy in the Post Office. They have been designed by those who have the closest possible familiarity with the needs of the Post Office—by people who have lived with the Post Office and not just looked at it. The Government believe that a scheme to which both sides are fully committed, as is the case with the Post Office, has the best possible chance of success.
There are areas of agreement between the proposals which are contained in the Bill and the decision as to how it should be implemented and the Carter Committee itself. The noble Lord has drawn attention to the views of the Carter Committee and has compared their ideas with the agreed proposals for the experiment. The Committee take the view that industrial democracy should start at the level of the Head Post Office or Telephone Area. As I understand it, they are speaking about organic industrial democracy, with which your Lordships' House is already familiar. The Government also believe that this experiment must not simply be restricted to the Board level arrangements which we have discussed. Indeed, my honourable
558
friend the Minister of State said at the first tripartite meeting last July that
"representation on the Board does not of itself create industrial democracy. It must be much wider and extend to all levels of the enterprise".
At this moment it may be convenient to comment on the missing 10 per cent. which the noble Lord, Lord Trefgarne, would like to be consulted, although they are not in the unions. The percentage of employees in the Post Office unions is much nearer full representation than 90 per cent. When one takes the statistical picture on a given day, one finds that contained in the figures of employees there are a number of people who have just joined the Post Office and who have not yet got around to joining a union. At the other end of the scale there are the part-time workers who, by the very nature of their employment, are not desirous of joining a trade union. So of the established, full-time workers in the Post Office, the figure could be closer to 100 per cent. membership of the unions than to 90 per cent. That is the reason for the apparent gap between membership of the unions and the number of employees in the Post Office.
At this point may I draw the noble Lord's attention to paragraph 14 of the Joint Study Group Report, which is available in the Library of the House;
"The Joint Study Group has given priority consideration to the question of an experiment at the level of the Post Office Board because only at this level would new legislation be required. However, consideration is also being given to the Possible scope for extending industrial democracy at regional and local levels, and the parties have already agreed in principle to an experiment involving 'new style boards' at regional level".
Since their report was presented, the Joint Study Group have been devoting a great deal of attention to the arrangements below board level, and I understand that they have now reached agreement on all but the final details of the arrangements which will operate at local level. These will involve the establishment of joint area policy committees which will enable staff to participate in the formative stage of decision-making on policy and planning matters of local concern. This is precisely what the Carter Committee has recommended. It is not diametrically opposed to the Carter Committee's views, as the noble Lord has suggested. I may have misunderstood him, but I believe that is what the noble Lord said.

559
Discussions of the arrangements for indistrial democracy at regional level are also well advanced, and I understand that the Post Office and unions hope that the participation structure covering all levels of the Post Office will be finalised and agreed soon. It was always intended that industrial democracy below Board level should form an integral part of the Post Office experiment, but priority consideration was given to the arrangements at Board level because it was clear that legislation would be required to implement the kind of scheme which the Post Office and unions had in mind. I would submit that this is a sensible course of action. It has meant that while the Bill was going through, management and unions could concentrate on the arrangements below Board level. Also, it made it possible for the full scheme to go ahead, without a long wait after it was finalised.
I have made a long speech because I am very deeply concerned that your Lordships should not accept this Amendment. We have before us a Bill which will allow to go ahead an experiment in industrial democracy in the Post Office, agreed by the Post Office management and the unions. I understand that the noble Lord, Lord Trefgarne, believes that we should hold it all up while we consider the report of the Carter Committee. I believe that this would be entirely wrong. We would delay an experiment with which the management and the unions are eager to proceed and which was welcomed by all sides in another place. Moreover, as I have said, the experiment is limited to two years, at the end of which it will be reviewed. That review will examine the report on the experiment and will also take account of the views expressed by the Carter Committee. Also, by that time the Government will probably have come to conclusions on the Carter Report as a whole, and will be in a position to examine the whole question of the structure of the Post Office.
All we are asked to do today is to allow this experiment to go ahead. During the Second Reading of the Bill, the noble Baroness, Lady Seear, drew attention to a remark I made about moving out of the theory of industrial democracy into its practice. She said, "It is a very murky theory". I submit that we must not allow this Post Office experiment to slide
560
back into the murk of theory for another six months. For this reason, after replying to one or two of the points which have been made by the noble Lord, I shall ask your Lordships to reject this Amendment.
The noble Lord has very kindly said that in order to facilitate business he would ask me the question which he would have asked on what was to have been his first Amendment. I have answered the question about the missing 10 per cent. He started by saying: "We have not heard the conclusions of the Government on Carter", Of course not; it appeared last night and, although expressions of opinion have been asked for, it is quite clear that the Government will need substantial time to collect voices and then consider whether a consensus has been reached.
The noble Lord has expressed the view that consumer representation is not adequate; but we cannot overload the Board. I think it may be too big anyway and two individuals who, in the opinion of the Secretary of State, are qualified to speak for the consumer would, in my view, have sufficient power to influence the Board as a whole. The noble Lord has said that the power of the Secretary of State is excessive. I do not think it is; the powers of Secretaries of State in general may be regarded as excessive, but the power of the Secretary of State in this case is no different from that of a Secretary of State in any other nationalised industry, because it is the Secretary of State who is responsible to Parliament for the overall performance of an industry and for that reason he must be allowed to reach final decisions on the individuals who will in fact exercise power in his name for the successful operation of a major industry.
The noble Lord also asked questions about the procedures for the choice of the five independent members, including of course the consumer members, and I think I answered that in the Second Reading debate. He asked whether the Government were satisfied with the union procedures. The Government are satisfied; in fact the procedures are already in operation because one of the major unions has already reached its decisions on the basis of the existing procedures.
Lord TREFGARNE: Do the electoral procedures of the unions include provision for secret ballots?
Lord WINTERBOTTOM: The procedures which are going to be used are the ones that I mentioned on Second Reading. It may be the wish of the unions on certain occasions to use a secret ballot, but in this particular case some unions are using their established procedures for choosing union officials. It is absolutely clear; the noble Lord knows how it works, and we believe that because it starts at local branch level considerable power lies in the hands of the individual to be informed and then to express an opinion as to the type of man who will represent him on the Board of the Post Office after the National Executive of the unions has heard the views of its branch members.
Finally, turning to the question of salaries, I have nothing to add to what said in my Second Reading speech. Perhaps I could say it rather more clearly: the question of whether future salaries for full-time Board members will be sufficient to attract people of the calibre required is of course not specific to the Post Office experiment. The Government are aware of this problem and I am sure they will bear it in mind in reaching decisions on the report of the Top Salaries Review Body. It is a little early to decide on this matter.
I have tried to reply as best I can to a rather pungent idea injected into our discussions. I believe that whereas no one is questioning the noble Lord's view that perhaps a further period of thought might be valuable, nevertheless I believe, and I hope the Committee will support me in this, that a disruption caused by a sudden change of course at the last moment can only be extremely damaging to a circle of individuals and organisations far wider than the Post Office itself.
8.13 p.m.
Lord MOTTISTONE: I should like briefly to support my noble friend Lord Trefgarne and I will not repeat his arguments, with which I agree. I suggest to the Government that there is another reason why a delay of this sort—and I am not sure that six months is long enough—would be very wise in this important experiment. I hasten to add that to me this is a serious and worthwhile experiment which needs to be encouraged, but all the thinking and such experience as there has
562
been so far in businesses of all sorts—and, after all, the Post Office is a business, and a very big one at that—is that one really must start the experiment from the lowest levels of the organisation and build it up to the top. I rather gather from the noble Lord, Lord Winterbottom, that there was at the same time a concurrent introduction of a Board at the top. All the evidence we have been able to gather in industry—and I have been looking into this for five years, and other people who are much more knowledgeable than I support it—is that you must get your roots thoroughly established before you bother with what happens at Board level.
It would seem to me, therefore, that there is every reason to delay the Board level experiment to make sure that the roots are properly established. This is neither the time nor the place to go into all the arguments about this and they are not superficial; they relate to such things as the difficult position of trade union members on top Boards retaining the authority within their union that they had before. They relate to the knowledge and experience required to run a big business, and such things as that. I rather feel that the Government rushed into this. They took the bull by the horns and rushed at it—at least that was the impression one got, although the noble Lord, Lord Winterbottom, is shaking his head. I should have thought there was for that reason a great deal to be said for the delay, coupled with the main one put forward by my noble friend, that the Carter Report, if it is effective in any way, will make in any case a major difference in the top management structure of the Post Office, and that it is at the lower levels, where the differences will not occur, where the ground work can be laid for a really solid experiment. I genuinely believe that in order to make a success of the experiment the Government would be wise to hesitate and think again about this Board level introduction. For that reason I support this Amendment very strongly indeed.
8.18 p.m.
Lord TREFGARNE: The noble Lord, Lord Winterbottom, answering most courteously, as he always does, the points that were made to him, said that in his view the delay would be damaging. The noble Lord, Lord Peddie, said that there

563
would be union trouble, but I am not sure how that would arise. After all, if we succeed in including this Amendment in the Bill it will have to be approved by the other place; and I wonder whether the noble Lord, Lord Peddie, is saying that the unions would not be satisfied with anything passed by the other place. One of my most important purposes in moving this Amendment was to give the other place a chance to reconsider this matter. We can only do that by moving an Amendment because the Bill has already been through the House of Commons and, unless we pass an Amendment to it, it will not return there.
The points made by the noble Lord, Lord Winterbottom, did not persuade me at all. The noble Lord seemed to think that the alternative to this—what he called "modest proposal"—was a
Resolved in the affirmative, and Amendment agreed to accordingly.
Clause 1, as amended, agreed to.
8.24 p.m.
House resumed: Bill reported with an Amendment.
Then, Standing Orders No. 43 having been suspended (pursuant to Resolution of 13th July), Report received, Bill read 3a, and passed, and returned to the Commons.
massive new Post Office Bill. I agree that when, and if, we come to implement all, or the majority, or whatever part of the Carter proposals as take our fancy, it will indeed need a major piece of legislation; but if, in the meantime, having re-thought through the matter, the Government chose to introduce another Bill to implement only the industrial democracy recommendations of the Carter Committee, then it would not be a major Bill; it would be like this one, just a clause or two. As I have said, I believe that the important effect of this Amendment is to give the other place a chance to consider the matter again, and I hope your Lordships will agree with me.
8.20 p.m.
On Question, Whether the said Amendment shall be agreed to?
Their Lordships divided: Contents, 37; Not-Contents, 20.

CONTENT

Abinger, L.

Denham, L. [Teller.]

Newall, L.

Alexander of Tunis, E.

Drumalbyn, L.

Northchurch, B.

Alport, L.

Elton, L.

St. Aldwyn, E. [Teller.]

Auckland, L.

Falkland, V.

Spens, L.

Avon, E.

Hanworth, V.

Strathclyde, L.

Belstead, L.

Hawke, L.

Swinfen, L.

Boyd-Carpenter, L.

Hornsby-Smith, B.

Trefgarne, L.

Brougham and Vaux, L.

Kinnoull, E.

Vivian, L.

Colville of Culross, V.

Long, V.

Ward of North Tyneside, B.

Colwyn, L.

Lyell, L.

Westbury, L.

Cullen of Ashbourne, L.

Macleod of Borve, B.

Young, B.

de Clifford, L.

Monck, V.

De Freyne, L.

Mottistone, L.

NOT-CONTENTS

Champion, L.

Murray of Gravesend, L.

Stewart of Alvechurch, B.

Collison, L.

Oram, L.

Stone, L.

Harris of Greenwich, L.

Peart, L. (L. Privy Seal.)

Strabolgi, L. [Teller.]

Kirkhill, L.

Peddie, L.

Wallace of Coslany, L. [Teller.]

Llewelyn-Davies of Hastoe, B.

Ritchie-Calder, L.

Winterbottom, L.

Lovell-Davis, L.

Segal, L.

Wynne-Jones, L.

Melchett, L.

Shepherd, L.

BRITISH RAILWAYS ORDER CONFIRMATION BILL
Brought from the Commons; read 1a, and (pursuant to the Private Legislation Procedure (Scotland) Act 1936) deemed to have been read 2a and reported from the Committee.

PREFERENTIAL PAYMENTS IN INSOLVENCY (NORTHERN IRELAND) ORDER 1977
8.30 p.m.
The MINISTER of STATE, NORTHERN IRELAND OFFICE (Lord Melchett)The MINISTER of STATE, NORTHERN IRELAND OFFICE (Lord Melchett) rose to move, That the draft Preferential Payments in Insolvency (Northern Ireland) Order 1977, laid before the House on 5th July, be approved. The noble Lord said: My Lords, I beg to move that the Preferential Payments in Insolvency (Northern Ireland) Order be approved. The Insolvency Act 1976, which contained many worthwhile and desirable changes to the law on companies and bankruptcy in Great Britain, was not extended to Northern Ireland in view of the considerable differences between the law on those subjects in Great Britain and Northern Ireland. These changes will be incorporated in comprehensive legislative provisions on the company and bankruptcy law of Northern Ireland, which are to be made public within the next year. However, the Government believe that the application to Northern Ireland of the additional protection provided in Great Britain for workers by the Insovency Act 1976 should not be delayed until the passing of the proposed legislation and, for that reason, this short order has been specially prepared.
The order increases the present limit of £200 on preferential payments for wages to £800 and thereby provides more realistic protection to employees caught up in the insolvency of their employer. The new limit of £800 is the amount now in force in Great Britain under the 1976 Act. I beg to move.
Moved, That the draft preferential Payments in Insolvency (Northern Ireland) Order 1977, laid before the House on 5th July, be approved.—(Lord Melchett.)
On Question, Motion agreed to.

LEGAL AID, ADVICE AND ASSISTANCE (NORTHERN IRELAND) ORDER 1977
8.33 p.m.
Lord MELCHETT: My Lords, I beg to move that the Legal Aid, Advice and Assistance (Northern Ireland) Order 1977 be approved. This order will bring the
566
law governing legal advice into line with the rest of the United Kingdom and will also make some changes to the existing legal aid schemes in Northern Ireland for both civil and criminal proceedings.
The main purpose of the order is to introduce the £25 or "Green Form" Legal Advice and Assistance scheme into Northern Ireland. The green form scheme was introduced in Great Britain in 1973 and has proved extremely successful. I am sure your Lordships will welcome the fact that this order brings the legal advice scheme in Northern Ireland broadly into line with the Legal Aid Act 1974. The financial conditions governing the scheme are the same as those currently applying in Great Britain and it is intended to amend these by regulation in the light of any future increases which may be approved for the rest of the United Kingdom.
There is one respect in which this order differs from the original £25 scheme. Section 7A(4) enables a court in certain circumstances to authorise a solicitor to assist a person who is party to proceedings. Experience of the operation of the corresponding provision in Great Britain has shown that on some occasions this facility has been misused by solicitors to represent a client in proceedings where an application for legal aid has been made and has been refused. Paragraph 4(c) of 7A will, it is hoped, prevent such abuse. The Order also makes certain changes to the existing legal aid schemes in Northern Ireland, again to bring the law in Northern Ireland into line with that in the rest of the United Kingdom. I beg to move.
Moved, That the draft Legal Aid, Advice and Assistance (Northern Ireland) Order 1977, laid before the House on 5th July, be approved.—(Lord Melchett.)
Lord BELSTEAD: My Lords, I welcome the Order. As the green form scheme was introduced into Great Britain over four years ago this order is obviously necessary, as is Article 6 which enables the means of an applicant for legal aid to be inquired into. That is done in Great Britain, of course, in order to fix the maximum that an applicant can be required to contribute towards legal costs. If my reading of Article 6 together with the Schedule is correct, then that will now be the system in Northern Ireland as well. My Lords,

567
with those few words I certainly support the passage of the order.
On Question, Motion agreed to.

CRIMINAL DAMAGE COMPENSATION (NORTHERN IRELAND) ORDER 1977
8.35 p.m.
Lord MELCHETT: My Lords, I beg to move that the Criminal Damage (Compensation) (Northern Ireland) Order 1977 be approved. This order will replace and amend the provisions of the Criminal Injuries to Property (Compensation) Act (Northern Ireland) 1971, and will affect claims for damage to property caused on or after 1 April 1978.
Under the 1971 Act and earlier legislation some 116,000 claims had been received up to the end of the last financial year, of which 100,000 had been settled: £200 million has been paid out, including interim payments on claims still in hand. The draft order follows on a review of the 1971 Act by a committee under the chairmanship of Sir James Waddell. The 1971 Act provides compensation for wanton or malicious damage to agricultural property; and for malicious damage to other property caused by unlawful assemblies of three or more persons or by proscribed organisations. In these respects the order closely follows the 1971 Act. In drafting this Order we have had in mind that damage to property should not and cannot be regarded only as a private injury but also as a loss to the community. Moreover, our experience of the kind and scale of terrorism suffered since 1969 suggests a need to ensure, more specifically than in the 1971 Act, that compensation does not go to the undeserving.
In Article 2 the term "unlawful association" has been redefined to include not only proscribed organisations but any organisation engaged in terrorism. This is an important extension of the scope of compensation. We intend in this way to cope with any proliferation of terrorist organisations—sometimes quite short-lived—which cannot be associated with any proscribed body. Article 9 places the onus on applicants to show that they took reasonable precautions to avoid loss. It would still be for the courts to decide, on appeal, what is reasonable. The
568
Article also provides that compensation may be withheld or reduced, subject again to any decision of the court on appeal, if the applicant did not comply, for example, with regulations for the storage of inflammable materials—a kind of negligence which greatly assists the fire bomber—or contributed to the loss by provocative or negligent behaviour; or if the property was being used for any unlawful purpose; for example, if it was used for unlicensed drinking or if it was an untaxed car.
Article 10, paragraph 3, provides that no compensation is payable to anyone who is or has been a member of a terrorist organisation, or who is or has been engaged in acts of terrorism, except at the Secretary of State's own discretion (under Article 12(5)), if he thinks it would be in the public interest to make some payment. Paragraphs (6) and (7) provide that no compensation is payable for a loss of £100 or less, and that any compensation payable will be reduced by £100. Paragraph (8) of Article 10 allows the Secretary of State, subject to appeal, to withhold payment of compensation until an applicant has given the police all reasonable help which could lead to the arrest of the person who caused the damage. Article 11 provides that where compensation for damage to a building is based on something greater than the diminution in market value—for example, on the cost of reinstatement—the applicant may be required to carry out that rebuilding as a condition of getting compensation beyond "market value".
Article 13 makes clear the Secretary of State's power to deduct from compensation debts due to Government Departments and public authorities. Articles 16 and 17 allow the Secretary of State to recover compensation from anyone convicted of causing damage in respect of which compensation has been paid; or from an applicant who has received reparation from such an offender at common law, or from an applicant who has failed to make a full and true disclosure of all facts relevant to his or her own claim. My Lords, I have attempted to draw attention to only the most important Articles, and in particular to the major changes from the 1971 Act. This is an important order, which in many respects mirrors the changes in compensation for

569
criminal injuries that we considered last week. I beg to move.
Moved, That the draft Criminal Damage (Compensation) (Northern Ireland) Order 1977 laid before the House on 13th July, be approved.—(Lord Melchett.)
8.40 p.m.
Lord BELSTEAD: My Lords, I should like to welcome the order and thank the noble Lord, Lord Melchett, for explaining it. It puts right an anomaly in the 1971 Criminal Injuries to Property Act whereby compensation could be paid only for damage to property caused by three or more persons or by proscribed organisations, Article 2 now defining an unlawful association as proscribed organisations and any organisation engaged in terrorism. That is an important extension of the scope of the Criminal Injuries to Property Act. The noble Lord, Lord Melchett, said that this is an important order. It certainly is. Two million pounds paid out in the last six or seven years is a huge sum of money.
I should particularly like to welcome the effect of Article 10, which prohibits the payment of compensation to terrorists. As the noble Lord said, this really completes the work begun by the Criminal Injuries to Persons Order with which we dealt last week. Now large sums of money will no longer be paid to those who are responsible for terrorism, which has happened on some occasions. I would bracket with that word of welcome Article 11, which enables compensation not to be paid until rebuilding has been completed, and Article 13, which prevents compensation payments to anyone who is in debt to the Government or to a public authority, and, as I am afraid we all know, there are too many of them in Northern Ireland at the moment.
I should like to express my thanks to Sir James Waddell and his Committee for reviewing the operation of the 1971 Act from which the drafting of this order springs. I have two questions I should like to ask the noble Lord, Lord Melchett, of which I have been unable to give him notice. Perhaps if he is unable to answer them this evening he will write to me. I read in the proceedings in another place that the Government intend at some future date to repeal the provision of
570
compensation for damage to agricultural property. That provision is in the order but the Government have expressed their intention that it should be repealed in the future. Why do the Government believe that this provision should be of no effect at some future date?
Secondly, I notice that Article 6 fixes the minimum amount of any claim at £100, although the Waddell Report recommended £50. I should be interested to know the sort of proportion of claims that have been made below the £100 figure and whether the Government really are satisfied that the increase from what was a £20 minimum to a £100 minimum will not be unduly hard upon small traders and householders. With those two questions, I support the passage of this order.
8.42 p.m.
Lord MELCHETT: My Lords, I am very grateful to the noble Lord, Lord Belstead, for his support for the order. I should like to echo his thanks for the work that Sir James Waddell and his Committee did in reviewing the 1971 Act. The noble Lord asked me two questions. As regards the £100 limit below which compensation for damage to property will no longer be paid, I do not have the exact figures for the number of claims which over the past few years have been met by payments of less than £100. I shall certainly write to the noble Lord giving him those figures.
The Government are certainly satisfied that £100 is a reasonable limit in view of the rate of inflation since this matter was examined and in particular since the 1971 Act has been in force. I think the noble Lord will agree — and as I said when introducing the order—the importance, when one views damage to property as being not only a loss to the individual but also a loss to the community, must be in reinstating and replacing a building which is blown up and a shop which is totally destroyed. It is also important to compensate individuals for loss that is caused to them in that way. But it seems quite reasonable to have a limit of something like £100 which, as the noble Lord will know, is in common use in most insurance policies giving cover against damage of this sort.
The noble Lord also asked me about the Government's intention as regards

571
compensation to agricultural property. The noble Lord knows that at the moment agricultural property is in a special position as compared to other types of property. It is the Government's expressed intention at some stage in the future to remove the special privileges that agricultural property has. However, as the noble Lord pointed out, the provisions in the order do not change agriculture's special position as compared to the 1971 Act—that has been left in for the time being. We shall obviously want to see how the level of violence and the extent of destruction of property goes in Northern Ireland over the next period of time before making a final decision on the timing of removing this special and extra compensation that is paid towards damage for agricultural property.
On Question, Motion agreed to.

NORTHERN IRELAND (EMERGENCY PROVISIONS) (AMENDMENT) BILL
8.44 p.m.
Lord MELCHETT: 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 Melchett.)
On Question, Motion agreed to.
Then, Standing Order No. 43 having been suspended (pursuant to Resolution of 13th July), Report received, Bill read 3a, and passed.

AIR SERVICE AGREEMENT WITH USA
8.45 p.m.
Lord BOYD-CARPENTER Lord BOYD-CARPENTER rose to ask Her Majesty's Government, in view of the fact that the Agreement which they have concluded with the United States of America for a new Air Service Agreement prevents them from honouring in full either the letter or the spirit of the undertakings given to British Caledonian Airways in paragraph 9 of Cmnd. 6400, what
572
provision they intend to make to compensate that airline. The noble Lord said: My Lords, in rising to seek leave to ask the Unstarred Question standing in my name I should like to make it clear that I do not propose to raise the whole complex question of the Bermuda Agreement. First, it is too large and important a matter to be dealt with adequately by an Unstarred Question at this hour of the day. Secondly, we have not yet—officially at any rate—seen the full text of the Agreement which I understand is to be signed in Bermuda on Saturday.
Apart from two general comments which I shall make quickly, I want to confine myself to the specific Question of which I gave notice—that is, the treatment under this Agreement of British Caledonian Airways, and of its consequential position. The two general questions on the Agreement, which I foreshadowed, are as follows. I believe it is now self-evident that the decision last summer to give notice to denounce the old Bermuda Agreement was singularly inept in timing, given that it was made last summer at the height of the American Bicentennial celebrations and with an American Election pending. Under the American system, where there is a change of Government following an Election, there is a period of three months of lame-duck government in which no serious negotiation can be carried out. I can only put down our Government's lapse in this respect to the fact that they felt that the possibility that a Government facing an Election might be defeated was too horrible for them to contemplate.
Secondly, it is clear that the original negotiating position, with its apparent insistence on single designation only on routes between London and New York, was on a wholly unrealistic basis. Having said that, I must—as I have already done once in this House—pay tribute to the skill and devotion to duty of our negotiators who, placed in a very difficult position as the result of the Government's two initial mistakes, did their level best to redeem it, and after the Department of Trade element in the team had been strengthened, did a very fine job of work indeed. It would be ungenerous and ungrateful not to accept that. However, the outcome for British Caledonian Airways, in my judgment, and, judging

573
from its published statements, in its judgment, has not been at all satisfactory or, indeed, what it might have expected. If one is to understand the situation it is necessary to sketch in the background, although in view of the hour I shall do so as briefly as possible.
Under the original Civil Aviation Guidance of 1972, which was produced by the then Conservative Government, British Caledonian was placed in a strong position. It was to be given a measure of preference over all the other independent airlines and an opportunity to compete with British Airways. It was specified as the major independent British airline. In accordance with that Guidance, in 1973 the Civil Aviation Authority granted to it, on its application, licences to operate inter alia to Singapore, Toronto, Atlanta and Houston. Appeals were submitted against some of those licences, but those appeals were dismissed by the then Secretary of State.
By the end of 1973 British Caledonian Airways was in possession of licences, to Singapore, Toronto, Atlanta and Houston, among other points. It was then the duty of the Department of Trade in the case of Singapore and Toronto, where we already had rights, to designate them, and, in the case of Atlanta and Houston, where we did not at that stage have rights, to seek to negotiate that these additional gateways should be opened under the previous Bermuda Agreement. I am sorry to have to tell the House that they did nothing at all.
I do not want to comment further on that because on a certain reading of the judgment of the Court of Appeal last year, in the decision in Laker v Secretary of State for Trade, it is at least arguable that the Department of Trade were under a legal duty, licences having been granted and having come into effect, to take steps to designate; and it may be, though it is not for me to comment on it, that on a study of that judgment British Caledonian Airways may feel disposed to take such steps as they may be advised. The House will understand, therefore, that I do not wish to state more than the bare facts.
The next stage in the procedure came when, in 1976, the present Government—Mr. Peter Shore then being the Secretary
574
of State—issued a new Guidance. That Guidance, as the House knows, suffered something of a battering from the Court of Appeal, which decided that the Secretary of State had exceeded his powers, acted ultra vires, and that some part of it was invalid. It was accompanied by a White Paper which is still, so far as I know, as valid as any White Paper is. It contained in paragraph 9, which I refer to in my Question, some clear indication of what the Secretary of State was trying to do to British Caledonian. He was proposing under his policy review to see that steps could be taken for the licences on certain of their routes to be taken away, but gave clear assurance that when Atlanta and Houston were opened up they would be able to operate there.
We now come to the Agreement itself as to which British Caledonian have expressed their disappointment. By one of those happy coincidences which adorn our public life, it so happened that a Member of another place, who is the chairman of the Labour Party Civil Aviation Committee in that House, asked a Question for Written Answer of the right honourable gentleman the Secretary of State for Trade. Again by happy coincidence, this was answered on the 19th of this month.
The Question, as it bears exactly on the issue I am raising, is one I should like to read to the House with as much of the Answer as seems to be relevant. For those who want to study the full Answer at length it is in the Official Report of the House of Commons of 19th July, Written Answers Columns 470 and 471:
"Mr. Kerr asked the Secretary of State for Trade whether he is satisfied that British Caledonian Airways will obtain a fairer opportunity to establish viable services to Houston and Atlanta under the new Air Services Agreement with the United States of America than could have been obtained under the 1946 Bermuda Agreement".
It will not surprise the House that Mr. Dell began his Answer:
"Yes. We have won a better deal for British Caledonian Airways than would have been possible under the 1946 Agreement".
He then goes on to refer particularly to the position on Houston, Atlanta and Dallas, and there are one or two aspects of it which are relevant to the matter I am raising tonight and on which I should like to comment.
It is true that, as he says, under the Agreement with the United States, British Caledonian are to have rights to operate services to Atlanta starting three years from now, whereas the United States' carrier on that route will be able to operate as soon as it is ready to do so. By way of balance, or purported balance, to that British Caledonian are given rights on Houston immediately with the comparable American carrier coming on in three years' time. But although Mr. Dell, in the Answer to which I have referred the House, seeks to brush it off as a minor matter, the right to operate out of Houston is greatly diminished in value by the fact that under the same Agreement a United States' carrier is authorised to operate out of Dallas/Fort Worth into London.
Noble Lords who are not familiar with the entertaining intricacies of the geography of Texas may not fully appreciate that Dallas/Forth Worth, is, first of all, a magnificent airport. I have visited it. It is immensely impressive. More important, it is a centre of inter-lining for United States traffic, and its area is larger than the whole of Manhattan Island which, when you visit the Americas, they tell you every five minutes; but it happens to be true. More important again, it serves the same area of industrial central and southern Texas as does Houston. It is a matter of some 200 miles away, which in terms of American distances, American roads, and American automobiles is not what that would seem in this country, and in fact it serves the same area as Houston.
Consequently, the position so far as British Caledonian is concerned is that they have to wait three years on Atlanta, for which they already have a licence, while an American airline, which I understand will be Delta—a highly efficient airline—gets well dug in. They themselves are free to start on Houston, and I understand intend to do so in a matter of a few weeks, but will face almost from the beginning a tapping of that market by an American airline through Dallas/Fort Worth. Mr. Dell refers to this as having a quite modest effect.
"There will be some indirect competition for BCAL's Houston service from the United States service to Dallas; …"
But of course it doe's alter the picture.
There was also a matter which, until this morning, was something of a mystery. It is my understanding that the Agreement as initialled during the famous all-night meeting last month provided also for a United States cargo carrier to operate immediately from Houston in competition with British Caledonian. Mr. Dell does not refer to that in his Parliamentary Answer. I was puzzled when I saw that, particularly because I know Mr. Dell—with whom I had the privilege of working when I was at the Civil Aviation Authority—as a man of the highest and most scrupulous integrity, who would never run the slightest risk of giving a fallacious or deceptive answer. With his habitual courtesy he wrote to me this morning and told me that in subsequent discussion the Americans had agreed to defer the operation of this cargo service out of Houston for three years, but apparently it will operate at that stage.
We have the position that British Caledonian who, for years have held licences on both of these points, who have the assurances given in paragraph 9 of last year's White Paper, will have to wait three years to go on to Atlanta, where the Americans will establish themselves without any British competition at all, and themselves will operate immediately out of Houston but faced with the immediate competition of American passenger and freight carriers from Dallas/Fort Worth tapping the same area, as well as the fact that at the end of three years they will have to face a cargo and no doubt American passenger carrier out of Houston. They seem, therefore, to have got considerably the worst of the deal.
Finally, I want to ask the noble Lord what the Government propose to do to help British Caledonian and compensate them in respect of this decision.
I have two suggestions to make, but the Government, with all their resources, may have better ones. One suggestion is that they should themselves be allowed to operate on Dallas/Fort Worth. I appreciate that in the first place they do not have a licence for that and that they would have to apply to the Civil Aviation Authority. I can, however, tell the House that when, in 1973, they applied to the Civil Aviation Authority, also for a licence on Dallas/Fort Worth, that application was rejected solely on the

577
basis, as the published statement by the Authority indicated, that it was premature, and secondly because they had themselves indicated that they would not want to operate it for some years. If they were to be allowed now to operate on Dallas/ Fort Worth, that would enable them to meet the sucking off of traffic to the Americans which otherwise will occur in respect of their Houston service and would give them a nice compact area to serve.
The other way in which they could be helped is this: there are no licence complications for them so far as Los Angeles is concerned: they hold a licence for Los Angeles. The Agreement provides that there is one further point to the United States, other than New York but an unspecified one, and I understand at the choice of the British Government, between London and Los Angeles. The Americans are doubly designating on Los Angeles; on Traffic figures it is the natural route for double designation and one understands why they are doing it. British Caledonian already have rights in the sense of a licence on Los Angeles and it would seem that one of the ways of compensating them for the somewhat raw deal they are getting in respect of the Southern States would be for them to be designated, holding a licence as they already do, on Los Angeles, and those are the suggestions I would leave with the noble Lord.
I know that the noble Lord will not contradict me when I say that British Caledonian are a very fine airline. They look after their passengers extremely well and although there is nothing more dangerous in the world of aviation than ever referring to safety considerations, they have a very fine safety record. Moreover, they have been in the past acknowledged to be the principal British independent operator, and here I would leave a quite serious point with the noble Lord.
It was the purpose of the Edwards Committee and their recommendation to set up a Civil Aviation Authority to try to take the guidance and control of civil aviation out of Party politics. It will be the greatest pity if we got into a situation in which British Caledonian, as the biggest independent operator,
578
were forced to look to Conservative Governments for more help and expect to be rather badly treated by Labour Governments for doctrinal reasons because they are a private enterprise airline. If that were to develop it would be extremely bad for civil aviation and would help to defeat some of the purposes of setting up a Civil Aviation Authority which was, as I have indicated, designed to seek to insulate this industry from the changes that could follow, for political reasons, from changes of Government.
Having briefly, for this is a big subject, even confined to British Caledonian, sought to raise this matter, I beg the Government—the Agreement is no doubt now finalised; it is to be signed on Saturday and nothing can be done about it—to accept that it lies in their hands to help to make up to British Caldeonian in other ways for the setback which they have received from this Agreement. I suggest that it would be in the interests of long-term stability of British Civil Aviation and of the non-political, non-partisan approach which we all want to see towards it if the Government were really to make some efforts, either in the way I have indicated or otherwise, to give them a little further help.
9.5 p.m.
Earl AMHERST: My Lords, I wish at the outset to echo what the noble Lord, Lord Boyd-Carpenter, said in appreciation of the efforts of our negotiators on their extremely difficult negotiation of a new Bermuda Agreement. I do not propose to follow him into the question whether the Government chose the right time to renegotiate it. This is a new Agreement, which I believe is now called Bermuda II, which we have not yet seen, but in the meantime there are a great many questions to which I wish to draw attention and I have given prior notice to the Minister of those questions.
How much overall have the British gained or lost by this new Agreement? How many new routes through the United States of America have the British gained in addition to the old Bermuda Agreement? Our previous policy of single designation seems to have been modified by double designation to New York and to an unspecified point yet to be announced. British Caledonian, I think I am right in

579
saying, have had their licence from Los Angeles taken away. Would it not be in all fairness and logical to appoint this company to be the second British designated operator to this new point, where-ever it is, whether it is Los Angeles or somewhere else?
Are the Government now still determined on a policy of single designation outside of New York and outside of this unspecified point for all routes across the Atlantic? What is the detail of the cutback in the United States Fifth Freedom through the United Kingdom? What freedom rights through the United States have the British had cut back as a quid pro quo? I have been told that the United States have been given unlimited Fifth Freedom rights through London to Frankfurt and that these rights have been given in perpetuity. Can such rights be given in perpetuity to anybody and, if so, what rights have been given to the British in return? I have also been told that the United States have been given unrestricted rights in London to pick up all and any United States originating traffic. Does this mean genuine stopover traffic only or is it totally unrestricted, including change of gauge? If so, what have the British got in return? What is the detail of the British Fifth Freedom rights through the USA?
I believe Laker Airways is to be the second British designated operator on the London-New York route. If the Skytrain service is to be so operated, will it be subject to the limitations of the licence for Skytrain? Because, if so, will not Laker Airways be heavily handicapped in competing with the reciprocal American service if that American service is not similarly restricted? In fact, will not Mr. Laker be called upon to compete with the American reciprocator with his hands virtually tied behind his back? I am informed that the US carriers have already filed their winter schedules with the British Government. Bearing in mind what happened last winter, when so many US lines indiscriminately dumped surplus capacity on London, are the Government now satisfied that the new regulations for capacity in the new Bermuda Agreement will totally protect the British operators?
The Earl of KINNOULL: My Lords, may I interrupt my noble friend? I am not sure whether he has read the Question on the Order Paper, but none of these
580
points comes within the scope of my noble friend's Question. I do not know whether that is a fair point to make.
Earl AMHERST: My Lords, I have already said that I was not going to follow the noble Lord, but I am going to say that questions on the Bermuda Agreement are raised; and I was going on to say, if the noble Earl would let me finish my speech, that I know we have not seen the agreement yet, and it may well be that we shall have to wait and see, but, in the meantime I think it is very useful to get these questions out into the open.
Can the Minister now give an assurance that these regulations for the scheduled operators will also fully cover operating across the Atlantic by the charter and the non-scheduled operators? I understand that the Concorde service to Washington is excluded from the control clauses of this new Bermuda Agreement, and that in exchange Pan American have been given the rights to operate a round-the-world service from Washington to London with 747 aircraft. Can the Minister say what will be the position when the Concorde is allowed into New York, as we all hope it will be; and can he give us any more information as to how this is going on?
I am sure there are a great many other questions relating to the whole of this Bermuda Agreement, and I understand that the agreement is still in the form of its final legal drafting. It should be operative on 23rd July—as the noble Lord, Lord Boyd-Carpenter, has already said, two days from now—but it will be published only some time in August. Therefore, in discussing it tonight, we may be (at least, I am, or I may be) talking in the dark. If so, I should not be surprised, or take it amiss, if the Minister, in his reply, tells me to wait and see.
To go back to the terms of the Unstarred Question, my Lords, it makes definite reference to Command Paper 6400, The Future of Civil Aviation Policy, about which I would ask for some clarification in view of what seems to have happened since it was published in February last. Paragraph 8 of this document stated that double designation for long haul routes across the Atlantic was to be ruled out. As a result, British Caledonian was to lose its licences for New York, Los

581
Angeles via Chicago and Houston and Atlanta via Boston. But paragraph 9 stated that British Caledonian was to retain its licence for Houston/Atlanta, and there was no mention of Boston. In a recent Press release British Caledonian announced the early inauguration of its non-stop service from London to Houston, and at the same time drew attention to an apparently last-minute United States decision to operate an American non-stop service from Fort Worth to London. British Caledonian state that this American service from Fort Worth/Dallas to London will very seriously deflect traffic from its Atlanta/Houston service.
Consequently, in an effort to offset some of these losses, British Caledonian are now asking that Fort Worth/Dallas be added to its licence for Houston, on the argument that Forth Worth, Dallas and Houston all lie in the same traffic catchment area. Can the Minister tell us whether the British Government or the US Government, either or both, consider this argument a valid one? I am sure that the answers to most of these questions lie in what we shall find out about the Bermuda Agreement when we see it, and, consequently, as regards the questions I have asked about British Caledonian, I shall not be surprised if the Minister still says, "Wait and see".
9.14 p.m.
The Earl of KINNOULL: My Lords, I do not intend to follow precisely what the noble Earl, Lord Amherst, has said on the wider scope of this question, because I think that my noble friend's Unstarred Question is fairly narrow, and rightly so, and specifically to do with British Caledonian vis-à-vis the Bermuda Agreement. I am sure that the whole House is indebted to my noble friend for the skilful manner in which he raised this matter. My only quarrel with him is that there are two paragraphs numbered 9 in Command 6400. There is a Part I and a Part II to the document. He did not say to which Part he was referring. I think your Lordships will agree that no Member of this House can come near to equalling my noble friend's experience in the political part of British aviation or in facing the practical problems following his five years' distinguished chairmanship of the Civil Aviation Authority. That
582
period of office temporarily silenced my noble friend. I well remember seeing him last year sitting silently on the Cross-Benches, no doubt longing to get up and interrupt some points which had been wrongly expressed; but I am sure that the House is now grateful that he is silent no longer and is able to express his views. My noble friend's Question is phrased in typically pungent terms and, indeed, his speech was typically pungent. I apologise for having missed the first few minutes of it.
If asked to give a view on the general points of the Bermuda Agreement, I think that many people would be as bemused as I am to understand the wisdom of the Government in their timing in terminating the old Agreement last year. It came in a Presidential year; it came mixed up with the IMF Conferences and with the Concorde problems. I do not think that one could have chosen a more sensitive occasion. The brinkmanship that followed may or may not have worried the Government, but it was extemely unattractive to the rest of us. For the thousands of Atlantic travellers who rely on British and American airlines not to know up to within five hours of the deadline whether all the services would be suspended was not exactly appealing. For the two countries, who pride themselves in a very special relationship and who pride themselves in leading the world in patient diplomacy, to be locked in this form of brinkmanship must have seemed strange to the rest of the world and not a shining example of the art of diplomacy.
My noble friend's Unstarred Question raises a number of very serious issues but the primary one, with which he dealt very well, is the future welfare of British Caledonian. Only a year ago, the Government were making some very graceful remarks about the major independent carrier: its value to the users, its undoubted appeal with its Scottish flavour, its impact on the international services, its value to British aviation and what it earns for the country. One must recall that two years prior to the announcement of the new guidelines, British Caledonian were locked in long and exhaustive discussions to reshuffle the international routes. The whole basis of the reshuffle was to find, within the Government's policy of single designation, a viable network with which they could foresee a good future.

583
I do not think the guidelines were over generous to British Caledonian; but I find it disturbing that a year later, when all the uncertainties should have been dispersed by the guidelines, and when British Caledonian, I believe, placed orders for certain VC10s on the strength of the routes they had been given, we find that the Government have apparently—I say "apparently" because we know little about the Bermuda Agreement—done a deal with America which interferes with last year's Agreement.
As the noble Earl, Lord Amherst, said, not a great deal of information has yet come out on the Bermuda Agreement and it is still to be ratified; but there seem to be three points of note. The first is, as my noble friend said, that British Caledonian have lost for three years the use or the service from Atlanta; so that has been delayed for three years. Secondly their Houston service, which is of immense importance to them, has been weakeened materially by the use or service now going into operation of the American carriers. Thirdly, I think that the surprising thing—and I hope the noble Lord will deal with this—is that the Government have not yet nominated the second point qualifying for double designation. The Americans have done so; we have not. As my noble friend said, I hope that the Government will nominate this quickly and that it will be Los Angeles. I hope that the Government and the noble Lord will examine urgently this matter of how they can right some of the effects of the Bermuda Agreement on British Caledonian and that they will be able to say something quickly about the second point of double designation.
Another point of which I have not warned the noble Lord—for which I apologise—is this. The noble Lord, Lord Merrivale, is not taking part in the debate, but I suspect he would have raised the question about Zaire as he raised it the other day with the noble Lord. I understand that British Caledonian have decided to withdraw these services simply because they are not getting the funds out of Zaire. They have not had them for three years. In America, if this should happen I understand that the American Government can implement some fairly tough anti-trade laws against the offending Government if one of their companies is genuinely
584
being dealt with harshly, unfairly and to the detriment of that company. This applies so long as it can be proved that it is a clear case of the foreign country acting unfairly. I understand that the British Government do not have these laws. I should like to ask the noble Lord whether he will look into this matter. It is obviously important particularly for independent airlines. I do not know whether British Airways have had similar experience.
The last point that I should like to raise is regarding the whole relationship and stability of licences, and the freedom that the Civil Aviation Authority was given by Parliament from Government; the freedom of issuing licences without interference unless it was a guidelines policy. If one is correct in saying that the Bermuda Agreement interferes with licences already granted by the Civil Aviation Authority and agreed by the Government, it brings a serious aspect into the whole question of licences and particularly in the independent sector when bankers and supporters, and all those producing enormous capital sums for independent carriers, rely on the licences. The licences should be sacrosanct for a period of time and there should be no interference. I hope that the noble Lord will be able to give some assurance tonight to that effect.
9.24 p.m.
Earl ALEXANDER of TUNIS: My Lords, I, too, am grateful to the noble Lord, Lord Boyd-Carpenter, for raising this matter. His experience as one-time chairman of the Civil Aviation Authority will add weight to his words which I hope will be followed closely by Her Majesty's Government. From the information available to us at the present time, we have come away from the negotiations with the short end of the stick. The key objectives of the negotiations of the new Bermuda Agreement, as they affect British Caledonian, have, in my opinion, fallen rather short of expectations. We have been reminded that the original agreement was signed in 1946 and substantially revised in 1966, which I believe was to the benefit of all parties.
Whether it was wise for the British Government to precipitate a wholly new agreement in those circumstances, must be open to question. Of course it is easy for

585
me to say this with the benefit of hindsight, of which I can boast twenty-twenty. However, with the signing of the new agreement in less than three days' time I cannot but feel that we have been "gazumped". I should like to explore the matter of the Dallas/Fort Worth clause and add a few points to those already expressed by previous speakers. I apologise if some of my comments seem to overlap those of earlier speeches.
The geographical triangle of the cities of Dallas, Fort Worth and Houston represent a heavy concentration of potential customers. Dallas and its neighbour, Fort Worth, share an airport which, as the noble Lord, Lord Boyd-Carpenter, said, even by Texan standards is enormous. Some years ago, at the beginning of the 1970s, this potential market caught the eye of British Caledonian during its search for business in the States. The early talks which took place found the Houstonians receptive to the idea and keen to encourage overseas airlines. In fact, they were keen to the point that the Chamber of Commerce of Houston, which represents powerful commercial interests in that area, came to London to beg for the inclusion of British Caledonian in the apportioning of the air carrier routes.
That appeal was not without influence. The airline, British Caledonian, estimated its passenger services as carrying 69,000 persons in one year's operation, and it was originally planned to start in the spring of 1978. They would be using the 707 and the newer, wide-bodied DC.30. Servicing a new route, my Lords, involves no small investment on the part of an airline. Engineering and aircraft maintenance cannot be done on the cheap and, of course, neither can the marketing and sales. It need hardly be added, perhaps, that to compete with foreign carriers in a home market is both a demanding and difficult task, whatever so-called "sphere of interest" is allocated to that airline.
This new agreement, I understand, allows an American carrier to operate an all-cargo service between London and Houston. British Caledonian estimates that this concession alone will cost the airline £750,000 in lost revenue. Furthermore, the effect of Dallas/Fort Worth
586
being part of the new Agreement will—and here I quote from what the airline say:
"Lead to a 34 per cent. diversion of legitimate British Caledonian traffic from Houston and a loss of revenue in the first year of £5 million for passengers and one third of a million pounds for cargo".
Those figures have been accepted as realistic by the United Kingdom authorities. To put it another way, the revised estimate they have to work on shows that the passengers who are expected to fly by British Caledonian now number only 47,000.
To aggravate matters, Pan American have applied for a licence to operate from Houston via Dallas/Fort Worth to London. I understand there is no reason why that licence should not be granted as it is within a domestic area and outside the terms of the Burmuda II Agreement—a fact which, if correct, somewhat surprises me. I was assured of this application by a director of British Caledonian. Therefore, to counter that threat, British Caledonian has had to advance the starting date of its London to Houston service to 23rd October this year, in order to build up a market as quickly as possible.
It has been generally assumed—and certainly it was the impression given by the news media—that the Bermuda II Agreement represented a triumph for this country and that British airlines would be getting a greater share of the profitable long-haul routes. However, as we have heard from the noble Lord, Lord Boyd-Carpenter, and others, this hardly seem to be the case.
I will refrain from taking up more of your Lordships' time, since the other arguments I was going to put forward have already been better expressed, and with greater force. However, I should like to conclude by asking the Minister, when he comes to reply, whether he believes there was adequate consultation with. British Caledonian, whether the Bermuda II Agreement really reflects the needs of this airline, and, finally, whether in future negotiations the airline's representatives should not be able to participate, rather than merely observing the proceedings.
9.30 p.m.
Lord TREFGARNE: My Lords, we are indeed grateful to my noble friend Lord Boyd-Carpenter for raising this matter tonight. As my noble friend Lord Kinnoull has said, his knowledge and authority on this subject are second to none. At the risk of upsetting my noble friend, I am going to depart a little from the Question on the Order Paper, and, relating to the Bermuda Agreement, put some general points to the Minister which I do not believe have been adequately ventilated thus far, and to which I hope the noble Lord will be able to reply. Not all of the matters I raise will be specific questions aimed at the noble Lord; some of them will be my own views on the subject. But the bulk of what I have to say will be in the form of the interrogative, aimed at the Government.
I wholly support the view advanced by my noble friend Lord Boyd-Carpenter that the deal which has been done on behalf of British Caledonian is depressing and unsatisfactory. I suppose that it all stems from the point which I think has been raised by every noble Lord who has spoken so far; namely, the timing of the denunciation of the first Bermuda Agreement, originally signed in 1946. That Agreement having served for 30 years, no less, suddenly fell into disfavour with the Government and, apparently without any detailed consultation with anyone, it was denounced. As all noble Lords have said, it was presidential election year in the United States, so the period of negotiation could only be short; it was the bicentennial year in the United States, which must have distracted them; the Laker Airways issue was unresolved and, above all, the position of Concorde was far from clear.
Who was consulted before this denunciation took place? Were the Civil Aviation Authority consulted? Surely they had a right to be consulted. Surely they should have been consulted. If they were, did they specifically agree not only to the fact of denunciation, but to the timing of the denunciation? Some of us might be persuaded, if the noble Lord went on long enough, that the fact of denunciation was in the long run justified. But I doubt whether any Member of your Lordships' House would be able to agree
588
that the timing was right, and as the timing was so crucial I want to know specifically whether the Civil Aviation Authority were consulted, and whether they agreed to the timing of the denunciation.
In addition to the Civil Aviation Authority, who else was consulted? After all, there were many people who had a vital interest in the matter. What about British Airways? We have hardly heard mention of them so far. But, of course, a great percentage of their business, including the operation of Concorde, falls within the ambit of both Bermuda I and, indeed, Bermuda II. And what about British Caledonian and Laker Airways? Did the Government ask them, or even consult with them, or even advise them that this denunciation was under consideration?
Regarding Laker Airways, my noble friend Lord Gisborough asked the noble Lord, Lord Oram, a Starred Question this very afternoon, and the noble Lord, Lord Oram, answered in clear and unequivocal terms, which I greatly admired, what he thought of the deal that Laker had got from his permit recently granted by the Americans. But I suggest that some of the problems, at least, which have so recently beset Laker have arisen from the fact that the Government threw the whole matter into uncertainty by denouncing the Agreement in the spring of last year. However, denounce it they did, and we are now entitled to consider and ask what success the Government and their negotiators have achieved in arriving at the new Agreement. I do not wish to detract from the words of congratulation which my noble friend Lord Boyd-Carpenter addressed to the negotiators, but, as Laker himself has complained, they were fighting with one hand tied behind their backs.
There are a few specific points that I should like to put to the noble Lord about the provisions of the new Agreement. As noble Lords have said, the final document is to be signed in Bermuda this weekend, although so far its text has not been published. Nevertheless, the comments in the American Press on the matter are infinitely more

589
complete and detailed—I cannot say accurate because I do not know—than those which we have had on this side of the Atlantic. The American Press has posed the question as to why it was that they, the Americans, were willing to publish in such detail the provisions that had been agreed at the all-night sitting while we were so diffident. I do not believe that we need to look very far for the answer to that question, because some of us were not too proud of what we had achieved.
Turning to what, if anything, has been achieved, can the noble Lord say, first, whether the provision in Bermuda I which allowed for all aircraft duly certificated by the signing authority, or holding certificates of airworthiness issued by what is called an ICAO country, is to be found in the new Bermuda II Agreement? This is particularly important because it may be said—and I say it—that Concorde is a duly certificated aircraft and, as such, ought to be allowed to land in New York or anywhere else. I shall revert to that point in a moment.
Secondly, may I look at the point which was considered and touched upon by the noble Earl, Lord Amherst; that is, the question of Fifth Freedom rights. The Government have said that certain restrictions are to be imposed upon Fifth Freedom carriers—that is, American carriers—operating from London to points in Europe, but the major point to which Fifth Freedom flights out of London to Europe are operated is to Frankfurt. Far from being decreased, the rights to Frankfurt have been increased. I believe this to be a highly damaging provision which the Government were wrong to concede, especially because, in addition to granting unrestricted rights through London to Frankfurt, apparently they have also now approved what is called a change of gauge provision. This means that American carriers can base a smaller aircraft in London, change passengers from larger to smaller aircraft and thus operate at a high frequency, which is still more damaging to British and other European carriers.
There is nothing—or very little, at least—that is available as a quid pro quo
590
to United Kingdom airlines operating out of the United States, because there are far fewer Fifth Freedom points beyond the United States to which we can operate. It is true that there are some to New Zealand and Australia. Indeed, British Airways have a joint arrangement with Air New Zealand for the operation of just such a service from Los Angeles onwards. However, the great catchment area of South America, which might be regarded as a legitimate Fifth Freedom destination for United Kingdom carriers, is not readily available, for two reasons: first, the strength of the regional carriers in that area who object very strongly to the provision of Fifth Freedom rights to Transatlantic carriers—namely, American regional carriers—and, secondly, the very real and perhaps unduly minimised difficulties of obtaining Fifth Freedom landing rights in South American countries from those South American countries themselves, which have to agree to these operations, as well as from the American Government.
One of the key features of this new Bermuda Agreement is said to be the capacity controls. Again the British Government have seen fit to keep quiet as to how these will work. There have been a number of unofficial reports in the American Press, some of which I have seen, but I should be obliged if the noble Lord could spell out in fairly clear terms how he believes that these capacity controls will work and, in the end, to whose advantage they will work.
Another point that I hope the noble Lord will be able to touch upon is the question of charter regulation. Before this Agreement comes into force charter flights are covered not by Bermuda I Agreement, as one might imagine, but by a separate document called a Memorandum of Understanding which has been used for this purpose for a number of years. But now we are told—and I welcome this—that charter flights are to be included in the provisions of the new Bermuda Agreement. But as to how they are to be included we are thus far not told. It is true that there has been some vague reference to multilateral arrangements. I am not exactly certain what that means, but I suppose it means that the charter flights across the Atlantic will

591
be shared out between all the major European carriers; for example, the Germans, the Scandinavians, the Dutch and the French. I hope the noble Lord will be able to give me some more information on that, and in particular I hope he will tell me whether our European colleagues have been consulted and what view they take of having to share their flights with us, if that is what is intended.
I want now to return to Concorde. As your Lordships will know, the Port of New York Authority until now has consistently refused to grant landing rights to Concorde on the grounds principally that the aeroplane is too noisy. In my view—and I believe in the view of many responsible people in this field—the Port of New York Authority has no right to impose this ban because the American Government—namely, the sovereign Government of the United States of America—have entered into the Bermuda I Agreement, authorising the use of any aircraft holding the appropriate certificate of airworthiness, and the Concorde most certainly holds such a certificate. I believe that the action of the Port of New York Authority is ultra vires; in other words, they are acting outside the scope of the law as it applies to them, in preventing Concorde from landing in New York, and I believe the Government should have been more forthright thus far than they have been in making this point.
I recognise, of course, that in this matter we have to take our French colleagues with us, but the delays in bringing it to court in New York were, in my view, regrettable. The answer may not have been only in bringing the matter to court. I suspect that we have not been sufficiently vigorous on the diplomatic front because, although the American Federal Government may have only limited sway over the New York State Government, or the Port of New York Authority, I do not believe they have used all the sway, however limited, they do have.
It is interesting to remember that in the late 1950s, when the first Boeing 707 aircraft came into service on the North Atlantic route, we were then operating very quiet Britannia aircraft, although, of
592
course, we had some Comets as well. However, the bulk of our operations were with comparatively quiet aeroplanes, and when those new, early and horrifyingly noisy Boeing 707s came into operation we could then have taken a strong line with the Americans and said: "We are not going to allow landing rights to your noisy 707s". But of course we did not because we were bound by the terms of the Bermuda Agreement.
The American Government, or at least one part of it, namely the PNYA, have chosen to disregard the Agreement which was so willingly entered into by both parties all those years ago. I think this means that when we were negotiating the new Agreement, Bermuda II, we should have said quite clearly that there was really not much point in entering into a new agreement if the Americans were not able to honour the old one. It is a matter of great regret that the Port of New York Authority continues to refuse Concorde landing rights and it is a matter on which the Government should continue to exercise themselves on the diplomatic front. Finally, my Lords, I want to end with a general observation on the provisions of the Bermuda Agreement. My noble friend Lord Alexander suggested that we have been "gazumped". I think we have been "taken to the cleaners".
9.45 p.m.
Lord ORAM: My Lords, I am faced straight away with something of a dilemma, and I am quite sure the noble Lord, Lord Boyd-Carpenter, will sympathise with me. He and I spent many years together in another place, and it was our habit there to look at the Question on the Order Paper and to confine ourselves to it. Indeed, if we did not, we were quickly rebuked. The noble Lord, in introducing this subject in his characteristically able way, did say that, with two minor exceptions, he would confine his remarks, as indeed he did, to the issue as tabled on the Order Paper. Because of his record in this field, particularly in recent years as chairman of the Civil Aviation Authority, of course the case that he deployed merits the most careful reply, and I shall do my best to give it that. Then, on the other hand, we have had a series of speeches, as the noble Earl, Lord Kinnoull, pointed out at one

593
stage, which were very much wider in their scope than the particular situation of British Caledonian Airlines under the Bermuda Agreement. This is my dilemma, therefore.
I acknowledge that the noble Earl, Lord Amherst, and the noble Lord, Lord Trefgarne, did me the courtesy, which I greatly appreciated, of giving me advance notice of the much more wide-ranging points that they have now raised. I do not in any way wish to hide behind, as I might be able to do, the actual words of the Question: I want to respond to the wider questions that have been raised. But I hope your Lordships will recognise that I must perhaps truncate my answers to the other noble Lords in order to give a fuller answer to the noble Lord, Lord Boyd-Carpenter.
I hope we shall have in mind, as has been mentioned by one or two noble Lords, that the Bermuda II Agreement is to be signed on Saturday. It will be published; it will be placed in the Library; there will be a Command Paper, and I have little doubt—though this is not for me to settle—that there will be an opportunity of discussing that. That, I suggest, will be the appropriate opportunity to take up many of the points that have been raised here this evening, although I will, for the reasons I have mentioned, reply briefly to a number of them.
Perhaps I may take the noble Lord, Lord Trefgarne, first. He raised a question, which I recall was raised, possibly at a Question Time or possibly when I repeated the Statement on the Agreement, about the timing of the notice to terminate the old Agreement. This point has been repeated by the noble Earl, Lord Kinnoull; it was made by the noble Lord, Lord Boyd-Carpenter, and subsequently by the noble Earl, Lord Alexander of Tunis. I have been asked: Was the CAA consulted in the decision to terminate the 1946 Agreement? Yes, the CAA was consulted, but this question of the timing, as I have made clear in your Lordships' House before, was a matter for decision by the Secretary of State for Trade alone.
Lord TREFGARNE: My Lords, I am obliged to the noble Lord, Lord Oram, for giving way. Of course, it is a matter
594
for the Secretary of State alone because he is the representative of the Government. The CAA is not the Government, but I asked the noble Lord whether it agreed to the timing.
Lord ORAM: My Lords, that I do not know; but it was consulted. I accept that no time is ideal for reaching such an important decision. It was a difficult decision, and whatever time had been chosen, I am sure would have come under criticism.
The noble Lord, Lord Trefgarne, asked about British Airways and British Caledonian. They, too, were consulted about the decision to terminate. Indeed, British Airways, to which the noble Lord made special reference, had for a long time made it clear that they were dissatisfied with the 1946 Agreement, and they were fully consulted throughout.
I turn to the question of certificated aircraft. The airworthiness provisions of the 1946 Agreement are maintained in the new Agreement with some minor textual changes. Duly certificated aircraft of either country will be granted landing rights provided that they, and the airlines operating them, comply with the laws and regulations of the other country. Our treaty rights for Concorde are maintained in the new Agreement.
Next, the noble Lord, Lord Trefgarne, asked about Fifth Freedom rights. I think that the noble Earl, Lord Amherst, was also interested in this problem. The new Agreement provides for a considerable reduction in the United States Fifth Freedom rights over London. On the other hand, United Kingdom airlines obtain some useful Fifth Freedom rights beyond the United States to points in Canada, South America and Mexico, and these will be of value to both British Caledonian and British Airways. Under the old Agreement there were no limits to United States rights over London to Frankfurt, but under the new Agreement only two United States airlines will be allowed on this route, one of which must be the airline operating the round the world service, the frequency of which will be limited to seven flights a week in each direction.
The noble Lord, Lord Trefgarne, then asked me about the capacity control and

595
whether I would spell that out. He will understand that it will be spelt out in the document to which we look forward, and we shall then be able to go into the matter in more detail. However, I shall merely repeat what I said on an earlier occasion. On North Atlantic routes airlines have to file their plans for each season with both Governments, which can then express dissatisfaction with them. In that event, there is provision for consultations between the Governments. In case of disagreements, the airlines will be entitled to operate fallback levels of frequencies based on not less than the previous equivalent season, plus a growth element. There are a number of detailed provisions which will be published in the Annex to the Agreement.
The noble Lord then went on to ask about charter flights. As I understood it, he stated the general position quite accurately; namely, that for the time being charter air services will continue to be governed by the existing Memorandum of Understanding with the United States on charters, under which it lifted its earlier severe restrictions on the access of our charter airlines to the United States market. It was agreed that this might be developed into a bilateral agreement. However, both sides agreed to work towards a multilateral agreement for all charter services between, on the one side, Europe and, on the other side, the United States and Canada. That is in accordance with recommendations adopted by European Governments in the European Civil Aviation Conference.
In answering the noble Lord, Lord Trefgarne, I have already dealt with some of the points notified to me by the noble Earl, Lord Amherst, but, together with other noble Lords, the noble Earl specifically raised one or two further matters. The noble Earl asked about gains and new routes for the United Kingdom. Without going into details, I would indicate that in the negotiations the United Kingdom gained 14 gateways into the United States, which compares with the nine previously held. So that is an indication of the gain there.
As the noble Earl, Lord Amherst, asked about Los Angeles in relation to single designation, and as a number of other noble Lords have raised this point,
596
perhaps I might explain the position regarding Los Angeles. The Statement of 23rd June, which I repeated in your Lordships' House, explains that, like the Americans, we would have the right to designate two of our carriers on two routes. The Americans have already made it clear that their two routes would be New York and Los Angeles. We have announced that Laker will be designated as our second carrier on the New York route so that Mr. Laker can operate his Skytrain service. But the Government's intention—and this particularly relates to one of the concluding recommendations from the noble Lord, Lord BoydCarpenter—is to retain the option to designate a second carrier on some other route, and the Secretary of State for Trade intends to keep that option open.
Although the Americans have decided to keep two of their carriers on Los Angeles, it does not follow that Her Majesty's Government are bound to match them. In fact, we believe that traffic at Los Angeles will be insufficient to justify more than two carriers for some time to come. As a result of the bargaining process which I have described, we have had to accept that there will be two United States carriers against our one. We see no justification for putting a second British carrier on that route and adding to the over-capacity that is likely to result from the existing three airlines.
To some extent this problem will be kept under control by the new capacity mechanism, but I suggest that it would not profit British Caledonian and it would certainly not be in the overall national interest to designate British Caledonian to operate again to Los Angeles. I hope that that deals with points made by a number of those noble Lords who have contributed to the discussion.
The Earl of KINNOULL: My Lords, as this is an important point, I should like to ask the noble Lord a question. I am sure he will agree that the Government have kept open a valuable option on this second designation route. If a British carrier comes to the Government and says, "We believe that we can make good use of this", does the Minister feel that the Government should take note of what that British carrier says, and, if so, has British Caledonian intimated to that effect to the Government?
Lord ORAM: My Lords, clearly at all times the British Government are in close contact both with British Caledonian and with British Airways. We take seriously the representations that they make to us, which would include any representations in respect of Los Angeles. I was answering the points of the noble Earl, Lord Amherst. I think he will agree that I have now answered them; or that I answered them in relation to the noble Lord, Lord Trefgarne—or I can hide behind his kind absolution to me that I need not answer all his points.
Perhaps I may answer just two points made by other noble Lords before I turn specifically to the speech and the argument of the noble Lord, Lord Boyd-Carpenter. The noble Earl, Lord Kinnoull, asked whether I would undertake to look into the different legal powers which the United States has by contrast with ours. Of course, there are these differences. I am not in a position to pontificate upon those differences here this evening, but I give him the undertaking which he sought.
There is one much more general point to the noble Earl, Lord Alexander of Tunis, who said that when the Agreement was announced through the media it was presented as something of a triumph for Britain. If he recalls the Statement that was made by my right honourable friend in another place and which I repeated here, and if he recalls the statements made to Press conferences at that time, he will know that there was no attempt on the part of Her Majesty's Government to present it in that light, as a triumph. Indeed, I would rather quote from Ambassador Boyd—and I am quoting here from a letter in The Times of 15th July 1977, from Sir James Dunnett. He recalled that Ambassador Boyd, in summing up the negotiations, had said:
"This is not a win or lose proposition. I think we both won and the public has won, and that is the way agreements between sovereign nations should work out".
Sir James Dunnett then goes on to say:
"These are remarks that I, for one, would fully endorse".
And I, for two, would fully endorse.
Now may I turn to the specific Question and the specific points made by the noble Lord, Lord Boyd-Carpenter. He calls attention in his Question to
598
paragraph 9 of Command Paper No. 6400. That paragraph describes the exchange of routes to be carried out between British Airways and British Caledonian they both agreed as part of the policy review. The paragraph, which I need not read in full, explains that British Caledonian's sphere of interest would include both Central and West Africa and virtually the whole of South America. The relevant part concerning British Caledonian's services to the United States reads as follows:
"It"—
that is, British Caledonian—
"will however retain its licence to serve Atlanta and Houston and it will be the sole British airline designated to operate this route when it becomes available for international services".
Paragraph 2 of the White Paper had noted that British Caledonian had begun services on routes to New York and Los Angeles in April 1973 but discontinued them in November 1974. The difficulties that British Caledonian had faced in establishing itself in the North Atlantic scheduled market in those years were one of the reasons why my right honourable friend Mr. Peter Shore reached the conclusion that a policy of double designation would not be in the best interests of British airlines. Paragraph 8 of the White Paper pointed out that the decision to rule out double designation on long-haul routes would involve the loss to British Caledonian of their existing licences to serve New York, Los Angeles, and Boston. The main features of the new Air Services Agreement with the United States concerning services to Atlanta and Houston will already be known to your Lordships as a result of the Statement to which I have referred several times and which I repeated in the House on 23rd June and the answers which I subsequently gave.
That Agreement provides sole rights for a British carrier to operate a non-stop passenger and cargo service to Houston for three years following signature of the Agreement. A United States carrier will have corresponding sole rights to operate a non-stop service from Atlanta. These were the facts which the noble Lord, Lord Boyd-Carpenter, rehearsed. At the end of the three years' period, both routes will be open to both sides. In the meantime, either side can start an indirect

599
service; that is, one making an intermediate stop at another point. This would of course not be very competitive with the direct service, but the opportunity is there; and possibly this has relevance to a point which the noble Earl, Lord Alexander of Tunis, was making in the reverse direction, that is from America.
The paragraph of the White Paper to which Lord Boyd-Carpenter referred contains a statement that British Caledonian will retain its licence to serve Atlanta and Houston and that it will be the sole British airline designated to operate to these points when they become available for international services. British Caledonian does retain its licence to serve Atlanta and Houston. It will be so designated by Her Majesty's Government at the appropriate time following signature of the new Agreement, and in good time before it wishes to start its services. As I said, Houston will be available to it for a non-stop service immediately. Atlanta will become available in three years' time, and I understand that this arrangement accords with British Caledonian's own wishes. I therefore fail to understand why the noble Lord should suggest that we have failed to honour in full either the letter or the spirit of the undertakings given to British Caledonian under the Civil Aviation Policy Review.
Lord BOYD-CARPENTER: My Lords, would the Minister not agree on reflection that it must be wholly contrary to the spirit, and I suggest the letter, of the paragraph, having, as he said, allowed British Caledonian to operate out of Houston, to have signed an Agreement which enables an American carrier to tap a large part of the Houston market by operating out of Dallas/Fort Worth and, at the same time, giving British Caledonian no assurance that it will be free to operate out of Dallas/Fort Worth? It really is no good to say, "I have given you a point A" if, at the same time, somebody else has been given point B which destroys a great deal of the value of point A because it taps that market.
Lord ORAM: I noted those points in the noble Lord's opening speech, my Lords, and I shall come to them in the course of my further remarks.
Lord BOYD-CARPENTER: My Lords, I await those further remarks with eagerness and interest. As the Minister was putting the general point of my question, I think it fair to point to the problem that paragraph 9 says that it may operate on Atlanta as soon as it is open for international service. It will be open for international services this autumn but it will not be allowed to operate on it for three years.
Lord ORAM: My Lords, I hope to pick up those points—perhaps not wholly to the noble Lord's satisfaction, but shall be dealing with them in my own way. I was about to say on this point that there can be no question of compensation for the airline, even if it were accepted that loss of a licence were grounds for compensation.
The main questions that have been raised in the debate are whether British Caledonian will be able to operate to the Southern United States on a viable basis, and whether we have obtained a better deal for them under the new Air Services Agreement than we could under the old Agreement. It has also been argued that we should have obtained more for British Caledonian by preventing competition from a United States carrier on the Dallas/Fort Worth route—the point to which the noble Lord has now returned. The Government believe that, far from complaining about the results, British Caledonian have every reason to be pleased with the outcome of these negotiations. It is relevant, I suggest, to compare the conditions under which they will now operate with what we would have expected under the old Agreement.
Under the first Bermuda, the best we could have hoped to negotiate was new routes to Atlanta and Houston, and possibly to other points, including Dallas, but these would have been available to both sides simultaneously. The United States authorities would have been entitled to designate several of their carriers to operate in competition with British Caledonian, and there would have been no satisfactory provision to enable us to restrain the amount of capacity these carriers could have put on to the routes; and if the American carriers had decided to push British Caledonian off the market by putting on more and bigger aircraft in

601
order to capture the traffic, there is little, under Bermuda I, that we could have done to prevent them.
Lord BOYD-CARPENTER: My Lords, I am sorry to continue interrupting the noble Lord, but is he really being realistic? Is he not aware that, in fact, for years past on the North Atlantic the carriers on both sides have arranged voluntary capacity controls? It would have been so obviously in the interests of neither of them to ruin both of them.
Lord ORAM: My Lords, it is very much a question of judgment, but I think that the danger would have been there. Under the greater freedoms to the Americans under Bermuda I, they might well have adopted the policy that I have indicated. Under the new Agreement, not only have we succeeded in obtaining the three years' sole rights that British Caledonian wanted to establish their service to Houston, but we have ensured that not more than one United States airline can be designated on each of these routes; and, further, that when British Caledonian come on to the Atlanta route, their United States competitor will be obliged to restrain its capacity in order to give them a fair chance to become established. This will help British Caledonian to establish themselves on the Atlanta route without fear of swamping of capacity by their competitor. The capacity-regulating mechanism, which is the main novel feature of the new Agreement, will also provide a continuing means of preventing the swamping which occurred under the old Agreement. These provisions on capacity are of considerable value to British Caledonian, and could not possibly have been negotiated under the old Agreement.
The counter argument, to which noble Lords have referred, is that from the start British Caledonian may have to face indirect competition from United States airlines operating to London from Dallas/Fort Worth. This airport, as has been said, is only some 200 miles from Houston, and clearly, I agree, to a considerable extent they are serving the same market. Naturally, British Caledonian would have preferred not to have had to face competition from an American carrier at Dallas—that is perfectly understandable
602
—but, unfortunately, it was just not negotiable that British Caledonian should be the only airline on either side able to operate a non-stop service between Texas and London for a three years' period. It was just not "on".
The Americans insisted that the Dallas service could also start once the Agreement was signed and that this would be available to one of their own airlines on a solo basis for three years. However, it should be remembered that British Caledonian can start their Houston service immediately. I am glad to see that they have announced 23rd October as their starting date. But a US airline to start from Dallas has still to be selected by the US authorities. There is a lengthy procedure under US law and possibly it will be accelerated in this case. However, I would suggest to noble Lords that British Caledonian are very likely to have a good head start. It could take several months after British Caledonian's starting date of 23rd October before a US airline can start the Dallas service, but I do not wish to suggest to the House that there can be any guarantee of this. It should be remembered also that estimates by the Civil Aviation Authority show that traffic at Houston should be half as big again as the traffic at Dallas. On this count also British Caledonian appear to have a good bargain.
Both British Caledonian and British Airways have now applied to the Civil Aviation Authority for a licence to serve Dallas/Fort Worth. This relates to the second of the suggestions that the noble Lord, Lord Boyd-Carpenter, has made. The Civil Aviation Authority will be carrying out its statutory duty in deciding whether to issue a licence for this route, and to which of the applicants it should be issued. In the first instance, this is a matter exclusively for the Authority to deal with. My right honourable friend the Secretary of State for Trade has the duty to consider appeals from the decisions of the Civil Aviation Authority, and, since this is a matter which may come to him on appeal, the House will understand that I certainly should not comment further on these applications. However, the Command Paper of February 1976 which was approved by both Houses of Parliament put Dallas/Fort Worth into British Airways' sphere of interest.
Lord BOYD-CARPENTER: My Lords, this is vitally important. Is the noble Lord indicating that the Civil Aviation Authority—although, as he said, it is for them to consider quasi-judicially the two applications—will be bound by his suggestion that the guidance given in 1976 compels them to choose one rather than the other?
Lord ORAM: My Lords, I was merely indicating what is in the Command Paper. It will be for them to make up their minds and it will be for the applicants to appeal if they wish. That is my understanding of the procedure which lies before the applicants.
Lord TREFGARNE: My Lords, as my noble friend has said, this is a vital point. Is the noble Lord aware—and perhaps he will correct me if I am wrong—that the Secretary of State has powers to direct the CAA in cases where the international implications appear to him to be paramount? Has he considered making such a direction in the case of these two applications?
Lord ORAM: My Lords, I am not personally in a position to know whether my right honourable friend has taken up that matter, but I will inquire and let the noble Lord know.
I do not accept that the sole rights that the Americans will have on Dallas for three years unbalances the Agreement as a whole. That has been the implication of much that has been said this evening. The US advantage on this route is upset by the fact that, while Manchester is available to us immediately, the Americans cannot start operations on their 15th gateway for three years. British Caledonian have expressed concern that the Americans will select a southern city as their 15th gateway, and that their services to Houston and Atlanta will suffer as a result. I do not think that the noble Lord made this point but it is a point which has been made. But the 15th United States gateway will have to be agreed with Her Majesty's Government and cannot be imposed upon us by the Americans.
We have also succeeded in obtaining for British Caledonian some Fifth Freedom rights to enable them to carry traffic from Atlanta or Houston to points in South America in their sphere
604
of interest. We could not have secured these rights under the old Agreement. I understand that British Caledonian themselves said during the negotiations that these rights would be of considerable potential benefit, and I have no doubt that this may be so, since I believe that no airlines are currently operating direct services between the cities concerned. If British Caledonian wish, the Department of Trade are ready to open negotiations for corresponding rights from the other countries concerned. The ability to combine services to South America with the new services to Houston and Atlanta will give British Caledonian new commercial opportunities and greater flexibilities.
I must explain the position regarding all-cargo services. The noble Lord, Lord Boyd-Carpenter, was rather more up to date in this matter than his noble friend Lord Alexander. I confirm what the noble Lord, Lord Boyd-Carpenter, says: that British Caledonian are entitled to operate an all-cargo service to Houston immediately, and I understand that they intend to start this October; but a United States carrier will not be entitled to operate a similar service for three years. I think that is what the noble Lord said.
Lord BOYD-CARPENTER: My Lords, I was informed, with his habitual courtesy, by the Secretary of State that the position was now as the noble Lord has indicated. I understand that when the Agreement was initialled the United States could have put their cargo service on at once but there has been some subsequent negotiation. Is that a fact?
Lord ORAM: My Lords, I believe that to be the position, yes. At Atlanta the Americans will have no right to operate a direct all-cargo service, whereas in three years British Caledonian will be able to operate both passenger and all-cargo services there direct.
The Americans' agreement that their carriers on these routes should go into Gatwick and not to Heathrow is another achievement of the new Agreement and perhaps one of the most important to British Caledonian. Under the old Agreement, we could not have prevented the United States carriers from operating to Heathrow, and this would have put British Caledonian at a considerable disadvantage. The fact that all the carriers

605
of both sides will have to operate to Gatwick will put matters on an equal basis and British Caledonian should be very satisfied that this will be so. They must also be glad at the great stimulus this will give to the build-up of Gatwick as a major scheduled service airport serving London. I hope that it will encourage other scheduled service airlines to move from Heathrow to Gatwick, both for long haul services like those to Atlanta and Houston and for the vital connecting services to Europe and other easterly points.
I suggest that all these gains for British Caledonian that we have secured under the new Agreement amount to far more than either we or they could reasonably have expected when we opened negotiations or, indeed, when the Civil Aviation Policy Review was completed last year. I accept that the Government did not secure all their objectives in these negotiations, and that British Caledonian have not secured 100 per cent. of their objectives. But we have not at any time claimed that we have obtained all our objectives. The Secretary of State was careful, in the Statement which I read to this House on 23rd June, to claim only that the new Agreement
"will give British airlines a fairer opportunity to fight for a bigger share of a growing market".
It is not to be expected in any negotiations that one will achieve all the targets with which one goes into the negotiations. We have had to give way on a number of points and to make a number of concessions to the Americans. In return, the United States have moved a long way towards us. It is the Government's strong belief, from the point of view both of our civil aviation interests in general and of British Caledonian in particular, that we have secured the best we could from these negotiations. Certainly we could have achieved nothing like these results unless we had served notice of
606
termination of the old Agreement. The deal, in so far as it affects British Caledonian, will give them improved new opportunities and several vital safeguards. They will be starting their Houston service in October. The Government hope that British Caledonian will in this way begin to maximise the opportunities for growth that have been created for them.
In conclusion, my Lords, I apologise for great length of my statement, but that is a reflection of the great importance of the subject that has been raised, and of the fact that noble Lords spread it out well beyond the strict limitation of the Question. If there is a fault, it is not mine but the fault of your Lordships' House.

GREATER LONDON COUNCIL (MONEY) BILL
Reported from the Unopposed Bill Committee (on Re-commitment) without Amendment.
WATER CHARGES EQUALISATION BILL
Returned from the Commons with certain Lords Amendments agreed to; with one Lords Amendment agreed to with Amendments; with the remaining Lords Amendments disagreed to with a Reason for such disagreement; the Commons Amendments and Reason to be printed.
PRICE COMMISSION BILL
Returned from the Commons with one Lords Amendment disagreed to with a Reason for such disagreement; the said Reason to be printed.
  LOCAL AUTHORITY PENSIONS AND WAR SERVICE
  LOCAL AUTHORITY PENSIONS AND WAR SERVICE
  UK RELATED TERRITORIES: POPULATION STATUS
  UK RELATED TERRITORIES: POPULATION STATUS
  SUGAR: MARKETS AND STOCKS
  SUGAR: MARKETS AND STOCKS
  BRITISH AIRTOURS: AIRCRAFT EVALUATION
  BRITISH AIRTOURS: AIRCRAFT EVALUATION
  HAWKER SIDDELEY 146 AIRCRAFT
  HAWKER SIDDELEY 146 AIRCRAFT